Business Opportunities - Re-Invention of a Military Icon - The Premium Humvee ?

The passing of the 75th D-Day Memorial together with the RAF Flypast for Queen Elizabeth's Official Birthday (spanning Chinook to Eurofighters to 'Red Arrows' BAe Hawks), provided  for a sense of Britishness rarely seen for years, but becoming more apparent as Brexit provides the backdrop for nationalist re-emergence.

For a moment, from a distant vantage point, the sight of the Chinook and Puma (with its load doors open and little 'bubble-nose') had the momentary appearence of Chinook and accompanying Bell-Huey, a sight straight out of the Viet Nam war.

The Royal Household Cavalry were in attendance for Trooping of the Colour (rather than the 'Air Cav' and 'Ride of the Valkeries') and the weather was glorious for all; whether stood on The Mall or peering through the TV screen.

But beyond the Pageantry, 'Pomp and Circumstance', the existence of the military hardware demonstrated the manner in which Britain partners with its international allies when ordering and developing service aircraft - the Chinook from the US and Puma from France. The flypast illustrated as much about international entente-cordial as that of respect for the Monarchy.

(NB the fascinating thing about the Chinook is that it is expected - with development upgrades - to span a century of operational service, up until 2060. The very essence of 'retro-futurism').

Another example of 'retro-futurism' was this week's guest vehicle on Jay Leno's Garage website : The re-cycled, 'up-cycled' and 'premiumised' AM General Humvee, recast by the new start-up Mil-Spec Automotive.

Today's version of recycled military 4 wheel drives is very different to that of the past.

After WW2 farmers and construction men bought the Willys and Ford Jeeps as utility runabouts, able to power on-site machinery from their bolt-on or pre-existing Power Take-Off units. A decade later ex-military Land Rovers were deployed in the same way, cheap and cheerful and very useful tools to do a multitude of tasks. (Their spiritual successors today being Quad-ATVs and Side-by-Sides).

But the second-life of ex-military 'Hummers' (derived from the acronym HMMWV - High Mobility Multipurpose Wheeled Vehicle) are very very different in prospect.

It follows the previously created path of the glamourised hard-core 4x4; as pioneered by the Mercedes Gelandewagen in high-end and AMG trim, and the subsequent various aftermarket converters of Land Rover Defenders and Jeep Wranglers, initially by British adapters such as Twisted, Khan, Chelsea Tractor and others.

The Humvee's very being and so packaging / architecture was designed in the 1980s, broad, long and heavy with adequate ground-clearance across large stretches of varied terrain; well ahead of time for major operational use and so recognition in Operation Desert Storm across Iraq-Kuwait during the early 1990s

 The very antithesis of the legendary Jeep, and its M151 sucessor, it was an enlargement and specialisation of the 'COTS' (commercially available off-the-shelf) Dodge's, Chevys and Fords; yet with seemingly lesser practicality.

Big, bulky and with limited carrying capacity of people and cargo, it was at first greeted with disbelief by the rest of the Military Engineering community.

[NB Whilst with Land Rover Business and Technical Strategy in the mid-late 1990s ('a lifetime ago') - interaction with then SVO Defence Contracts team (led by the gentlemanly George Adams) was necessary when scoping the possibilities of a new forward control vehicle as a Joint Venture prospect with another very well respected military manufacturer.

It was then - whilst absorbed in 'MoD Services-Spec' requirements from any new vehicle - that the Land Rover team's initial perspective on the Humvee was sought and readily given. It had - until 1990 and use in the desert - made no sense given the need for "mountain goat agility", carrying capacity and compactness for severe off road/forest and urban-conflict environments.

History would illustrate why the Humvee came into its own as a desert LDP (Long Distance Patrol) vehicle before becoming 'Up-Armoured' for urban-conflict patrol use].

After Desert Storm and later conflicts in the Middle East and Afghanistan in the 2000s with much media coverage, the Humvee obviously became seen as the soldiers best friend by the public. Even if not quite so true in the field when initially very prone to bullets and land-mines. It looked tough, but unless upgraded with ballistic protection, was definitely not.

The failings of the Humvee have been recognised and its replacement involves a mix of lightly re-engineered COST vehicles to reduce costs, and creation of various new vehicles within-built  Ambush Protection, in light and heavy guises of GVW, under the Joint Light Tactical Vehicle moniker.

The now ageing and defunct Humvees have since 2009 been gradually sold-off by the US government through military surplus sales channels, which themselves have created a network effect of US regional and international on-sellers and direct-sellers. Typical are the likes of websites like www.govplanet.eu for the European markets, and www.humveeuk.com in Britain.

