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Burns International Security Services

 


Address:
2 Campus Drive
Parsippany, New Jersey 07054
U.S.A.

Telephone: (201) 267-5300
Fax: (201) 397-2493


Statistics:
Division of Borg-Warner Security Corporation
Incorporated: 1909
Employees: 40,000
Sales: $920 million
SICs: 7381 Detective, Guard, and Armored Car Services


Company History:

Burns International Security Services, formerly a subsidiary of the Borg-Warner Security Corporation, became a division within its parent company in the mid-1990s. Along with its own security branch divisions and Burns, Borg-Warner Security also held under its corporate umbrella the Wells Fargo Guard Service Division and operated under the familiar Pony Express, Wells Fargo, and Burns names. In complementary tandem, these Borg-Warner divisions and subsidiaries offered a full array of security and protection services designed to meet an ever increasing private-sector security need in a nation that has seen its crime rate grow at an alarming rate. As a Borg-Warner subsidiary, Burns had to weather some difficult years while the parent company repaid a large leveraged buyout debt that had forced it to go private and downsize in the late 1980s before again emerging as a public corporation in 1993. Burns, restricted to providing guards and related security services, benefited from the restructuring and in the mid-1990s was faring well in an industry in which the demand continued to expand.

The base company from which Burns International Security Services evolved, the William J. Burns National Detective Agency, was established in New York in 1909 by the son of Irish immigrant parents. Burns was born in Baltimore, Maryland, in 1861 and raised in Columbus, Ohio. He attended business college, and then joined his father in a tailoring enterprise, but became an amateur sleuth when, in 1878, his father began serving as police commissioner in Columbus. Although he had no official position with the police department, young William earned a reputation for detective work in forgery cases. For a brief period he worked for the Furlong Detective Agency in St. Louis, Missouri, then, in 1889, entered the U.S. Secret Service, where he had considerable success in tracking down counterfeiting operations, both in the United States and Costa Rica. He also uncovered bribery and land fraud by government employees, leading to the conviction of several federal, state, and municipal officials.

Burns left government service in 1906, with a growing reputation for incorruptibility and excellent detective work. For a time he continued to track down dishonest administrators, including the entire board of supervisors of San Francisco, California, and that city's political boss, Abraham Ruef. Burns and his associates had tough going, having to fight corrupt money interests, including, among others, a national trolley car trust and newspaper magnate William Randolph Hearst, who employed the cartoonist Ed Fisher to caricature them in what would later develop into the "Mutt and Jeff" comic strip.

In 1909, the by then celebrated detective organized the William J. Burns National Detective Agency, and within a year convinced the American Bankers' Association to terminate its association with the agency's chief competitor, the long established and renowned Pinkerton Agency. The move gave the new Burns agency the job of protecting the 12,000 member banks. Somewhat later the agency also gained the responsibility of protecting the holdings of the American Hotel Association. Initially, however, the agency was engaged as much in detective and investigative work as in protection services.

William Burns, from time to time returning to government service, left interim control of the agency to his two sons, Raymond J. Burns, president, and William Sherman Burns, secretary and treasurer. In 1913, the agency changed its name to the Burns International Detective Agency. By this time, the company was becoming famous for innovative detective methods, which, in 1916, involved Burns himself in something of a scandal and began the tarnishing of his image. Hired by the millionaire, J. P. Morgan, Burns led a midnight raid on the law offices of Seymour and Seymour, a firm that, like Morgan, was handling the sale of munitions to France and Great Britain, soon to be the allies of the United States in World War I. The firm was suspected of stealing trade secrets from Morgan, and Burns was trying to obtain evidence of its crime. Burns installed a Detectophone in the offices, a primitive listening device and the ancestor of the modern day "bug." Also, with the aid of New York City police, he wire tapped the firm's telephones. The operation came to light when a disgruntled former employee of the Burns Agency disclosed it to the authorities. When the smoke created by newspaper coverage cleared, Burns was fined $100 for illegal entry.

In 1921, William J. Burns took the directorship of the Justice Department's Bureau of Investigation, the forerunner of the FBI. However, his three-year service in that office did nothing to enhance his reputation, since during that time the Bureau became involved in the scandals that plagued the administration of President Warren G. Harding. Burns resigned in 1924, leaving the directorship to his chief assistant, J. Edgar Hoover. By that time he was a fallen idol, a "distinguished sinner," under virulent attack as an agent provocateur whose anti-union and anti-Communist crime-fighting methods played havoc with civil liberties. Burns went into full retirement, moving to Sarasota, Florida, where he died on April 14, 1932.

