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Volvo Truck Wins $177.5 Million Pentagon Contract

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The Department of Defense awarded Sweden's Volvo AB (NASDAQOTH: VOLVY  ) -- or more specifically, Volvo's Mack Trucks subsidiary -- a $177.5 million contract Friday for the purchase of tractor trailers.

The contract, designated "fixed-price with economic-price-adjustment/indefinite-delivery," is what is commonly known as an "IDIQ" contract. This means that while the price paid per item purchased may be fixed, there is no obligation incumbent upon the Pentagon to buy any particular number of trucks -- although the size of the contract certainly suggests their intention to buy a lot of them.

With your average Mack truck ranging in price from just under $100,000 to as high as $200,000, this contract could easily encompass the sale and purchase of 1,000 or more trucks and trailers from Mack's several product lines, with sales stretching from now through April 9, 2017. Purchases will be made for the U.S. Army, Navy, Air Force, Marine Corps, and federal civilian agencies.


Read/Post Comments (18) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 12, 2013, at 12:41 AM, dlpsr wrote:

    Glad Ford, CAT, etc cannot compete with Chinese company Geely, I mean Volvo.

    We deserve to be overrun by the Chinese. We are beyond stupid.

  • Report this Comment On May 12, 2013, at 1:02 AM, bbaker904 wrote:

    Before anyone complains about not made in USA, Volvo now makes trucks in Virginia. Freightliner moved most of their production to mexico along with International. Perterbuilt is too small and so is Kenworth. Freightliner bought the Sterling line which was fords big truck revamped. So Volvo getting the contract will keep thousands of jobs going in Virginia.

  • Report this Comment On May 12, 2013, at 1:08 AM, jnjons23 wrote:

    this nobama gov., & hillary & old bill breathing on their backs would buy chineze trucks for half the price if they could get to work in the ever thicking toxic ozone descending on china. nobama has no us values as he is a commie from kenya. whatever happened to the car industry he bailed out a taxpayers expense. he just rolls the printing presses 24/7. good luck liberal, u will never go to work, we don't need no more of u drug crazed ididots in a workplace that isn't here. learn a few foreign languages, u will need them.

  • Report this Comment On May 12, 2013, at 2:06 AM, Hngnthweb wrote:

    This is treason...this administration has proved its incompetence and treason at every level...there is NO reason our trucks should be built in Sweden..Nothing against the Swedes....

  • Report this Comment On May 12, 2013, at 2:37 AM, mark328 wrote:

    Although the car division of Volvo was sold by Ford to Geely, the truck division was never sold, it was always owned by the original Swedish Volvo, even to this day. Geely doesn't own Volvo's truck division - that is still owned by the original Swedish company. Google it. The truck division was always left out of the car division sales to Ford from Volvo.

  • Report this Comment On May 12, 2013, at 4:40 AM, crash3085 wrote:

    At least two people (bbaker904 and mark328) who commented have a clue, although Volvo and GMC were once in bed together. They were never involved with Ford and certainly not with Geely. Volvo now owns Renault Trucks, Mack, Nissan Diesel, and I don't know what else. I believe they have a U.S. factories in Virginia, North Carolina, Maryland, and Pennsylvania. This is good news for American workers and suppliers.

  • Report this Comment On May 12, 2013, at 5:57 AM, ULTIMATETRUTH777 wrote:

    Long story short, Volvo cars is owned by the Chinese, Volvo Trucks are owned by Sweden. Even though they share the same name (Volvo) they were split, Ford took Volvo cars and eventually sold it to the Chinese.

  • Report this Comment On May 12, 2013, at 7:29 AM, TruckU3 wrote:

    FJR1300A - PACCAR is not owned by the Chinese.

    You might want to Google this - you'll find the majority of shareholders are the chairman of PACCAR Mark Piggot and his family. Based in the USA. Not China. PACCAR has always been a USA company that is growing in other countries, including China. Kenworth, Peterbilt and DAF are under the PACCAR umbrella.

    As for Macks being built in Sweden, they are built here in the states, just owned by Volvo. Previously they were owned by Renault, and before that Signal Companies. Volvo trucks in the USA traces its blood line to the old White Motor Corporation, which Volvo bought 25+ years ago. White (which owned White, Autocar, Western Star and in the 60's Diamond T, Reo (later Diamond Reo) had financial troubles, was obtained by Volvo, which also obtained the class 7 and 8 divisions of GM and were badged as Volvo/White/GMC for a time. Until the mid 1970's, White had an exclusive marketing agreement for Freightliner trucks (badged as White-Freightliner). Freightliner was USA owned until Daimler bought them.

