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|Articles - February 2014|
|Tuesday, January 21, 2014|
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Beyond its direct contribution to the bottom line, Cohen adds, the company’s work for the military also informs its growing consumer offerings. He cites a product based on a boot designed for troops in Afghanistan that was honored among Outside magazine’s Gear of the Year in 2012. “It has a direct effect, because if it’s strong enough for the military, and it has strong results for other applications, it certainly has a great crossover, in both materials and construction,” Cohen says.
Few companies embody that crossover between Oregon’s legacy in outdoor equipment and its work for the military more than Leupold & Stevens. Its highly trained workers use computer-controlled lathes the size of SUVs to turn upwards of 2 million pounds of aluminum every year into rifle scopes for hunters and snipers alike. Its engineers frequent military firing ranges and shooting schools for feedback on their products. At the same time, U.S. and NATO military personnel arrive every month or so to tour its headquarters, which has grown into the footprint of a Costco since Leupold moved to a then-isolated corner of Beaverton in 1968.
The 107-year-old company did limited work for the Navy during World War II but ramped up its defense business in earnest when the Army adopted one of its long-range scopes in the mid-1980s. It then acted mostly as a subcontractor to rifle manufacturers until setting up a division devoted exclusively to defense in 2008. “It is a growing percentage of our business as a standalone channel,” says Kevin Trepa, Leupold’s vice president of global sales and business development and a 25-year Marine Corps veteran.
Like LaCrosse, since its purchase by ABC-Mart in 2012, Leupold is not publicly traded and shares limited financial information. The company’s total revenues are in excess of $100 million, and it employs about 700. While Trepa declines to say exactly how Leupold’s sales break down among divisions, he notes that the defense business was up 30% in 2013. Among its work for every branch of the military, it landed a five-year, $42.8 million contract last year to provide a version of its Mark 6 scope to the U.S. Navy Surface Warfare Center.
For many fighters, Leupold’s optics have become as fundamental to their gear as their combat boots, giving the company a degree of confidence that’s waned at many other defense contractors in recent years. Even after the deep cuts to federal spending known as sequestration, Trepa says he expects the growth to continue: “The military is still buying equipment that it needs, and there are still global deployment requirements for our armed forces.”
Business is also brisk at an Oregon company that’s laid claim to more than half the market for handgun laser sights. In a conference room at a Wilsonville industrial park, past a sign in the lobby that politely reminds visitors that loaded firearms are not allowed inside, Crimson Trace CEO Lane Tobiassen excuses himself to his office to grab a small picture frame. Inside is a copy of the first Crimson Trace contract from the U.S. armed forces — a $500,000 Navy SEALS order it’s been fulfilling since 2010. The same year, the company spun off its military-focused products into a division called CTC Defense. It drummed up additional business among weapons manufacturers, including an order for 25,000 laser sights for M72 rocket launchers. Tobiassen says the military division, which represents just under 10% of sales, made up a larger portion of Crimson Trace’s revenue in 2012 than at any point in the company’s 20-year history.
Yet the gradual withdrawals in Iraq and Afghanistan gave the company plenty of warning that it would have to diversify to keep that division growing. Less expected was the disorder that erupted last year in contracting circles following congressional standoffs on the debt ceiling and the federal budget. “You also have this inertia on the part of the people making new product and new contract decisions to hold off and to hesitate, because they don’t know if they’re going to have funding to do what they want to do for the warfighter,” Tobiassen says.
To keep its defense products moving, he’s dispatched his staff to pursue militaries upgrading their gear in Australia, the U.K., Canada, Mexico and other allied countries. The commercial side, meanwhile, has tracked recent years’ robust growth in handgun sales, allowing the company to add 50 employees in 2013 and bring its total workforce to 160.
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