Security

Fewer Bombs Puts Armored Vehicle Maker At Risk

In 2004, tiny South Carolina manufacturer Force Protection, Inc. had a staff of 12 hand-building one heavily, lumbering, armored vehicle for the military a month. Two years later, the workforce had grown to 400, churning out one per day. Now, Force Protection has over 1,800 employees, making more of these Mine Resistant Ambush Protected […]

Jeerv_1
In 2004, tiny South Carolina manufacturer Force Protection, Inc. had a staff of 12 hand-building one heavily, lumbering, armored vehicle for the military a month. Two years later, the workforce had grown to 400, churning out one per day. Now, Force Protection has over 1,800 employees, making more of these Mine Resistant Ambush Protected vehicle, or MRAPs in a month than they did in all of 2006.

But how much longer they'll all have jobs is unclear. The wave of improvised bombs in Iraq in subsiding. And so is demand for the MRAPs. After buying more than 5,000 of the vehicles in the last two years, the Marines haven't included any money for more MRAPs in their latest budget. The Army is considering cutbacks, too. Talk of replacing every Humvee in Iraq with an MRAP has died down.

Force Protection wasn't the only firm supplying the vehicles, the Wall Street Journal notes. But "f all the defense companies building MRAPs for the military, Force
Protection is the only one solely focused on armored trucks. That leaves it particularly vulnerable to any large-scale military cutback."

The risks facing the company became apparent on Nov. 30, the same day that North Carolina's two Republican senators, Elizabeth Dole and
Richard Burr, joined... Force Protection executives at a ribbon-cutting for a new plant in Roxboro, N.C., where the company will manufacture a different type of armored off-road vehicle known as the Cheetah. *

Just hours earlier, the Marines had announced their cutback. Mingling with local dignitaries, [former CEO Gordon] McGilton was unaware of the development. He later got the bad news from a reporter at the event. *

Mr. McGilton says Force Protection can weather future cutbacks by retrenching, selling trucks to foreign militaries and producing MRAP
spare parts. He also believes the U.S. military will order more of the company's armored vehicles, including the new Cheetah, because the success of MRAPs in Iraq has raised expectations that U.S. forces will be protected from roadside bombs no matter where they're deployed...*

For 2008, Wall Street analysts expect the company to report a profit of
$1.01 a share, according to Thomson First Call. For 2009, they see that falling to 64 cents a share. The company doesn't provide earnings guidance.*

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