    As for Kenworth and Peterbilt "not being big enough" for such a contract is absurd - there is enough capacity for such orders at their plants, a third shift could be added - however, military spec vehicles are very labor intensive and can slow the rest of the production down.

    If Freightliner were to have gotten the contract, the units would most likely have been Western Star plant builds with Freightliner badging (as they have done in the recent past).

  • Report this Comment On May 12, 2013, at 7:38 AM, jfelano wrote:

    It's Obama's fault.

    I'm never amazed by the amount of stupid people on this forum.

  • Report this Comment On May 12, 2013, at 7:44 AM, TruckU3 wrote:

    Also, Oshkosh is not affiliated with Daimler - there was a partnership for chassis assembly years ago, but that ended over a decade a go. Oshkosh is a stand-alone builder with several apparatus brands under its umbrella.

  • Report this Comment On May 12, 2013, at 7:52 AM, marine1967 wrote:

    TruckU3 is absolutely correct.!!!

    I have spent nearly 30 years associated with the truck manufacturing industry and it is all correct. My only question is, when did Mack start building trailers???? The writer is incorrect with his term Tractor-Trailers. Mack obly builds the truck ( Cab, Class 7-8 vehicle) not the trailers. Trailers come from other companies such as Great Dabe, Utility, Evergreen, Stout and a few others, which would be a sepeate bid and contract

  • Report this Comment On May 12, 2013, at 8:09 AM, stan01020 wrote:

    you mean all of those great companies in detroit can not build a truck to pentagon specs????? please, is that because nomama has never run a business but he has ruined a business, buy america should be number one with our governemnt,

  • Report this Comment On May 12, 2013, at 10:01 AM, mike28584 wrote:

    I would say that detroit can not complete because of the union wages they have to pay.

  • Report this Comment On May 12, 2013, at 11:20 AM, ziggyfff wrote:

    Can the ridiculous uninformed right wing union and Obama haters just stop commenting until they understand anything here. Detroit and/or the Auto unions are NOT INVOLVED in this contract bidding. It is for big rig truck makers ONLY. The contract is going to a US based truck maker, not the Chinese, not the Swedes, not some commie based group that Obama is conspiring with. Please go back to The Blaze articles and watch your bleach blonde news readers on "Faux" news...everything you're writing here just exposes how little you know...geeez

  • Report this Comment On May 12, 2013, at 12:24 PM, cityperson wrote:

    Wow, we in the US are owned by allot of other countries and send many things some where, hard to keep up with all the wheeling and dealing that goes on. Hard to find, buy American products anymore, under the Buy America Act, that was required when I did large government contracts.

  • Report this Comment On May 12, 2013, at 5:00 PM, MCCrockett wrote:

    Assuming that there was a "Buy American" clause in the RFP, what companies other than Daimler, Volvo, and PACCAR could submit a bid?

    These are the three largest truck manufacturers with manufacturing faciites located in the United States.

  • Report this Comment On May 12, 2013, at 6:39 PM, jim202b wrote:

    These trucks will be manufactured on the current Volvo/Mack production lines in Dublin, Virginia (Volvo) and Macungie, Pennsylvania (Mack). Engines and transmission will come from their Hagarstown, Maryland plant.

    These trucks will almost certainly be slightly modified versions of Mack and Volvo trucks currently moving freight across the US today. The only differences will be the paint and lack of some comfort amenities.

    Daimler, thru the Freightliner brand, has supplied these trucks in the past. Most of these were manufactured at Freightliner plants in Portland, Oregon and possibly Mount Holly, North Carolina.

    As to the posts questioning why Detroit's auto companies are not supplying these, the simple answer is they do not build trucks this size and haven't for many years. But the Dept. of Defense does buy many pick-ups from Detroit in the same type of contract as this one. That is buying a commercial product with only the slightest changes for everyday use on military bases here and overseas.

  • Report this Comment On May 12, 2013, at 6:51 PM, jim202b wrote:

    In answer to mike28584, Volvo is a UAW represented plant just like Detroit automakers. Freightliner is also UAW and the other large truck builder (Paccar) is represented by International Assoc. of Machinists and Aerospace Workers.

    In short, union representation had NOTHING to do with who got the contract. The fact that Volvo builds the large trucks asked for in the contract has everything to do with it. Detroit does not and has not for many years built anything close to the requirements that this contract asked for.

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