When Burns died, his agency was the second largest such business in the United States. His sons, Raymond J. and W. Sherman, always more cautious than their controversial father, began the process of transforming the business from a general detective firm to one specializing in guard services. During the Great Depression the agency's guards were used by industrialists, several of whom were under siege by desperate strikers. Some were also used to infiltrate unions as labor spies. In addition, Pinkerton and Burns both provided scabs during strikes, as a subcommittee of the Senate Committee on Education and Labor, chaired by Robert M. LaFollette, Jr., revealed in its investigations. When the practice came to public notice, both agencies ended it. Pinkerton even went so far as to refuse industrial guard services during strikes, but not Burns, which filled the need for some of Pinkerton's former clients. Between 1933 and 1936, the company made almost $330,000 from providing security guards, and in 1936 alone netted close to $156,000 from the operation, an increase of 266 percent over the previous year. However, the notoriety surrounding labor espionage and charges of civil liberty abuse lodged against both Pinkerton and Burns left both companies publicity shy and much more circumspect in their policies.

Raymond J. and W. Sherman Burns remained at the company's helm through the Great Depression, World War II, and into the 1960s. In fact, the agency remained under direct family control into the late 1970s, when George E. B. King, the grandson of William J. Burns, became CEO. During that time the company had shifted its focus from crime investigation to protection service and continued to expand. By the end of the 1950s, Burns was grossing more than $20 million. Among its clients were General Motors, General Electric, Standard Oil of New Jersey, du Pont, A&P, and the American Bankers Association, the organization that had given the agency its first big contract back in 1909.

In 1959, in its 50th year, the company had 30 regional offices and close to 12,000 employees, about one-fourth of whom were either former FBI agents or policemen. Although it took on most protection and detective jobs, except divorce investigations, Burns declined to engage in labor espionage and cases involving politics, the areas in which it had previously been publicly embarrassed. The agency continued to use infiltration methods, and its Undercover Department remained at the core of the organization. Claiming to have the personnel and resources to take on an assignment "of any size, any time and place a client wants it," Burns employees masqueraded undercover as everything from janitors to college professors, at rates of up to $25 per hour, depending on the assignment. Moreover, the company maintained enviable crime analysis laboratories and massive identification files, using an impressive array of state-of-the-art scientific equipment. By that time, supported by these resources, Burns was taking on about 5,000 assignments per year, some with considerable public fanfare, as when, in 1959, it was hired by the former Soviet Union to protect visiting Russian dignitaries, including Premier Khrushchev, and provide security at the Soviet trade fair in New York.

The business of Burns often necessitated clandestine or covert operations, which, as in the 1930s, subjected it to exposure and negative publicity. For example, in 1961 the agency went head to head with the American Association of University Professors (AAUP) when it circulated a letter indicating that it was ready to provide agents to infiltrate college student bodies in order to spy on faculty members. Burns apologized for what it maintained was the misguided scheme of a single operative in Houston and promised that academic espionage would be added to its list of taboo assignments.

As Burns continued to change its essential focus from criminal investigation to protection services, it led the way in what was a rapidly expanding industry. Undertaking some unique assignments, the agency agreed to protect the canine guards of the Dog Owners Guidance Service of New York against dog nappers. That company's watchdogs came equipped with collars announcing that they were under the protection of Burns. It was that sort of service that helped Burns improve its sometimes tarnished image.

In the 1970s, Pinkerton's and Burns International Security Services were the two largest contract security companies in the United States but were being pushed hard by the Wackenhut Corporation, a relatively new player in the security service game. There was undoubtedly room for competition, though, for it was in that decade, fired by drug trafficking, that the crime rate began a rapid upwards spiral. In 1974, analysts estimated that a full two percent of the GNP was being lost to crime.

By 1978, Burns had 99 branch offices in North and South America. Both Pinkerton and Burns were grossing about $200 million in business, and both employed about 40,000 people. With emphasis on security rather than detective work, Burns and Pinkerton became known colloquially as rent-a-cop businesses. Although Burns continued to provide alarm installation and monitoring systems, by 1979 about 86 percent of its total sales came from its guard services.

