Bloomberg Businessweek:

In the 1970s, Colt and other American gunmakers, following the bad example of Detroit’s Big Three automakers, grew smug and lazy. Like Japanese and German car companies, more nimble foreign gunmakers grabbed market share. By the 1980s, Smith & Wesson had lost the U.S. police to Austria’s Glock, while Colt saw Italy’s Beretta snatch its main U.S. Army sidearm contract. In 1985, Colt plant employees who belonged to the United Auto Workers launched a protracted strike for higher pay. Replacement employees weren’t up to the task, and “quality suffered badly,” says Feldman, then an organizer for the National Rifle Association. In 1988 the Pentagon gave Colt’s M16 contract to FN Herstal of Belgium. Four years later, Colt filed for bankruptcy court protection from its creditors. “With the end of the Cold War,” says Hopkins, the firearms marketer, “it seemed like the company might never recover.”

[ … ]

Complicating matters, Colt then blundered into the vortex of American gun-control politics. In a December 1997 editorial in American Firearms Industry magazine, Zilkha’s handpicked CEO, Ron Stewart, made a pair of proposals that set off alarms in Second Amendment circles. He urged “the creation of a research and development program to further firearm technology toward more advanced methods that promote safety (such as personalized firearms).” And he recommended that Congress require gun owners to obtain a federal permit. “All hell broke loose,” says Feldman …

Zilkha relieved Stewart of his CEO duties in late 1998; by the following year the Colt smart gun was dead …

The withered commercial handgun business—by now reduced almost exclusively to producing copies of classic handguns—was left behind under the name Colt’s Manufacturing. The two companies shared the West Hartford factory. To the consternation of workers, a metal fence was erected to denote the corporate split …

Among other failings, the severed halves of Colt somehow missed the post-2008 “Obama surge” as much as other U.S. gun manufacturers. Whipped up by NRA warnings that the Democratic president intended to toughen gun control, consumers cleared gun store shelves of ammunition and weapons. Better-prepared manufacturers such as Glock saw sales rise sharply. Under the terms of the Colt split, however, Colt Defense could reach the booming civilian market only by first selling its rifles to Colt’s Manufacturing, a debilitated company with sclerotic lines of distribution. Colt’s Manufacturing, for its part, offered only a limited selection of the handguns so much in demand. …

S&P projects that company revenue will fall by 5 percent to 15 percent in 2014. It cites “declining commercial rifle sales as demand returns to more normalized levels following a surge in recent years” and a sharp reduction in Pentagon demand for new M4 rifles following the end of the wars in Iraq and Afghanistan. “The government’s plan to shrink the size of the Army also poses a threat to long-term demand for the rifle,” S&P notes. On May 14, Colt reported that revenue for its first quarter of 2014 slumped 22 percent, to $50 million. The company suffered a loss of $7.8 million for the period. During an investor conference call, CEO Dennis Veilleux said, “I’m not pleased with these results.”

Ignoring the source (Bloomberg), this is actually good reporting and analysis and a good rundown of the troubles that have plagued Colt.

Colt got fat from military contracts, lost control over good QA, and lost interest in the civilian firearms market.  This happens often to manufacturers for the military, since making milspec parts means that there is very little innovation and contracts aren’t as flexible to customer feedback as in the civilian market.  Soldiers and Marines have to use what they’ve been issued.  I get to choose my guns, and hence I have a Rock River Arms AR-15 instead of a Colt.  I have always said that a gun isn’t truly tested until it hits the civilian market.

There is one aspect of Colt’s demise that isn’t mentioned here, and that is the role of labor unions.  All gun manufacturers in Northern states (which are not “right to work” states) have suffered from the same erosion of quality and cost problems or they will in the future.

The lessons for all gun manufacturers should be clear.  First, labor unions kill companies.  The future of industry is in right-to-work states.  Second, any flirtation with gun control is death to a gun manufacturer.  Gun owners punish cooperation with gun controllers.  Third, fat-ass government contracts tends to corrupt a company.  The most healthy market for guns is the civilian market.  It also happens to be the least fickle and most reliable.

Finally, overseas production (in Japan, for instance) is a loser proposition.  I turned down the chance to buy a Browning bolt action rifle because of that very thing (made in Japan stamped on the barrel), and thought that Winchester rifles were now made exclusively in Columbia, S.C.  I later found out that parts are now made in Columbia, while assembly is done in Portugal.  Instead I purchased a Tikka T3 Hunter 0.270.  In other words, I went with a foreign manufacturer who actually knows how to make guns.  The Remington and Ruger bolts were so loose they flopped like dog ears.  The Tikka was tight and is a tack driver.

Bottom line: move South to right-to-work states, make guns for the civilian market, make them well, and avoid the corruption that goes along with being in bed with the government.  It’s too late for Colt.  They will go belly up before long.  It isn’t too late for others – you know who you are.

Ctpost.com:

When Stag Arms of New Britain wanted to produce a scaled-down version of a popular AR-15 rifle that was banned last April by Connecticut — part of a broader crackdown that was upheld Thursday by a U.S. District Court judge in Hartford — it ran the specifications by law enforcement.

“Right off the bat, they were helpful,” said Mark Malkowski, the company’s president and owner. “They did look at prototypes. They did this about three times. After that, they said it really wasn’t their responsibility to determine what was legal or not.”

The reluctance of the State Police to put its seal of approval on the Stag 22, a semi-automatic rifle that accepts lower-caliber bullets and fewer rounds of ammunition than its predecessor, is emblematic of an ongoing tension between the firearms industry and law enforcement over weapons development.

State police spokesman Lt. J. Paul Vance said his agency would hate to sign off on a gun, only to have one of its components render it illegal on a technicality.

