The Virtues Of Being A Small Firearms Manufacturer
BY Herschel Smith
5 years, 11 months ago
A decade ago, Kentucky’s Anderson Manufacturing was a small machine shop that didn’t make firearms.
By 2016, it was making more rifles than Smith & Wesson, according to the latest available data from the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Anderson’s big seller: assault-style rifles that cost up to $2,100 and require no lubrication. Anderson says it made nearly 454,000 rifles that year, or about 57,000 more than Smith & Wesson.
Anderson is the leader among a cluster of small, private companies that are taking market share from America’s biggest gun makers. They are doing so with catchy marketing or weapons that have, for example, more knockdown power for hunting wild pigs.
Some rifles made by companies such as Patriot Ordnance Factory and Daniel Defense fire larger .308-caliber rounds instead of the .223-caliber rounds more commonly used in AR-15s. Another firm, Kel-Tec CNC Industries Inc, makes the hot-selling Sub-2000 rifle – which folds up small enough to fit into a backpack. It costs $500 and fires popular 9mm handgun ammunition.
By contrast, America’s leading gun makers have struggled over the past two years, with the three biggest seeing their rifle market share slip to 44 percent in 2016 from 57 percent in 2011, according to ATF data. Over the same period, a cluster of about 30 small companies combined for 51 percent of overall rifle production, up from 37 percent.
Top rifle maker Remington Outdoor Company emerged from bankruptcy in May. Net firearms sales at Sturm Ruger & Company Inc fell 7 percent during the nine-month period that ended Sept. 30. And American Outdoor Brands Corp, parent of Smith & Wesson, saw shipments of long guns, including rifles, fall 32 percent in fiscal 2018, compared to the previous year.
Smaller players largely have sidestepped scrutiny about their products or their financing because activists have mostly focused on pressuring big retailers and gun makers with publicly traded stock or debt held by mutual funds. Excluding the big three, there were 28 companies that made 10,000 or more rifles in 2016, up from 20 companies in 2011, according to ATF data.
“The number of manufacturers was shocking to me,” said Christopher Ailman, chief investment officer for the $219 billion California State Teachers’ Retirement system, which this fall started a new effort to press gun makers and retailers on safety.
But small gun makers have plenty of options for capital outside of public markets. Smaller rifle makers get financing from community banks, credit unions and makers of metal-cutting machines, according to a Reuters analysis of firearms financial disclosures filed with more than a dozen secretaries of state.
“We’re not going to starve any of these companies of capital because there’s always someone” willing to lend gun makers money, said John Streur, chief executive of Calvert Research and Management. The Calvert unit, part of Eaton Vance Corp, has pressed big retailers to restrict gun sales.
Windham Weaponry in Maine received an $8 million revolving credit line and a $3 million term loan last year from Bar Harbor Bank & Trust, according to local real estate records. The company and the bank did not respond to requests for comment.
Anderson Manufacturing received financing in 2013 from The Bank of Kentucky as its rifle sales began to surge, according to financing reports filed with the Kentucky secretary of state. The bank has since been acquired by North Carolina-based BB&T Corp, which did not respond to a request for comment.
Clearly, the author and interviewees are befuddled at the proliferation of calibers for AR style rifles, from pistol caliber carbines (PDW) to the .450 Bushmaster. It’s as if the AR was only ever good for 5.56mm. Sometimes these articles can be amusing.
Equally amusing is that apparently no one in the controller movement understood that there are too many manufacturers now to tackle by squeezing their lines of logistics. The key here is to [1] have employee-owned companies, [b] be serviced by small banks, [c] minimize debt, [d] keep your employees happy, and [e] make an excellent product.
Or in other words, run your business based on a Biblical model. God will bless it.
On December 18, 2018 at 6:12 am, Duke Norfolk said:
This is a very heartening trend. Blessed indeed.
On December 18, 2018 at 8:18 am, WiscoDave said:
I’ve used Anderson lowers in a few builds I’ve done.
As with most “firearms” related stuff, these people have no idea whatsoever about what is out there. They’d probably have the vapors if they knew about the training that is so readily available.
On December 18, 2018 at 9:08 am, Fred said:
Pretty good primer on what the American Communists think of the evils of free markets in trade and of the raising of capital. They really are going to destroy America and everybody just watches while examining the finer points of the ambient temperature of the water and argue at length with detailed specificity, about the nature of this or that bubble now rising to the top in the pot.
They’re going to kill us all.
On December 18, 2018 at 12:03 pm, billrla said:
That was more useful industry analysis than anything you will find on popular investment web sites, with regard to the publicly traded gun manufacturers.
Reminds me of how microbreweries flourished as the big, multinational (now global) breweries merged with each other to produce ever more bland beer.
On December 18, 2018 at 2:39 pm, Bram said:
If a manufacturer doesn’t have big government contracts, they can cater to the desires of the civilian market. And in any market, the big, clumsy dinosaurs eventually get destroyed by agile new competition.
On December 18, 2018 at 3:22 pm, John Matterhorn said:
Palmetto State Armory is another fine example. Good product at a great value. The only way the tyrants can stop this is a national ban on interstate commerce for these products. They are only an election cycle or two away from that.
On December 18, 2018 at 5:15 pm, Gryphon said:
“An Act Banning the Manufacture, Sale, or Possession of Assault Rifles” is how the “law” will be Worded. The (((bolsheviks))) Hate true Capitalism just as much as they Hate Religion, Individual Freedom, and Everything about America in general. Imagine how many more Weapons Manufacturers we would have if not for the existence of all the non-Constitutional ‘3-letter agencies’ like ATF.