In the five years to 2016, the Tactical and Service Clothing Manufacturing industry's performance will rely on government spending on national defense, much like it did during the past five years. President Barack Obama confirmed plans to pull out 40,000 troops from Iraq by the end of 2012, after about nine years in the country. This move will drastically cut the federal government's spending on defense programs. According to IBISWorld, demand for tactical clothing from the industry's largest market segment will shrink, significantly limiting revenue growth. Over the five years to 2016, industry revenue is forecast to grow at a mere 0.6% per year to $ 258.3 million. While defense spending is slated to be cut as early as 2012, IBISWorld anticipates that revenue will increase during the year, supported by demand from local protective services like fire and police departments. For this reason, industry research firm IBISWorld has added a report on the Tactical and Service Clothing Manufacturing industry to its growing Apparel Manufacturing collection.
The Tactical Clothing industry primarily manufactures tactical apparel for the personal, military and service (e.g. police and fire service) markets. Tactical apparel describes clothing with specialized functions such as fire protection, puncture resistance, high visibility and water repellence. The industry does not include manufacturers of safety equipment such as body armor and bulletproof vests. The Tactical Clothing industry depends heavily on funding of defense and domestic protective services. Military personnel, firefighters, police officers and emergency medical technicians (EMTs) require apparel made of highly functional and protective fabric (i.e. fire-resistant, waterproof and puncture-protective). Therefore, demand for Tactical Clothing industry products is closely linked to activity in these downstream industries. As spending on defense and protection grows, revenue climbs as well. Meanwhile, sales for the Tactical Clothing Manufacturing industry have grown to $ 250.1 million.
Despite rising revenue, profitability for industry operators has declined. During 2010 and 2011, the skyrocketing prices of cotton and synthetic fibers like nylon and neoprene put a damper on margins. To cut costs and improve profitability, many participants have sent their manufacturing activities to operators in low labor-cost countries (a process known as outsourcing). This trend has limited the need for domestic employment.
According to IBISWorld analyst, Nikoleta Panteva, as defense spending winds down over the next five years, demand for tactical apparel will likely fall as well. Industry operators including Ohio-based Fechheimer Brothers Company, Propper International and Carhartt Industries will rely more heavily on the domestic protective sectors' use of their products. Still, revenue growth is not forecast to be as robust as it has been since 2006. Continued outsourcing will limit US manufacturing activity, while increasing import values at an average of 3.9% per year to $ 167.8 million. Industry participants will focus on product enhancement and market expansion to effectively compete and boost sales.
For more information, including latest Industry trends, statistics, analysis and market share information, download the full report from IBISWorld on the Tactical Clothing industry
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