Oshkosh Defense contract, News of a defense industry contract worth billions of dollars and perhaps 25 or more years of work is less than a week old, and already the Fox Valley is buzzing about the possibilities.
On Tuesday, the U.S. Army awarded Oshkosh Corp. the contract that, in the long term, could be worth up to $30 billion to build a new type of armored truck in Oshkosh.
The Army and Marines Corps want up to 55,000 Joint Light Tactical Vehicles from the Fox Valley's largest manufacturer, supporting thousands of jobs at the company and its Wisconsin suppliers.
The year after year of steady manufacturing will offer job security for several thousand Oshkosh Defense employees and more than 300 suppliers, plus hundreds of other businesses.
In effect, the contract provides an economic security blanket for the region for the foreseeable future.
The Fox Valley, from Fond du Lac to Green Bay, is the second-largest economic region in the state, behind only metropolitan Milwaukee, according to the Oshkosh Chamber of Commerce.
"This is the story of the century for Oshkosh," John Casper, the chamber's executive director, said about the new defense contract. "I see the housing market being real strong in the next number of years. I see retail expanding and the service industry expanding, all because of the energies... nothing but good comes from that."
Vehicle production will start slowly, but over time the contract will infuse an enormous amount of money into the economy, especially in northeast Wisconsin where many Oshkosh Corp. suppliers are located.
The initial contract is for $6.75 billion to build 17,000 of the vehicles. However, over time it could top $30 billion for 55,000 vehicles and associated services.
The first vehicles will be produced over about 10 months, in small numbers, with the Army and Marines getting them in 2017.
Very soon, Oshkosh Corp. will hire about 100 salaried employees, including engineers, to support the contract. Production will ramp up to 3,000 vehicles per year, supporting the current workforce of several thousand employees and creating a number of blue-collar jobs that still has not been determined.
"It underscores that there will be some stability in the manufacturing sector, at least with that organization and its suppliers, and that's encouraging," said Chris Matheny, vice president of instruction at Fox Valley Technical College in Appleton.
A good sign
The contract is a timely boost for Oshkosh Corp., which in 2014 announced the elimination of 760 jobs because of declining defense spending. In its bid for the latest contract, the company spent tens of millions of dollars to beat out two formidable competitors: AM General LLC, which built military Humvees; and a team of Lockheed-Martin Corp. and BAE Systems Plc.
"This should set a tone that Oshkosh will be in this business for a while," Matheny said.
The timing of the contract announcement was ironic, as some of the company's suppliers were attending a seminar aimed at helping them find other markets when defense spending is down.
"If we had known (about the contract), we probably wouldn't have had the workshop," said Bill Newhouse, a senior account manager for MCL Industries, a Pulaski manufacturer of electrical controls and an Oshkosh supplier for decades.
At one time, MCL was almost entirely dependent on Oshkosh Corp. Now the company's business is more diversified, and that's good, but it still values defense spending, he said.
"When these kind of opportunities come along, you don't say 'no.' This contract has been on our radar for a couple of years," Newhouse said.
Northeastern Wisconsin has an exceptionally high level of manufacturing jobs, including a U.S. Navy littoral combat ship building program in Marinette that employs several thousand people.
"Right now I am working with 10 manufacturers who are expanding, and that doesn't include the defense industry impact," said Peter Wills, executive director of Progress Lakeshore, formerly the Economic Development Corp. of Manitowoc County.
A manufacturer from Columbus, Ohio, recently acquired a plant in Manitowoc. That firm, AT&F Co., is a steel fabricator that has work in the defense industry, according to Wills.
"It's just frosting on the cake to attract companies here," he said.
A financial hit in 2014
Until 2013, Oshkosh Corp. had been on a hiring spree in what former U.S. Defense Secretary Robert Gates once said was one of the most impressive military vehicle production runs since World War II.
"That was asking for a miracle, and they got it," said Jerry Murphy, executive director of New North, an economic development group that represents industry in the Fox Valley and northeastern Wisconsin.
Then military business took a big hit in 2014 as contracts wound down and the Department of Defense curtailed spending.
Wisconsin companies defined as prime contractors by the government received about $2.8 billion in federal government business in fiscal 2014, down 28% from $3.9 billion in 2013, according to the Wisconsin Procurement Institute, which tracks government spending.
For the first time in years, at least, Dane County led the state with $406.8 million in federal procurement money, while Winnebago County, which is home for Oshkosh Corp., took second place with $354.3 million.
Thus, the timing of the new Oshkosh contract, the largest in the company's 98-year history, could not have been much better.
