Force Protection to Start Building Third Truck Line (Update1)
2007-07-09 15:38 (New York)
(Adds analyst's comment in fourth paragraph.)
By Edmond Lococo
July 9 (Bloomberg) -- Force Protection Inc., the largest
maker of blast-resistant trucks for the U.S. Marine Corps, plans
to begin producing a lighter and faster third model before the
end of this year.
A new plant will manufacture 70 to 90 of the Cheetah
vehicles in the fourth quarter. The factory, whose location
Force Protection declined to disclose, will be able to build
2,000 trucks in 2008, said Michael Aldrich, vice president for
government relations at the Ladson, South Carolina-based
company, in an e-mail today.
The Cheetah features the same blast-deflecting V-shaped
hull as the company's Cougar and Buffalo vehicles now being
built for use in Iraq and Afghanistan. Such hulls are four times
safer than flat-bottomed trucks, the Marine Corps said. The
previous two models are part of the Mine Resistant Ambush
Protected vehicle, or MRAP, program.
``There is a need for this type of vehicle,'' James
McIlree, an analyst at C.E. Unterberg Towbin in New York, said
in an interview. ``The current fleet of MRAP vehicles weighs a
lot; they are less maneuverable and they are gas guzzlers.''
At 8 tons, the Cheetah is less than half the weight of the
17-ton Cougar, Aldrich said. The Cheetah has a cruising speed of
80 miles per hour, compared with 55 miles per hour for the
Cougar, he said. Prototypes of the Cheetah were unveiled in
October.
Shares of Force Protection rose 21 cents to $23.56 at 3:08
p.m. New York time in Nasdaq Stock Market composite trading.
They had gained 34 percent so far this year before today.
Like Detroit
Force Protection hasn't received any Cheetah orders,
Aldrich said. The company will begin building the trucks
commercially, without a Pentagon order, because it expects there
will be demand from the U.S. and allied nations.
``We are producing it like Detroit puts out a new car
line,'' Aldrich said.
The strategy is similar to how Force Protection won its
first orders for the 22-ton Buffalo, which has been used to
remove mines and roadside bombs in Iraq and Afghanistan since
2003, McIlree said. Force Protection began building the trucks
without a Pentagon order, and was ready to supply them when
demand arose, said McIlree.
Unterberg has done investment banking work for Force
Protection in the past year. McIlree rates the shares ``buy''
and doesn't own any.
Largest Share
The Marine Corps has ordered blast-resistant trucks valued
at more than $1.7 billion from six companies since January, and
Force Protection has captured the largest share with about 44
percent. The Marine Corps has said it may buy 20,000 more
trucks, with a value of about $20 billion, by January.
Force Protection splits production of Cougar vehicle awards
evenly with Falls Church, Virginia-based General Dynamics Corp.
through a 50-50 joint venture set up last year.
Force Protection will manage 100 percent of the Cheetah
output, and not make use of the joint venture with General
Dynamics, Aldrich said.
The location of the new plant will be disclosed in the next
few weeks, he said.
--Editor: Zahradnik (wsd).
Story illustration: To chart the growth in Force Protection's
sales of armored vehicles, click {FRPT US DES6 <GO>}. To graph
U.S. annual federal budget outlays for defense, see
{USBODEFN <Index> GP <GO>}. To compare the relative performance
of Force Protection shares, see {FRPT US <Equity> COMP D <GO>}.
To contact the reporter on this story:
Edmond Lococo in Boston at +1-617-210-4629 or
elococo@bloomberg.net.
To contact the editor responsible for this story:
Rich Zahradnik at +1-212-617-3671 or
rzahradnik@bloomberg.net. |
