More Registrar Consolidation

Sidney Vianna

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#1
http://www.ul.com/newsroom/newsrel/nr040108.html

Underwriters Laboratories' Management System Registration Business to Merge with Germany's DQS
Deal Combines Geographic Strength to Achieve Top Five Global Market Position


NORTHBROOK (April 1, 2008) -- Underwriters Laboratories (UL), a world leader of product safety testing services, announced today that its Management System Solutions business will merge with DQS, a leading global registrar in independent third party management system certification services headquartered in Frankfurt, Germany. Under the agreement, the new entity will operate as a separate, stand-alone organization, with UL maintaining an ownership share. John Schmidt, UL's Chief Development Officer, will sit on its Supervisory Board. Financial terms have not been disclosed. "This is a synergistic joining of companies with complementary geographic strengths and a shared commitment to customer service and technical excellence," said Keith Williams, UL's President and CEO. "By combining forces, we will achieve a top five global market position in the management system certification industry, and we will have the capacity to serve as a leading provider of these services in every major geography."
This merger will meet the growing market demand to offer a full suite of services to customers who are expanding globally. It will also enable UL to provide a broader scope of management system registration services to better serve its valued customers. "Our businesses share a dedication to ensuring the sustainable success of management systems and processes," added Stefan Heinloth, Managing Director of DQS. "As organizations of all sizes and scope of industry face more and more challenges due to the speed of change within both domestic and international markets, the need for superior, secure management systems becomes paramount."

FAQ

What will this mean to me?
The primary driver of this merger is to provide our customers with a comprehensive suite of services in all major geographies around the world. While UL currently offers a leading position in North America and Asia, DQS brings a strong European presence. The combined entity will achieve a Top 5 global market position immediately upon completion of the merger.
Customers should expect to receive the same level of service they're used to receiving, now enhanced by a true global capability.

Will I have access to new services as a result of this merger?
UL's MSS business and DQS currently offer similar, comprehensive services in the management system assessment arena. This merger meets a growing market demand to offer services to our global clients in all major geographies.

Will I have the same account manager and customer service contact?
Yes. Please continue to work with the same account manager and customer service contacts until further notice.

Will this impact my existing certification?
Your certification will remain in effect. We are working closely with our accreditors to make sure there is a seamless transition of your certifications from UL to DQS-UL, as required.

Will I still be able to demonstrate to my clients that we are registered with UL?
Yes. The UL Registered Firm mark will continue to be provided through DQS once the merger is completed and the UL Registered Firm mark will be identifiable on your certificate.

Does the merger mean I am not certified by UL?
UL's MSS division is a part of the merged company and your certificate will continue to carry the UL Registered Firm mark. Current UL clients' certificates will be transferred to the merged company (for with UL is a major shareholder).

About Underwriters Laboratories:
Underwriters Laboratories is an independent, not-for-profit product safety certification organization that has been writing Standards for Safety, testing products and involved in conformity assessment for well over a century. UL evaluates more than 19,000 types of products, components, materials and systems annually with 21 billion UL Marks appearing on 71,000 manufacturers' products in the global marketplace each year. UL has also issued nearly 9,000 registrations to management system standards and has performed more than 12,000 assessments in 62 countries. UL's worldwide family of companies and network of service providers includes 62 laboratory, testing and certification facilities serving customers with business operations on six continents. Visit www.UL.com.

About DQS:
DQS, a German Registrar for Management Systems, was founded in 1985 by the German Institute for Standardization (DIN) and the German Society for Quality (DGQ) as the first German registrar for management systems. With offices in more than 30 countries, DQS is one of the most renowned companies in the international certification business today. Registered office is Frankfurt am Main, Germany. DQS' range of services comprises assessments according to more than 70 recognized standards and technical or industry-specific specifications, as well as assessments to intra-company requirements. To performing these services, DQS has more than 1500 auditors available worldwide.
 

Sidney Vianna

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#5
Re: More Registrar Consolidation: UL and DQS to merge.