"It's an opportunity for us to kind of bang the bell. It's like a new model of car; there's a whole lot of new design work and engineering that goes into it," Murphy said.
The Wisconsin Procurement Institute helps businesses win government contracts. The Oshkosh deal is a "game changer" for businesses, but getting a chunk of it won't necessarily be easy, said executive director Aina Vilumsons.
Oshkosh's current suppliers have an advantage, Vilumsons said, as the planning for this contract began years ago.
However, that doesn't preclude the need for other suppliers, she said, and for various reasons some companies might drop out of the supply chain.
"You need to have a company culture that will embrace the requirements of defense work, and not all businesses can do that. Often, your books are opened up to other people. The government (customer) will talk to your staff, your engineers. Once they get into the reality of it, some companies don't want to work with the government," Vilumsons said.
Often, the best place to start is through a defense contractor's website that probably has information for suppliers, and agencies such as New North, the Wisconsin Procurement Institute, the U.S. Federal Contractor Registration website and the U.S. Small Business Administration.
"Unless a company is trying to find you, it can be like swimming upstream. But if you don't swim, you will never get there," said Douglas Fisher, director of the Center for Supply Chain Management, at Marquette University.
Growing pains expected
Sometimes a big defense contract puts pressure on other companies in the same region.
"As manufacturers, we already have a pretty tight labor market. This (Oshkosh) contract puts more pressure on skilled labor and, frankly, will probably raise wages. But that's all good for the consumer when they can buy a home and do the things they like," said Dan Ariens, chairman of the Wisconsin Economic Development Corp., and CEO of Ariens Corp., a Brillion manufacturer of outdoor power equipment.
"The growing pains are something we will gladly deal with. It's kind of like the extra stress Wisconsin has to deal with when the Packers go to the Super Bowl," said Scott Beyer, interim dean of the College of Business at University of Wisconsin-Oshkosh.
In the long run, Beyer said, Oshkosh could become a larger, more diverse community as a result of the money that flows through the community from defense spending.
For now, however, the effort is on gearing up for the contract. Thousands of items go into building something as complex as an armored truck that can function as a mobile command post with state-of-the-art electronics and communications equipment.
There are also the machines that make the components, which is an industry by itself.
"Everybody's going to gain from this. It's just a nice shot in the arm for the area," said Bill Capelle, vice president of American Pride Equipment and Services, an industrial machine supplier in Green Bay.
On Tuesday, the U.S. Army awarded Oshkosh Corp. the contract that, in the long term, could be worth up to $30 billion to build a new type of armored truck in Oshkosh.
The Army and Marines Corps want up to 55,000 Joint Light Tactical Vehicles from the Fox Valley's largest manufacturer, supporting thousands of jobs at the company and its Wisconsin suppliers.
The year after year of steady manufacturing will offer job security for several thousand Oshkosh Defense employees and more than 300 suppliers, plus hundreds of other businesses.
In effect, the contract provides an economic security blanket for the region for the foreseeable future.
The Fox Valley, from Fond du Lac to Green Bay, is the second-largest economic region in the state, behind only metropolitan Milwaukee, according to the Oshkosh Chamber of Commerce.
"This is the story of the century for Oshkosh," John Casper, the chamber's executive director, said about the new defense contract. "I see the housing market being real strong in the next number of years. I see retail expanding and the service industry expanding, all because of the energies... nothing but good comes from that."
Vehicle production will start slowly, but over time the contract will infuse an enormous amount of money into the economy, especially in northeast Wisconsin where many Oshkosh Corp. suppliers are located.
The initial contract is for $6.75 billion to build 17,000 of the vehicles. However, over time it could top $30 billion for 55,000 vehicles and associated services.
The first vehicles will be produced over about 10 months, in small numbers, with the Army and Marines getting them in 2017.
Very soon, Oshkosh Corp. will hire about 100 salaried employees, including engineers, to support the contract. Production will ramp up to 3,000 vehicles per year, supporting the current workforce of several thousand employees and creating a number of blue-collar jobs that still has not been determined.
"It underscores that there will be some stability in the manufacturing sector, at least with that organization and its suppliers, and that's encouraging," said Chris Matheny, vice president of instruction at Fox Valley Technical College in Appleton.
A good sign
The contract is a timely boost for Oshkosh Corp., which in 2014 announced the elimination of 760 jobs because of declining defense spending. In its bid for the latest contract, the company spent tens of millions of dollars to beat out two formidable competitors: AM General LLC, which built military Humvees; and a team of Lockheed-Martin Corp. and BAE Systems Plc.
"This should set a tone that Oshkosh will be in this business for a while," Matheny said.
