HOUSTON, TX - March 10, 1999 - STEWART & STEVENSON SERVICES, INC. (NASDAQ:
SSSS), a leading manufacturer and distributor of industrial and energy
related equipment, announced the
following statement in response to media coverage of the Family of Medium
Tactical Vehicles (FMTV)
program. The facts below specifically address false or misleading
statements by Newsday relating to
Stewart & Stevenson and FMTV.
FMTV is the "Soldiers' Choice" because of its quality and reliability and
the commitment of a highly-skilled
workforce dedicated to assembling one of the most modern tactical trucks in
the world.
In its most recent article - the sixth since May 1998 to repeat
egregious errors about FMTV
and Stewart & Stevenson - Newsday insults the experienced employees at
the FMTV
assembly plant in Sealy, Texas, less than 60 miles from Houston. The
700 people who
assemble and support FMTV include retired military personnel with
maintenance skills,
assemblers and managers handpicked from other corporations and other
highly-trained
workers. The workforce has an average of more than four years in
previous job-related
experience prior to joining Stewart & Stevenson.
Newsday questioned the company's experience assembling wheeled
vehicles. Stewart &
Stevenson has been assembling and manufacturing vehicles since World
War II, when the
company built and rebuilt trucks for the U.S. Army. In recent years,
the company has built or
assembled thousands of trucks, buses, airline ground support vehicles,
and tactical trailers for
U.S. and foreign customers. On the FMTV program, Stewart & Stevenson
assembles trucks
incorporating components manufactured by U.S. Army approved vendors
throughout the
United States. These components which represent about 80 percent of
the cost of a FMTV
are purchased from union and non-union suppliers.
"Stewart & Stevenson takes strong exception to misrepresentations made
about FMTV and
the people who build this truck," said C. LaRoy Hammer, senior vice
president of Tactical
Vehicle Systems." These are dedicated, experienced people, many of
whom have
considerable experience in vehicle design and production. Each and
every employee of this
company is committed to providing the soldiers with the safest
tactical truck in the world at
an extremely fair price to the taxpayer."
After a highly competitive source selection process, which involved
the production and
extensive testing of 15 FMTV prototypes, the Army, in October 1991,
awarded Stewart &
Stevenson a firm-fixed price multiyear contract to assemble the first
10,843 FMTVs. The
company won this contract based on "Best Value" criteria which
considers past performance,
bid credibility as well as cost.
In October 1998, the Army awarded Stewart & Stevenson a second
multiyear contract for
9,000 A1 Model FMTVs. These vehicles will have five major upgrades: An
EPA-mandated
electronically-controlled diesel engine; and Antilock Brake System
which meets federal
highway safety standards; a SAEJ1939-compliant databus; an Interactive
Electronic
Technical Manual; and a driveline enhancement package. The Army
intends to procure a
total of 85,000 FMTVs over 30 years for approximately $16 billion.
Stewart & Stevenson strongly disputes allegations made about FMTV
cost. In fact, the price
of FMTV has remained almost constant since 1991. The program consists
of a family of 12
variants ranging from a basic 2.5-ton cargo truck to the more complex
5-ton wrecker. Each
variant has a different unit cost based on mission package. FMTV costs
nearly $5.00 per
miles less to operate than the existing antiquated fleet of M35 and
M939 trucks. Overall,
FMTV is the most cost-effective tactical truck ever procured by the
U.S. military.
Most importantly, FMTVs currently being delivered to the Army far
exceed contractual
requirements in safety, reliability and performance. This fact is
supported by Army records
obtained in more than one million miles of testing conducted on FMTV
since program
inception in 1991. The consistent 98 percent availability rating
achieved in the field and the
8,000 miles between failures (against a requirement of 3,000) verify
this trucks superiority.
FMTV already has surpassed the capabilities of all previous Army
medium tactical truck
programs.
