The US Army has awarded a $30 billion contract to Oshkosh Corporation (NASDAQ:OSK) for replacing Humvee units with Joint Light Tactical Vehicle (JLTV). Other candidates showcasing military vehicles included industry giants such as Lockheed Martin and Humvee builder AM General.
In the next 10 years, the Army and Marine Corps would replace about 55,000 combat vehicles, in turn driving the cost of the defense contract as high as $30 billion. About 49,100 vehicles will be supplied for the Army and 5,500 for the marines. Oshkosh CEO Charles Szews stated that the JLTV is 70 percent quicker and one-third lighter. On Wednesday, the Wiscosnin-based industrial company demonstrated the prototype to local officials.
“This contract provides nice stability for our defense business for the long-term,” said Szews.
The contract provides a much-needed boost for Oshkosh as it had eliminated 760 jobs, last year. Lockheed and AM General will have 10 days to file a formal protest for the award, but it would affect AM General as it was supplying Humvees. The U.S Army and Marine Corps aims to improve the flexibility and mobility of armored vehicles, transported using the CH-47 Chinook, CH-53 heavy-lift helicopters and by amphibious vessels. According to Defense News, the JLTV should be lightweight for increased mobility, but heavy to protect military from ground attacks.
Oshkosh Corporation, founded in 1917, designs and build trucks, truck bodies, military vehicles and access equipment. The company employs about 12,000 people, and it is divided into four business groups: defense, fire and emergency, access equipment and commercial.
Seth Weber, RBC Capital Markets analyst said the contract would make up for an expected decline in Oshkosh’s Access Equipment Business, and this would become its most profitable business. It remains unclear, but union workers in Oshkosh agreed to a contract extension, so the company could cut down labor cost for their project in 2013.[ Source ]