September 4, 2015 – thenorthwestern.com (Oshkosh Wisconsin), By Nate Beck
While the Fox Valley hailed word last week that Oshkosh Corporation won a $6.7 billion military contract to build the Humvee’s replacement, an effort to diversify the Fox Valley economy remains in motion.
The U.S. Army Aug. 25 awarded Oshkosh Corp. a long-contested contract to build the Joint Light Tactical Vehicle, or JLTV, which will replace about a third of all Humvees. That contract could ultimately run through 2040 and net the company more than $30 billion to build more than 50,000 JLTVs for the Army and Marine Corps.
Wayne Folske, owner of Oshkosh Corp. supplier #1 Stop Service and Towing, 4477 Poberezny Road, said although the Oshkosh Corp. contract will mean a boom for his business, he’ll continue to invest in other arms of his operation.
“This is great news for the little service providers, it’s going to be huge,” he said. “It’s a lot to look forward to with the JLTV.”
Folske does warranty work and towing for Oshkosh Corp. trucks, but tows and repairs other vehicles, too. On weekends he runs Pig’s In Heat, a catering company of sorts that roasts whole pigs.
Anthony Ross, University of Wisconsin-Milwaukee professor of supply chain management, speaks to Oshkosh Corporation suppliers Aug. 25, at the University of Wisconsin-Oshkosh Alumni & Welcome Conference Center, 625 Pearl Ave. (Photo: Nate Beck / Oshkosh Northwestern Media)
So Folske has “lots of henhouses,” which means if eggs spoil or a fox sneaks in, he’s covered, he said. While his Oshkosh Corp. contract is an important part of his business, he has to rely on revenue from other avenues to keep the businesses afloat during periods of drooping defense spending.
“It’s like any other business,” he said. “You have that roller coaster. You got to put away in your nest when business is good, and you got to take out of your nest when business is not so good.”
Folkse’s business with Oshksoh Corp. often requires him to work with other suppliers across the region, and that helps build a network; each finished truck takes sweat and know-how from up and down the Fox Valley.
How to build a henhouse
Before Oshkosh Corp. announced its military contract Aug. 25, a group of business leaders and Oshkosh Corp. suppliers met that morning in the University of Wisconsin-Oshkosh Alumni & Welcome Conference Center, 625 Pearl Ave. to reflect on how to branch into supplying other industries.
The event was a brainstorming session of sorts, geared to get suppliers puzzling on how to pursue other manufacturing options in aerospace and other industries.
Anthony Ross, a professor and founder of Supply Chain Management Institute at UW-Milwaukee, spoke to the group, extolling how successful companies jump into other markets to avoid catching a backslide in their business model.
“Either you, your customer or your customer’s customer has been impacted by the slowdown in military defense contracting. Now, why is that?” Ross said to the group of suppliers. “Don’t we have the ability to identify new markets? … Have we been caught sleeping? I don’t know.”
The message aligned with an effort by New North, a northwest Wisconsin economic development group, to map Oshkosh Corp.’s network of suppliers with Department of Defense grant funds.
To do that, New North created a networking site: Supply Chain Marketplace. That site seeks to connect Oshkosh Corp. suppliers up and down the Fox Valley.
The initiative seeks to encourage suppliers to pursue other markets, namely in aviation, by harnessing the Experimental Aircraft Association's annual AirVenture convention to attract the aviation industry.
In October 2012 and April 2013, Oshkosh Corp. laid off about 1,000 employees; about 1,400 workers lost jobs in Oshkosh and Neenah, an economic drain of about $90 million across the region, according to ECWRPC numbers.
So, with about $2 million in funds from the Department of Defense Office of Economic Adjustment, regional stakeholders are pursuing a multi-pronged effort to build an aviation industry in the Fox Valley, to transition from a defense-reliant economy to diversify.
Greater Oshkosh Economic Development Corporation, or GO-EDC, is tasked to complete phase one by year’s end.
The East Central Wisconsin Regional Planning Commission is compiling the application for phase two of the initiative. This is a request from the Department of Defense to implement the finalized plan from phase one — or about $2 million in federal funds to do that.
ECWRPC July 31 approved a plan to pursue phase two — dubbed Regional Capacity Building — the funding during its quarterly meeting in New London.
ECWRPC Director Eric Fowle said the recent Army contract award to Oshkosh Corp. shouldn’t hinder the region from securing the grant. The DoD approves grant funding based on how the Fox Valley used dollars from phase one.
And during the defense downturn, the Fox Valley proved its reliance on federal contracts when employment dipped at Oshkosh Corp. and beyond, Fowle said.
“They know about (the Army contract), but they still want to see the region get on its feet and diversify its economy,” Fowle said. “And the fact that we have our act together is a good sign.”
The information above is for general awareness only and does not necessarily reflect the views of the Office of Economic Adjustment or the Department of Defense as a whole.