Strict quality safeguards are in place to prevent truck defects. The
FMTV facility in Sealy
assembles trucks at a quality rate of 99.96%, virtually error free on
the moving production
line. A recent independent ISO 9001 audit of Stewart & Stevenson's
system and processes
reconfirmed the quality certification.
Evidence of FMTV quality is in corrosion prevention. Minor problems
with cab corrosion
early in the program exposed the inadequacy of the FMTV anti-corrosion
specifications.
Stewart & Stevenson, working in concert with the Army, raised the bar
on the FMTV
program. Stewart & Stevenson has set new standards in anti-corrosion
measures that the
Army will adopt for all future tactical wheeled vehicles. Improvements
such as
double-galvanized steel combined with an annual corrosion maintenance
program ensure
FMTVs will exceed the current Army anti-corrosion standards despite
the hostile
environments in which FMTVs must perform.
There have never been a "series of rollovers" with FMTV as incorrectly
reported by
Newsday in repeated articles. The Army and Stewart & Stevenson
discovered a driveline
issue in early 1998. Vibration to the driveline when FMTV was driven
at highway speeds
caused two FMTV incidents. In one of these instances, a FMTV rolled on
its side, with no
injury to the driver or passengers. Upon discovery of the driveline
issue, the Army issued a
Safety-of-Use Message (SOUM) which limits FMTVs to 30 miles-per-hour.
There have
been no incidents since the SOUM was issued. Since the FMTV is
primarily designed to
operate in demanding off-road environments where tactical trucks
rarely reach speeds of 30
miles-per-hour, FMTV is totally safe to perform all missions with the
SOUM in place.
A joint team of government and industry experts immediately identified
the root cause of the
driveline issue, established a solution and verified the driveline
enhancement package in more
than 72,000 miles of on-road and off-road testing with no powertrain
failures. Stewart &
Stevenson has started to retrofit existing FMTVs with the driveline
upgrade. The SOUM will
be lifted on each FMTV as it is retrofitted. The driveline enhancement
package will be
assembled into the A1 Model FMTVs, which will have no operational
restrictions.
FMTV is the safest medium tactical truck in the U.S. military
inventory. This statement is
supported by the fact that a total of 15 FMTV incidents have warranted
reporting to the
Army Safety Center since 1991. Two of these were related to the
driveline issue as stated
above, nine were attributed to driver error, three due to ground guide
error and one FMTV
was hit while parked. None of these accidents resulted in serious
injury to drivers or
passengers. Media coverage that misstates this record is a disservice
to the men and women
of the armed forces.
Recent press reports have incorrectly stated that Stewart & Stevenson
"was permitted" to
assemble FMTVs after receiving a suspension from the Air Force on a
radar contract known
as the Peace Shield Program. Stewart & Stevenson was briefly suspended
from receiving
new government contracts between May 19 and November 8,1995. No
contracts relating to
the FMTV were awarded to Stewart & Stevenson during that period. The
Tactical Vehicle
Systems division - a distinct organization within the corporation -
was not associated with the
Peace Shield generator issue. The Army prudently followed Federal
Acquisition Regulations
in seeking a Compelling Reasons Determination to prevent interruption
of FMTV production.
Stewart & Stevenson is not suspended or debarred from any government
agency. It is
grossly misleading to link the Air Force generator issue to the FMTV
program.
Since the beginning of the FMTV program, Stewart & Stevenson has
repeatedly provided
factual and timely information to the media. Neither Stewart &
Stevenson nor our Army
customer has ever suppressed information regarding FMTV. In fact,
Stewart & Stevenson
believes what has been proven again and again in independent audits of
cost and quality,
government technical testing and operational deployments: FMTV is the
world's best tactical
truck, the "Soldiers' Choice."
Contact: Mr. LaRoy Hammer, Senior Vice President
Phone: (713) 868-7653
Fax: (713) 861-3895
Email: l.hammer@ssss.com
-- -Shane****************************** Military Rails Online http://www.e5e.com/militaryrails ******************************
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