The MacNeal-Schwendler Corporation

815 Colorado Boulevard
Los Angeles, California 90041
U.S.A.
(213) 258-9111
Fax: (213) 258-3838
Web site: http://www.macsch.com

Public Company
Incorporated: 1963 as The MacNeal-Schwendler Corporation
Employees: 700
Sales: $134.8 million (1998)
Stock Exchanges: New York
Ticker Symbol: MNS
SICs: 7372 Prepackaged Software

The world’s largest provider of mechanical computer-aided engineering (MCAE), The MacNeal-Schwendler Corporation develops software that simulates the functionality of complex engineering designs. With the software developed by MacNeal-Schwendler, engineers gained the ability to determine design flaws before embarking on the final stages of development. The company began providing such capability to engineers in 1963, when Richard MacNeal and Robert Schwendler developed design verification solutions for the aerospace industry. MacNeal-Schwendler’s signature software, MSC/NASTRAN, was introduced in 1971 and was joined in the 1990s by MSC/PATRAN, a pre- and post-processor for engineering analysis. With operations in 38 countries and 50 direct sales offices, MacNeal-Schwendler marketed its products to aerospace, automotive, industrial, computer, and electronics manufacturers. The company also offered products such as geometric modeling and automatic meshing tools, which were used by engineers during a product’s development stage, and a product that solved problems involving high-speed impact.

The Early Years

MacNeal-Schwendler’s most senior employee during the late 1990s was the company’s founder, Richard MacNeal, whose penchant for self-deprecation masked one of the pioneering minds in computer software development. Born in Warsaw, Indiana, MacNeal moved with his family at age three to Philadelphia, where the well-to-do MacNeals enrolled their son in Penn Charter, a 300-year-old private school run by the Quakers. A student at Penn Charter through the 12th grade, MacNeal distinguished himself in his studies, but by his own admission he was a failure in nearly every other pursuit. He characterized his social development as “retarded.” He described himself as a “nerd.” His hours away from the classroom were painfully frustrating. “I was the worst football player you have ever seen,” MacNeal remarked to a reporter from Forbes magazine. “I was 17 and hadn’t kissed a girl.”

MacNeal’s embarrassments outside the classroom did not disappear after he left Penn Charter for Harvard University. Feeling a need to distance himself from his youth, MacNeal applied to the revered Ivy League university because “Harvard was the best, and I wanted to get away from home,” but the experiences in Philadelphia repeated themselves at Harvard. Intent on studying engineering, MacNeal’s extracurricular foibles surfaced again, but this time in the classroom. “I had the highest glass-breaking bill in the history of the school,” he remembered, referring to the glass beakers used in experiments. But as he had at Penn Charter, MacNeal excelled in the classroom, completing his studies at Harvard in three years. After graduation, he joined the Army at the height of World War II, ending up at the predecessor facility to Edwards Air Force Base, where his duties included calculating the trajectories of bombs. At the end of the war he took the $250 soldiers received to pay their way back home and used the stipend to settle in southern California, where he enrolled at California Institute of Technology (Cal Tech) to continue his studies. At Cal Tech, MacNeal earned a Ph.D. in electrical engineering and stayed at the university for a short time to teach and work for a company formed by Cal Tech students and faculty called Computer Engineering Associates.

Once MacNeal cut his ties to Cal Tech during his late 30s, he began working for Lockheed Corp., the giant aerospace company. His stint at Lockheed was brief, lasting only a year: “I was impatient,” MacNeal recollected, “I just didn’t fit into a big company. On my exit interview, they asked me if I wanted to know what my supervisor wrote about me. He said I was intelligent and talented and stuff like that, and then he said I was lacking in tact.” After he left Lockheed, MacNeal teamed up with Robert Schwendler, and the pair formed MacNeal-Schwendler. The formation of his own company marked a turning point in MacNeal’s life, a signal transition that he needed to make. “Here I was,” he recalled, thinking back to the months prior to MacNeal-Schwendler’s formation, “39 years old and hadn’t really done anything. I wasn’t satisfied.”

