Just a very interesting article about how the Military is working with the top outdoor companies
FEBRUARY 01, 2005 -- In the two decades following World War II, some of the best outdoor gear was military surplus. Despite the emergence of a true outdoor "industry" in the mid- to late-1960s, enthusiasts still bought from surplus stores throughout the '70s. And why not? Soldiers, after all, hiked, climbed, and generally played outdoors for a living, so their "outdoor" equipment was durable, functional, and pretty good, overall.
   
But compared to the growing array of commercial, purpose-specific outdoor gear, "pretty good" military product could no longer cut it. In those early years, the technological progress in the outdoor realm was staggering. From 1970 to 1980, the outdoor industry created internal frame packs, free-standing geodesic dome tents, and incredibly light, warm, and compressible sleeping bags. On the apparel side, moisture-moving polypropylene base layers, Malden Mills' warm-when-wet polyester Polarfleece mid-layer fabrics, W.L. Gore's waterproof/breathable Gore-Tex outer shell fabrics—and the whole layering "system" that combined the three—came into being.
   
The military was slow to adopt these new, superior technologies. By 2000, polypro underwear, Malden Polartec fleece (the next generation of Polarfleece), and Gore-Tex outerwear and boots were standard issue. Packs, tents and sleeping bags likewise got new technology treatments, although in all cases, the military's gear was nearly a decade behind the commercial stuff.
   
Lumbering bureaucracy was partly to blame, as was the outdoor industry's move toward offshore manufacturing to control costs. Since by law—the Berry Amendment—U.S. military gear must be made in the U.S. from U.S. materials, outdoor manufacturers that both sourced and built products overseas gave the military fewer (and more expensive) opportunities to buy better equipment.
   
The outdoor industry's political leanings probably didn't help, either. Due to its activist roots and conservationist ethic, selling to the "military industrial complex" left a bad taste in the industry's collective mouth. In fact, as one long-time public relations provider puts it, selling to the military is "the outdoor industry's dirty little secret." Indeed, a few outdoor companies declined to discuss their military business because of their internal misgivings about it.
   
At the same time, the steady decline in defense spending throughout the 1990s gave the Pentagon precious little incentive to spend its dwindling funds on soldiers' packs, tents, and outdoor clothing. But then came the 9/11 attacks, whereupon the languid pace of a peacetime military abruptly exploded into a frenetic build-up for the Global War on Terror. Soldiers deploying to the unexpectedly harsh environments of Afghanistan and Iraq quickly made it clear how woefully inadequate their equipment was, and the military scrambled to respond.
   
And therein lies the tale of a new relationship between the armed forces and the outdoor industry. In many ways, it is a brave new business world of old-fashioned values and newfangled "outside the box thinking" on both sides of the equation.
   
War is Hell, But…
   
While an unsavory thought, it is nonetheless a fact that the Global War on Terror is good for many businesses—including those in the outdoor industry. The military's rush to get the guys on the ground the gear they need has meant a large increase in sales of, among other things, general outdoor gear, packs, and cold weather clothing. The Defense Supply Center, Philadelphia (DSCP), which is, in the words of DSCP's Gary Shute, "owner of the supply chain" for such items, expects to sell about $2.2 billion of product in 2005. That's down from the $2.6 billion spent in 2004, but either figure is about double what was done in 1999—a result, says Shute, that reflects the present "increased ops tempo."
   
Two outdoor companies that have profited from that tempo are CamelBak and Outdoor Research. Petaluma, CA-based CamelBak almost single-handedly created what has become the hydration category. A decade ago, when the company introduced its first hands-free drinking system, it was an immediate success with nearly every type of outdoor enthusiast. Within a few years, CamelBak products had percolated into military use, and today, says Woody Scal, CamelBak's EVP of sales, they're "used by every [U.S. military] service, and many foreign ones. CamelBak has a dedicated military and law enforcement division, and, adds Scal, does business with every level of the armed forces "from [an entire branch of] 'service' to 'soldier.'"
   
Although CamelBak stays mum on the exact dollar figure, its military business is booming. According to a former potential investor in the company, of CamelBak's estimated $75 million to $78 million in total sales last year, $35 million came from the military side of the house.
   
