MSI Data Receives $50-Million Contract : Costa Mesa Company to Supply Army With Inventory Devices

After years of struggling to land a major buyer for its portable inventory-taking machines, MSI Data Corp. of Costa Mesa announced Monday that it had won a $50-million contract to supply the devices to the U.S. Army.

The award, the largest in the company’s 19-year history, was viewed by MSI officials as “a major win” and as strong evidence that their 2-year-old turnaround efforts are finally paying off.

“It’s a significant indication that things are beginning to happen and that we have the momentum we’ve been looking for,” said MSI President Charles Strauch, who joined the company two years ago after it had slipped into second place in the industry it had created and dominated since its inception.

Strauch, a turnaround specialist recruited specifically to halt MSI’s slide, said the potential of the contract could exceed $50 million because its terms also allow the Navy and the Air Force to purchase their inventory-control equipment under the same contract.

No Immediate Impact

However, Strauch said the contract is not expected to have an immediate impact on employment at MSI, which has about 700 workers worldwide.

The contract calls for MSI to supply the Army with an unspecified number of its new hand-held data collection terminals over the next five years and to provide maintenance services for them for the next 10 years. The new devices, which resemble an oversized pocket calculator, attach to a laser device whose beam reads bar-code symbols.

Strauch told MSI shareholders at the company’s annual meeting last week that Allen-Bradley, a machinery manufacturing subsidiary of Rockwell International, has agreed to purchase a significant quantity of the same devices to keep track of its machinery.

According to MSI officials, the Army intends to affix bar-code labels, similar to those already on food and other dry goods packages, to all of its weapon systems throughout the world. By reading the labels with the laser gun scanners, much as supermarket cashiers do at the checkout counters with table-top scanners, the Army says it can inventory its weapon systems more efficiently.

Syscon Is Prime Contractor

MSI will supply its system to Syscon Corp., a Washington company. Syscon will supply laser guns, bar-code printers and telephone communication devices to complete the package. Syscon, the prime contractor, received a $94-million contract, which includes the $50 million for MSI.

The contract award came as a bit of a surprise to MSI officials, who said they knew nothing of the pending Army announcement when they officiated at the company’s annual meeting just last Tuesday.

Strauch said MSI won the contract over its arch-competitor, Telxon Corp. of Akron, Ohio, the fast-growing company that bumped MSI out of its leadership position in the market for portable inventory devices about two years ago. The competition with Telxon began heating up about 2 1/2 years ago when Telxon unexpectedly won a multimillion-dollar contract to supply the Army with inventory-counting devices for its office equipment.