Body armor business booms
Companies such as Ceradyne and Armor Holding post large gains after DoD spends $5 billion in five years to protect troops; smaller companies find niche markets in custom-wear, police
From the annals of the obvious, the Washington Times reports this week that sales of body armor are soaring due to increased demand from the war in Iraq, with the Department of Defense spending $5 billion on protective vests — $3,150 per each soldier deployed into a combat zone — in the past five years. All of this, experts say, is good for business. “No matter what the price of body armor is, it is crucial to conducting military operations,” said Michael French of the investment banking firm Kaufman Brothers. Consider Costa Mesa, California-based Ceradyne as an example. One of twenty companies in the market, in 2006 it posted $662.9 million in sales, an 80 percent increase from sales of $368.3 million in 2005, with 75 percent of revenue coming from the federal government.
Of course, if the war ends, Cerdayne loses as well, but this member of the industrial military complex sees bright skies ahead: “We believe that the military has set goals that will create demand for body armor for the rest of 2008 and beyond,” said company CFO Jerrold Pellizzon. Other companies involved in the body armor business include DHB Industries, Armor Works, and Armor Holdings, but those companies are mainly focused on winning large DoD contracts. (Armor Holdings has seen sales increase 44 percent to $2.36 billion in 2006 from 2005 as a result.) Others offer more specialized products. Fairfax, Virginia-based PT Armor, for instance, sells custom-fitted vests for soldiers and police officers (mainly in big and tall sizes, we presume). “Some guys cannot just wear armor off the shelf, and we have the capability to make armor for them,” said company President Michael Glaze, who reports that his company does $2-5 million in annual sales.
Those looking for potential markets should also look to New York City. The NYPD announced this week that it would soon spend $3.3 million, and $617,000 each year forward, on Level 3A bulletproof vests for 4,500 auxiliary officers. The move comes after two unarmed, volunteer police officers were gunned down recently in Greenwich Village.