Seattle, WA-based Outdoor Research knows a thing or two about military sales, as well. A long-time supplier of gloves and gaitors to the Marines (and other services), OR has seen its military sales skyrocket in the last few years. The Marines recently awarded OR a $5 million contract to produce a Cold Weather Contact Glove, a military version of an offshore-produced commercial product. The company has also seen increased demand for other gloves and glove systems it provides to the military.
   
OR's U.S. manufacturing capability, which it has maintained even while sourcing many products overseas, has proved an excellent asset. "One reason we have [the] U.S. manufacturing [facilities] is for the Berry [Amendment] compliance," explains Susan Lee, OR's manager of government sales. "[And] we have seen big profitability from our U.S. operation because of the military."
   
Both CamelBak's and OR's military business profits are more complex than a simple bottom line increase. Because military users are traditionally much harder on their gear than the average outdoor enthusiast, both companies have been able to improve their commercial products thanks to military feedback. Likewise, military customers have benefited in fit, features and design aesthetics because of lessons learned on the commercial side. "Look is not as important as function to the military user," says Lee, "but it's still there."
   
In addition, Outdoor Research has been able to keep its U.S. operations profitable in a time when outsourcing seems to be the business maxim du jour, and CamelBak has gained a priceless amount of credibility for its products.
   
"If people see a CamelBak on a Mt. Everest expedition, they say, 'you just paid someone [to use it].' If they see a CamelBak in the Tour de France, they say, 'you just paid someone.' But if they see CamelBaks issued to soldiers, they say, 'you can't pay the military to do anything! It must be good!'" says Scal.
   
CamelBak and OR are hardly isolated instances of how relationships with the military can bolster business and product development. Today's military/outdoor business climate has gone beyond mere shared back scratching. Both sides are taking a far bolder, more proactive role.
   
One such example is Cascade Designs, which, in effect, partnered with the Defense Department to create a commercially viable military water purifier. Another is Arc'teryx, which made an unlikely alliance to provide the Marines with a better backpack. But perhaps the most interesting situation is the collaboration between the Army Soldier System Center, Special Forces soldiers, outdoor industry material suppliers, and an iconoclastic alpine climber.
   
MSR and the MIOX
   
The traditional outdoor/military product development relationship is fairly straightforward: either the company sees the potential to sell an existing product to the military, or the military sees potential in a product the company makes. But Mountain Safety Research's MIOX Purifier was different.
   
"MIOX was the first product development [project] that came from the military world that was commercialized for both military and outdoor markets," explains Kevin Gallagher, Military Affairs Manager for Cascade Designs Inc. (CDI), parent company of MSR.
   
One of the hottest new technical products in the outdoor industry, the MIOX Purifier creates a potent dose of mixed oxidants which, when added to a water supply, "inactivates" all the bad bugs (viruses, bacteria, Giardia, and Cryptosporidium). About the size of a small flashlight, the unit runs on two camera batteries and uses electrolysis to convert a brine solution (common salt and water) into a cleansing cocktail. As it turns out, that cocktail will also defeat a great number of chemical and biological agents—the kinds of things soldiers may face in the field.
   
The MIOX technology itself has Army genes: it is licensed from the MIOX Corporation, which makes municipal and industrial water disinfection units utilizing this same mixed oxidant—hence MIOX—process. MIOX Corporation, in turn, was a spin-off of Los Alamos Technical Associates (LATA), which developed the mixed-oxidant generation process in 1982 under a contract to the U.S. Army.
   
The high-tech water disinfection company hooked up with the hard-core outdoor company through DARPA, the Defense Advance Research Projects Agency. The Agency is, in its own words, "The central research and development organization for the Department of Defense (DOD)."
   
According to Gallagher, "DARPA recognized that there were exciting [water purification] technologies available, but needed a partner, someone who could focus on manufacturing and had expertise in distribution."
   
As that partner, CDI—best known for its Therm-A-Rest sleeping pads—was the logical choice. It has a proven U.S. manufacturing capability, so Berry compliance wasn't an issue, and it had an equally proven track record with the military.
   
"Our military business accounts for between 5 and 10 percent of our total revenues," Gallagher says, "and [our] military division is a separate strategic business unit. It shares manufacturing and accounting, but has completely separate marketing and product development."
   