MacNeal-Schwendler Gets Under Way in the 1960s

For MacNeal, the awkward genius unable to fit in wherever he went, a career as an entrepreneur at last provided his niche in life. The years of searching were over and personal satisfaction was at hand. Working with an initial investment of $18,000, MacNeal and his partner developed their first program in 1963, an innovation called SADSAM. SADSAM was an acronym for Structural Analysis by Digital Simulation of Analog Methods, a product they designed for the aerospace industry. As with all their programs, MacNeal and Schwendler built products that helped manufacturers build their own products faster, better, and cheaper. The concept, a revolutionary idea in the early 1960s that would become commonplace by the end of the century, centered on simulating the effectiveness of a product well before the particular product reached the final stages of its development. By gaining the ability to determine fundamental flaws related to stress, vibration, and other conditions early in the design process, manufacturers involved in complex engineering businesses could make necessary adjustments before their products reached final development stages. The result was tremendous cost savings to the manufacturer, cash that otherwise would have been earmarked for the construction of prototypes and the innumerable revisions to a product’s original design. It was a method for foreseeing the problems inherent in creating sophisticated machinery that would become known as computer-aided engineering (CAE). With the introduction of SADSAM in 1963, MacNeal and Schwendler had positioned themselves as important innovators in the promising science of CAE, a field that would become an integral partner in the growth of high-technology industries during the latter half of the 20th century.

With the power of hindsight, MacNeal’s and Schwendler’s position in 1963 appeared poised on the brink of resounding success, but from the pair’s perspective after the introduction of SADSAM, there was much to be concerned about. The partners had a product, they believed, that would serve as a valuable aid for the aerospace clientele they courted, but unless their prospective customers believed in the value of SADSAM, MacNeal and Schwendler would have little cause for celebration. Fortunately, the pivotal struggle to secure contracts received a boon when the company participated in a project sponsored by the National Aeronautic and Space Administration (NASA) in 1965. The NASA project called for the development of a unified approach to computerized structural analysis, resulting in the creation of NASTRAN, or NASA Structural Analysis Program. NASTRAN represented one of the first efforts to consolidate structural mechanics into a single computer program. It was a signal step forward. As the leading edge of CAE development moved forward, MacNeal and Schwendler were again positioned at the forefront. Their biggest contribution to the evolution of CAE occurred in the wake of the 1965 NASA-sponsored project; its arrival secured a lasting future for The MacNeal-Schwendler Corporation.

MSC/NASTRAN Debuts in 1971

Six years after MacNeal-Schwendler participated in the NASA-sponsored NASTRAN project, the company developed its proprietary version of NASTRAN, a program dubbed MSC/NASTRAN. The 1971 introduction of MSC/NASTRAN marked a momentous leap forward for the company, giving it a powerful and consistent revenue-generating engine to propel itself in the decades ahead. (The market strength of MSC/NASTRAN was represented by its longevity as revenue producer—by 1995, MSC/NASTRAN was in its 68th release.) From the business attracted by MSC/NASTRAN, the small entrepreneurial partnership formed by MacNeal-Schwendler developed into a genuine corporation, its structure and geographic range of operations blossoming as the 1970s progressed. Two years after it began marketing MSC/NASTRAN, the company had the financial wherewithal to make its first foray into foreign markets, establishing an office in Munich, Germany in 1973. Three years after entering Europe, MacNeal-Schwendler turned its sights eastward and opened an office in Tokyo, Japan. Highlighted by these important first steps overseas and underpinned by steady and meaningful growth on the domestic front, the company matured during the 1970s, a decade that witnessed the legitimization of MacNeal-Schwendler as a recognized world leader in CAE software. The decade also brought its own significant misfortune: the death of one its founders. In 1979 Schwendler died unexpectedly, a traumatic experience for MacNeal that left him in charge of achieving the dream the two partners had envisioned. Although the loss of Schwendler represented a severe personal blow to MacNeal, the company pressed forward with little hesitation as the 1980s began, inching toward greatness in the CAE field.

