For 200 years, Remington has been one of the most famous names in guns, supplying arms to soldiers in the civil war, both world wars and to generations of gun enthusiasts. Now it has met its match: the gun-friendly presidency of Donald Trump.
After a golden era of sales under Barack Obama, America’s gun manufacturers are in trouble. Sales have tumbled, leaving the companies with too much stock on their hands and falling revenues. The crunch claimed its biggest victim this week when Remington filed for bankruptcy.
The move does not mean the end. Remington is using the US’s chapter 11 bankruptcy law to offload $700m of its $950m in debt, and to restructure the company. But it does underscore the level of distress in the industry.
In December, American Outdoor Brands, the owner of Smith & Wesson, reported that its profits had fallen 90% year over year, from $32m to just $3.2m. Sales fell 36%. Last October, Sturm Ruger, the US’s largest firearm manufacturer, announced its quarterly revenues had fallen 35%. Both companies will report their latest results shortly but neither is expected to announce a dramatic increase in sales.
“They call it the Trump slump,” said Robert Spitzer, a professor at the State University of New York at Cortland and the author of five books on guns.
“Gun sales have become politicized to a great degree,” he said. “Gun purchases recently have been made not just because someone wants a new product but to make a statement; not just because of fears that there might be tighter regulation but also to make a statement against Obama.”
With Trump in the White House, said Spitzer, gun sales had sharply defaulted to their long-term trend of declining ownership rates.
“Gun ownership has been declining since the 1970s and there are now fewer gun owners than ever,” said Spitzer. Fewer people are hunting, younger people are less interested in gun ownership and the gun industry has had little success in its attempts to appeal to women and minorities.
The US has the highest rate of gun ownership in the world with 88 guns for every 100 people. But just 3% of the population owns an average of 17 guns each, with an estimated 7.7 million super-owners in possession of 140 guns apiece.
The surge of gun purchases under Obama was largely driven by sales to existing gun owners. Sales spiked on Obama’s re-election and after his calls for new laws in the wake of tragedies like the Sandy Hook massacre in 2012, which claimed the lives of 20 children and six adults.
Remington, owned by Cerberus Capital Management, made the Bushmaster AR-15 style rifle that was used in the Connecticut shooting. The company is being sued by the parents of the victims in the Connecticut supreme court.
After the shooting, Cerberus, whose billionaire chief executive Stephen Feinberg was a major Trump supporter, came under pressure from its investors to sell Remington.
But Cerberus struggled to find a buyer for the company and settled for letting its investors sell their shares in the company. The bankruptcy agreement will let Cerberus sever its ties with Remington.
Mass shootings continued apace every year since 2012, including the worst attack in modern US history last year, when a gunman killed 58 people and himself in Las Vegas. But with no threat of tighter gun laws, the gun industry has not seen the sales boost that mass killings produced under the Obama administration.
Spitzer said there may be better news aheads for the gun companies. In November, Americans return to the polls again for midterm elections, raising the possibility of major gains by Democrats, given Trump’s historically low poll numbers and a pattern of poor performance for the president’s party in midterms.
“If the Democrats do well, the gun industry and the NRA [National Rifle Association] will no doubt use it as an opportunity to issue dire warnings about gun rights. Their aim is to press as many guns into the hands of as many people as possible,” Spitzer said.
Culled from The Guardian