Business

Sixty years of innovation at YSI

In this time of discouraging economic news, villagers can rest reassured that at least one Yellow Springs company is thriving. Celebrating its 60th year and boasting record profits, YSI Incorporated has navigated the last six decades successfully by sticking with its core values of innovation, social responsibility and maintaining an excellent relationship with its employees, company leaders say.

Recently, YSI Incorporated paused to honor its 60th anniversary with a public showing of a new film, “Who’s Minding the Planet: The Story of YSI.” The documentary, commissioned by YSI, was made by local filmmaker Aileen LeBlanc.

In the film, YSI co-founder Hardy Trolander describes the company’s early serendipitous successes by saying, “There’s an awful lot to be said for pigheadedness, for being too dumb to know what we should have been doing.”

No one would call the company dumb anymore. Rather, according to CEO Rick Omlor, YSI has prospered by making shrewd choices along the way.

“We have reinvented ourselves many times,” he said in a recent interview.

For instance, in recent years, company leaders made the strategic choice to focus on producing instruments for the measurement of water quality and water velocity, a choice that dovetailed nicely with the world’s growing concern with global warming and environmental sustainability. In a further strategic decision regarding its production of water quality measurement tools, YSI has carved out its own niche in the outdoor water market, Omler said, avoiding the oversaturated market of tools that measure the quality of drinking water.

While the current troubled economic climate will no doubt affect YSI in some way, that effect will probably be offset by the incoming Obama administration’s interest in promoting environmental sustainability.

“We think we’re in the right place at the right time,” Omlor said.

While YSI’s financial success may be linked to good decisions and good timing, just as important is its employees’ pride in making the world a better place, according to Omlor.

“People feel good about what they do here,” he said. “At the end of the day we’re producing a product that is helpful to humankind. We’re not making toasters.”

Along with celebrating its 60th birthday, YSI is also celebrating other recent honors, including this week’s announcement that YSI was named the Dayton Business Journal Manufacturing Business of the Year. Omlor was recently named the regional winner in the technology division for the Entrepreneur of the Year award, sponsored by the Dayton-based business Ernst and Young, and co-founder Hardy Trolander was inducted into the Dayton Engineering and Science Hall of Fame. (see accompanying article.)

In 2007, YSI reported a record year, with top line revenue growth of 15 percent and a 10 percent increase in its Yellow Springs workforce, according to the YSI Web site. In that year, YSI also increased its worldwide reach, adding offices in India and Australia. The company, with 2007 sales of almost $73 million, employs about 300 people worldwide, and half of its business is outside the country, Omlor said.

Other YSI offices are located in Japan, China, Ireland, the United Kingdom, Bahrain, Spain and Hong Kong. In the United States, YSI has offices in San Diego, St. Petersburg, Fla., Baton Rouge, La., San Diego and Marion, Mass. And according to Omlor, the company recently opened its 17th office, in Abu Dhabi.

The Yellow Springs headquarters employs 150 people in its Brannum Lane offices, although only 15 of those employees live in the village, according to Elizabeth DeForest of the company’s human resources department. Many new employees express a desire to live in the village but say housing is too expensive, DeForest said.

YSI needs offices around the world due to its emphasis on not only providing products to monitor water quality, but also providing support services to those who purchase the products, another strategic decision that has turned out well, Omlor said.

“These are technical projects, and we’re teaching people how to use them, listening to their needs. It takes time,” he said, adding about YSI’s customers, “In any geographic area in the world there’s someone there speaking your language.”

Along with its water quality monitoring products, the company has a smaller Life Sciences division, which produces instruments for glucose measuring. The company’s glucose measuring instruments, long essential to research on diabetes, have more recently been retooled to respond to the growing need to measure glucose during the production of biofuels, according to the YSI’s 2007 annual report.