I love the date of the announcement - 1st April! :lol:
That was my first thought, as well. But since you joined this thread, let me ask you: how come we don't hear more news like this coming from the UK? You guys have the most traditional certification market in the World. The one which has been in place for over 30 years. So, why don't we hear more of mergers and acquisitions in the British MSC sector?
 

Stijloor

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#6
Re: More Registrar Consolidation: UL and DQS to merge.

In a saturated (registration services) market, the only way for the CB's to survive is merge. The market forces have driven the profit margins so low that it is very difficult to sustain this type of service. Merging leads to cutting overhead and likely layoffs....

The end is not in sight.

Going to China is not the answer either. A good friend of mine in this business told me that 3-year registration cycles are "sold" for less than a $1,000. No way for a western CB to survive there.

Stijloor.
 

Sidney Vianna

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#7
Re: More Registrar Consolidation: UL and DQS to merge.

In a saturated (registration services) market, the only way for the CB's to survive is merge. The market forces have driven the profit margins so low that it is very difficult to sustain this type of service. Merging leads to cutting overhead and likely layoffs....
As long as CB's focus solely on cost cutting measures to maintain their profit margins within acceptable levels, they will have a losing proposition. For those with reasonable knowledge of the certification business, it is clear that competition on price alone has led to a significant degradation of the certification product quality.
If the market foments and supports a certification process where there is no correlation between the certificate and the performance of the certified system, the market forces will eventually drive CB's into oblivion. Not a minute too soon, some might say.

Unfortunately, many CB's are managed by people with questionable business acumen who are only capable of devising cost cutting measures as a solution for their low profit margins.
 
J

JOHANNPETER

#8
Re: More Registrar Consolidation: UL and DQS to merge.

Hello,

I just spoke with people from DQS and they told me that the reason for the merger was not any kind of cost cutting but to complement each other in different geographical regions. It is part of the DQS strategy to grow worldwide and to be able to serve large global companies. It sounds true because DQS is one of the most expensive registrars but they try to offer real value adding services. The difference is the quality of their auditors. I once asked for their competence citeria for aditors and they told me the auditor needs at least 5 years practical experience in the industry sector he´s auditing and, in adition, managerial experience. With better qualified auditors who really can add value during the audits, they have no problems to justify higher fees.:agree:
 
J

Josey Wales

#9
Re: More Registrar Consolidation: UL and DQS to merge.

I think Sid said it best and other have alluded to the fact that there is no free lunch. Profit margins in the registration business industry are razor thin and in order to stay in business CB's need to cut costs. Unfortunately what gets cut are value added services. CB's cut auditor rates or hire auditors with little experience which drive down the value of registration. More registrars will be acquired or go out of business as this trend continues. (there have been rumors of a BV / SGS marriage)

Getting bigger will enable large registrars to put pricing pressures on small and mid-sized registrars to the point they will have to sell or go out of business.

Some registrars have resisted playing the price game, but as long as there are companies that just want a cert. there will be room for low priced registration services.

The registration industry hasn't helped itself either. While many certifed organizations (and registrars) say their ISO certification gives them a "Marketing advantage", opens new markets to sell product, and is a catalyst for internal improvements the registration industry has not been able to quantify increased shareholder value.

Eventually, like any business cycle, as soon as the carnage is over, survivors margins will increase to a plateau and stay unless something comes along to radically change the industry.
 

Sidney Vianna

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#10
Re: More Registrar Consolidation: UL and DQS to merge.

(there have been rumors of a BV / SGS marriage)
Do they have a prenuptial agreement?:tg:

The certification sector has an atypical business model. The buyers of the CB services and the actual users of the CB services tend to have very different expectations. What constitutes value added audits to the registrants is not the same to the registrant's customers.

Most registrars tend to "appeal" to their direct customers, failing to address other stakeholders expectations. And, while the accreditation process should maintain the process integrity, thus keeping the balance between registrants and their stakeholders, some believe that is not happening.

The number and pace of CB mergers indicate (to me at least) a shake-up in the registration sector.
 

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