“Are we going to be responsible for that?” said Vance, who became a household name for his many news conferences following the Dec. 14, 2012, massacre. “It’s their responsibility to make sure it conforms to the letter of the law.”

[ … ]

A majority of gun manufacturers are said by industry observers to be far along in the process of converting their traditional AR-15 rifles into .22-caliber models for sale in Connecticut, including Colt’s Manufacturing, the granddaddy of the state’s firearms industry. Multiple requests for comment were left with Colt, which was founded in 1836 in Hartford and employs about 600 people in the state.

In most modification cases, what is known as a center-fire mechanism is swapped out for a rim-fire mechanism. This inhibits the rifle’s ability to accept higher-caliber bullets like those used at Sandy Hook Elementary School.

[ … ]

Shooting purists are not as keen about .22-caliber rifles and the rimfire mechanism …

First of all, what an absurd, stolid article, e.g., low-caliber bullets, high caliber bullets, and so on.  Second, I’ll bet “shooting purists are not keen about .22-caliber rifles” in the AR-15 platform (if by that they mean .22LR).

There is a time and place for a .22LR long gun, for teaching youngsters to shoot, plinking, killing small game, etc.  I learned to shoot as a youngster with a .22LR long gun.  Those were good days.

But with Stag Arms trying to construct a long gun with these specifications in the AR platform, and with the future about this weapon known to everyone who understands these things (it won’t sell and it’s a waste of time and money to develop it), the question necessarily arises “Why is Stag Arms still in Connecticut?”  And “Why is Colt still in Connecticut?”  And as for that matter, “Why are Connecticut shooters still citizens of Connecticut?”

Come South, men.  Come South.

Has hell frozen over?

A firearms company that makes AR-15 style rifles for the iconic brand Colt, will open a plant in Breckenridge in Stephens County. Oregon company Bold Ideas confirmed the development Friday.

Bold Ideas goes by the name Colt Competition, making high accuracy rifles for competition shooting.

The company has not officially announced the opening, but employment applications are already available at the Breckenridge Chamber of Commerce. A non-specific, help wanted ad appeared in the local newspaper classifieds earlier in the week.

Sources say Colt Competition will move into a large vacant industrial space on the north side of town, previously used by Karsten Homes to manufacture mobile homes.

The move by Colt Competition into Breckenridge comes as the CEO of Colt Manufacturing in Connecticut has said there will soon be few good answers to keep his company in the state. Connecticut passed some of the nation’s most restrictive gun laws this week.

It also comes weeks after Governor Rick Perry reportedly sent letters to gun companies, encouraging them to move to Texas. Perry sent a message on Twitter to Colorado company Magpul as recently as March 21, saying “Come on Down to Texas.” The Governor’s office did not confirm Friday if it had sent a recruitment letter to Colt Competition.

Remember this comment, seemingly confident?

Like on so many occasions in the company’s history, Colt’s CEO has his head up his ass.
1.) Colt’s “ties” to Connecticut are just lengthy because of tenure. They’re not “deep” because the state would ban Colt’s product and put them out of business tomorrow, if it could.
2.) Colt’s real legacy is in the West — can any other manufacturer EVER compete with the picture of a cowboy holding a Colt Dragoon, Navy or Peacemaker? If Colt were serious about their “heritage”, they’d long ago have moved out of the gun-hating East and moved West, to a state which would not only welcome them, but protect them.
3.) Colt probably thinks that the military will save them. I imagine that the manufacturers of Garands, M14s and M1 Carbines probably thought the same.
4.) Colt regards the civilian market with the same regard as a man does his laundry: tiresome, but something that must be looked after. (Run your eye down a list of wonderful, beautiful Colt models which have long since disappeared from their catalogue because of “lack of demand” and then look at the prices which second-hand Diamondbacks now command.)
5.) One of the reasons Colt’s civilian guns suffer is because they are expensive compared to the competition. One of the reasons ANY product is expensive is high overhead — reasons such as real estate, taxes and salaries. Anyone care to compare the salaries of Connecticut with, oh, Texas, Oklahoma or Arizona in comparable jobs?

Let Colt sleep in the bed they’ve made in Connecticut. Good luck to them.

So was the comment wrong?  What do readers know of this move by Colt, and how much of the company does this segment represent?

The CEO speaks, Courant.com.

Our customers are unusually brand-loyal. In many cases, they personally identify with the firearm brand they choose. Although our Connecticut heritage has historically enhanced our brand, that will change overnight if we ban the modern sporting rifle.

As a result Colt, as well as other Connecticut manufacturers such as Mossberg and Stag Arms will see immediate erosion in brand strength and market share as customers migrate to manufacturers in more supportive states. This will have consequences for dozens of Connecticut companies and thousands of workers. Connecticut will have put its firearms manufacturing industry in jeopardy: one that contributes $1.7 billion annually to the state’s economy.

Like every other precision manufacturer in Connecticut, Colt is constantly approached by other states to relocate, but our roots here are deep. Colt is and always has been an integral part of a state characterized by hard work, perseverance and ingenuity.

I know, however, that someday soon, I will again be asked why we fight to keep well-paying manufacturing jobs in Connecticut. I will be asked why we should continue to manufacture in a state where the governor would make ownership of our product a felony.

I will be asked these questions and, unlike in the past, there will be few good answers.

He’s right.  Some of the customer base will be faithful, but this issue runs deep, and many will abandon them.  We’ve also discussed how many will abandon Remington, too, for staying in New York and focusing almost exclusively on a new military contract.  It won’t work out well for Remington.

But the CEO will likely have to decide whether this is bluster or serious-speak.  The State of Connecticut won’t listen to him and will probably pass their ban.  When they do that, Colt will have to decide whether it is a Remington or a Magpul.  The choice is theirs, and no amount of posturing in local newspapers will delay or change things.

These are serious times for a lot of people.