The company is also a Lead Systems Integrator for hydration and purification systems. "DARPA had been funding 20 different [water purification] R&D programs, and Cascade Designs was involved in three or four. One was MIOX," notes Gallagher. After reviewing the technologies, "it was clear that MIOX had the most potential," he adds.
   
The real key to CDI's success, both with MIOX and with its military business in general, is its manufacturing core competency. Because outdoor is, for the most part, a seasonally driven industry, manufacturing downtime is common. While this is bad for cost effectiveness—since making more product results in cheaper overall operating costs—it's good for the military.
   
"We view [the military business] as a way to keep factories operating profitably," Gallagher says. And that becomes leverage in the company's prime market, as well. "Where we stand to benefit is the ability to bring exciting technology [to the outdoor market] that we've developed on the military side. One of the big 'wins' for the outdoor side is the level of innovation that's possible because of what is coming from DOD-funded research."
   
The military customer, of course, gets its own advantage. Any product with commercial viability ends up costing less to make, and its profit potential means the manufacturer has a vested interest in keeping quality control high while further cutting operating costs.
   
"Had MIOX—or anyone, for that matter—tried to create the project only for military, then I think the price would have been higher," offers Gallagher. "The ability to bring versions to market simultaneously benefited both groups. For the outdoor market, the benefit came from extensive testing done during Operation Enduring Freedom—DARPA paid for that for nearly a year before the product was released. For the military, the biggest benefit was lower cost."
   
Arc'teryx and the ILBE
   
As any backpacker will attest, choosing a pack is a very personal thing—unless you're a soldier. In that case, you get what you're given, and you'll like it…unless all the soldiers not only "don't like" the pack, but can't do their job as effectively with what they're issued. Such was the case when U.S. troops went into Afghanistan in late 2001.
   
"When the U.S. went into Afghanistan, the number one complaint item was the [issue] backpack," says Tyler Jordan, CEO of Arc'teryx, a high-end outerwear and pack manufacturer based in Vancouver, British Columbia. "There was lots of breakage."
   
The Marines, in particular, were unhappy with their equipment, and since they needed it immediately, they did what Marines have always done: they adapted, improvised and overcame.
   
"We wanted a commercial pack. Period," says Lt. Col. Gabe Patrizio, program manager for Infantry Combat Equipment at Marine Corps System Command (MARCORSYSCOM). "We didn't have time or desire to make our own when we knew that a [commercial] company out there could make it well enough."
   
The Marines also needed about 200,000 units of the pack—called Improved Load Bearing Equipment, or ILBE—over four years. When the bidding dust settled, Arc'teryx had won the contract, but with a twist. Since the Canadian company has no U.S. manufacturing capabilities, it, too, had to adapt and improvise by partnering with a company that did have that capacity. The partnership—and the entire ILBE process—is not only an excellent example of the military's new interest in the outdoor industry and its willingness to update its procurement tactics, but also of how canny business thinking in the outdoor industry can pay off.
   
It all started with an invitation. "In a case like [this], knowing that some commercial players had never played in the military market, we wanted these [types of] companies to be able to talk with us," explains Patrizio. The result was an "Industry Day," at Quantico, VA, in August 2002. "[The Marines] invited textile, backpack and [government contract] manufacturers," recalls Jordan. "They told us, 'here's what this thing has to do, on a rush timetable.' They wanted proven technology morphed into the new pack."
   
Patrizio's brief to the assembly was direct: "I made it clear to them that this was like an AA Meeting. They had to stand up and say, 'I'm so and so, I have design but no manufacturing capability,' of the like." The group was a diverse one, he adds. "Many of [the companies attending] were design, not manufacturing, houses, while conversely, plenty of government contractors there knew military work, and had manufacturing but no design capability." Of 12 proposals, says Patrizio, "theirs [Arc'teryx's] was deemed to be best for the government after evaluating manufacturing, technical requirements, cost— everything."
   
Arc'teryx's design was based on one of its large Bora backpacks, and the company teamed with Propper International, a large military-oriented manufacturer. Officially, Propper is the prime contractor, and Arc'teryx is the sub-contractor: the Canadian firm sends people to Propper's facilities, trains their workers, and specs the material to be used. Best known for making most of the Battle Dress Uniforms (BDUs) worn by every branch of service, Propper has won nearly $432 million in clothing and equipment contracts since 1998—$153 million in 2003 alone.
   
