A Year of Customer-Focused Achievements

MSA achieved record sales of $990 million in 2007 while becoming more customer-focused than ever before. Inspired by a newly established Customer Service Promise – “We Make the World Safer, One Person at a Time” – MSA renewed its commitment to providing customers with service unmatched in the safety industry and, in the process, enhanced its ability to provide a growing line of sophisticated safety solutions for customers in key global markets. To be sure, MSA strengthened its business in 2007 with an emphasis on four strategic imperatives, all of which drive toward the ultimate goal of building customer loyalty by delivering exceptional levels of protection, quality and value.

These imperatives are:

• Achieve sustainable growth through product leadership;
• Expand market penetration through exceptional customer focus;
• Control costs and increase efficiency in asset utilization; and
• Build the depth, breadth and diversity of our global team.

In 2007, MSA secured seven Advanced Combat Helmet (ACH) contracts totaling $36 million.		MSA’s FireHawk®M7 AirMask became the first self-contained breathing apparatus (SCBA) to be certified as compliant with two new standards adopted by the National Fire Protection Association.		A major new product in 2007, the OptimAir®TL Powered Air- Purifying Respirator was designed using both North American and European resources.

Product Leadership

In 2007, MSA’s innovation pipeline produced new or improved safety products that delivered greater value and features for our customers while meeting high certification standards. Our product leadership reflected our integrated global capabilities in R&D, our advanced manufacturing processes, our safety expertise and our intensified focus on meeting – quickly and cost effectively – the everchanging needs of customers.

In North America, MSA once again demonstrated its ongoing leadership in the fire service industry with the introduction of the FireHawk M7 self contained breathing apparatus (SCBA). The FireHawk M7 Air Mask became the first SCBA to be certified as meeting two rigorous new standards adopted by the National Fire Protection Association for both open-circuit SCBA and Personal Alert Safety System devices.

The Altair® 4 and Altair® 5 Multigas Detectors, right, cost about one-third less than the products they were designed to replace, while providing greater features and versatility for users.

With a $1.5 million order, the Jacksonville, Florida Fire and Rescue Department was the first customer to take delivery of the new FireHawk M7 Air Mask. MSA also completed NFPA re-certification of its entire Cairns Helmet product line. And in the growing market for fall protection, MSA completely redesigned its comprehensive line of harnesses and lanyards to meet new Canadian and U.S. standards under a very tight deadline.

Major new product launches in North America included the OptimAir TL Powered Air-Purifying Respirator (PAPR) and the next generation series of Altair Multigas Detectors. The OptimAir TL PAPR was developed using both North American and European resources. It is MSA’s first completely new PAPR designed for the North American market since the early 1990s. Two exciting new features associated with this product include an automatically-activated cartridge switch that sets blower speed and optimizes battery performance, and an internal pressure switch that compensates flow rates for varying altitudes.

The Altair 4 and Altair 5 detectors are great examples of MSA’s heightened global focus. These are platform projects that will ultimately replace the Solaris, Orion, Sirius and FiveStar product lines at dramatically lower costs and with more exciting features for our customers.

In Europe, MSA introduced the Chillgard M-100 Refrigerant Sensor, a compact photoacoustic infrared sensor that detects potential leaks of halogenated refrigerants with twice the performance accuracy of earlier models, and at a much lower cost. Other major product launches in Europe included: the AirGo Modular SCBA; new Left/Right hearing protectors that offer enhanced protection for ears of different shapes and sizes; and the Fuego Helmet from MSA Gallet, providing new and advanced head protection for firefighters.

Reflecting the company’s excellence in product innovation and design, MSA received the 2007 Outstanding Corporate Innovator award from The Product Development and Management Association.

MSA was recognized for its company-wide commitment to innovation and continuous development of profitable new products in highly competitive markets. Previous winners of this highly coveted award include Apple Computer, BMW Group, Eastman Kodak and Hewlett-Packard, to name just a few.

New Left/Right muffs from MSA Sordin offer enhanced hearing protection for ears of different shapes and sizes.		MSA Paraclete continues to design and manufacture body armor kits that fulfill mission-specific military applications, including those for U.S. Special Forces.		In 2007, MSA’s fall protection harnesses and lanyards underwent a major redesign to meet new Canadian and U.S. standards.

Market Penetration

Around the world, the value of MSA’s product leadership was demonstrated through several contracts that reflected the company’s focus on developing products that provide exceptional value, engineering, performance and reliability. For example, MSA secured contracts totaling $10 million to provide CBRN (chemical, biological, radiological and nuclear) Ultra Elite Gas Masks, Response Tactical Hoods and Safe Escape Hoods to the State of New York, the New York State Transit Authority and police departments in the state. Additionally, military orders rebounded strongly in 2007, led by seven North American contracts totaling $36 million for Advanced Combat Helmets, a $6 million Air Force contract for MCU-2/P gas masks, and a $7 million order from the United States Air Force for the Fire- Hawk M7 Air Mask, representing the first-year delivery award against a five year contract. During the year, MSA Safety Works, our growing retail consumer products business, expanded its presence with The Home Depot. Overall, 78 additional Home Depot stores began carrying MSA Safety Works products after MSA unveiled new customer-friendly packaging concepts.

The Fuego Helmet from MSA Gallet provides firefighters with new and advanced head protection.

