Competition Heating Up in Military Truck Industry

5/15/2012
By Sandra I. Erwin

By Sandra I. Erwin
Truck manufacturers are pulling out all the stops in anticipation of a new round of contract awards this summer for the Army-Marine Corps joint light tactical vehicle.
The high-stakes JLTV competition is viewed as a bellwether, as it is among the few military hardware procurements expected to move forward despite projected cuts to the Pentagon's budget.
JLTV also has become a touchstone for the military’s less-is-more approach to buying new equipment. Whereas in years past the Army would have spent several years and billions of dollars in research and development, it is now expecting contractors to provide ready-made prototypes within months. The vehicle also was intended to signal a departure from the money-is-no-object culture of military procurement. The target price tag for JLTV, $250,000 per vehicle, seems high by commercial truck standards, but in the world of military armored trucks, that price is considered affordable. By comparison, the mine-resistant ambush protected (MRAP) trucks that the Pentagon purchased for the Iraq and Afghanistan wars cost between $500,000 to a million dollars apiece.
At an industry exhibition this week in Warren, Mich., a new JLTV prototype joined the fray. Humvee manufacturer AM General unveiled a “blast resistant vehicle - off road,” nicknamed Bravo, to compete in the next phase of JLTV. Sometime this summer, the Army and Marine Corps are scheduled to select up to three candidates from a pool of six competitors. The winners will move into the “engineering and manufacturing” phase of the program and build 22 trucks that the military will test before it decides which one, if any, it will buy. The Army said it would purchase 50,000, and the Marine Corps 5,000.
AM General Vice President for Business Development Chris Vanslager said truck manufacturers are optimistic about JLTV.
“There’s high confidence across the board,” he said in an interview. Although the defense budget is clouded in uncertainty, “Everybody feels strong that this program has a high probability of going forward,” Vanslager said.
AM General’s competitors include Lockheed Martin Corp., Oshkosh Defense, Navistar Defense, BAE Systems, and a General Tactical Vehicles, a joint venture of General Dynamics Land Systems and AM General.
AM General decided on the dual-bid strategy as a way to hedge its bets. The company has manufactured the Humvee for 30 years, and faces a dramatic drop-off in sales as the U.S. military no longer is ordering new Humvees. Although several foreign countries continue to buy Humvees and the U.S. military will keep at least 100,000 in its inventory for years to come, the company will be under pressure to win a JLTV contract in order to secure a long-term future in the industry.
JLTV at one point was on the verge of cancelation. The Army and Marine Corps launched the project in 2007 and three industry teams were awarded contracts to develop trucks. But it later became clear that the program was headed down the path to a million-dollar truck that was much heavier than the Marine Corps wanted. The services last year changed course and decided to scale back their wish lists. The program became less about bells and whistles and more about affordability and technological maturity. The trucks also must offer substantial ballistic protection as well as add-on armor kits that can be installed in combat zones to protect troops from roadside bombs.
“When the government last year changed the requirements, that caused us to rethink our strategy,” said Vanslager.
The company’s JLTV prototype already has racked up 4,000 miles of testing, and its components collectively have logged about 300,000 miles, he said. The truck was put together from existing components that AM General has either purchased from other suppliers or developed in-house over the past decade, Vanslager said.
As JLTV moves along, the cost of the vehicle will be closely scrutinized. Contractor promises to deliver it at under $250,000 is no guarantee that it will happen, considering the track record of most military vehicle programs. One of the misconceptions in the industry, experts said, is that the military can choose to buy “off the shelf” vehicles and save money. But there is no such thing as a truly commercial vehicle that meets combat needs such as survivability, off-road mobility and ruggedness. Commercial trucks are cheaper because manufacturers sell millions of them. Military orders, by contrast, are in the hundreds, or maybe thousands if things go well. Marine Corps officials already have warned industry that the program will not survive if cost targets are not met.

Topics: Business Trends, Business Development, Doing Business with the Government, Land Forces

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