NTS President Tries to Blend Philosophy and Science Into Own Version of Reality

What is reality? Now there’s a question seldom weighed in corporate offices, where the only reality that often matters revolves around stock price and profits.

Jack Lin, president of National Technical Systems, worries about those things as well. Particularly lately, because Calabasas-based NTS, a testing and engineering services concern, is rebounding from a $1.8-million loss on revenue of $21.4 million in the fiscal year ended last Jan. 31.

But Lin’s interests extend well beyond running NTS. He is just as concerned with how he, NTS and everything else in the world are in some way connected, creating an interrelated universe whose reality spans well beyond what most people perceive. Lin tries to find the meaning of that reality within himself, rather than looking to someone or something to provide the answers.

“He’s a spiritual man, not in a religious connotation, but in a holistic sense,” said NTS Chairman Aaron Cohen, Lin’s business colleague for the past 25 years.

Lin’s views are rooted in the philosophies of the Far East, and in the teachings of Swiss psychiatrist Carl Gustav Jung, of whom Lin, 55, is a self-proclaimed devotee. And they are views Lin readily shared with a recent visitor.

For most of its 25-year history, NTS has been profitable. But losses in two of the past three years have hurt its stock price, which closed Monday at $2.125 a share, down from a three-year high of $5.625 per share. Asked if his philosophical interests make him a better executive, Lin replied, “I don’t know if they do or they don’t.”

Works on “Star Wars”

Lin’s interest in the spiritual contrasts with his position as the top engineer at a company that tests products against the laws of science. NTS, with 330 employees and seven major facilities in three states, has tested sections of space rockets to make sure they could withstand the shock and vibration of liftoff. NTS has tested fuel lines, hoses and other components in the Space Shuttle to make sure they would work in space.

The company also performs automobile-crash testing, tests how hazardous materials respond to various environmental factors, and, without giving details, handles “lower level” tests for equipment designed for the Reagan Administration’s Strategic Defense Initiative, known as “Star Wars.”

Nearly all of NTS’ business is either funded by or regulated by the federal government, which means, Lin said, that NTS must be ready to shift directions, depending on what programs are maintained or dropped by various administrations.

Born in Montreal, Lin’s family moved to the Bronx in New York when he was 10. He attended Brooklyn Technical High School before getting his degree from New York University, then moved to Los Angeles in 1956 and attended USC.

Besides receiving a bachelor’s degree in engineering from NYU and an MBA from the USC, Lin said he also has extensively studied transpersonal psychology, which he defines broadly as “getting insight by looking within.”

In 1961, he and Cohen, also an engineer, went into business for themselves equipped with virtually no money but with “a willingness to work very hard,” Lin recalled. They started by testing building materials used in offices, to see whether the products could withstand rain and the other elements.

Bought Firm Back

Later they moved into aerospace parts testing, and by 1968 their company, then known as Approved Engineering Test Laboratories, was approaching $1 million in annual revenue. They also had run out of working space and didn’t have enough money to move or expand, so they sold the business that year to Whittaker Corp, a Los Angeles-based electronics and industrial parts concern for $1.2 million in Whittaker stock.

But soon Whittaker was struggling, and the company began putting assets up for sale, Lin recalled. Lin and Cohen, using borrowed money, bought back their business in 1972 for its book value, then $2.4 million.

In 1975, they took their company public, and by 1981 had changed its name to National Technical Systems.

Lin and Cohen also acquired a tiny welding school in Downey. Cohen took an interest in the running the school, which soon became a chain of trade schools, while Lin concentrated on NTS. At the time with two such disparate businesses as trade schools and parts testing, it was hard, Lin and Cohen said, to raise money. So in 1981, NTS sold 40% of the schools to the public, and the chain became United Education & Software, an Encino-based company that today runs 30 career schools and is enjoying strong success.

In 1985, NTS divested itself of United Education entirely. But Lin remains the chairman of United Education as well as NTS president. Cohen, meanwhile, runs United Education as its president but also is NTS’ chairman.

Has Larger Gains

Lin and Cohen also own minority stakes in both companies. Lin holds about 14% of NTS, which, at the stock’s current price, is worth $1.2 million. Cohen owns 18% of NTS, worth $1.6 million.

At first glance, NTS’ divestiture of United Education would seem a poor decision. United Education’s revenue has more than doubled so far this year, compared to 23% gain for NTS. United Education’s return on equity is running about 35% this year, against 12.5% for NTS. Stock price? United Education is up 110% so far this year, five times NTS’ gain.

Cohen offered that “maybe NTS shouldn’t have divested itself totally of UES shares, but at the time UES was having bad financial problems.” In its fiscal year ended Jan. 31, 1985, United Education lost $2.9 million after a disastrous foray into the computer business. Because NTS still owned more than half of United Education’s stock, NTS ended the year with a $1.5-million loss.

In the early 1970s, at about the time NTS acquired the welding school, Lin’s personal life began changing as well. As he recalled, he had always harbored thoughts about the “interconnectiveness” of all parts of the universe, and longed to investigate his feelings further. But he “absolutely set them aside” while growing up. His first marriage ended in the process; he’s been married to his second wife for the past nine years.

NTS, meanwhile, was expanding even as it was shedding United Education. It began soil analysis, set up a research department for developing protective eye wear for the military, and began manufacturing such products as energy-saving light switches that were activated whenever someone would simply enter or leave a room.

Situation Improved

But the diversification didn’t work. All three efforts lost money, and last year “We realized we were just stretching too far,” Lin said. So NTS discontinued all three lines, producing last year’s $1.8-million loss.

Things are better this year. In the six months ended July 31, NTS earned $610,000 on revenue of $12.4 million. If it repeats that performance in the latter six months, NTS would post one of its best years ever.

“If you want to grow rapidly you have to take risks,” Lin summarized. “Then you have to have enough wisdom to decide which are working and which are not. And that’s harder.”