Newspaper article St Louis Post-Dispatch (MO)

Making Crime Pay Companies That Provide Security Are in Line for a Business Boom

Newspaper article St Louis Post-Dispatch (MO)

Making Crime Pay Companies That Provide Security Are in Line for a Business Boom

Article excerpt

While President Bill Clinton in his State of the Union message described the national landscape as "shattered by crime," Wall Street already is figuring ways to profit from the violence.

"Given public demand for more protection and the systemic causes of crime," said William Newman, chief investment strategist at Kidder, Peabody & Co., "additional investment opportunities should arise."

This isn't a case of a few profit-hungry companies seeking a chance to capitalize on individual tragedies. In its publication "Outlook 2000," the Bureau of Labor Statistics ranks the security industry among the 20 fastest-growing service industries, only slightly behind data processing and computer software.

The murders of tourists in Florida, the bombing of the World Trade Center and the shooting of passengers on a Long Island commuter train are just a few of the most-publicized incidents that have drawn attention to crime in the United States, said Alan Lizotte, professor of criminal justice at the University at Albany in upstate New York.

Whether crime is on the rise or not - Lizotte said "the number of violent crimes is going down" - hardly matters, because perceptions are what count: Recent opinion polls show that fear of crime is the No. 1 concern among Americans, and Clinton placed fighting crime at the top of his political agenda.

"America is now considered the most violent society of the industrialized nations," Newman said.

None of this hurts the stock of companies like Diebold Inc., Sensormatic Electronics Corp. and Corrections Corp. of America, among other firms that make security equipment and operate prisons. Newman expects these companies to generate annual revenue growth of 13 percent through the 1990s.

Faced with rising crime and shrinking budgets, law enforcement agencies increasingly are turning to private security companies.

"Every elected official running in 1994 will be confronted by two main issues: fiscal constraint and violent crime in America," said Doctor Crants, chief executive at Corrections Corp. of America. "The combination of the two is causing politicians to think about the further privatization of correction facilities."

Corrections Corp. is able to get new prisons up and running in a year, while state governments take two to five years, Crants said. In addition, Corrections Corp. operates these facilities at a lower cost to the taxpayer than does the state, he said.

Non-government spending for private security is estimated at $52 billion annually. By the year 2000, annual expenditures will double to more than $100 billion as local governments transfer some police functions to private security companies, Newman said.

Kansas City recently initiated programs to use private security operations for 23 police duties. …

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