Company Perspectives:

Simply, we enable our customers to design and build better products faster. We do this with computer aided engineering software and services. We minimize the need for costly prototypes and time-consuming tests with computer simulations of product performance and the manufacturing process.

In 1983 MacNeal-Schwendler made its debut as a publicly traded company, completing an initial public offering that raised proceeds for future expansion and established the company’s ticker symbol on the over-the-counter exchange. A year later, the company’s stock migrated to the American Stock Exchange, a move toward greater prominence that befitted the stature of a fast-growing, industry innovator. The company’s MSC/NASTRAN software by this point had grown into an industry standard. In the engineering departments of many of the leading high-technology corporations—companies that involved the aerospace, automotive, heavy machinery, and shipbuilding industries—MSC/NASTRAN was relied heavily upon to provide detailed simulation and design verification data. MacNeal-Schwendler’s mainstay product had become instrumental to the success achieved by those companies undertaking projects facing complex engineering challenges. As the 1980s progressed, however, the company had to contend with its own complex challenges. Its industry was evolving rapidly, changing the dynamics of its business environment.

Technological breakthroughs during the 1980s engendered tremendous advances in interactive computer graphics and lowered the cost of producing powerful engineering workstations. These advantages broadened MacNeal-Schwendler’s customer base, increasing the size of the company’s potential consumer community. At the same time, the technological breakthroughs also caused the general computer industry to grow explosively, which, in turn, attracted a legion of new competitors in the industry, stiffening competition. This new surge of competition coupled with defense industry cuts toward the end of the decade conspired against MacNeal-Schwendler, tarnishing the company’s long record of consistent success. The problems intensified as the 1990s began, prompting one analyst to remark, “They have an excellent product and they’re an extremely wellrun company, but they have not anticipated the kind of competition they’ve gotten.”

Although MacNeal-Schwendler was by no means in a precarious financial situation as the 1990s began, the superficial damage stemming from an overdependence on military spending did provoke changes at the company. Focus shifted to the commercial market, leading the company to create testing software for automobile and satellite makers, as well as for large manufacturing companies. Toward this end, the company entered into a joint marketing and development partnership with Aries Technology in 1992. The following year (its 30th year of business) the company allied itself with Aries Technology to the fullest extent by acquiring its joint venture partner and thereby widening the design engineer audience the company targeted. The company’s anniversary year also marked the establishment of a subsidiary office in Moscow, where MacNeal-Schwendler hoped to take part in the massive development under way in Eastern Europe.

As the company’s 30th anniversary celebrations were winding down, so too was the development work for a significant product introduction, MSC/NASTRAN for Windows. The software, introduced in 1994, made MacNeal-Schwendler’s signature code—ranked as the world’s most popular finite element analysis software—available to personal computer users. This achievement was followed by another encouraging development, an acquisition that swelled the company’s stature to unrivaled size. In 1994 MacNeal-Schwendler acquired PDA Engineering, a producer of pre- and post-processing software. Once completed, the absorption of PDA Engineering into the company’s fold made MacNeal-Schwendler the largest single provider of products to the mechanical CAE market in the world.

MacNeal-Schwendler achieved global dominance just as its pioneering leader was beginning to step aside and make room for a new generation of leadership. MacNeal, in his early 70s during the mid-1990s, vacated the presidential post in 1995, setting the stage for the appointment of Tim Curry to the office of president and chief operations officer. The following year, when the company expanded its operations in Latin America by opening a new office in Brazil, Curry was named chief executive officer, as MacNeal reduced his work schedule to three-and-a-half days a week. Under Curry’s stewardship, the company moved toward the late 1990s, its position as an industry pioneer and a market leader secured by three decades of MacNeal’s leadership. Hope for the future rested on the shoulders of the company’s new leader and new, innovative software solutions for the engineering challenges of the 21st century.