Resideo (REZI) has announced that they intend to acquire First Alert, Inc., a leading provider of home safety products from Newell Brands for $593 million in cash.
The deal is a natural extension to Resideo’s home comfort and security business and extends the number of residential sensors they have in the home. For those unfamiliar with the security industry, for many decades Resideo and its affiliates have previously sold First Alert equipment across it’s residential new construction and other professional segments.
“We’re excited about First Alert becoming part of our overall product portfolio and the growth opportunities we’ll have in the future. Their strategy and vision as a company align with our vision to help make homes safer and more secure,” said Scott Harkins, Vice President, Sales and Channel Americas.
As far as timelines for this transaction to occur, they have intentions of integrating the First Alert brand into the Resideo umbrella later in the first quarter of 2022. However, as with all acquisition’s including this one, it is still subject to regulatory approval.
As many of you have probably experienced or heard about, there is currently a backlog of container ships in most US Ports; this backlog is causing a delay in the regular supply chain that leads security products to customers.
So you may ask yourself, how exactly has this happened? Well, there are a few reasons why supply chains have been stressed across a plethora of industries, thus resulting in product availability delays. Over the past two decades over 90% of the world’s global trade has been shipped by sea and with 70% via shipping containers. Simply stated, shipping products by sea has been the most cost effect means for sending goods abroad.
The United States has continued to increase the outsourcing of the production of goods to foreign countries, mostly for economic reasons which has resulted in a supreme reliance on importing goods, instead of producing them at home, in today’s global commerce. As well, US companies have also increasingly relied on JIT “just-in-time” inventory systems to order their goods at the last moment, rather than stocking the items on their shelfs, which has resulted in lower inventory levels.
Together with, during the past two decades the shipping business has not been too profitable, meaning little investment has been put into building new ships. To make matter worse here in the US, our railroad companies have also been cutting costs and reducing their headcounts which has created the perfect storm for the shipping logistics crisis that we find ourselves in today.
Many industries including the security industry are also experiencing a global semiconductor chip shortage too. The sudden lockdown from the coronavirus created a ripple effect, where suppliers were unable to meet the growing demands for the silicon microchips that power today’s security system electronics. The remote work from home environment along with cloud infrastructure amplified and prioritized the sales of gaming gadgets, phones and several other electronic devices. And, the remaining stock of chips left available was insufficient to catch up to the pent-up demand in a slew of industries, including the security industry.
The good news is that we anticipate both crises to come to an end soon. Shipping routes now have alternative locations, like Florida, which are offering to carry more of the load, and semiconductor manufacturer’s, like Qualcomm, have stated that they expect the chip manufacturing shortage to begin resolving itself by the third quarter of 2022. So, if you are one of the many who are experiencing delays in receiving your parts order, you are not alone. Here at GeoArm, we are monitoring the two shipping crises described in this article on a day-to-day basis and keeping track of the out-of-stock items. So that when these parts do become available again for distribution, our customers will be first in line to receive them.