3/2/2011Has Photo Enforcement Peaked?
Top vendor of red light and speed cameras reported no substantial growth in the past six months as resistance mounts.
The largest operator of red light cameras and speed cameras in the United States experienced essentially no growth in the first half of fiscal 2011. Melbourne-based Redflex Traffic Systems told Australian investors Friday that its revenue increased by a three-tenths of a percent over the same period last year -- less than the rate of inflation. In 2009, Redflex sales were booming with the activation of 445 new systems. In fiscal 2011, Redflex only boasted eight new contracts.
"As a result of the macro economic challenges facing the US market throughout 2010, and the current politically challenging times, new contract executions have declined," the Redflex filing explained. "The number of installed systems includes some cameras that may not be generating revenues for various reasons including: warning periods; delays in going live; legislative issues; road work; or maintenance actions."
The majority of new contracts are in New Jersey townships -- Cherry Hill, Hillside, Philipsburg, South Orange and Springfield -- not in major cities. Redflex cited Democratic Party ties as the main reason these Garden State towns welcomed automated ticketing machines.
"The growth in the contract base and contract execution pipeline is primarily focused in high growth markets in a number of states across the politically moderate eastern seaboard," the company explained. "While the overall acceptance of traffic safety enforcement programs continues to rise, a vocal minority persists in trying to appeal to various political leaders and attract media headlines with their efforts opposed to traffic safety enforcement."
That vocal minority turned out to be an electoral majority in five cities last year, one that reached 70 percent of those casting a ballot in Mukilteo, Washington. To date, all fifteen cities that have put the question to residents have banned automated ticketing machines. To combat further referendum efforts, Redflex and its competitor American Traffic Solutions have hired consultants to form organizations that give the appearance of grassroots support for photo radar and intersection cameras. The consultants also generate positive online comments and letters to the editor on behalf of such programs.
"Redflex utilizes its corporate voice, the voice of customers and also of third party advocates to lead the discussion in all types of media -- including earned, paid and social media," the company filing explained. "Redflex projects its corporate voice through activity in social media through an aggressive online reputation management program... Redflex continues to support 'grassroots' efforts in several states, including Illinois, Ohio, New Jersey, Tennessee, Virginia, Arizona and Texas with other states like Louisiana and Washington to join in coming months."
To reassure investors, Redflex reiterated that the company's only priority is cash flow. If any of the firm's safety programs fail to bring in money, they are dropped.
"In response to the company's concentrated focus on profitability, contract renewals are strong, however we have elected to not renew some contracts where our performance criteria could not be met," the Redflex filing explained.