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|Articles - February 2014|
|Tuesday, January 21, 2014|
Page 1 of 4
BY PETER BARNES
Through most of last year, nearly every U.S. Marine who wore out a pair of boots received a replacement manufactured near the Portland airport. LaCrosse Footwear completed a $29.5 million contract to deliver 202,000 pairs of boots to the service last spring – the largest-ever military order for the company’s Danner brand. The 82-year-old Oregon company is better known for providing footwear to hard-core hikers, woodland laborers and the fashion-forward who want to dress like them. At the same time, though, Danner has also filled contracts with the Pentagon dating back to the early 2000s.
The defense market can be easy to overlook in Oregon, a place with a bigger reputation for its antiwar movements than for its military history. It’s the only state west of the Rockies without an active-duty military base and one of only a few nationwide. A mere quarter of one percent of the Defense Department’s 2012 contract spending took place in Oregon. Yet when it comes to the U.S. defense budget, even the crumbs can come with nine zeroes: Including primary and subcontracts, the DOD did roughly $1 billion in business in Oregon that year.
Dave Hunt, executive director of the Pacific Northwest Defense Coalition, says the companies helping to fill those contracts range from five-employee machine shops to Daimler Trucks North America. Since the PNDC formed in 2005, it’s assembled a database of 4,000 potential suppliers for its members. Last fall, it held its first-ever supply-chain conference with 75 companies that included Daimler, shipbuilder Vigor Industrial and aerospace manufacturer Precision Castparts. “We had four different roundtables during that morning where you were seeing the business-to-business connections being made across the table,” says Hunt, “people realizing, ‘Oh, wow, you have that capacity? We didn’t know there was anybody here who had that capacity. You have that 3-D printing machine? We didn’t know anybody had that facility in Portland.’”
Danner is a fitting example of the way defense money gets spent at businesses across the state. Unlike the big-name weapons and aircraft manufacturers that buoy the economies of places like California and Virginia, work for the armed forces represents less than half of revenues at LaCrosse Footwear. It’s a side of the company that attracts limited notice from the shoe-shopping public, but a contract with the Marines represents a significant injection of revenue that can bring another 40 to 70 workers into the Danner factory.
Likewise, more than 1,000 companies doing business in the state – many in Oregon’s staple industries like outdoor gear, electronics and IT – sold a largely unadvertised but significant portion of their product lines to the military in 2012. Congressional budget standoffs clipped the Pentagon’s spending on those goods by 7.7% last year, and the final numbers for Oregon’s 2013 defense business were expected to drop substantially as contractors finish cleaning up the Army’s Umatilla chemical depot. Worse, business leaders say, is the uncertainty wrought by patchwork temporary budgets, debt-ceiling brinksmanship and the recent government shutdown that ground development of many new products to a halt. To stay ahead, Oregon’s defense businesses have needed to innovate and diversify to satisfy this massive, demanding market.
At Danner, scents of glue and leather mingle amid the hiss of grinders and compressed air. A machine that thrashes water-filled boots like a paint mixer to test their Gore-Tex liners sits at one end of the high-ceilinged production floor, while at the other, a man wearing blue plastic gloves scrutinizes a tall stack of hides, rejecting about 40% of them as inferior leather.
That focus on quality and the flexibility of the 59,000-square-foot factory won the company its first large military contract in 2004, in spite of a higher bid than its competitors. “It took us quite a few years to enterprise, because it was almost a tight-knit circle, a closed circle, of other brands that were doing it for many years,” says vice president of sales and marketing Craig Cohen. “We stayed true to quality and stayed true to delivery, which allowed us to get a sample order in, and it built from there.”
Military orders have come in steadily ever since. At the end of last year, Danner was in the running to provide the Marines with another 110,000 pairs of boots. But, like every DOD supplier these days, the boot maker has watched U.S. defense spending shrink every year since its recent peak in 2010. In response, says Cohen, the company stopped factoring the defense contracts into its yearly budget assumptions a few years ago, hiring additional factory workers on a temporary basis to fill defense orders as needed. To keep them working, Cohen says, his team is focused on expanding sales in niche markets where price is secondary, such as heavy-duty boots for cold environments or elite special-forces teams.
Thursday, March 26, 2015
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Friday, February 20, 2015
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BY DAN COOK | Photos by Jason E. Kaplan
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Thursday, March 26, 2015
BY KIM MOORE
A conversation with Craig Wanichek, president and CEO of Summit Bank.
Friday, March 20, 2015
BY OB STAFF
Join us to celebrate and network with Oregon’s best green workplaces!
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BY LINDA BAKER | OB EDITOR
Will community banks survive the digital age? Three CEOs peer into banking's crystal ball.
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BY JACOB PALMER | OB DIGITAL NEWS EDITOR
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