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AM General’s Strategy Pays Off: $1.6B In Humvee Contracts

Posted by Sydney J. Freedberg Jr. on

AM General will sell Afghanistan 1,259 M1151 Humvees plus 414 M1152 models.

Humvee maker AM General just announced a $356 million contract to build 1,673 Humvees for Afghanistan. (The US is paying). It goes to show that even after losing the biggest military wheeled-vehicle contract of the century, AM General just keeps trucking along.

Last fall, the Army picked Oshkosh over AM General and Lockheed Martin to build the better-protected replacement for the Humvee, the Joint Light Tactical Vehicle (JLTV). Lockheed swiftly launched a protest and filed a lawsuit, but AM General went quietly. Why? While Lockheed’s nascent ground-vehicles division was actually a gamble on the part of the parent company, much smaller AM General had a stable business model to fall back on.

AM General photo

AM General will provide Afghanistan 414 M1152 Humvees (pictured) and 1,259 M1151 models.

Building 55,000 JLTVs would have been great, but there are 230,000 Humvees already in service worldwide, and they all need spare parts. Many users need and can afford upgrades. And many other countries want American tactical vehicles but can’t afford the JLTV. AM General expects to be building, modifying, and maintaining Humvees for a long time to come — including for the US Army and Marines, since they currently plan to replace only 1/3 of their Humvees with JLTVs.

For the US military, the JLTV provides a combination of maneuverability and protection that the uparmored Humvee cannot. For countries like Afghanistan and Iraq, which routinely send men to war packed into white Toyota pickup trucks, an uparmored Humvee — heck, any Humvee — is a big step up.

Below is a roundup of recent AM General contracts they’re willing to talk about (some customers are cagey, especially Middle Eastern ones). All told, and including today’s Afghan announcement, I count almost $1.6 billion worth of work:

  • Sometime in 2015 or early 2016, there was a $25 million, 120-vehicle contract modification to a Foreign Military Sale with an unspecified nation.
  • In July ’15, there was a $373 million contract for 2,082 Humvees for “Afghanistan, Iraq, Kenya, Lebanon, Ukraine and Tunisia.”
  • In September, there was a $429 million contract for Humvee ambulances for the regular Army, National Guard, and Reserve to use in disaster relief in the US.
  • In October, AM General announced multiple contracts totaling $42 million for “Iraq, Afghanistan, Tunisia, Israel, Turkey, Kenya, Lebanon and the United States.”
  • In February 2016, there was a $57 million multi-national contract for “Iraq, Serbia, Argentina, and the U.S. National Guard and Reserve.”
  • In June, the Pentagon awarded AM General a $66 million contract for 356 Humvees for Iraq.

In addition to those orders, there’s an ongoing public-private partnership with the National Guard and Red River Army Depot to refurbish and upgrade older Humvees — some of which will need to serve for another 30 years or more. That’s $250 million of orders so far.

What do you think?