Oshkosh Wins US Fire & Emergency Vehicles Contract, 2012-2017

Money talks(click to view full) In June 2012, Oshkosh Corp. in Oshkosh, WI won a maximum $382 million fixed-price with economic price adjustment contract for “commercial type fire and emergency vehicles” on behalf of the US Army, Navy, Air Force, Marine Corps and federal civilian agencies. The contract will run from FY 2012 – 2017, using Defense Working Capital Funds, and will end on June 5/17. The USA’s Defense Logistics Agency Troop Support division in Philadelphia, PA will place orders as needed (SPM8EC-12-D-0009). Oshkosh Fire & Emergency has slid from sales of over $2 billion per year in 2007, to under $1.5 billion in 2011, even as its operating income turned negative. A 5-year order that maxes out at under $400 million will put a dent in that decline, but won’t reverse it by itself. A failed Board proxy battle by Icahn Group also highlighted past Oshkosh’s moves to bid below its own costs, in order to secure defense work. The question for Oshkosh investors, and for new President Wilson Jones, is what margin Oshkosh managed to retain on this contract, lest it contribute to operating income issues without changing total sales trends.