Well, loden is just another name for boiled wool but usually means a flat fabric. it´s also wool but usually woven. Both materials pass a process called "Walken" in german. it means a treatment with hot water and a mechanical densening with heavy hammers or rolls witch causes the fibers to felt. Of course loden is also used to sew this kind of sleeveless jackets.
One of the oldest factories is nearby and was first mentioned in a tax list of the year 1434 (yes, 1434).