"[Propper] knows a lot more about dealing with the military," says Jordan. "They're good at building units and delivering them on time."
   
The Marines, meanwhile, get the latest in gear without having to deal with a newbie military contractor. It is, as Patrizio puts it, "a perfect example of all the synergies going on in design and manufacturing. [Arc'teryx] teamed with a defense manufacturer who doesn't have all the [in-house] expertise, but has the capability, people and factory to make lots of [packs]."
   
And while Arc'teryx won't "build [our] company around it," Jordan is optimistic about future military business. "We see good potential for our presence [in the military market]. Every solider needs a good backpack and a good jacket, and now we have a strong manufacturing partner."
   
Outerwear for the Next Generation
   
When Special Forces soldiers first went into Afghanistan in early 2002, they found their cold weather clothing to be woefully inadequate. Within a year, they not only had new, warmer clothing, but the apparel represented a radical departure from traditional outerwear, both in the military and in the outdoor industry. This new clothing, called the Protective Combat Uniform, or PCU, was built from scratch as an integrated system of seven interlocking levels of performance and environmental protection.
   
The speed of deployment of the PCU was breathtakingly fast for the military, even for the Special Operations community, which has much greater flexibility to adopt new equipment than do the regular forces. Far more remarkable, however, is the story of the PCU's genesis, a tale that revolves around a concept and a climber.
   
In both the military and the outdoor industry, the traditional layering system combines a moisture-moving base layer, mid-layer insulation, and a "hard" waterproof shell, such as one made from Gore-Tex fabric. In theory, the wearer's sweat in this "hard shell" system is moved away from the body by the base layer, is dispersed into the mid-layer, and then evaporates through the breathable Gore-Tex fabric. In fact, however, "anyone who has ever tried to move while carrying a load quickly removes the Gore-Tex," says Fred Chan, the program manager for Special Operations Forces (SOF) Warrior Protection at the U.S. Army Soldier Systems Center (SSC) in Natick, MA. Enter the concept, soft shell, and the climber, Mark Twight.
   
First introduced by the outdoor industry in the late 1990s, soft shell emphasized keeping the wearer dry from the inside by concentrating on moving moisture away from the body, rather than shielding the body from environmental moisture. This was an idea near and dear to Twight, a talented, often controversial alpine climber who pioneered a radically "fast and light" style of climbing. He had been playing with a clothing system with a highly water resistant—not waterproof—outer shell over moisture-moving polyester pile.
   
"It takes a tremendous amount of force to get water vapor through water that's [condensed] on the inside of Gore-Tex," Twight explains. By using what he calls "plastic components"—polyester garments that move moisture but don't absorb it—he found he had a super-breathable system that kept him comfortable in a very broad range of temperatures and conditions, whether he was moving or not. This was exactly what Fred Chan was after. "Either a soldier is moving or he's at rest," Chan says. Regardless of which, he has to be able to stay warm.
   
During this period, Twight was also doing contract work for the military. "By the end of 1998, I was training Special Operators how to move in the mountains," he recalls, and he was quite impressed with them as a group. He was not impressed with their cold weather gear. "These guys had really bad stuff."
   
Meanwhile, Fred Chan and the SOF Warrior Protection group, which is responsible for individual clothing, equipment and protection gear for all Special Operation Forces (Army Green Berets and Rangers, Air Force Parajumpers, Navy SEALs, and some Marine units), were looking at upgrading the same "stuff" that so appalled Twight. Providentially, the two met at an Outdoor Retailer show, and talked shop.
   
"I explained what I call 'constantly self drying,' says Twight. "I told Fred in that meeting that someone could come out of the water, onto a beach, and walk [the clothing system] dry in an hour. The whole reason for hard shell, the fear of getting wet, was suddenly taken away."
   
Twight had already tested the system: he'd put his "plastic components" into a bag, filled the bag with water, then donned the wet garments and climbed Mt. Superior, near Salt Lake City, UT. "The layer next to my skin was dry in 15 minutes," he says. "If the stuff is 100 percent polyester and it fits properly, it dries very quickly."
   