As of this week, Govplanet illustrates a US government auction with a reserve of $2,000 (Eur 1,764) for a 2001 two-door soft-top. Other past indicators show the wide availability, from under $1,000 for a shell and basic ancilleries to $20,000 for a cosmetically refurbished 4-door hard-top vehicle.

The median price though is around the $5-6,000 mark for direct ex-Army stuff, and around $15,000 for lightly refurbished vehicles.

But whilst the public gaining access to Humvees was much improved over the narrow sales channels for ex-Army vehicles before the internet, web forums allow those in the know and those interested in private purchase, to better understand the important issues around purchase, ownership, maintenance and resale.  

And web commentators and youtubers like Doug Demuro allow for good direct insights of such matters via postings such as his Jalopnik column.

The three young founders of Mil-Spec - as per Jay Leno's Garage this week - have obviously reviewed the marketspace to their offering, and believe that there is potential for a  'better than new' Humvee in the private sphere, something wholly re-furbished and upgraded inside the cabin, replacing vacuum formed plastics with aluminium and luxury materials and finishes, aswell as aesthetic upgrades to various external features, such as turn signals, lamps, bumper bar, wheels, tyres.

And with conjoined academic backgrounds in Design and Economics, it was self-presumed they knew how to research the potential market, devise a healthy cost vs retail price profit and set-out a low set-up cost start with low cashflow demands within the overall business plan  well before setting up. And on paper they no doubt did.

The asking price for the apparently much improved Mil-Spec Humvee is $218,000.

That is an awfully large amount of money, especially so when seen by those many Humvee-literate people who know the vehicle and know its mechanics and know the actual cost of turning a 'pigs ear' into a 'velvet purse'.

If the business is successful, they view that 'velvet purse' as going straight into the founders' pockets for relatively little outlay in BOM (bill of materials) and strip and rebuild time, given the starkness and simplicity of the Humvee, even with fancy GPS connected instrument dials.

Inevitably, the comments section of the website immediately drew detractors of the 3 young men, their offering and the business model.

Some highlighted that there are already Humvee refurbishers turning over a basic living by doing one or two vehicles and selling them on to buyers who are looking for something affordable other than a standard American 4x4 Pick-Up truck or SUV.

Others view the founders as simply 'rich kids' who are squandering Dad's money on a frivolous and ill-considered business venture for whom their are few actual buyers beyond the ignorant wealthy as a momentary plaything.

The founders see things differently, believing they have a recipe for success in resuscitating at a premium level what might be forgotten hero vehicle.

If actually plausible and the first 10-20 units sold provide a solid cashflow to pay-down any start-up debts (likely bootstrap finance from family) and provide a substantive cash cushion by which to expand internationally to likewise select buyers (such as the Arab states) then there could be a viable outcome, the Up-cycled Humvee seen as the enlarged spiritual successor to Lamborghini LM, if far more luxurious fitments and accessories can be introduced.

At this point the founders obviously need to focus on immediate retail possibilities to gain income. But simultaneously they need to start considering what their true USP is besides basic mechanical improvement and lightly 'blinged' cosmetics.

Just as the Humvee in the field had various guises, so must the Mil-Spec breed across the world to match and surpass local buyer expectations.

Those 3 young men need to start truly exploring how very specific  'bolt-on' product design possibilities can provide additional new 'after-sales' revenue streams.

The military personnel who configured and reconfigured the Humvees from their  Motor Pools had to provide as best they could a product that would be driven by their colleagues over deserts and plains and had to surmount ravines and rivers; in all types of guise, from 'Helmet Top's in Helmund, to stripped-down low-silhouette reconnaissance buggies, before the taking of Basra.

Mil-Spec should adopt that military mindset, to think about strategy like a General, and vehicle details like an Engineering Corps Technician.

The Arabs loved the old Dodge Powerwagon, from the early oilfield days, because it was 'Always Faithful' to them; and such histories also offer guidance.

The Humvee in action was not always so faithful, with its many mechanical faults, but Mil-Spec should remember the arguably over-touted phrase "Semper Fidelis" of the Marine Corps, to be Always Faithful to itself and its customers.

And if that means reconfiguring the business model itself as learning provides valuable input, don't be dissuaded from the original mission.

Importantly for the new business helping to put life back into Detroit, it would be good to prove the naysayers ultimately wrong, by taking the truths of what they say to remold the venture as it progresses.

Remember, every good General listens to what is said in the AM to tweak strategy and tactics by the PM.