Bye Bye, American Pie: The End Of Colt Firearms.

If kids growing up today learn the word Apple for their first consumer product, then when I grew up in the 1950s, the first consumer product name we knew was Colt.  So there’s a bit of personal regret, I must admit, at the not-unexpected news that Colt, the storied old gun manufacturer, has slipped into Chapter 11 and appears to be on the way out. This won’t be the first time that Colt has hit the skids, in fact the company almost didn’t survive shortly after Samuel Colt started it up in 1836, and it went through bad times – work stoppages, strikes, business downturns – on a regular basis every ten or twenty years. In fact, my father’s first job was at Colt’s in 1941 but he decided not to remain with the company because my mother didn’t particularly like living in Hartford and he was convinced that the company would fall on hard times once World War II came to an end.  He was right. It did.

colt                Colt’s has not only been the oldest, continually-operating manufacturing company in America (although sometimes it operated in name only) but the rampant Colt logo, which adorns the frame of every gun, was the first commercial logo ever copyrighted in the United States.  The problem with the company, however, was that it always tied its product development to what it perceived would be the next generation of military small arms, and while it guessed correctly sometimes, such as with the Colt 1911 pistol, other times it guessed wrong.  And because it guessed wrong on the military side, it missed changes in the civilian market as well.

The biggest mistake the company made was to tie its fortunes over the last several decades to the M-16 battle rifle, whose design Colt purchased from Gene Stoner in 1961 and then began receiving large military contracts in the build-up in Viet Nam.  By the 1980s the original patents had expired, Colt could no longer protect its brand, and other companies like Bushmaster and FN began outselling the Hartford-made product both to the U.S. military and abroad.

You would think that Colt would have revived over the last few years given the upsurge in demand for black guns (a.k.a. assault rifles, a.k.a. modern sporting rifles) on the civilian side, but this didn’t happen at all.  First, other companies like Bushmaster and DPMS had focused their marketing on commercial sales, and this made Colt just one of many companies now selling to the public at large what had become a generic gun design.  Second, Colt abandoned revolver production in the mid-1990s, never got into small, polymer-frame pistols which were the coming thing, and kids turning into gun-buying adults just don’t watch cowboy movies any more.  It’s hard for me, a pre-Boomer, to imagine not knowing the name Colt, but I’ll bet you my teen-age grandson has no idea what the name means at all.

But leaving aside issues of consumer tastes and how those tastes change, I think there’s another major reason why Colt’s is on the veritable block, namely, the fact that the demand for black guns has run its course, and none of the gun companies whose balance-sheets are dependent on sporting-goods sales of ARs are having an easy time.  Even Smith & Wesson, whose AR products only accounts for a small percentage of their overall sales, admitted that the 10% decline in overall revenues for Q3 on a year-to-year basis was from a shrinking AR market which “drove most of the sales decline.”

A gun company selling only one, basic product which nobody wants to buy is a gun company in trouble.  And no matter what the NRA and all the pro-gun advocates say, guns still represent a particular consumer product which a majority of American consumers can do without.  And if Americans can do without guns, they can even do without an iconic name like Colt.

 

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Gun Sales Are In The Tank But Don’t Expect The NRA To Compromise Its Views Anytime Soon

Has anyone noticed what’s been happening to the gun business lately?  Smith & Wesson stock has collapsed, it’s trading for about half of the price of just five months’ ago; third-quarter net sales at Ruger dropped from $170 million to $98 million from the same quarter a year ago; and the industry’s most venerable gun maker – Colt – might have closed its doors altogether had it not been saved by a last-minute loan.

Gun sales started to slow down during the summer, which is normally when everyone in the gun industry takes a deep breath and begins planning for the fall and winter months when most of the industry’s sales take place.  But not only didn’t the usual rebound occur after Labor Day, they stayed flat in September and then really began to go South.  If you had purchased 10,000 shares of S&W on June 19, your investment today would be worth less than six thousand bucks. Meanwhile, the Dow during that same five-month period has surged upward by more than six percent.

nics                The gun industry usually uses the monthly NICS background check number to chart sales trends, but lately those numbers simply don’t square with the market conditions that have affected the balance sheets ot companies like Ruger, Colt and Smith.  While NICS checks have certainly dropped from the more than 2 million monthly numbers that were recorded at the end of 2012 and the beginning of 2013, the numbers just published for October showed a slight increase over the previous month and the September number was the second-highest September ever recorded by NICS since the system became fully operational in 1999.