In Europe, the German Federal Defense Forces (Deutsche Bundeswehr) awarded MSA a $36 million six-year contract for self-contained breathing apparatus, spare cylinders and test benches. MSA Europe also won contracts to furnish F1 and F2 X-trem helmets to the French Police and the Algerian Civil Security Forces. In China, MSA won $5 million in orders from the Beijing Fire Bureau for self-contained breathing apparatus, helmets, thermal imaging cameras and air carts. In the Middle East, MSA secured a $5 million contract to supply the Iraqi National Defense Forces with MSA Paraclete body armor and plates. MSA also won a $4 million contract to supply SAVOX mine rescue packs to Anglo Platinum, a leading platinum producer based in South Africa.

MSA’s new 77,000 sq. ft. manufacturing facility in Querétaro, Mexico opened in December, marking MSA’s 50th year of doing business in Mexico.

Strengthening MSA’s position in promising growth markets has been a focus of the company since MSA founders first explored business opportunities in Europe in the 1930s. Today, with MSA flags in more than 40 countries, that vital element of MSA’s business strategy has never been more evident. In 2007, recognizing the growth potential that exists in India, MSA became a 100 percent owner of MSA India (formerly a joint venture), and relocated its headquarters to a modern facility in Calcutta. To reach and serve customers in the Middle East, MSA opened a new office in Cairo, Egypt while in Southeast Asia, MSA created its first business in Thailand by purchasing the assets of a former MSA distributor there.

Perhaps most notably, MSA broke ground on a new manufacturing and technology center to be located in Suzhou, China. Scheduled to be completed in 2008, this facility will serve as the new hub of all MSA business activity in China.

MSA’s new facility in Mexico serves as a key manufacturing site for several MSA products, including head protection, fall protection and instrumentation.		MSA executives break ground on a new technology and manufacturing center in Suzhou, China.		A technician with MSA Australia customer Adelaide Brighton Cement relies on an Orion® Plus Detector to monitor toxic ammonia levels.

Delivering Enhanced Productivity at a Lower Cost

Clearly one of the best avenues to increase customer loyalty is to consistently offer products and services that deliver value commensurate with customer expectations. This simple business axiom served as the driving force behind a major initiative in 2007 that will enhance MSA’s global competitiveness for years to come. In January 2007, MSA launched Project Magellan, an initiative to reconfigure the company’s North American factory network to reduce costs, improve utilization and enhance value and service for our customers.

A key element of Magellan was the shifting of fire helmet production from New Jersey to Jacksonville, North Carolina. This transition was completed in the third quarter. The second major milestone of Project Magellan occurred in December when John Ryan III and other company executives celebrated the opening of a new 77,000 square foot manufacturing facility in Querétaro, Mexico. As one of MSA’s fastest growing markets, Mexico has been a site of MSA operations since 1957. The new stateof- the-art manufacturing center, located 135 miles northwest of Mexico City, currently employs about 90 MSA associates with employment expected to increase to about 170 throughout 2008. The plant will serve as a key manufacturing site for a number of MSA products, primarily for the Mexican market, but eventually serving markets around the world.

Scheduled to open in 2008, MSA’s new facility in Suzhou, China will serve as the hub for all MSA business activity in China.

Global Teamwork

In 2007, MSA created a new global organizational structure that ensures globally coordinated functions in operational excellence, product marketing, new product development and human resources. Ultimately, this realignment and redeployment of resources will allow MSA to serve its customers better and more efficiently. Already this new structure has resulted in vastly improved cooperation between MSA’s engineering centers, marketing teams and operations staff. And the company is training associates at MSA facilities around the world, from China to São Paulo, and from Sydney to Pittsburgh and Berlin, to adopt best practices that will enhance quality and reduce costs for MSA and its customers.

Customer Loyalty – The Best Strategy for Growth

In October, MSA hosted its second annual Investors’ Day in Pittsburgh and at the Allegheny County Fire and Police Training Academy. The one-day event provided analysts and investors with an in-depth look at the company’s growth strategies, and gave participants a unique first-hand experience with MSA products through a live-burn training exercise.

MSA earned the No. 1 ranking for “Sales & Service Support” in 2007 from Airgas’ Telesales Group, which based the score on internal surveys evaluating 30 top manufacturers. And MSA’s overall customer satisfaction scores also rose to high levels. Yet, MSA associates know they can do more… and they are.

During the year, MSA launched a major endeavor that places a new level of focus on generating high levels of customer satisfaction and, ultimately, customer loyalty. The major elements of this program are an educational effort designed to broaden associate understanding of Customer Loyalty drivers, communications training for all of MSA management, and new tools every MSA associate can use to identify opportunities for improvement and, in the process, make meaningful contributions that drive customer delight.

“Making the world safer, one person at a time,” starts with our employees. As a global leader in safety, MSA associates are dedicated to achieving the highest levels of workplace safety. Recognizing that, MSA’s Cranberry, Pa. manufacturing facility was named one of the safest in the country by the Occupational Safety and Health Administration.

As 2007 came to a close, marking 93 years in business for the company, it was evident that MSA had become much more than the world’s leading manufacturer of sophisticated products that help protect people around the world.

Indeed, MSA has enhanced its performance, capabilities, processes and operations, and the value of our products, for the benefit of our customers. Today, MSA is better aligned and positioned – with growing global businesses and an expanding global product line – to keep to its customer promise of “Making the World Safer, One Person at a Time.”

Working to ensure proper emergency response capabilities, the Dubai Civil Defense Crew relies on MSA Auer’s BD96 SCBA for training purposes at Intersec Middle East – the largest exhibition for commercial safety, fire & rescue, safety & health and homeland security in the Gulf region.