Colt: The Gunmaker Who Can’t Shoot Straight

BY Herschel Smith
5 years, 4 months ago

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.

 

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Comments

  1. On June 2, 2014 at 10:09 am, Ralph Rusty Newkirk said:

    There is NOTHING WRONG with caring for your workers that make your QUALITY PRODUCT! UNIONS have always benefited the workers, unfortunately, corruption runs rampant when money is concerned. RIGHT TO WORK states DO NOT benefit the workers, they just drive wages DOWN! If you want to work for less, MOVE OVERSEAS! To have pride in your work you have to be treated as a VALUABLE part of the equation. BUY AMERICAN or enjoy the YEN your buying habits have turned the U.S. Dollar into!

  2. On June 2, 2014 at 10:30 am, transvaluation said:

    You must be in a union?

    There was a time in history for unions, unfortunately they are part of the problem now and not the solution.

    All union shops, quality has dropped and costs have increased (not just labor costs).

    Right to work states benefit the worker that wants to do better, not pigeonholing the worker, and allowing them to work harder, improve themselves, and excel. Under union contracts works are only allowed to do the status quo.

  3. On June 2, 2014 at 10:47 am, Herschel Smith said:

    And union members can enjoy the war zones like Detroit that they have created due to inflated worker wages and fat retirement contracts.
    Here’s the problem. The market must manage this, not collective bargaining agreements. Collective bargaining has been bad for companies in the North, and right-to-work in Southern states has created robust, competitive work environments where workers are encouraged to better themselves and do anything necessary to make their work a better place.
    Besides. I hate the union attitude that “I turn this screw – not that one. You hammer that nail, not the other one. Stay out of my shop.” That attitude didn’t build America. And that attitude won’t rebuild America.
    Gun manufacturers – move South! Right-to-work will ensure that you get the most qualified and competitive workers, and that you pay the most competitive salaries.

  4. On June 3, 2014 at 10:39 am, disqus_iulM4CIA78 said:

    I work in a right to work state and guess what my employer takes really good care of me. Why? because I work hard, not because i pay dues.

  5. On June 3, 2014 at 3:49 pm, moral DK said:

    Unions protect lazy or otherwise incompetent employees. Employers should have the say in what happens at their business, not some union rep that’s getting rich from worker’s dues and from pay-offs.

  6. On June 2, 2014 at 10:17 am, Leigh said:

    Unfortunately, they bought LWRCI. The innovations and quality of that company are going to be lost as well….
    I knew it wasn’t going to bode well for the makers of my favorite piston-rifle, when they got bought out. This is what happens when you let money come before what you have built – ie, Bushmaster.

    Leigh
    Whitehall, NY

  7. On June 2, 2014 at 2:17 pm, Daniel E. Watters said:

    There has been no official confirmation of Colt buying LWRCi. Colt’s SEC filings have made no mention of it.

  8. On June 3, 2014 at 6:45 am, Leigh said:

    I can’t remember where I saw it – never mind I found it.

    http://www.thefirearmblog.com/blog/2014/02/20/breaking-news-colt-buying-lwrc-60-million/

    I have found no remarks denying the sale either.

    Leigh
    Whitehall, NY

  9. On June 3, 2014 at 8:07 am, Daniel E. Watters said:

    After three months, you’d think there would be an official announcement.

  10. On June 2, 2014 at 10:18 am, dawg said:

    It is the fat government contracts combined with unions that lead to shoddy products.

    Nearly anything a union was organized for a century ago is now a government regulation, except for pay issues. And on the national level, unions are political creatures that constantly support only Democrats, regardless of how it affects their workers. They act as tools for Democrats. This makes unions dishonest and political pawns. I’m tired of the results.

  11. On June 2, 2014 at 3:35 pm, Cameraman said:

    Colt’s decline is what happens when you get in Bed with Uncle Sugar, and let quality Suffer with a To hell with it Stance on Consumer Products. I Bought Colt”s in the 90″s, but now alas I am Buying Pistols Made In the Asian Market, Good Quality Fair Price, No Union BS

    Semper Fi

  12. On June 14, 2014 at 2:19 pm, robertsgunshop said:

    The 2 AR’s I have I built from the bare lower up. I got to control the quality and the price. I built both of then ( a A2 and a M4) for the cost of one Colt. I’ve had a couple of Colts come through and I didn’t think they were all that. Too bad they can’t get back to the days of the Python and Trooper models.Back when quality was a major concern.

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This article is filed under the category(s) Firearms,Guns and was published June 1st, 2014 by Herschel Smith.

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