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26 Aug 15. Oshkosh Corp will dominate the U.S. military’s wheeled vehicle market after winning a $6.75bn deal to build 17,000 armored trucks to replace the U.S. Army and Marine Corps’ aging fleet of 140,000 Humvees, analysts said on Wednesday. The Wisconsin-based company said it will hire some engineers, procurement experts and operations staff in coming years, but expects no hiring surge since work on the new Joint Light Tactical Vehicle, or JLTV, will offset other military truck programs that are due to taper off.
“This contract provides nice stability for our defense business for the long term,” Oshkosh Chief Executive Charlie Szews said in an interview on Tuesday. The new program is expected to ramp up to around 3,000 trucks in fiscal 2020.
The contract win lifted Oshkosh shares nearly 7 percent on Wednesday, helping reverse losses after Oshkosh cut its full-year profit forecast last month. Oshkosh expects defense revenues of $900m and to break even in 2015, with foreign sales seen driving big gains in 2016.
Roman Schweizer, defense analyst with Guggenheim Securities, called the contract a “monster (truck) win” for Oshkosh, and said it would help shore up Oshkosh’s defense business, which declined significantly after the end of the Iraq war, and the U.S. drawdown from Afghanistan.
RBC Capital Markets analyst Seth Weber said it would also help make up for an expected cyclical decline in Oshkosh’s Access Equipment business, now its most profitable segment.
Szews said Oshkosh is in “a much better financial position” than in 2009 when rivals questioned its ability to fulfill big contracts to build mine-resistant ambush-protected vehicles, or MRAPs, and medium tactical vehicles, or FMTVs.
Oshkosh has paid down the huge debt load it had five years ago and now generates significant cash flow each year, he said.
Szews said Oshkosh prided itself on meeting its commitments, and was ready to start building the new trucks for the Army and Marine Corps, on its integrated line, which cranks out a mixture of 20 firetrucks, cement mixers and military vehicles each day.
Schweizer said the Army’s novel approach of giving credit to contractors for providing technical data packages could provide grounds for a protest. (Source: Reuters)
25 Aug 15. JLTV programme could eventually be re-competed, Humvee future still unclear. Several tactical wheeled vehicle decisions remain following a 25 August award to Oshkosh Defense for the massive Joint Light Tactical Vehicle (JLTV) programme, such as whether or not production will be re-competed and how to handle remaining Humvee fleets.
Interestingly, as an option within the initial USD6.7bn contract, the US Army can buy a technical data package from Oshkosh for JLTV that would allow the service to re-compete production, Colonel Shane Fullmer, the army’s JLTV project manager, told reporters.
However, the army has not decided if or when it would do that.
Colonel John Cavedo, the army’s former JLTV project manager, explained during a media roundtable that buying the data rights would likely only be considered if the government found it had available funding and the potential for significant savings. (Source: IHS Jane’s)
25 Aug 15. Brazilian Army maintains 8×8 programme despite budget crunch. Brazil is facing serious budgetary limits but its army is maintaining plans to locally develop an 8×8 mobile gun system known as VBR-MR (Viatura Blindada de Reconhecimento-Media de Rodas), part of its Guarani Strategic Project. A research and development contract is expected to be awarded by the army’s Manufacturing Directorate (DF) to Brazilian Iveco Latin America this year to carry out the automotive platform’s development, a source close to the programme told IHS Jane’s. VBR-MR is intended for heavy direct fire-support and will be