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Gearing up

Markets | November 1, 2014 | By:

ROI: Supplying fabrics, materials and services to the military.

The U.S. Army’s decision to make its latest training uniform with no reflective element punched Oakdale, Minn.-based Safe Reflections Inc. right in the bottom line.

Safe Reflections bases 35 percent of its business on military sales, namely reflective products for workout gear, which were on the previous Army trainers. So when the Army changed its mind, it stung. Chuck Gruber, Safe Reflections president and COO, wondered, “Could it be a trend?”

Military contracts can be big business for fabric manufacturers. The military can be a fairly steady customer and, for some companies, a growth opportunity for current products and future product development. But the military has its particular processes and special challenges—and relationships count.

That good working relationship came into play between Safe Reflections and the Army, Gruber says. He got an urgent call from the Army regarding its new gear—but not to add reflective elements. The blue dye in the shorts was bleeding into the yellow ARMY, creating an unseemly green logo.

“They called us and said, ‘We know you do some cool stuff. Can you help us?’” Gruber says. “We have a couple of products specifically designed for dye migration and blocking of dyes so we were, very quickly, able to come up with some formulations.” They sent an answer to the Army; the military tried it, did some wash testing and decided to go forward. “We just shipped an order to them today,” he says.

“We have been serving them for more than 15 years, and all of the branches of the military know our capabilities,” Gruber adds. “They know that we’re a domestic manufacturer and that we’re a technology leader.”

Demand for supply

There are different ways to sell product to the military. A company, especially one with a specialty product, can be a preferred supplier—which is part of Safe Reflections’ military business. A company can bid directly on military procurement postings. A company can also subcontract with a military contractor.

That last option is preferred by Emigsville, Pa.-based Herculite®. Every few years the company may bid on selling a roll of its high-performance laminated or coated fabrics directly to the armed services; it’s just completing a small direct sale, says Jeff Sparks, Herculite’s business manager for tent and structure fabrics. However, it’s been a strategic business move to work as a supplier to a contractor.

“There are a lot of times we could sell directly to the military, but choose not to,” Sparks says. “When you get into the bidding process on large bids, it’s a lower margin business. It requires a lot of work, and we’d need someone completely dedicated to just doing that.”

For Herculite, it’s more profitable to sell to a military contractor, even though sometimes the contractor sells the entire roll of fabric to the military. “That’s what they specialize in. They know how to bid; that’s their business,” he says. “And it’s a better strategic plan for how our company is designed.”

Relationships with the military, even as indirect suppliers, can be close. Sparks says that serving on IFAI’s committee to rewrite and help modernize the military specifications gave him valuable contacts within the Department of Defense. Gruber has visited Rice Patterson Air Force Base’s garment design office twice already this year. Marlen Textiles, New Haven, Mo., prefers to display and network with contractors at trade shows.
Made in the U.S.A.

Nearly all fabric sold to the military must comply with the Berry Amendment, which states that all components of the end product must be sourced domestically. This isn’t always easy, and there are very few exceptions to this rule.

“There are some challenges,” Sparks says. “Because of the change in global markets with polyester and substrates, there are fewer and fewer people who make those things. On the vinyl side, it’s easier, but on the substrate side it’s a challenge.”

Marlen Textiles went all in and, as of January 2014, all of its products—military and consumer—are Berry Amendment compliant. Marlen makes industrial textiles for outdoor applications and is a supplier to military contractors. “We have been in business since 1951 and actually started out supplying the military,” says Alan Prelutsky, executive vice president. Some of its fabrics are on boats in the Coast Guard or covering tanks in Afghanistan. After supplying the military for 63 years, however, a situation came up in 2010 when Marlen lost a contract because of noncompliance, even with about half of
its products Berry-compliant.

“That was really the impetus to start investigating, and then pursuing, full Berry compliance,” says Prelutsky. In the four-year process, the company affirmed that it’s harder to manage a vendor 6,000 miles away than one 600 miles away, and that the cost of doing business with overseas vendors is higher.

It was a bold move for a company whose military-related sales are only 10 percent of its business, but Prelutsky expects to see a good return on the investment. The “Made in USA” logo is already a centerpiece of the company’s marketing materials.

“There is some level of patriotism in the country, so there’s a perceived benefit in the market to Berry compliance,” Prelutsky says. “And it does help us if
we do any military endeavors.”