Despite the industry's growth, even the 1970s proved challenging for Burns. In 1971, a New York detective was convicted of selling police records to private businesses, including Pinkerton, Wackenhut, and Burns, and the security firms were fined for "giving unlawful gratuities" and "rewarding official misconduct." Burns also came under scrutiny for its practice of hiring ex-FBI agents, although it was hardly alone in doing so. Competition was also growing, and Burns, Pinkerton, and Wackenhut saw their combined share of the guard-service market drop from 39 percent in 1972 to about 23 percent by 1982. Of the three giants, Burns reportedly fared the worst. Still under the nominal control of the Burns family, its high net earning mark of about $8 million dropped to about $4 million in 1981. It then altered its market strategy somewhat, going after the business of large national and international firms, even using the equipment of its rivals to meet its customers' demands.

In 1982, Burns International Security Services became a subsidiary of Baker Industries and moved its operation from its Briar Cliff Manor headquarters in Westchester County, New York, to Parsippany, New Jersey. Baker had itself been acquired by the Borg-Warner Security Corporation in 1978, a division of Borg-Warner that was originally created as part of a continuing diversification and expansion program begun in the 1950s. Baker, operating under the Wells Fargo name, was a provider of armored car services, and Burns added new investigative and security services, providing additional diversification within the security service arena.

The security business, still dominated by Burns, Pinkerton, and Wackenhut, picked up and boomed throughout the 1980s. By 1982, it had become a $3.3 billion industry, of which Burns had a $250 million share, second only to Pinkerton's $300 million. With crime rapidly becoming the number one problem in the United States, the number of persons employed by private security firms grew from about 1.05 million in 1980 to 1.6 million by 1993. Many companies that had formerly hired their own security guards changed to using services that Burns and other firms offered.

However, the period proved difficult for Burns's parent company. Straddled with a large debt, Borg-Warner had to take steps to downsize and restrict its operations. In 1986, it spun off York, one of its holdings, to its shareholders. The next year it was threatened with a hostile takeover from corporate raiders Irwin Jacobs and Samuel Heyman. It was saved when Merrill Lynch Capital Partners organized a leveraged buyout and converted Borg-Warner to a private company. Burdened with a $4.5 billion debt, Borg-Warner sold off all its holdings except its automotive and security divisions, including Burns. The company went public again in 1993, as Borg-Warner Security, and spun off Borg-Warner Automotive to its shareholders. With the restructuring, Burns initially remained a publicly traded subsidiary but was later converted to a division within the corporate infrastructure of Borg-Warner. Nevertheless, the Burns Agency has remained at the old Baker corporate headquarters in Parsippany with a major branch operating in Hartford, Connecticut.

According to a 1993 study by industry analyst William Cunningham, growth in protection and security services would continue into the 21st century. In fact, in the mid-1990s, there were over twice as many private-sector security personnel as there were public-sector law enforcement agents, and with a relative decline in public law-enforcement funding, the demand on the private sector would likely continue to increase. Such projections boded well for Burns International.





Further Reading:


Caesar, Gene, The Incredible Detective: The Biography of William J. Burns, Englewood Cliffs, N.J.: Prentice-Hall, 1968.
"The Dog Watch," Newsweek, September 12, 1962, p. 104.
Dorfman, John R., "Caught Flat-Footed," Forbes, April 12, 1982, pp. 74, 78.
"George E. B. King Elected Top Executive of Burns International," Wall Street Journal, May 4, 1979.
"The History of William J. Burns," The Nation, November 23, 1927, p. 561.
"Junior Burns Man," Newsweek, May 22, 1961, p. 60.
Kerber, Ross, "Policing the Growing Security Business," Washington Post, September 6, 1993, p. 5E.
Lipson, Milton, On Guard: The Business of Private Security, New York: Quadrangle/New York Times Book Co., 1975.
O'Toole, George, The Private Sector: Private Spies, Rent-a-Cops, and the Police-Industrial Complex, New York: W.W. Norton, 1978.
Rackham, Anne, "Bad Times Mean Good Times for Security Guard Firms," Los Angeles Business Journal, February 15, 1993, p. 23.
"Crime: The Super Sleuths," Newsweek, August 31, 1959, p. 67--68.
"Notes from the Capital: W. J. Burns," The Nation, July 13, 1916, p. 32.
Youmans, Sabrina, "Private Security Firms Locking Up Varied Services," San Diego Business Journal, October 11, 1993, p. 21.

Source: International Directory of Company Histories, Vol. 13. St. James Press, 1996.




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