MILWAUKEE — Automatic federal budget cuts could delay the replacement of military Humvees, a valuable contract bid on by truck-maker Oshkosh Corp. and worth thousands of jobs.
Oshkosh Corp.'s chief executive officer, however, says he is hopeful that won't happen after speaking with military officials "at the highest levels."
Defense Secretary Chuck Hagel outlined a plan Wednesday for what might happen if the Pentagon has to cut more than $50 billion from the 2014 budget and $500 billion over the next 10 years as a result of the automatic spending cuts that began taking effect earlier this year. One program at risk could be the replacement of 55,000 military Humvees, said James Hasik, a senior fellow for emerging defense challenges at the Atlantic Council, a policy research group that focuses on international defense issues.
Marine Corps Commandant Gen. James Amos recently told Inside Defense magazine that his top priority was an amphibious combat vehicle that would replace a design used since the early 1970s and he was "not willing to die in a ditch" over the Humvee replacement if the budget cuts continued. With the price of the Humvee replacement, called Joint Light Tactical Vehicles or JLTV, rising from an original $250,000 per vehicle to up to $400,000, the Marines have an added incentive to abandon the program, Hasik said.
"I think the amphibious vehicle program is what the Marines are going to defend," he told the Milwaukee Journal Sentinel (http://bit.ly/1cq7tyy ). "I don't think they should be enthusiastic about defending the JLTV, given all the other things they might want."
The Humvee contract has an estimated worth of up to $30 billion over 20 years. Oshkosh Corp. is one of three companies bidding on it, along with Lockheed Martin Corp. and AM General Corp. The companies are delivering replacement prototypes to the Army this month for testing.
"The JLTV program is a huge contract that probably would forever change the company. It's a huge order," Oshkosh Corp. spokesman John Daggett said.
Oshkosh CEO Charles Szews said Tuesday in a conference call with analysts that he thinks the replacement will happen on schedule. It's a high priority for the Army and Marines because Humvees can be used in almost any conflict anywhere in the world, the company said.
The Army is expected to buy most of the Humvee replacements in the long-term, but the Marines are important because they would buy about a third of the initial vehicles, said Loren Thompson, chief operating officer of the Lexington Institute, an Arlington, Va., policy research group. He wasn't sure whether the Army could afford to go ahead without the Marines.
Of the three bidders, Lockheed Martin is probably the most technologically advanced and AM General has experience as the maker of the Humvee, Thompson said. Oshkosh is seen as likely the cheapest bid, which "could have an advantage given the budget situation in Washington," he said.