Magazine article National Defense

Industry Execs Ponder a Shrinking Tactical Wheeled Vehicle Market

Magazine article National Defense

Industry Execs Ponder a Shrinking Tactical Wheeled Vehicle Market

Article excerpt

OSHKOSH, Wis.--Inside a 350,000-square foot facility known as "South Plant," Oshkosh Defense workers fabricate cabs for the Army's family of medium tactical vehicles program. They are producing 60 trucks a day in two shifts on an assembly line that snakes its way through a building that was originally erected in 1972 and has been expanded several times since.

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Military truck manufacturers, however, are beginning to worry about the long-term future of the industry. A 2010 report by Forecast International, a business intelligence firm, predicts nearly 26,750 light wheeled vehicles worth $12.4 billion will be produced worldwide during the next 10 years. The U.S. armed services plan to spend more than $3 billion annually on tactical wheeled vehicles over the next several years.

But the long-term outlook for suppliers still looks fuzzy as a result of several factors. One is that the U.S. military already has a huge inventory of trucks and is looking to save money by refurbishing rather than buying new ones. Another unexpected twist in the truck market has been the Pentagon's fast-paced, $36 billion program to acquire armored vehicles known as mine-resistant ambush-protected, or MRAP. The scope of the MRAP investment means that the Pentagon is likely to scrutinize future truck buys to make sure that the services are incorporating MRAPs into their truck fleets, rather than storing them in warehouses for a future war.

Since 2007, a host of manufacturers have received contracts to produce up to 16,000 MRAPs.

"The nature of MRAP and its urgency and the choice of acquisition method did bring on a lot more players and develop some of them beyond their wildest dreams," said Chris Chambers, line leader for BAE Systems global tactical systems.

But the MRAP business eventually will slow down. Companies expect that most of the money in the tactical wheeled vehicles business will be in maintenance and upgrades to the current fleet.

"There is still a lot of money in tactical wheeled vehicles in the whole recap arena and technology insertion within those programs," Chambers said.

One of the most highly anticipated programs is the recapitalization of the Humvee fleet, executives said. Manufacturers better known for heavier trucks such as Oshkosh, BAE Systems and Navistar, are gearing up for the competition. All said they are currently investing their own research and development dollars in anticipation of requests for information later this year.

"We will continue to expand our portfolio across the medium and heavy tactical fleet, but we think we have good products and efficiencies to offer to the light tactical market as well," said R. Andy Hove, executive vice president and president of defense at Oshkosh.

Navistar's vice president of government business, Pat MacArevey, said the company also will compete for Humvee work. "We've put some thought into it and done some tests to see what that would look like. 1 would anticipate that we will be putting forward a solution and a proposal."

BAE Systems, which is trying to make a big comeback into the truck market after losing the medium-truck contract to Oshkosh, has offered detailed plans on what it will be offering for the Humvee upgrade program. BAE executives even have a brand name: Integrated Smart V.

Adnan Hiros, business development director of light tactical vehicles at BAE, said the company's concept features a monocoque hull that will provide lighter weight and higher protection. The technology--used in vehicle, aircraft and boat construction--supports loads by using the exterior as opposed to an internal frame. The hull and capsule will use high-strength steels rather than "exotic materials" to keep costs down, Hiros said. BAE's proposal will include blast resistant seats, the relocation of the fuel tank to the back of the vehicle and an improved suspension system, he added. …

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