Billions of Dollars' Worth of MRAPs Head to the Scrapyard. Who Profits?


Force Protection's Cougar 6x6 MRAP. Good luck scrapping it. Source: Wikimedia Commons

During 10 years of continuous warfare, the U.S. spent $50 billion building a fleet of 25,000 Mine-Resistant, Ambush-Protected armored vehicles, or MRAPs, to protect our troops. Over the years, these vehicles won praise for saving the lives of thousands of servicemen and -women, who might not have survived had they been riding in Humvees when attacked by IEDs. But now, their time is done.

The war in Iraq is over (for us), and the war in Afghanistan is winding down. And the MRAPs? They're headed for the scrapyard.

With little immediate need for heavy, heavily armored gas slurping trucks in its future, the U.S. military is trying to figure out what to do with all its MRAPs. The Army hopes to sell as many as 2,000 MRAPs to friendly foreign nations, and destroy thousands more (to keep them out of enemy hands). Roughly half the force will then be shipped back stateside, and to forward-deployed locations for mothballing -- where they will await the next war in a state of suspended animation.

The only question remaining: Which MRAPs, specifically, will the military keep, and which will it scrap?


25,000 armored trucks? That's a lot of MRAPs. Source: Wikimedia Commons.

On this question hinges the fortunes of the half-dozen odd companies that worked to build the military some 25 different variants on the "MRAP" concept. The companies that manufacture the MRAPs that the military keeps could win millions of dollars in additional contacts to repair, refurbish, and pack away MRAPs for a rainy day. Those whose MRAPs the Pentagon decides to ditch ... will not.

So ... who are the winners and losers in this contest?

According to a report on DefenseNews.com over the weekend, the U.S. Army has finished tallying its needs for future MRAPs and decided to keep 8,585 vehicles total, and 5,651 of the most modern, all-terrain version of the MRAP, Oshkosh's (NYSE: OSK  ) M-ATV will be retained, as will 2,934 MaxxPro Dash and MaxxPro armored ambulances from Navistar (NYSE: NAV  ) .


The winners: Navistar's MaxxPro Dash (left) and Oshkosh's M-ATV (right). Source: Wikimedia Commons.

That's good news for these two companies, whose products will form the core of America's MRAP fleet going forward. It's bad news for Britain's BAE Systems (NASDAQOTH: BAESY  ) , and America's Textron (NYSE: TXT  ) and General Dynamics (NYSE: GD  ) , though. As their MRAPs head to the scrapyard, they'll take these companies' hopes of future parts and service revenues with them.

Probably the biggest loser of all is General Dynamics. In 2011, GD laid out $360 million to acquire MRAP specialist Force Protection in a bid to capture that company's MRAP manufacturing business, and in particular, its follow-on business of servicing thousands of Cougars, Buffalos, and Ocelots. Just three years later, it looks like that $360 million investment is about to become worthless.

There's a reason Warren Buffett didn't invest in MRAPs
From start to finish, the MRAP boom lasted all of 10 years. A lot of investors bought into it ... and a lot of investors lost money as a result. But they didn't have to. As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks with a limited shelf-life. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 


Read/Post Comments (8) | Recommend This Article (5)

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 January 06, 2014, at 6:09 AM, Badgenumber150 wrote:

    GOOD! D.H.S. has enough of them.

  • Report this Comment On January 06, 2014, at 12:23 PM, Sheardbeard wrote:

    If they are not in bad condition why scrap them. We have so much space on all the bases in the US and else where that is currently not being used. We know we will need these again, and I beleive not that far in the future. So stop Government waste now. Store them.

  • Report this Comment On January 06, 2014, at 12:31 PM, TMFDitty wrote:

    Fair point. The problem is basically cost. DoD estimates that shipping an MRAP home, rehabbing it and getting it ready for mothballing costs about $250,000 to $300,000 per unit. That's roughly half the cost of building a new MRAP from scratch.

    Given this, the plan to keep the newest, least-banged up MRAPs, which have also had the most time to benefit from trial and error and the figuring out of the most effective configurations for resisting IED blasts (and scrapping the older models), actually does make some sense.

  • Report this Comment On January 06, 2014, at 1:52 PM, skitty06 wrote:

    The only reason Oshkosh is doing OK is because that was an Obama pet project. Texas and the rest got passed over. Seems a waste to make these vehicles only to scrap them. I pass by the recycling center every day and see some of these vehicles being ready for scrap. BAE had upwards of 3000 jobs at the high point and now is closing.

  • Report this Comment On January 06, 2014, at 3:52 PM, TMFDitty wrote:

    skitty06 -- I don't suppose you have a camera with you in the car as you drive by the recycling yard? We'd love to get a nice clean snapshot of one of those MRAPs getting taken apart, if you're able to get it.

    Drop me a line at writerich@gmail.com if you're willing to help us out with this?

  • Report this Comment On January 06, 2014, at 6:53 PM, squigmyster wrote:

    make good snow plows for Chicago SIDE STREETS

    strip them sell them to the public,farmers,desert rats

    must be some good use for them besides selling the scrap metal to china lol.

  • Report this Comment On January 07, 2014, at 3:11 PM, jammerh wrote:

    So nice to believe roadside bombs won't ever again be a problem...nice, if more than a little unrealistic.

  • Report this Comment On January 30, 2014, at 6:27 PM, dweisleder wrote:

    So why did GD get this contract today? Makes 0 sense. Another score by the government!

    General Dynamics Land Systems - Force Protection, Ladson, S.C., is being awarded a $25,960,947 firm-fixed-price contract for the development, design, and production of 468 Seat Survivability Upgrade (SSU) Kits in support of the Program Executive Office Land Systems, Program Manager, Mine Resistant Ambush Protected Vehicles. The SSU Kit includes energy absorbing seats, 5-point seatbelts, blast mats, internal crew Automatic Fire Extinguisher System reconfiguration, and driver/co-driver compartment upgrades. The kit also improves interior vehicle layout, reduces egress impedance, and creates intentional stowage locations. Work will be performed in Ladson, S.C. The term of the contract is not to exceed 18 months, with an expected completion date of July 2015. Fiscal 2012 procurement Marine Corps; Fiscal 2013 research, development, test & evaluation, Marine Corps; Fiscal 2013 other procurement, Navy, and Fiscal 2013 other procurement, Air Force contract funds in the amount of $25,960,947 will be obligated at time of award and all funds will expire at the end of the fiscal year. This contract was competitively awarded via the Federal Business Opportunities website, with four offers received. The Marine Corps Systems Command Quantico, Va., is the contracting activity (M67854-14-C-5500).

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2783635, ~/Articles/ArticleHandler.aspx, 10/31/2014 1:11:34 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement