Oshkosh Is Really Truckin'

CEO Bohn has used an acquisition spree to quadruple profits

When Robert G. Bohn hired on at Oshkosh Truck Corp. (OTRKB ) in 1992, the heavy-duty vehicle manufacturer was essentially a one-trick pony--and a wobbly one at that. Three-quarters of its sales were to the Defense Dept. The work was dependable, to be sure. But even as a brand-new vice-president for operations, Bohn could see that with the end of the cold war, defense orders would be heading south.

Today, Oshkosh is a horse of a different color. Since taking over as chief executive in late 1997, Bohn has been on an acquisition spree. The Oshkosh (Wis.) company now boasts three full-fledged operating units--with military vehicles ranking last in sales, behind commercial trucks and emergency vehicles.

Along the way, Bohn has tripled total revenues, to $1.45 billion, and quadrupled profits, to $50.9 million, in the year ended Sept. 30. By culling businesses where Oshkosh lagged, he has transformed the company's stock performance, logging an incredible price gain over the past four years of roughly 250%. "We like the mix," says Keith E. Ringberg, equities director at Sentry Investment Management Co., which bought 2% of Oshkosh after Bohn began his diversification drive.

BOOSTERS. This year will be tougher. Sales of concrete mixers and other commercial vehicles, which skidded 30% in fiscal 2001, could decline 20% or more in 2002. But while Bohn concedes that net income will slip to $44.4 million in that period, the 48-year-old CEO says 2002 revenues should top $1.6 billion--partly owing to overseas expansion. In its first foreign venture, Oshkosh recently paid $140 million in cash for Geesink Norba Group, a Dutch maker of garbage trucks. Bohn figures he can now piggyback onto Geesink Norba's Continental dealership network to sell and service Oshkosh's other lines.

The defense sector is set to provide another boost. Even before September 11, Oshkosh's defense sales had been rebounding; they surged 53%, to $423 million, in fiscal 2001 as Oshkosh hit full production of a medium-duty truck it is building for the Marine Corps. Now, with military outlays rising, Bohn thinks Oshkosh can land even more work both in the U.S. and abroad.

Bohn's military campaign isn't without risks. In its biggest contest, Oshkosh is up against Stewart & Stevenson Services Inc. (SSSS ) for the next fleet of medium-duty trucks for the U.S. Army. And the Houston company has bested Oshkosh before. "If I thought I was in the military business, I don't know that I'd go to Europe and buy a garbage-truck company," snipes Michael L. Grimes, CEO of Stewart & Stevenson.

Diversification is risky, too, but so far Bohn has chosen his targets wisely. Before deciding to branch out, he says, "we looked in the mirror and asked: `What are we?"' The soul-searching led management to stick to businesses it shined in--that's why Oshkosh held on to its defense segment--and to limit its hunt to market-dominating outfits that, like Oshkosh, made high-end, custom vehicles. Despite the rapid pace of dealmaking, the former Johnson Controls Inc. executive also has been patient. He confides that Oshkosh "dated" one acquisition target, McNeilus Cos., for four years before making a move. In 1998, Bohn finally shelled out $217.6 million for the Dodge Center (Minn.)-based manufacturer of concrete mixers and garbage-truck bodies.

Oshkosh also has managed to reap real synergies from its aggregated assets. For instance, its Pierce Manufacturing Inc. unit figured out how to replace an arm-thick bundle of wires that had to be stuffed behind the dashboard of a fire truck with four computer boxes connected by a single strand. Now, Oshkosh uses that same high-tech control system in its military trucks. Similarly, it has taken all-wheel steering developed for its military trucks and offers them on its Pierce fire engines. "Ultimately, the success of a diversified company comes down to the quality of its operating management, and Oshkosh has a strong team," says analyst Robert F. McCarthy Jr. of Robert W. Baird & Co. In just four years as ringmaster, Bohn has pulled off quite a trick: Now his pony has legs.

By Michael Arndt in Oshkosh, Wis.

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