Spartan targets overseas growth, partner

By Kevin Krolicki and Poornima Gupta

DETROIT (Reuters) - Spartan Motors Inc (SPAR.O: Quote, Profile, Research, Stock Buzz) expects to see its overseas sales grow to account for up to half of its revenue over the next five years as it searches for a commercial partner that can market its specialized vehicles in a range of new markets, including China.

John Sztykiel, Spartan's chief executive officer, also said he expected to post income growth in 2008 that would at least match the company's five-year average of 36 percent growth.

"We feel we've got a very good opportunity for that to again become reality in 2008," Sztykiel told the Reuters Auto Summit in Detroit. "We've been doing it for the last five years."

The weaker U.S. dollar should give Spartan a competitive advantage as the Charlotte, Michigan-based manufacturer looks to ramp up exports and find partners that can support that effort, Sztykiel said.

"We do very little export overseas right now. There's tremendous opportunity overseas, especially with the current exchange rates," he said. "We don't have many what I would call partnerships today, I would be shocked if we didn't have some two to three years from now."

He added: "America now has the opportunity now for the first time in a long time to be a low-cost manufacturer."

Szytkiel said Spartan would look for corporate partners with strong distribution networks. He said Spartan was open to a number of possibilities about how that tie-up would be structured and how vehicles would be branded and marketed.

"I think we've got a very open thought process," he said. "Whatever serves the market best."

MILITARY PROGRAM BOOMING

Spartan, which had specialized in making chassis assemblies for recreational vehicles and fire and rescue trucks, is one of several companies that have rushed into the market for a new class of heavy-duty military vehicles designed to reduce U.S. combat deaths from roadside bombs in Iraq and Afghanistan.

Known as Mine-Resistant Ambush-Protected (MRAP) vehicles, the new transports feature a heavy V-shaped hull designed to repel the force of an explosive blast from under the vehicle.

Spartan is a sub-contractor on the MRAP program to military suppliers including General Dynamics Corp.(GD.N: Quote, Profile, Research, Stock Buzz), BAE Systems Plc (BAES.L: Quote, Profile, Research, Stock Buzz) and Force Protection Inc. (FRPT.O: Quote, Profile, Research, Stock Buzz).

Military vehicle sales grew to $20 million in the third quarter -- or about 13 percent of quarterly revenue. Sztykiel said he expected that share to stabilize around 25 percent.

Sztykiel said he expected Spartan's military sales to grow 30 percent in 2008 as the Pentagon awards contracts for an already planned 15,000 MRAP vehicles and places orders for a second-generation of the armored vehicles early next year.

"We see continued opportunity for continued growth in the military business. Vehicles in the futures will have to have some kind of underside or mine-resistant type protection," he said. "Now that you can buy land mines for less than $3 a piece or wrap together artillery shells with duct tape and explode them with a cell phone, vehicles -- no matter where you are -- are going to have to have some kind of underside protection."  Continued...