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Pentagon's Truck Giveaway Could Dent Defense Contractors
Scrapping 13,000 Used Armored Patrol Trucks Would Cut Into Replacement-Parts Business at Navistar, Oshkosh, BAE
The Pentagon is giving away mine-resistant, ambush-protected trucks that have been used in Afghanistan, pictured, and Iraq. Michael M. Phillips/The Wall Street Journal
Available: armored patrol trucks; battle-tested; some dents, dings, shrapnel scars. Price: free.
The Pentagon wants to give away 13,000 mine-resistant, ambush-protected trucks because they have outlived their original purpose. "We've notified our friends and allies that we have MRAPs available and if they want them they can have them," says Alan Estevez, deputy undersecretary of defense for acquisitions, technology and logistics.
Unclaimed trucks are probably destined for the scrap heap—bad news for the defense contractors that keep the vehicles supplied with suspensions, engine parts and transmissions. Truck makers are cutting jobs as revenue drops.
Although the trucks' armored bodies are credited with protecting U.S. troops from roadside bombs in Iraq and Afghanistan, military planners want more-versatile vehicles that can be deployed quickly as troop levels decrease. A full-size MRAP (pronounced EM-rap, of course) weighs about 40,000 pounds, stands 10 feet tall and costs the Pentagon about $500,000 new.
"There's no opportunity in holding on to what you don't think you'll need for the future," Mr. Estevez says.
Interest from foreign militaries has been tepid. But they are a hit with stateside police agencies. Almost 200 trucks have been distributed to police departments since August and requests are pending for an additional 750 trucks. The vehicles, many of which feature machine-gun turrets, are off-limits to private citizens and businesses.
Lucky recipients run from the Ohio State University campus police force to Florence County, S.C., which replaced an armored vehicle from the 1970s that the sheriff department's SWAT team had used for about 15 years. A new armored truck would have cost at least $188,000.
"The price was right because it was free and it fit with what we need it to do," says sheriff's Capt. John Crouse. "It stops bullets. It keeps you from getting shot."
Ohio State declined to comment.
Scrapping unclaimed MRAPs would be a blow to truck maker Navistar International Corp. NAV -2.64% , which built nearly 9,000 of the 27,000 vehicles bought by the Pentagon. Navistar's defense-related revenue fell 51% last year to $541 million as demand for trucks and replacement parts dried up. The company wants the U.S. Army to repurpose MRAPs for other uses, such as vehicles for battalion commanders. The more MRAPs that remain in service, the more sales of high-margin replacement parts for Navistar.
"We've been trying to get the government to take a pause instead of pushing these vehicles into the shredder," says John Akalaonu, senior program manager for Navistar's defense unit. The Illinois-based company, which was generating $2 billion a year from MRAP sales a few years ago, recorded just $39 million in total defense sales in its latest quarter.
"The money has been spent to get these vehicles. It doesn't make sense to just give them away or shred them," Mr. Akalaonu says.
Oshkosh Corp. OSK -0.46% and BAE Systems BA.LN -0.80% PLC also built armored trucks.
Oshkosh predicts that defense sales could fall by about 40% this year, after dropping 23% in 2013. The Wisconsin company cut 900 employees from its military-truck assembly business last year. Production of an all-terrain MRAP for Afghanistan kept Oshkosh afloat when sales of its commercial and public-safety vehicles crashed during the 2008 recession.
BAE is closing a truck plant in Sealy, Texas, for lack of work and is fighting to keep a York, Pa., plant afloat with low-rate refurbishment work for the British company's Bradley armored personnel carriers.
The Army, Marine Corps and other services intend to keep about 11,000 MRAPs. About 6,500 trucks are still being used in Afghanistan, but the bulk of those will return stateside by the time the U.S. military withdrawal is completed late this year. About 6,000 trucks—many of them, older models used in Iraq—already have been returned to the U.S. Another 1,600 or so are in Kuwait.
Trucks that aren't being kept by the military are being offered as-is. And an expert on military vehicles predicts they won't find many takers from foreign militaries, especially for the trucks used in Afghanistan.
"Nobody will want them," says Dean Lockwood, an analyst with Forecast International Inc. "The Afghan terrain is hell on vehicles. It's eating them alive."
For police, though, the bulky trucks project a show of force at hostage incidents, civil disturbances and other situations where SWAT officers with military-grade weapons, uniforms and helmets are deployed.
Design and testing for the seven-year-old, $50 billion MRAP program took months, rather than the years that is typical in U.S. military procurement. To expedite production, contracts were awarded to five companies. Several variations were ordered, including wreckers, ambulances and bomb-disposal vehicles.
That variety required the service branches to stock different sets of replacement parts and train mechanics to work on more than two dozen variations. That is why the Pentagon doesn't think it is a good idea to transfer the trucks to the fledging Afghan army.
"They're a great vehicle, but they're an expensive vehicle to maintain," says the Pentagon's Mr. Estevez. "Part of that is because they weren't built to be sustained over time."
