Spartan Motors CEO Sees No Difficulty Filling Big DoD Order
DOW JONES NEWSWIRES
May 14, 2007 4:25 p.m.
By Rebecca Christie
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Spartan Motors Inc. (SPAR) will have no trouble filling large new orders from the Pentagon, despite the massive expansion required, Chief Executive John Sztykiel told Dow Jones Newswires.
Charlotte, Mich.-based Spartan is a major supplier to Force Protection Inc. (FRPT) and General Dynamics Corp. (GD) on the Pentagon's new Mine-Resistant Ambush Protected vehicle program. The U.S. Marine Corps seeks at least $8.4 billion in armored vehicles over the next few years, with the potential for additional orders for thousands more vehicles.
Capacity has been the biggest issue for the Defense Department's armored vehicle program. At the beginning of the Iraq war, few companies made armored vehicles at all, let alone in significant numbers.
Now the MRAP program aims to create a broad industrial base that can supply new vehicles quickly. Suppliers like Spartan will play a major role in that effort, as they turn blast-resistant hulls from multiple vendors into full-fledged combat vehicles.
Sztykiel says his company has no trouble working with different vehicle designs. They all use similar engines, tires and transmissions, which means they also can be fixed easily in a combat zone, he said.
"There is an extremely large amount of commonality, which is how we've been able to not only work with a couple of companies, but at the same time, too, move to increase production as needed to supply our strategic partners," Sztykiel said in a telephone interview.
In addition to the new MRAP vehicles, Spartan also has worked with BAE Systems PLC (BAESY) on light armored vehicles for Iraqi forces. Military vehicles are now the fastest-growing segment for Spartan, long known for its work on motor homes and fire trucks.
Spartan uses no automation in its assembly lines, Sztykiel said. Instead, skilled auto workers turn each chassis into a drivable vehicle. The CEO said this leads to easy expansion, especially since Michigan is full of experienced auto industry workers in search of new jobs.
"Three years ago, we were doing zero (armored vehicles). Then in 2005, we went from design to production in less than 12 months," Sztykiel said, describing armor's emergence as a major business line.
"Today, we're averaging approximately four to six units per day. By the end of July, we'll have the capacity to build in excess of 20 units per day on a single shift in a four-day work week," he said.
This translates into about 400 armored vehicles per month. If demand outstrips that capacity, the company can add a second shift and expand into the other three days of the week, he said.
"We look at it in 90-day intervals," Sztykiel said. "The hulls have to come to us. So we always get advance notice of what's going to be happening and when it's going to be happening."
Although military vehicles are leading Spartan's business growth, the company also is expecting an uptick in motor-home sales. Sztykiel said consumer demand has built up and may soon translate into higher sales, despite high gasoline prices and other factors that have suppressed the motor-home market for the past two years.
Sztykiel said his company has made a smooth transition to the armored troop transport market, despite the many different versions of the new MRAP vehicles.
"Our demonstrated ability to provide product exactly the way the customer wants it has prepared us perfectly for this military business model," he said |
