Government contracts inject billions of dollars into the regional economy. Fincantieri Marinette Marine has its contract worth up to $5.5 billion for the Navy’s new frigate, while Oshkosh Corp. recently had its 10,000th joint light tactical vehicle roll off the assembly line.
We can now add another significant government contract to the list: Oshkosh Defense, a wholly owned subsidiary of Oshkosh Corp., winning a contract from the U.S. Postal Service to update its vehicle fleet.
These large contracts are not just good for Marinette Marine or Oshkosh Corp., but also their deeply rooted regional supply chains.
The contract for the USPS’s next-generation delivery vehicle covers between 50,000 and 165,000 vehicles over a period of 10 years. Under the contract, the USPS has committed to paying Oshkosh $482 million to initiate engineering efforts to finalize the production vehicle design and for tooling and factory build-out activities that are necessary prior to vehicle production.
“This is not only a big deal for Oshkosh Corp., but also the U.S. Postal Service,” says John Pfeifer, the company’s president and chief operating officer. “They haven’t updated their fleet in three decades and we’ve designed a vehicle focused around the driver.”
The contract has drawn scrutiny from some Ohio lawmakers. Ohio is the home state of another finalist for the project.
As part of the deal, Oshkosh will manufacture both zero-emission battery electric vehicles and fuel-efficient low-emission internal combustion engine vehicles.
“One of the services the Postal Service provides is delivery of e-commerce packages, and we wanted to make it easier for drivers to make those deliveries,” Pfeifer says. “We have a low-level access point and the vehicle is simply easier to use. It’s designed to keep drivers safe and as productive as possible.”
Manufacturing the USPS vehicles opens up a new product category for Oshkosh Corp., Pfeifer says. And while the company has made electric vehicles for some of its other lines, this will be its largest electrified vehicle contract to date. “The technology has gotten to a point (with electric vehicles) that we can take it to a wider scale and make it more affordable than it was in the past.”
Production is slated to begin in the second half of 2023. While the company has yet to determine where it will build the new vehicles — Pfeifer says it will be in the United States — the new USPS vehicle was engineered in the Fox Valley.
“This contract is good for the Fox Valley since this is where we developed this project,” he says. “We had a lot of engineers employed on this project.”