3 Reasons Gun Companies Are Under Pressure

Originally published on March 28, 2018 9:58 am

Remington Arms Co., an American gun company with roots stretching back over 200 years, has filed for Chapter 11 bankruptcy protection. Saddled with almost $1 billion in debt and a victim of shifting market trends, Remington, like many other gun companies, faces a constant uphill battle wrought with political pressures and changing sentiments on gun ownership. Here are three reasons why gun companies are now struggling to find profits.

1. The surprise 'Trump Slump'

In the decade before the 2016 election, the firearms industry saw a nationwide boom in gun sales stoked mostly by political fears of new gun control legislation under a renewed Democratic regime.

"First the Democrats got the majority in Congress in 2006, and then Obama got elected in 2008, then in 2012 Sandy Hook." says Philip Cook, a professor of public policy at Duke University. "Each of these build on what was already a pretty strong trend."

Gun companies saw a jump in sales, with intermittent spikes in the aftermath of mass shootings. The Federal Bureau of Investigation went from processing nearly 9 million background checks for firearms in 2005, to a record breaking 27 million in 2016. Gun companies anticipated continued growth under yet another Democratic president, and ramped up production. Debt-saddled Remington announced the opening of a new plant in Alabama in 2014. The National Shooting Sports Foundation shows that the gun industry overall saw an 81 percent increase in jobs between 2008 and 2016.

All of this came crashing down when Donald Trump, a friend of the gun industry, took office. Speculation of future gun control subsided, buying habits slowed, and gun companies found themselves sitting on stockpiles of weapons they are unable to move as quickly as before.

2. Shrinking markets

Pew Research Center's latest study on U.S. gun trends shows that 66 percent of gun owners own more than one gun. Some analysts conclude that dips in sales are not just tied to political fears, but the simple fact that the traditional gun purchasing demographic has exhausted itself, and gun companies are just now feeling the pressure.

"Their big money comes from people who amass mini-arsenals," says Julius Wachtel, a retired political science professor at California State University Fullerton, and former agent for Bureau of Alcohol, Tobacco, Firearms and Explosives. "They just need more people going out there and buying a lot of guns ... again, culture has shifted."

This has caused many gun companies to expand outside of their traditional markets to look for new potential buyers. "Everybody is fighting each other to sell firearms to the same group of people," says Robert Farago, author of the blog The Truth About Guns. "There's a huge market untapped that the firearms manufacturers have to go after because they've saturated the market of the enthusiast."

Farago adds that such a challenge will be difficult. Most major media publications won't allow gun manufacturers to advertise on their platform, and recently, traditionally gun friendly online communities such as YouTube and Reddit have closed ranks on content meant to actuate gun sales.

3. Product misfires

During the glut, many gun companies launched a series of products that did less-than-stellar on the market. Remington faced allegations that its M700 series of rifles fired without anyone pulling the trigger. A class action lawsuit would see the company paying out $12.5 million and agreeing to fix the guns. In 2014, the company released the R51 pistol, which became plagued with production problems and poor reviews. Ruger, another gun company that has seen declining sales in the last two years, took a $2.5 million hit when it issued a recall for its Mark IV line of handguns, citing safety concerns. Ruger also issued a recall for its Precision Rifle series for safety concerns as well.

Safety related recalls aside, companies also released a number of products that just didn't appeal to customers. In 2013, Remington took a technological leap to introduce its 2020 line, which included a state-of-the art scope that automated range finding and aided in targeting. The line didn't do well, troubled by reported issues with the advanced optic system, and the hefty $5,500 price tag also steered customers away. All issues that hurt customer confidence in companies that historically relied on word-of-mouth recommendations and strong quality control.

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