Security: A Growth Industry in Mexico

          By SAM DILLON

                MEXICO CITY -- Dale Bulkley, who works for Kroll-O'Gara
                Co., the investigation and security concern, found how common
          kidnappings have become here while investigating the abduction of a high
          school student along a boulevard winding through an affluent Mexico City
          suburb. Nine other victims, he learned, had been taken hostage in recent
          months along the same leafy road.

          Mexico has become a dangerous place. And because it is gaining
          importance as a world business center, Kroll-O'Gara forecasts rapid
          growth for its "risk mitigation" services. Bulkley runs a kidnapping-evasion
          course at a driving track north of Mexico City, teaching clients how, if
          worst comes to worst, to crash through roadblocks set up by kidnappers.

          "We wreck a lot of cars," he said. The course is part of an array of
          products and services, from armored cars to business intelligence, that
          Kroll-O'Gara is selling as it expands its operations in Mexico.

          "We're increasing our investments because our clients have a keen interest
          in doing business here, but there's great concern over safety," company
          president Jules Kroll told 200 executives here the other day at a
          wine-and-cheese reception marking the opening of the company's Mexico
          City offices. "We want to lower the barrier caused by those fears."

          Many factors explain the crime driving the growth in Mexico's security
          industry. The gap between rich and poor is huge and growing wider.
          Many police officers have joined forces with organized crime. The justice
          system is so discredited that most crimes go unreported. The governing
          party is in decline, along with its power to suppress criminals.

          The president of a Japanese electronics company was kidnapped in
          Tijuana in 1996 and an American real estate broker was shot to death in
          a taxicab in December. But so far, foreigners have been victimized far less
          than Mexicans; thousands of local people are robbed, assaulted or held
          for ransom each year.

          As a result, Mexico has become one of the most competitive markets in
          the world for bulletproof vehicles; at least 20 factories are armoring cars.
          The streets of Mexico City, Monterrey and Guadalajara are clogged with
          motorcades of wealthy executives in armored Jeep Cherokees, trailed by
          carloads of private bodyguards. Armies of contract gunmen stand sentry
          outside stores and factories. Hundreds of businesses advertise alarm
          systems, stun guns and telephone-listening devices.

          No one really knows how much Mexicans are spending to assuage their
          fears, but experts say the amounts are growing fast. In an interview, Kroll
          cited a recent study that estimated revenue for the private security industry
          worldwide at $55 billion last year and projected this to grow to $200
          billion by 2010.

          Hoping to capture a big chunk of that revenue, Kroll and the owners of
          the O'Gara car-armoring business in Fairfield, Ohio, merged in
          December. The idea behind this union is that both companies' goods and
          services can be sold to the same international executives. With gross
          profit of $58.8 million on worldwide revenue of $190.4 million last year,
          Kroll-O'Gara appears to have grown significantly since the merger. In the
          first half of 1998, the company earned $36.2 million on revenue of
          $111.8 million.

          Operations in Mexico account for 4 percent to 5 percent of the
          company's worldwide revenue, a share that is likely to grow, although not
          tremendously, because the company is aggressively expanding in many
          other areas of the world, said Brian W. Ruttenbur, an analyst with Sun
          Trust Equitable Securities.

          "With all the instability there, Mexico is a perfect place for Kroll-O'Gara
          to be," Ruttenbur said. "Their armored-vehicle sales have been absolutely
          blockbuster."

          At Kroll-O'Gara's car-armoring factory here, 35 workers were installing
          bulletproof glass and Kevlar armoring in a dozen stripped-down
          Volkswagen Jettas, Chevrolet Suburbans and Jeep Cherokees.

          Daniel Bell, Kroll-O'Gara's general manager, said that armor plating came
          in various strengths -- some repel bullets from handguns, others from
          bazooka shells. But regulations are chaotic here, and many companies
          exaggerate the protective quality of their armor, Bell said.

          "And this is a case where if you don't get what you pay for, there can be
          very negative consequences," Kroll shouted above the whine of an
          air-powered drill.

          For about $40,000, Kroll-O'Gara's Mexico plant can protect cars against
          handguns. The company also exports cars hardened to higher standards
          from its factory in Ohio. Recent incidents show that the cost of
          bulletproofing a car is money well spent, Bell said.

          Because survival can depend as much on steel nerves as bulletproof
          windows, 120 Mexican clients are now taking Kroll-O'Gara's
          evasive-driving course, Kroll said.

          For those who fall prey to kidnappers, the company offers ransom
          negotiation services. Anti-abduction specialists based in Miami, including
          at least one retired CIA official, help those negotiating directly with
          kidnappers, usually family members, company colleagues or lawyers.

          Kroll first traveled to Mexico on business in 1975, when he investigated
          employees who were padding purchases at an encyclopedia company.
          Similar business investigations have been handled over the years by Kroll
          employees traveling from offices in Los Angeles and Miami. Now they
          can operate from the new base here.

          Current clients include Mexican companies that have contracted
          investigations in the United States and elsewhere in the world, as well as
          European, Japanese and American clients seeking information on potential
          Mexican clients, said Thomas Cash, director of Kroll-O'Gara's Latin
          American operations.

          "Say you're going to invest in a tourism business in the Yucatan," Cash
          said. "What labor problems can you expect? Is your partner a big
          contributor to some political party?"