I’m going to tell you a dirty little secret about those NICS numbers.  What they really show is that more gun owners are registering gun transactions with NICS whether they need to or not.  In some states, like Connecticut, NICS calls are much higher because the new law requires that all gun transfers between individuals, not just between dealers and purchasers, go through NICS. New York State, where Andy pushed through a universal background check law right after Sandy Hook, is now running 30,000 checks a month when the state averaged less than 20,000 monthly before Sandy Hook.  Right after Connecticut mandated universal background checks there was stupid talk by Glenn Beck and other NRA apologists about how Connecticut gun owners were going to stage massive disobedience against the registration requirements of the new law.  These are the same [expletive-deleted] loudmouths who never miss the opportunity to remind the rest of us how ‘law abiding’ gun owners tend to be.  Now these law-abiding  patriots are going to start lining up to break the law?  Give me a friggin’ break.

Gun sales have always been a function of one thing and one thing only, namely, a fear among gun owners that the guns are going to be taken away. Right after the World Trade Center attack there was a brief spike in sales, but by the time it was noticed, it had already disappeared.  Even before Obama started talking about a gun bill after Newtown, Dianne Feinstein rolled out her assault rifle ban, and within two weeks you couldn’t find a black gun on any dealer’s shelves. I was selling the Stag AR-15 Model 3 in my shop when I could get them, for a thousand bucks a pop and other dealers were marking them up even more. Today I can go online and buy one for $736.89.

I don’t think the drop-off in gun sales will end anytime soon, particularly now that both legislative chambers in Washington are painted red.  But I also don’t think that the vulnerability of the gun industry will make its leadership more amenable to discussing effective strategies to curb the misuse of guns.  Because the one thing they know above all is that the anticipation of new gun controls will spur sales, but after the law is passed, gun ownership always declines.  If it goes much lower, the gun business will be in for a very rough time.

 

 

America’s Oldest Gun Manufacturer May Be Ready To Quit

Last week the Colt Firearms Company came within an inch of defaulting on its major credit line, which might have meant the demise of America’s oldest, continually-operating industrial enterprise. This isn’t the first time that the most iconic name in small arms has faced financial Armageddon.  As recently as 2003, the company reorganized itself in an effort to stabilize production of civilian and military small arms, then tried an IPO in 2005 which was withdrawn when the investment market greeted the plan with no money and a big yawn.

Financial problems started plaguing the Hartford-based gun maker within a few decades following its founding in 1835.  The company, like most gun manufacturers, experienced substantial expansion during the Civil War, but a fire that destroyed much of the factory in 1864, coincided with a drop in government contracts that did not reverse itself until the Army adopted the “Peacemaker” revolver in 1873, placed an order for 8,000 units which probably kept the company from oblivion.  Once the Single Action Army revolver, as it was known, became an official military sidearm, it quickly caught on with law enforcement units and civilians, a pattern that Colt would repeat with John Browning’s greatest gun design, the 1911 pistol chambered in the venerable 45ACP.

colt peacemaker                Between 1911 and 1945, Colt delivered more than 3 million pistols to the Army, shipped several million more to customers overseas and used the gun to promote all its pistol and revolver products to civilians at home. The Colt logo, known as the “rampant Colt,” became a fixture throughout the gun industry and beyond; the company name and logo may have been the most identifiable consumer brand not only in the United States but overseas.  The good news about the 1911 pistol was that it functioned equally well whether it was chambered for 45 or 9mm, the latter much more popular in Europe than over here, as well as a hybrid caliber known as the 38 Super which was favored by military and law enforcement units in countries south of the Rio Grande.

While Smith & Wesson took much of the domestic law enforcement market away after World War II with its K-frame revolvers (the chief difference being that the S&W had less moving internal parts, hence, easier to repair and maintain), Colt made up for much of this deficit in the 1960s when it took over Gene Stoner’s rifle design and began producing the M-16.  The rifle remained a Colt product until the late 1980’s, when production stoppages and quality issues at the factory forced the government to give the contract to the Belgian arms maker FN.  And while Colt continues to manufacture variants of this rifle for armed forces here and abroad, there are at least ten other companies that have produced some portion of the 8 million M-16s that are still floating around the globe.  Meanwhile, on the civilian side, the semi-auto version of the gun, known as the AR-15, has long ago become the staple of various manufacturing companies like Bushmaster and Panther Arms, both of whom have outsold Colt in volume of sporting sales.

What really sunk the company to a secondary rank among American gun makers was the five-year UAW strike at the Hartford facility which resulted in handgun sales slowing to a trickle and, frankly, a majority of those guns being considered poorly made.  But worse, the disappearance of Colt from the handgun market came precisely at the time when hi-cap, European pistols like Beretta, Sig and Glock started to take over the American law enforcement market and thence into civilian hands.

When I was a kid, every boy owned a Tom Mix or Roy Rogers revolver ; my grandson has his own I-Phone but couldn’t care less about a name like Colt.  In the consumer market it’s what’s new that counts.  Guns are an old technology. Could the Colt situation presage the future of the gun industry as a whole?