Oshkosh sees moderate hiring after U.S. Army truck deal award

By Andrea Shalal

WASHINGTON, Aug 26 (Reuters) - Oshkosh Corp will dominate the U.S (Other OTC: UBGXF - news) . military's wheeled vehicle market after winning a $6.75 billion deal to build 17,000 armored trucks to replace the U.S. Army and Marine Corps' aging fleet of 140,000 Humvees, analysts said on Wednesday.

The Wisconsin-based company said it will hire some engineers, procurement experts and operations staff in coming years, but expects no hiring surge since work on the new Joint Light Tactical Vehicle, or JLTV, will offset other military truck programs that are due to taper off.

"This contract provides nice stability for our defense business for the long term," Oshkosh Chief Executive Charlie Szews said in an interview on Tuesday. The new program is expected to ramp up to around 3,000 trucks in fiscal 2020.

The contract win lifted Oshkosh shares nearly 7 percent on Wednesday, helping reverse losses after Oshkosh cut its full-year profit forecast last month. Oshkosh expects defense revenues of $900 million and to break even in 2015, with foreign sales seen driving big gains in 2016.

The Army said Tuesday that Oshkosh beat AM General, the privately held maker of the original Humvees, and a team made up of Lockheed Martin Corp and Britain's BAE Systems Plc (Other OTC: BAESF - news) to win a deal that could eventually be worth $30 billion for 55,000 vehicles.

Roman Schweizer, defense analyst with Guggenheim Securities, called the contract a "monster (truck) win" for Oshkosh, and said it would help shore up Oshkosh's defense business, which declined significantly after the end of the Iraq war, and the U.S. drawdown from Afghanistan.

RBC Capital Markets analyst Seth Weber said it would also help make up for an expected cyclical decline in Oshkosh's Access Equipment business, now its most profitable segment.

Szews said Oshkosh is in "a much better financial position" than in 2009 when rivals questioned its ability to fulfill big contracts to build mine-resistant ambush-protected vehicles, or MRAPs, and medium tactical vehicles, or FMTVs.

Oshkosh has paid down the huge debt load it had five years ago and now generates significant cash flow each year, he said.

Szews said Oshkosh prided itself on meeting its commitments, and was ready to start building the new trucks for the Army and Marine Corps, on its integrated line, which cranks out a mixture of 20 firetrucks, cement mixers and military vehicles each day.

Schweizer said the Army's novel approach of giving credit to contractors for providing technical data packages could provide grounds for a protest.

(Reporting by Andrea Shalal; Editing by Richard Chang)