Military sales prompt big growth for Oshkosh Truck
9/9/2005

By Brian E. Clark
WisBusiness.com

OSHKOSH – It was a career-defining moment for John Stoddart, president of the defense arm of Oshkosh Truck Corp.

At a recent ceremony at the Iwo Jima Memorial in Arlington, Va., Stoddart – a retired Army colonel - was introduced to a Marine Corps general.

Before Stoddart could say more than a few words, the general told him he was honored to meet the automotive executive. Stoddart was taken aback.

“He told me his son was in one of our trucks in Iraq that had hit a roadside bomb and been completely mangled,” Stoddart said in a recent interview.

“But he said his boy was alive and well because of our work,” he added. “That made me very happy. It made me love what we do here even more.”

These are busy and profitable times for Oshkosh Truck – the state’s largest defense contractor - due in large part to the wars in Iraq and Afghanistan.

The company also makes fire, garbage, ambulance, rescue and other commercial trucks for civilian use. While European sales have been down, the company’s sales of emergency vehicles in the United States have been strong.

In addition, Stoddart said the company is bidding to build tactical vehicles such as armored personnel carriers for the military.

“We’re ready to grow even more,” said Stoddardt, who came to work for Oshkosh Truck a decade ago when defense sales were a respectable $350 million. He has seen his division’s sales triple nearly during his tenure.

And since 2000, employment in his division has grown from 1,404 to 2,237 workers. Overall, the company employs nearly 6,000.

In the third quarter of 2005, which ended June 30, total sales for Oshkosh rose nearly 37 percent to $819 million. And that was led by a 47 percent leap in military sales over the previous year.

During the past year, shares have gained more than 50 percent.

For the first nine months of fiscal 2005, total sales increased to $2.1 billion, up from $1.6 billion during the same period in 2004. Overall, sales for this fiscal year are forecast to be almost $3 billion.

Military sales should earn the company more than $1 billion for fiscal 2005, which ends this month. That’s up from $744 million last year, when total sales topped $2 billion for the first time.

Moreover, company officials estimate that defense contracts will increase to $1.2 billion in fiscal 2006.

Stoddart said he believes he has the "best job in the world."

"For a former military man, what could be better work than helping keep our soldiers safe?" he asked.

“I’ve gone over there and ridden in those trucks with our soldiers,” said Stoddart, a Nevada native who served 26 years in the Army.

“I may be a fat old guy, and I’ve gotten a few funny looks, but I tell them this ain’t my first rodeo,” said Stoddardt, who has been involved in the logistics side of armed conflicts from Southeast Asia to Central America to the Middle East.

Brian Rayle, an analyst with FTN Midwest Research in Cleveland, said the wars in Iraq and Afghanistan have been good for Oshkosh Truck.

“As you look at deployments worldwide, they have benefited because of the potential for replacement and parts and armoring,” he said.

He predicted the defense arm of the company will remain strong, even if troop strength in the Middle East is drawn down in coming years.

“The parts and service business will decline, but they will continue to remanufacture,” he said. “I’d predict their defense side will be relatively healthy for five to seven years after the war.”

Oshkosh has more than 6,500 heavy trucks in combat zones in Iraq and Afghanistan. Hundreds of them have been attacked or even shredded by bombs.

Oshkosh also has contracts to armor Marine and Army trucks and Humvees to better withstand roadside bombs. That work is done at sites inside Iraq.

Even if the vehicles weren’t facing lethal fire, the harsh conditions are wearing them out fast.

Trucks should normally last about three years in Iraq, but some are used practically around the clock – getting more than a year’s worth of abuse in one month.

Maintenance is done at bases in Iraq, much of it by 500 Oshkosh employees who receive combat pay for their work in the war zone.

“Thank goodness, we have not lost a single employee over there,” he sighed.

Many of the worn-out or damaged vehicles have been shipped back to Oshkosh where they are first remanufactured at a recently purchased 300,000-square-foot plant on Harrison Street.

At another plant, south of the Oshkosh corporate offices, newly minted military vehicles roll off assembly lines, heading for technical and road tests before being shipped to the Middle East.

At the Harrison Street plant, scores of damaged trucks are parked, waiting to be torn apart and restored.

“It’s the largest chop shop in America,” Stoddart quipped.

According to company officials, it costs 30 percent less to completely rebuild a truck than manufacture a new one.

Stoddart said he made the jump to Oshkosh when his career hit a lull.

“I was recruited to come here and it was a fortuitous move for me,” said Stoddart, who noted that Oshkosh began building trucks for the military during World War II.

Stoddart said many of the employees who work on armor vehicles or work on Oshkosh trucks in forward bases Iraq and Afghanistan are veterans of those conflicts.

“There is a retiring cadre of soldiers who make excellent field service representatives,” he said.

“They know the units, the people and the systems,” he said. “We bring them here, teach them our standards and have them help build trucks, write manuals and learn how to do it all.”

Stoddart said he did not realize his company’s work would evolve into armoring vehicles.

He declined to discuss the strength of the insurgency, which has claimed hundreds of American and thousands of Iraqi lives.

“I stay away from political questions,” Stoddart said diplomatically.

But he would discuss the bombs that soldiers face and their vehicles.

“They range from basic to sophisticated and you have to have the right strength of armor and slope to deflect blasts” he said, using a model truck to illustrate his point.

“Our guys are doing it as we speak,” he said, noting that Oshkosh employees have armored 10,000 vehicles.

“And when we get emails from soldiers who have survived a blast, I post them on the bulletin board so our guys and gals on the line know that our work is appreciated,” he said.


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