MSE

By Gerard O’Brien - 01/13/2008

Julie Pusich-Lester works the newly remodeled control panels for the Mariah wind tunnel project underway at MSE Inc. Technicians can work controlled experiments on wind tunnel components and interpret data in the comfort of the state-of-the-art computerized control room.

Finding niche markets, partnering with others and building a strong reputation for quality are the key elements that will carry MSE Inc. into 2008 and beyond.

This is not your grandfather’s engineering firm; this is the firm of the future.

Jeff Ruffner, 50, president and CEO of MSE Inc. and the Mike Mansfield Advanced Technology Center, harps on the fact that while the solution-based engineering firm may not be well understood in Butte, its reputation is solid across the country… and growing.

Ruffner took the helm last July when former CEO Don Peoples retired. Peoples remains on the board and still lobbies for the firm. Ruffner sat down with The Montana Standard last week to review the firm and look at its plans for 2008.

MSE is a major Butte employer of 147 people locally and a total of 165 across the country, with an annual payroll of $10.4 million in 2007, and a Montana payroll of $9.4 million. It paid $118,000 in property taxes last year.

MSE is slowly transitioning from a government- funded entity to more of a problem-solver for the larger players, such as Boeing, the U.S. Army and Department of Energy’s Hanford nuclear plant cleanup project.

“It’s tougher to look at the future than the past. But in 2008, I expect our revenues to be up and I expect growth in the company. Some of that will occur here and some will occur elsewhere in the county,” said Ruffner, a Montana Tech engineering graduate.

MSE has been long tied to the MHD project, magnetohydronamics, (a method of superheating coal through an electro-magnet to build efficiencies in burning coal).

That project ended in the 1990s, yet the public still See MSE, Page D10 attaches MHD to MSE.

“Granted, MHD is what got us here,” Ruffner said. MHD also attracted engineers from across the globe and it created several spinoff companies for Butte in the process.

Today MSE is a different, more diverse animal.

“We’re headquartered here in Butte, we will always be headquartered here, and we will always have major projects here. But if we’re going to grow, we have to get out to other areas of the country.” The company has satellite offices in Morgantown, W.Va, Spring Lake, N.C., Oakridge, Tenn., Richland, Wash., and Idaho Falls, Idaho.

“Our model is, once you build up those relationships with customers, there is a very good workflow between the satellite offices and our corporate offices,” Ruffner said. “Customers want someone locally where they can still knock on the door and have them solve their problems. That creates jobs for the satellite and for the experts in the corporate office. Also, we hire locally. In other words, engineers from Oakridge are employed at that site.” One of the major accomplishments for MSE this past year was that it was recognized by the Department of Energy as the expert on soil and groundwater remediation. That designation is worth $2 million alone in work this year. It will bring some stability to a company that usually must compete with every other engineering firm in the country for federal appropriations.

“We’ve been striving for that designation for 30-plus years,” Ruffner said. “What it means is basically that the DOE, which has about 30 earmarks to hand out, recognized four groups — of which we were one — as having been found to add significant value to DOE’s operations. It is written into the fabric of the Senate bill.” With the growing concern over groundwater pollution, and the fact that those problems will be ongoing for quite some time, the designation for MSE puts it in the forefront as the firm to turn to for research on that issue.

“We will be their expertise, because nearly every DOE facility sits on a river, such as Hanford in Washington on the Columbia River, or the Idaho National Laboratory in Idaho Falls, on the Snake River. They all have groundwater issues,” Ruffner said.

Another public image issue — similar to the MHD one — for the firm to deal with is its diversification. At times it seemed like it was bidding on any and all problems it could find, from building a supersonic wind tunnel to developing extremely high temperature plasma burners that melt down weapons. Publicly, it didn’t appear to have an over-arching strategic plan.

Not so, says Ruffner.

“What we’re very good at is solving difficult problems for our customers. We have a lot of core capabilities, expertise in aerodynamics, thermal systems, soil and groundwater; but we are very opportunistic, too.

“To us, we always ask the question, ‘Does it represent a difficult problem that we are good at solving, and does it fit in our broad range of expertise?’ If so, the company bids on it.” “Part of our issue is how do we portray ourselves? I’d say we are difficult problem-solvers.” In reality, the firm is more of a subcontractor to various larger corporations such as Boeing or Lockheed Martin, providing backup, expertise in a low-cost, time-efficient manner.

“We have the infrastructure, the safety systems in place, the federal audits, which allow large corporations to bid on projects, and then turn to us as a small business to do the research. They don’t have to baby-sit us and we’re very good playing the role as a second-tier subcontractor,” Ruffner said.

“To boil it down, we are very good at pragmatically solving difficult problems for our customer.” For example, a large oil company had called MSE after learning about its wind tunnel work.

“They had a problem with water in gas wells. In a matter of six months we had developed a jet pump to dewater gas wells, one of our product lines for that firm alone. Did I plan on being on the oil and gas business with gas pumps? No, but it fell back on our core competency,” Ruffner said.

Providing research and development is the overall strategic plan.

“If you look at our, business we want to be about 75 percent services and 25 percent providing products, but we’re not there yet,” Ruffner said.

Niche markets There are still some very site-specific niche markets that MSE is involved in.

One example is its plasma furnaces, that melt down weapons arsenals at extremely high temperatures.

There are two such furnaces under construction; one in Crane, Ind., and the other in Hawthorn, Nev., (which is in the permitting process). Also, the firm is working with Hyundai in South Korea to build a large-scale furnace for nuclear waste.

“We have a large-scale engineering system going to South Korea this summer. We’ll engineer it and get them operating,” Ruffner said.

federal funding Without federal funding, MSE would likely not exist. However, these days MSE draws on federal earmarks 55 percent of the time, versus 100 percent in the past. So it is slowly transforming to a private corporation.

“It’s just not a good idea to have all your eggs in one basket,” Ruffner said. “Not a good way to run the business. Earmarks can have a negative connotation, but what they mean is we have contracts, we have performance requirements that we must meet. If we don’t, we don’t get paid.” At present, about 75 of its work is for the government. Over time, the company plans to diversify more.

“It’s a great field to be in,” Ruffner said. “I would encourage high school students to study in the science and engineering fields. It will only grow. And, for us, it’s a big benefit being in Butte, MSE can be a big benefit, because it is drawing on engineers who grew up in Montana and now want to return.”