In the wake of losing a recent potential $8 billion Joint Light Tactical Vehicle contract, Oshkosh is "not interested in being a low-margin, commodity-type supplier," company President and CEO John Pfeifer said Wednesday.
The Army announced on Feb. 9 that it had selected AM General for the contract over Oshkosh Defense. The contract has an initial award of more than $230 million and is potentially worth more than $8 billion over the course of a decade. Under the contract, AM General would produce more than 20,000 JLTVs and more than 9,000 trailers.
After Oshkosh requested a debriefing from the Army, debriefings were completed the week of Feb. 13 with all offerors, Michael Sprang, a project manager with the Army’s Joint Program Office for JLTV, wrote in a statement to Inside Defense on Wednesday. Oshkosh has not yet said whether it will protest the decision.
During a virtual presentation at the Citi 2023 Global Industrial Tech and Mobility Conference, Pfeifer said he was surprised and disappointed that Oshkosh did not win the follow-on contract but added that when they saw the price of the contract award, “we were not interested in supplying that vehicle at that level of price.”
“We're a business that thrives on innovation. We thrive on quality supply, and we are not interested in being a low-margin, commodity-type supplier,” he said.
Pfeifer said the company will invest its defense segment resources more toward combat programs, such as building the weapon system for the Stryker vehicle.
“And we’ll continue to grow in profitable categories, understanding that tactical wheeled vehicle[s] will likely be under pressure for quite some time,” he said.
Oshkosh won the original JLTV contract in 2015 and has built more than 19,000 trucks and 3,500 trailers to date, according to the company. Oshkosh can continue to produce the vehicles through 2024 before the new contract kicks in, in 2025, the Milwaukee Journal Sentinel reported Tuesday.
When asked whether the company would take a hit financially from the JLTV loss, Pfeifer said it will hurt in the short term, but he still expects strong growth beyond 2025 as the company continues to invest in combat programs.
“We will absolutely get over this. We’ll put our capital where it belongs. We’re going to continue to grow with or without JLTV,” he said.