Force Protection’s Cougar 6×6 MRAP. Good luck scrapping it. Source: Wikimedia Commons
During 10 years of continuous warfare, the U.S. spent $50 billion building a fleet of 25,000 Mine-Resistant, Ambush-Protected armored vehicles, or MRAPs, to protect our troops. Over the years, these vehicles won praise for saving the lives of thousands of servicemen and -women, who might not have survived had they been riding in Humvees when attacked by IEDs. But now, their time is done.
The war in Iraq is over (for us), and the war in Afghanistan is winding down. And the MRAPs? They’re headed for the scrapyard.
With little immediate need for heavy, heavily armored gas slurping trucks in its future, the U.S. military is trying to figure out what to do with all its MRAPs. The Army hopes to sell as many as 2,000 MRAPs to friendly foreign nations, and destroy thousands more (to keep them out of enemy hands). Roughly half the force will then be shipped back stateside, and to forward-deployed locations for mothballing — where they will await the next war in a state of suspended animation.
The only question remaining: Which MRAPs, specifically, will the military keep, and which will it scrap?
On this question hinges the fortunes of the half-dozen odd companies that worked to build the military some 25 different variants on the “MRAP” concept. The companies that manufacture the MRAPs that the military keeps could win millions of dollars in additional contacts to repair, refurbish, and pack away MRAPs for a rainy day. Those whose MRAPs the Pentagon decides to ditch … will not.
So … who are the winners and losers in this contest?
According to a report on DefenseNews.com over the weekend, the U.S. Army has finished tallying its needs for future MRAPs and decided to keep 8,585 vehicles total, and 5,651 of the most modern, all-terrain version of the MRAP, Oshkosh Corporation (NYSE:OSK)‘s M-ATV will be retained, as will 2,934 MaxxPro Dash and MaxxPro armored ambulances from Navistar International Corp (NYSE:NAV).
That’s good news for these two companies, whose products will form the core of America’s MRAP fleet going forward. It’s bad news for Britain’s BAE Systems PLC (ADR) (OTCMKTS:BAESY), and America’s Textron Inc. (NYSE:TXT) and General Dynamics Corporation (NYSE:GD), though. As their MRAPs head to the scrapyard, they’ll take these companies’ hopes of future parts and service revenues with them.
Probably the biggest loser of all is General Dynamics. In 2011, GD laid out $360 million to acquire MRAP specialist Force Protection in a bid to capture that company’s MRAP manufacturing business, and in particular, its follow-on business of servicing thousands of Cougars, Buffalos, and Ocelots. Just three years later, it looks like that $360 million investment is about to become worthless.
The article Billions of Dollars’ Worth of MRAPs Head to the Scrapyard. Who Profits? originally appeared on Fool.com.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool owns shares of General Dynamics and Textron.
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