Abu Dhabi, UAESunday 16 June 2019

Oshkosh seeks to grow Middle East operations with latest armoured vehicle

Exclusive: Region can swell US defence firm’s global revenues, senior executive says

Local firms picked up most contracts on third day of defence exhibition in Abu Dhabi. Ravindranath K / The National
Local firms picked up most contracts on third day of defence exhibition in Abu Dhabi. Ravindranath K / The National

Oshkosh Defence, part of US truck manufacturer Oshkosh Corporation, aims to grow its business in the Middle East to even out “spiky demand” in recent years, and hopes its latest all-terrain armoured vehicle will help to boost regional sales.

“Demand for our products in the Middle East is what we call 'spiky',” said Mike Ivy, senior vice-president of international programmes and global integrated product support at Oshkosh Defence. He was referring to peaks and troughs of demand created by specific circumstances, which can result in sizeable, but intermittent, deals.

“We would love to build a portfolio in the Middle East which has a fairly constant demand,” Mr Ivy added at the International Defence Exhibition and Conference (Idex) taking place in Abu Dhabi this week.

Oshkosh Defence, whose parent company is listed on the New York Stock Exchange with a market capitalisation of almost $79 billion, has been active in the Middle East for several decades, supplying its speciality logistics trucks and military vehicles to regional governments and others.

The bulk of its business in the region comprises replacements and upgrades of the company’s legacy vehicles, in particular, basic logistics trucks that carry weapons on to battlefields, and its M-ATV (mine-resistant ambush protected) all-terrain armoured vehicles.

However, it has not signed a deal for a new fleet of military vehicles with a Middle East customer since 2012 and 2014, when it sold M-ATVs to the UAE and an unnamed second GCC country in two separate deals worth “multi-hundreds of millions of dollars” each, according to Mr Ivy.

The UAE bought 55 Oshkosh M-ATVs in a foreign military sale from the US government in 2011, then increased the deal by a further 750 vehicles the following year.

The region has the potential to contribute “significantly” to the company’s global revenues, Mr Ivy added. Oshkosh Corporation does not disclose regional financial results.

Middle East governments are ramping up military expenditure to strengthen national security amid geopolitical tensions. Defence spending in the Arabian Gulf is forecast to increase to $110.86bn in 2023 from $103.01bn in 2019, according to a report by Jane’s IHS Markit last week.

“You do not have to look too deeply into the Middle East to realise many countries have pretty dangerous neighbours and want to be well equipped to defend themselves,” Mr Ivy told The National.

“Middle East customers are also very interested in inter-operability [of services and products] with the US and other allies. We can offer that as our products are approved by the US Department of Defence and we supply to many other nations.”

Oshkosh’s future growth strategy is centred on potential sales of its latest armoured vehicle, the J-LTV (joint light tactical vehicle), and accompanying firepower platforms.

This vehicle is more lightweight – it can carry up to four or five soldiers compared to the M-ATV’s 11 – and has increased off-road mobility suitable for the rough terrain and challenging climatic conditions prevalent in the Middle East.

At the same time, Oshkosh will continue to market its other models to regional customers. It has small offices in the UAE and Saudi Arabia but no plans to set up in any other GCC states unless demand requires a deeper presence. “We’re always open to new opportunities,” the vice-president added.

Updated: February 20, 2019 10:37 AM

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