Outdoor Research, the Seattle-based maker of outdoor apparel, could soon be down by more than 250 workers after complications with several government contracts, including one to make medical masks for the state of Washington.
This week, the company said it would cut 112 workers, including 55 in Seattle, in 60 days unless it gets resolution on a stalled multimillion-dollar federal contract to make cold-weather gloves for the U.S. military. The other 57 jobs are in its facility near Los Angeles.
Those prospective layoffs would follow earlier cuts of around 150 jobs from a separate mask-making operation that Outdoor Research launched early in the pandemic but closed this fall after its primary customer, the state of Washington, didn’t opt to buy more masks, company officials said.
It’s “clearly a brutal week for the organization and high emotions across the board,” said Brett Kruse, OR’s vice president of people and culture.
The latest round of cuts would leave OR with around 225 workers in Washington and 34 in Los Angeles, in addition to contractors in its offshore operations. OR is co-owned by former Nordstrom co-president Dan Nordstrom and South Korea based Youngone Corp.
The two sets of layoffs aren’t related: OR’s mask operations represented a pandemic pivot, while its defense work, which accounts for 25% to 30% of its total revenues, has been going on for decades.
But both point to the challenges of being a government supplier in turbulent times.
OR’s gloves business has been caught up in the Byzantine government contracting process. In August, OR announced a three-year, $49 million U.S. Army contract for a “Cold Weather Glove System.”
But after a competitor protested the deal, the Army split the award and gave 40% of the work to the rival, said David Costello, who lobbies for OR. If that weren’t enough, amid the current federal budget battles, uncertainties remain over funding for the Army contract’s second and third year, Costello said.
OR’s mask misstep seems mainly to be the result of pandemic economics.
The company was one of several outdoor apparel makers, including Seattle-based Feathered Friends and Portland shoemaker KEEN, that shifted to making personal protective equipment, or PPE, early in the pandemic, when foreign producers were struggling and shortages were crippling the U.S. medical system.
OR’s mask operation, located in its headquarters building on First Avenue South, began production in June 2020 and eventually hit a daily peak of 70,000 surgical masks and 15,000 folding N95 masks, Kruse said.
Most of that went to the state, under a $9 million deal for 12 million surgical masks and just over a million flat-fold N95 respirators, said Linda Kent, spokesperson for the state enterprise services department. The purchase was part of “an emergency backstop of PPE” for hospitals and other organizations between March 2020 and October 2021.
But even before OR finished the state contract, foreign suppliers were already refilling the U.S. market with PPE at a fraction of the price domestic producers, with their higher labor costs, could charge, Kruse said.
“The state of Washington and a variety of other hospital systems were in desperate need for [PPE] when they couldn’t get it elsewhere,” Kruse said. “But when the international supply chains open up again, we struggled to compete.”
Prospects for both OR’s glove and mask businesses remain unclear. The company is “leveraging every relationship that they’ve got” to resolve the Army contract, Kruse said.
The company has allies. U.S. Sen. Patty Murray, member of the appropriations committee’s defense subcommittee, is pushing “the Army to provide Outdoor Research with additional visibility into future orders that may help them save many or all of the jobs that are at risk,” a Murray spokesperson said in a email Friday.
Prospects for mask business are cloudier. Although Washington has plans for a long-term PPE inventory, and expects to solicit bids later this year, “the state’s mask inventory is enough to meet current demand,” Kent said.
Likewise, while the recently enacted federal infrastructure bill contains funding for domestic PPE manufacturing, it’s unclear how long it will take to roll that funding out, Costello said.
That means more uncertainty for OR and its workforce — and, arguably, for the rest of Washington, which could find itself in another global pandemic, another global supply chain meltdown and another domestic shortage of PPE.
“It’s not a matter of if, it’s just when,” said Garrett Nixon, manager at Feathered Friends, which partnered with OR on mask production for several months early in the pandemic. “So I would think we wouldn’t want to rely entirely on foreign production again.”