MAN SIGNS UK SUPPORT VEHICLE CONTRACT – OSHKOSH TAKES STOCK
04 Apr 05. Following successful contract negotiations with the U.K. MoD MAN ERF UK Ltd has been awarded an order for just under 5200 trucks. The contract is worth €1.5bn and also provides for an option for approximately 2100 further vehicles. Deliveries of the vehicles will commence in 2007 and be completed in 2013. In October of last year MAN ERF UK Ltd was given the status “Preferred Bidder”, thereby beating three international competitors.
The vehicles are models from the high-mobility off-road ranges HX and SX with two and three/four axles respectively. The chassis will be assembled at the Vienna plant of MAN Nutzfahrzeuge Österreich AG in Austria. The order ensures a continuous workload for the Vienna plant and thus helps to safeguard jobs. The high local content of the vehicles comes from the bodies, which will be completely produced in the UK. The local body manufacturers involved include Marshall SV Ltd, EKA, Fluid Transfer, Andover Trailers and Atlas Cranes.
This year MAN Nutzfahrzeuge is celebrating 90 years in military vehicle production. Right from the start the armed forces with their specialised requirements relating to the engineering of the vehicles were among the company’s customers. Military vehicles from MAN are in operation in more than 65 countries. The high-mobility SX and HX ranges were developed specifically for off-road use in the military sector. They prove themselves in civilian duties too, however, for example in disaster relief or as expedition vehicles.
Countering any accusations that the company’ would not be around in twenty years’ the timescale of the MoD contract, on April 6th, the FT reported that MAN added a little to its defensive shield yesterday with a bullish profit forecast from its commercial vehicles unit.
The shares rose 2.9 per cent after the company said it expected to add €100m in 2005 to last year’s €342m operating profit at the truck and bus division. That makes a 26 per cent gain this year for the stock, which has tripled in value since MAN fended off a hostile takeover by the head of one of its subsidiaries two years ago.
Since Blackstone’s €3bn acquisition of listed chemicals group Celanese last year, cash-rich US and UK private equity firms have been on the lookout for underperforming or messy conglomerates to take over and break up, exploiting the unwinding of the Deutschland AG system of friendly cross-shareholdings.
MAN is at or near the top of many lists, which extend to as many as a third of Germany’s blue-chip companies. It has five disparate divisions, from trucks to printing machines, and its largest shareholders sold their stake three months ago. The company has long defied predictions of break-up, and a strong performance in commercial vehicles, boosted by a big order from the UK defence ministry and healthy demand in eastern Europe, strengthens its hand. A market capitalisation of more than €5bn is daunting for financial buyers, which might have difficulty digesting MAN and selling on all its divisions. It needs to keep ahead, though. The commercial vehicle cycle will eventually turn downwards, possibly next year. It must deliver on promised cost cuts and drive its margins higher.
However, reality struck the procurement process when Oshkosh administered what can only be described as a wake up call to the MoD and this Government, which may be the first of many. BATTLESPACE visited Oshkosh at the Warminster ABRO plant where the company is completing the current contract for 357 wheeled tankers for the MoD.
The first sign BATTLESPACE had of problems was when we were informed that Oshkosh had not been asked to the first vehicle to be delivered to the user on February 21st, the forecast ISD slated by Oshkosh two years ago.
“We were specifically excluded by Lord Bach,” said Jonathan Shorer, Oshkosh’s U.K. ‘s representative.” When asked the r