Room for growth

While current military action is in something of a lull compared to previous years, some manufacturers see it as a growth market—especially for sales in items not combat- or deployment-specific. Both Westlake, Ohio-based MMI Textiles and Safe Reflections provide fabric for everyday-use items such as for training, base needs or general attire.

Military-related sales make up about 60 percent of MMI Textiles’ business, and director of operations Nick Rivera still sees room for growth: a future of smaller volume and quicker turnaround rather than the extremely large government contracts that are a result of massive deployments. “From our perspective of being a small business and with the ability to react as quickly as we can, I feel in a growth position with the U.S. military,” Rivera says.

Safe Reflections’ military business is growing at a nice rate, Gruber says, to the point that it’s hiring a person to work exclusively with military sales, a first for the company.

There are some sales spikes when new clothing designs roll out or when recruiting becomes more active, but Gruber does not anticipate any serious slowdowns. “It is growing, and it is growing at a nice rate as new programs roll out,” he says. “I don’t expect that it will tap out as long as military service continues to be active. Clothing wears out.”

Coshocton, Ohio-based Buckeye Fabric Finishing Co. also sees the military as a growth area. Currently, indirect military sales are about 10 percent of the company’s business. “We’re always looking to grow,” says Buckeye president Kevin Lee. “I would like to see it at 15-20 percent. It’s nice to have them as part of your mix. It increases your volume, so you’re not dependent on one sector of the commercial versus military market.”

Outside markets

As suppliers to military contractors, most military fabric producers have a general idea of where their materials end up, but not always exactly. MMI Textiles’ Rivera has been known to stop people in uniform at the airport and ask to examine their gear. He’ll look at the design, the function and how the fabrics and hardware are used. “There are only a few of us who are producing the fabrics or materials that go into these items,” he says. “It’s nice to be able to say, ‘Oh, your boots are cool, and we make the product that goes into it.’”

Sometimes manufacturers don’t know how their fabric is used or where it’s going—including to overseas military markets. There is no non-compete clause with mil-spec fabrics.

Fall River, Mass.-based Duro Textiles LLC has made a purposeful foray outside of U.S. borders in an effort to maintain the bottom line, according to a report in Fall River’s The Herald News. The company is shipping military-bound fabrics to places such as China, Saudi Arabia, Australia and Colombia.

Rivera says MMI has received quote requests from overseas militaries, such as Germany and Malaysia. Working to a foreign military specification can add more layers of complication, however. To ensure MMI makes something that will work, Rivera says they often try to steer them to U.S. military spec.

Reputation and innovation

Jeff Sparks is looking at a brochure for one of Herculite’s performance and custom product lines. There isn’t a colorful circus tent or an awning on a trendy café on the cover of the brochure: It’s an image of a soldier and an airplane. On the back, it shows the commercial product.

“It says Made in USA, pride in country, and that our products are military performers,” Sparks says.

Buckeye, which has made fabric coatings for the military since World War II, uses military images for marketing purposes to show the company heritage and to give credibility. “I think often if people think you have expertise and knowledge of working with the military, it’s a quality and service factor that they value,” Kevin Lee says.
One thing not marketed is military innovation. That’s because sources say innovation is primarily driven by the commercial sector.

Sparks can think of few things in Herculite’s product line that were developed for the military—one such item is a special-request radiant heat barrier.

Military requests are often made to strict specifications and don’t push development in themselves. However, Chuck Gruber says, technology developed for a commercial purpose can find its way into the military market, sometimes even before it hits the commercial market. For garments, he says, the military often works with shorter lead times than the private sector. A military-proven technology can, in turn, push commercial sales.

The military is ramping up its need for performance materials. The U.S. Army’s Natick Soldier Research, Development and Engineering Center (NSRDEC) hosted the Textile Science and Technology Industry Day in June 2014, where it spelled out some of its needs from industry suppliers. (See “A U.S. Army wish list” on page 30.) In addition to the burgeoning protective needs of the health care, law enforcement and sports industries, the military is providing another important market for suppliers of performance fabrics that protect and serve—so learning how to negotiate that market should provide dividends for decades to come.

Lynn Keillor is a freelance writer and editor based in Minneapolis, Minn.

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