Scott Woods company visits: MSA Safety
World in Motion – Global equities blog

Scott Woods company visits: MSA Safety

I drove about four or five hours from Winchester, Virginia, to Pittsburgh, Pennsylvania – where it was freezing cold and snowing – to visit MSA Safety. The CEO offered to take me out for dinner, which was interesting because we were able to talk about the business itself as well as his views on running a company.

It is fascinating listening to a CEO, and three hours with anyone in such a position is a great opportunity that cannot be replicated in a meeting. On this occasion we talked about capital allocation, culture and growth. We were not simply sitting there with iPads taking notes, it was very much a back and forth conversation about what they think the next 10 years will hold for the business and how to sustain returns. Hearing from a CEO directly in this way is one example of truly active management.

MSA stands for Mine Safety Appliances, but really it manufactures hard hats, self-contained breathing apparatus for firemen and full protection equipment. It has been around for 100 years and has a strong brand power – it is the number one player in pretty much every product area in which it participates. The company is progressive too: after 9/11 it asked firefighters about their experiences. One important thing it learned was that the firefighters struggled to climb so many stairs while carrying 50lbs of equipment, and in response MSA cut the amount of weight. The difference is night and day and it is saving lives.

The reason I like MSA Safety is that it has brand power. If you’re a fire department in New York you are not going to skimp on equipment that is saving lives as well as protecting your employees’ lives; so you go with the player which invests the most and is cutting edge. Big brand power enables the business to charge a higher price and sustain decent margins. It is all about scale advantage.

The next morning, we went to a MSA Safety manufacturing facility and saw how MSA manufactures a lot of the equipment, and we were shown some of the new technology that is being added; for example, innovations with radios. Before, firefighters would have to pick up the radio and touch it in order to communicate with colleagues, which is inconvenient if you are climbing a ladder. But, again, after listening to firemen MSA integrated radios into headsets, making them hands-free. This extra effort to learn from the people that use its equipment is a small thing, but it is very effective.

MSA has a 60% share in hard hats1 because it is one of the only scale players in the US, supplying its products to large corporations all over the US. The hard hat itself differs from others as it doesn’t roll over when you put it down; for example, while you are putting your gloves on. It’s an attention to detail.

Our main takeaway from this visit was that MSA Safety applies constant attention to detail, is innovating constantly and has strong brand power.

1 June 2020
Scott Woods
Scott Woods
Portfolio Manager
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June 2020
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1 Stifel/MSA Safety, January 2020

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