Downturn in military truck market produces more losers than winners.

• Author: Beidel, Eric
• Position: Tactical Vehicles - Industry overview - Geographic overview - Company overview

The Army and Marine Corps have spent the past decade fighting two land wars that required significant improvements in the trucks that carried troops around the battlefield.

The past 10 years saw the development of mine-resistant ambush-protected (MRAP) vehicles, crucial upgrades to Humvees and other enhancements that created a steady cash flow from the Pentagon to the industrial base.

But the last of those wars is winding down, and the Defense Department has begun to curtail its spending. Officials now say they will shift their focus to the Asia-Pacific region and operations in the air and sea.

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Tactical wheeled vehicles will play second fiddle and become an "industrial capability" that the military can ramp up when needed just as it did with the MRAP, analysts say. The quick design and purchase of more than 20,000 of these heavily armored vehicles generally is seen as an acquisition success, but it didn't come with any guarantee to sustain the supply base it created once the need was met.

The frustration and anxiety among suppliers in the tactical vehicle market is palpable. The armed services have begun to terminate, delay or cutback on anticipated truck programs. Soon they will begin to thin their fleets by getting rid of older vehicles instead of spending the money to reset them. And manufacturers have very little to look forward to in terms of large production contracts.

Envisioned as a replacement for aging Humvees, the Joint Light Tactical Vehicle (JLTV) has dominated the conversation and become the center of industry focus. But even that program, which Army officials have called one of their top-three priorities, creates a muted sense of optimism among companies with production lines. The program calls for just 22 vehicles during the engineering and manufacturing development phase and low-rate initial production not until 2016 or 2017.

Companies will have to wait a long time for large volume production opportunities, said James Tinsley, a land systems analyst at consulting firm The Avascent Group.

"JLTV is the only game in town right now so they are all focused on it," Tinsley said. "But 1 expect the industrial base will suffer over the next few years."

President Obama's budget request states that JLTV will be critical to maintaining a strong base that can supply trucks to the military, especially because the family of medium tactical vehicles ends production in 2014.

Army officials speaking at the National Defense Industrial Association's recent annual tactical wheeled vehicle conference in Monterey, Calif, tried to address the cutbacks in lighthearted ways. One official used a cartoon of a giraffe unleashing a string of profanities while drowning in quicksand. Another modeled his speech after a priest's sermon, commanding industry to go forth and find cheaper ways to develop products. They suggested that companies would have to find out where they fit into a new truck strategy that is being defined by shrinking fleets and fewer buys.

The Army has completed three...