Over the next couple of years, Twight worked with Chan and the Special Forces soldiers to engineer, from the very best technology in the outdoor industry, what was sent (and is still being sent) to the soldiers in Afghanistan. Malden fabrics—already the outdoor industry standard for moisture movement—form the foundation, Level 1, as well as lighter-weight insulation layers, Levels 2 and 3. Levels 4 and 5 form the de facto soft shells: a lightweight windshirt and stretch woven parka and pants, respectively, all built from Nextec's Epic. A permanent silicone treatment, Epic encapsulates the fibers of the fabric so that it won't absorb water, but will let moisture pass though it easily. Level 6 is rainwear, designed for the times, says Chan, "when it's hosing out," and is still in development. Level 7, the puffy coat and pants, are Primaloft pieces with Epic shells.
   
While moving, the user wears Level 1, and the Level 4 windshirt. "The beauty of putting the windshirt there is that it slows down evaporative cooling and offers some wind and water resistance," explains Twight. For colder conditions, the user might add the Level 2 or 3, or he might opt for only the Level 1 and the Level 5 soft shell, with the latter being, according to Twight, "probably better than any soft shell-type fabric for its weight than is available in the outdoor industry." Level 7 is for stationary insulation. "As soon as you stop, you put on the puffy coat and your base layers dry," notes Twight. "All your moisture goes into the puffy coat, but who cares! It's all plastic."
   
Lessons learned
   
The bottom line is that doing business with the military has obvious benefits. Companies that do so end up with more business in general—business that often helps round out the seasonality of outdoor, and that can keep factories running more consistently, which is a very big deal to manufacturing-based companies. Outdoor companies also end up with a sizeable user group that, literally, cannot come in out of the rain.
   
"These [soldiers] have to do the job," says Twight. "They're given a three-hour window, and told they might get picked up afterwards. But if not, they'll have to hike out for two days." Weather and terrain impediments are simply ignored, and such abuse provides data that can just as easily be incorporated into improving a commercial product as it can a military version.
   
In addition, providers to the military get product testing information that is "far and away above what commercial product [manufacturers] have access to," says David Costello, who spearheads Malden Mills' military sales. "Natick [the Soldier Systems Center] is very sophisticated," adds Nextec CEO Bill McCabe. Both men have seen this in action: Malden's Powerdry and Polartec fabrics, and Nextec's Epic fabrics, are foundations of the Protective Combat Uniform.
   
"The military has a totally different testing procedure," continues McCabe. That includes having a full-time Research Psychologist as part of its Product Optimization/Evaluation Team. "The team evaluates how soldiers react to any new product—gun, helmet, anything—and [the Psychologist's] job is to find out if something worked, if it needed to be thicker, thinner, or what have you." Such information can't help but infiltrate behind military lines and into commercial ones.
   
But there's a less obvious, and more far-reaching, benefit to those commercial lines. "The Outdoor Industry is [largely] driven by fashion, which means change. Sometimes [companies] simply have to make a change," says McCabe. Or, as designer Kurt Gray, who helped create the PCU, puts it, "Fashion and technical [apparel] are diametrically opposed. People only want to buy technical [apparel] once, but they want to buy fashion again and again."
   
In the military world, however, it is all about function. If a soldier's equipment fails, he's likely to end up dead; how that equipment looks—camouflage issues aside—is far less important. "It's different from the profit [motivation] in [the] outdoor [industry]," says Cascade Designs' Kevin Gallagher. "[The military] wants to get the best possible gear to the guy in the field." In military terms, the crucial concept is performance. "We have a performance requirement, not a 'spec,'" says MARCORSYSCOM's Lt. Col. Patrizio. "[Every item] needs to meet a requirement. How [a manufacturer] makes it is up to them, as long as it works."
   
That functional focus is, of course, the primogenitor of what has become today's outdoor industry. How ironic then that the military "student" is now beginning to teach the outdoor "master."
   
"What stands out for me," says Gallagher, of his dealings with the military, "is what my expectations were and how I feel about that today. I entered in thinking, 'I'm going to be working with the $300 hammer people.' I had a very unflattering view of military R&D. The reality is different—[it is] lots of brilliant, risk-taking people. It makes me feel better about paying my taxes."   
   
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