Part of the company’s success can be linked to its emphasis on research and development, according to the 2007 annual report, which stated that in 2007 YSI invested $8 million in research and development, “a substantial amount for a company our size.” The wisdom of this investment can be seen in the fact that in that year 20 percent of sales came from products introduced in the past several years, the annual report stated.

For example, YSI’s water quality monitoring instruments measure “18 or 19 different parameters” of water quality, including salinity, dissolved oxygen, conductivity and temperature, according to Omlor, who said the company is continually adding more parameters in response to its customers’ needs.

A love of learning and building new things lies at the heart of YSI, begun by then-Antioch College engineering student Trolander and three friends in 1948, with each partner investing $100 of his personal savings. The startup company, like Vernay Laboratories, had its first home in the basement of the college science building.

While Antioch had a reputation for producing radical activists, it also produced a stream of budding entrepreneurs, thanks to the influence of former president Arthur Morgan, Trolander said in the YSI film.

“It was the greatest force for free enterprise in the area,” Trolander said, adding that the college earmarked 25 percent of its total budget for research programs.

One of the company’s first assignments was to invent a device for measuring core body temperature for local scientist Leland Clark, the creator of the heart lung machine. Clark “asked if we could get it done by the next day,” Trolander said, and he did so. Other early challenges were inventing a bike that had a built-in radio for Huffy Corporation in Dayton and a camera timing device for Wright Patterson Air Force Base that was used during training practices for new bombadiers.

YSI in later years turned its focus toward environmental monitoring instruments, and in 2006 divested itself of the legacy division of precision temperature measurement sensors.

Trolander led YSI for almost 30 years, and his influence is still felt, according to YSI Foundation Director Susan Miller. The YSI Foundation, since its inception in 1990, has contributed more than $2.3 million to charitable causes, focusing on recent years on environmental ventures.

Along with the company’s focus on innovation and philanthropy, Trolander brought to YSI his interest in employee ownership. Now one of the oldest and most established employee-owned businesses, or ESOPs, the structure has contributed to YSI’s success, Miller believes.

“My contribution is directly related to the growth of the company,” she said. “When I feel I’ve done a good job, it reflects on the company and it’s good for me.”

All YSI employees who have been with the company a year become employee-owners, and in 2007, the YSI stock went up 25 percent, according to Miller. Employee ownership does not mean that employees make executive decisions, although the CEO routinely requests input before decisions are made, she said.

The ESOP structure helps to create at YSI a culture of interdependence and caring that has kept her on the job for more than 20 years, Miller said.

“There’s a family atmosphere, a great comradeship,” she said.

However, the YSI culture was challenged in 2001 when testing revealed groundwater contamination in neighbors’ wells. Further testing made clear that YSI, now focused on producing instruments to measure water quality, had itself contaminated its environment.

“When we found we were responsible, there was a feeling of betrayal,” former CEO Malte von Matthiessen said in the movie. “We had started down the road of being a green company, and this was an abrupt break with what we were trying to do.”

The culprit turned out to be industrial solvents used decades previously that were legal at the time. Faced with perhaps its greatest crisis, the company decided to tackle the problem head on, by first taking responsibility for the contamination, then creating a transparent process for its cleanup, in conjunction with the Ohio EPA. While YSI couldn’t escape the environmental sins of its past, it could address them in a new way, company leaders believed.

“I’m proud of the story now,” YSI vice president Gayle Rominger said in the film. “It turned out overall to be a positive experience.

However, those years were “a very distracting, turbulent and expensive time” for the company, Omlor said. “It took a lot of time and attention and a lot of capital. It was a tough couple of years.”

YSI ended up paying millions in settlements, Omlor said, and the EPA-approved remediation efforts are underway, with one more injection into the ground to go.

With the challenge of the company’s worst nightmare largely behind it, YSI Incorporated is moving ahead with hope for a prosperous and meaningful future.

“YSI is a bunch of smart people doing great work,” Omlor said in the film. “That’s what gets me up in the morning.”

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