The timing of the contract announcement was ironic, as some of the company's suppliers were attending a seminar aimed at helping them find other markets when defense spending is down.
"If we had known (about the contract), we probably wouldn't have had the workshop," said Bill Newhouse, a senior account manager for MCL Industries, a Pulaski manufacturer of electrical controls and an Oshkosh supplier for decades.
At one time, MCL was almost entirely dependent on Oshkosh Corp. Now the company's business is more diversified, and that's good, but it still values defense spending, he said.
"When these kind of opportunities come along, you don't say 'no.' This contract has been on our radar for a couple of years," Newhouse said.
Northeastern Wisconsin has an exceptionally high level of manufacturing jobs, including a U.S. Navy littoral combat ship building program in Marinette that employs several thousand people.
"Right now I am working with 10 manufacturers who are expanding, and that doesn't include the defense industry impact," said Peter Wills, executive director of Progress Lakeshore, formerly the Economic Development Corp. of Manitowoc County.
A manufacturer from Columbus, Ohio, recently acquired a plant in Manitowoc. That firm, AT&F Co., is a steel fabricator that has work in the defense industry, according to Wills.
"It's just frosting on the cake to attract companies here," he said.
A financial hit in 2014
Until 2013, Oshkosh Corp. had been on a hiring spree in what former U.S. Defense Secretary Robert Gates once said was one of the most impressive military vehicle production runs since World War II.
"That was asking for a miracle, and they got it," said Jerry Murphy, executive director of New North, an economic development group that represents industry in the Fox Valley and northeastern Wisconsin.
Then military business took a big hit in 2014 as contracts wound down and the Department of Defense curtailed spending.
Wisconsin companies defined as prime contractors by the government received about $2.8 billion in federal government business in fiscal 2014, down 28% from $3.9 billion in 2013, according to the Wisconsin Procurement Institute, which tracks government spending.
For the first time in years, at least, Dane County led the state with $406.8 million in federal procurement money, while Winnebago County, which is home for Oshkosh Corp., took second place with $354.3 million.
Thus, the timing of the new Oshkosh contract, the largest in the company's 98-year history, could not have been much better.
"It's an opportunity for us to kind of bang the bell. It's like a new model of car; there's a whole lot of new design work and engineering that goes into it," Murphy said.
The Wisconsin Procurement Institute helps businesses win government contracts. The Oshkosh deal is a "game changer" for businesses, but getting a chunk of it won't necessarily be easy, said executive director Aina Vilumsons.
Oshkosh's current suppliers have an advantage, Vilumsons said, as the planning for this contract began years ago.
However, that doesn't preclude the need for other suppliers, she said, and for various reasons some companies might drop out of the supply chain.
"You need to have a company culture that will embrace the requirements of defense work, and not all businesses can do that. Often, your books are opened up to other people. The government (customer) will talk to your staff, your engineers. Once they get into the reality of it, some companies don't want to work with the government," Vilumsons said.
Often, the best place to start is through a defense contractor's website that probably has information for suppliers, and agencies such as New North, the Wisconsin Procurement Institute, the U.S. Federal Contractor Registration website and the U.S. Small Business Administration.
"Unless a company is trying to find you, it can be like swimming upstream. But if you don't swim, you will never get there," said Douglas Fisher, director of the Center for Supply Chain Management, at Marquette University.
Growing pains expected
Sometimes a big defense contract puts pressure on other companies in the same region.
"As manufacturers, we already have a pretty tight labor market. This (Oshkosh) contract puts more pressure on skilled labor and, frankly, will probably raise wages. But that's all good for the consumer when they can buy a home and do the things they like," said Dan Ariens, chairman of the Wisconsin Economic Development Corp., and CEO of Ariens Corp., a Brillion manufacturer of outdoor power equipment.
"The growing pains are something we will gladly deal with. It's kind of like the extra stress Wisconsin has to deal with when the Packers go to the Super Bowl," said Scott Beyer, interim dean of the College of Business at University of Wisconsin-Oshkosh.
In the long run, Beyer said, Oshkosh could become a larger, more diverse community as a result of the money that flows through the community from defense spending.
For now, however, the effort is on gearing up for the contract. Thousands of items go into building something as complex as an armored truck that can function as a mobile command post with state-of-the-art electronics and communications equipment.
There are also the machines that make the components, which is an industry by itself.
"Everybody's going to gain from this. It's just a nice shot in the arm for the area," said Bill Capelle, vice president of American Pride Equipment and Services, an industrial machine supplier in Green Bay.
Blogger Comment
Facebook Comment