Oshkosh Corp. won a $6.75 billion contract to supply the U.S. military 17,000 new light trucks, which is seen as an upgrade to its aging fleet of Humvees.
The Wall Street Journal reported that the deal may extend for up to 25 years and requires Oshkosh to build as much as 55,000 Joint Light Tactical Vehicles. It added that the Wisconsin-based company beat out Lockheed Martin Corp. and AM General LLC, the producer of the Humvee, to get the deal.
The Washington Post said the contract's total value could reach up to $30 billion, and is one of the largest contracts ever awarded by the U.S. Army, which will get 50,000 of the vehicles while the rest will go to the Marine Corps. The report said the JLTVs will have tougher armor than Humvees but move like a sports utility vehicle while carrying heavy load.
The Journal noted that the deal provides Oshkosh a long-term stability that allows it to ride out volatility in its specialty vehicles business. The paper said the Minnesota-based company has cut hundreds of jobs as its defense unit has struggled from the Pentagon's cost-cutting. It added that the company's shares jumped by 12 percent to $43 dollars after the announcement, allowing its shares to recover from a 20 percent slump this year.
The Post said the JLTV was designed based on the urban wars that the U.S. fought in Afghanistan and Iraq, where soldiers usually encounter hidden roadside bombs. It added that production will start this year, and the Army will have a unit equipped with the vehicles by 2018.
The Journal said Lockheed will decide if it would contest the Army's decision after a debriefing, but the paper noted that Oshkosh's win will be more painful for AM General, which had benefited from the steady business of Humvee production.
The Post said the Humvee will continue to be used, but will be steadily phased out, noting that the vehicle has seen action in the 1989 invasion of Panama, the Persian Gulf War, the Bosnian War and the wars in Iraq and Afghanistan.
