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Firearms

Industrial Codes

NAICS: 33-2994 Small Arms Manufacturing
SIC:
NAICS-Based Product Codes:

Product Overview

The manufacturer, sale, and ownership of firearms have played an integral role in the development and culture of the United States since nearly its inception. From the establishment of the first national armory at Springfield, Massachusetts in 1794 to the technological advances of the nineteenth century to the often controversial federal oversight of the twentieth and twenty-first centuries, the gun industry has helped shape a national consciousness that is, for good or ill, distinctly American. Once a necessity for food and protection, guns had become a political football by the twenty-first century, and the industry itself was in a state of flux.

This essay will confine itself to a discussion of the firearms commonly known as "small arms," as opposed to those used for military purposes. Small arms is a term first seen in English usage in the early eighteenth century and denotes those weapons designed for personal, generally hand-held, use. The category includes such weaponry as rifles, shotguns, revolvers, pistols, assault rifles, and submachine guns.

The very early history of guns, including the invention of gunpowder, is somewhat murky. Gunpowder (or black powder, as it became known), for instance, is variously alleged to have originated in China, Arabia, Germany, or yet someplace else entirely. The fog begins to lift, however, by the fourteenth century, when the initial references to cannons were made in Italy and England. Handgun references had appeared by the middle of that century, and the ensuing evolution of small arms is fairly well documented.

Advances in the ignition systems of firearms were crucial to the development of modern guns. Beginning with muzzleloaders, which were fired by applying a lighted match or wick to gunpowder and a projectile that had been loaded into the muzzle end of the weapon, firing mechanisms on small arms gradually became safer and more reliable. The matchlock systems developed in the early fifteenth century, for example, got the lighted wick out of a person's fingers and into the mechanism of the gun. The wheel lock of the next century did away with the need for a match at all, replacing it with a steel and iron pyrite interaction that created a spark to light the powder. Flint and steel combined to create the necessary spark in the flintlock ignition of the late seventeenth century, and the percussion lock (or caplock) of the early nineteenth century was the forerunner of contemporary self-contained ammunition.

By the nineteenth century, the United States had become a hotbed of weaponry innovation, especially in an area of the Connecticut River Valley known as "Gun Valley." Among the many notable names of that era and a sampling of their inventions were: Samuel Colt (inventor of the revolver), Richard J. Gatling (first machine gun), Sir Hiram Stevens Maxim (semiautomatic rifle and fully automatic machine gun), and John M. Browning (semiautomatic pistol, gas-operated machine gun, and the Browning Automatic Rifle, or BAR). It was a heady time in which fortunes were made, technological ground was broken, and the subject of small arms engendered very little discussion at all. Not incidentally, it was also a time of fewer people, more available land, hunting as a means of procuring sustenance, and the Civil War fresh on the collective mind of the populace.

The world had, naturally, changed by the onset of the twenty-first century. An increasingly urbanized society became divided on the need or desirability of small arms in the hands of its citizens. One faction saw personal gun ownership as a fundamental entitlement guaranteed by the Second Amendment of the U.S. Constitution. Hunting, competitive shooting, and self-protection were considered perfectly legitimate pursuits. The other side blamed the relative accessibility of small arms for such societal ills as crime and suicide, as well as voicing concern over the proliferation of such weapons worldwide. And the small arms industry became caught in the middle.

The 1990s were especially volatile for the gun industry. Increased government regulation, such as 1994's Brady Handgun Violence Prevention Act, had a mixed impact as consumers stocked up on weapons before new measures went into effect. The unprecedented initiation of litigation against manufacturers by major cities, starting with New Orleans in 1998, was another immense challenge as the prospective costs of defending such lawsuits forced manufacturers to explore new ways to prosper in the coming years. Some companies, for instance, filed for bankruptcy protection, while others entered into settlement negotiations. Still others broadened their product offerings, branching into such ancillary markets as specialty clothing and sporting goods. Perhaps most notably however, the adversity prompted the famously competitive industry to begin to band together as a group.

The small arms industry is a mature one, with products that do not quickly wear out and are unlikely to need replacement in a consumer's lifetime. Despite that, and the business concerns presented by a changing customer base and cultural atmosphere, the industry is in little fear of extinction. The twenty-first century saw sales, particularly of handguns, on the rise once again. Manufacturers continue to investigate new marketing avenues, from cutting-edge technologies to foreign-made weapons to shooting accessories to the Internet. Cultivating or reviving nontraditional customer bases, such as women and youth, are also in play. Market growth is an ongoing worry, but hunters still hunt, police officers still police, and competitive shooters still compete. Small arms are what they all use.

Market

It is notoriously difficult to pinpoint the numbers of U.S. citizens who own guns or, accordingly, the number of weapons within a given household. One reason for this is that such statistics are typically gathered by survey and people have many motivations for giving false information — from raging paranoia to valid privacy concerns. By combining survey statistics provided by the National Rifle Association (NRA) and Reason Magazine, however, the percentage of private gun owners appears to be stable at between 39% and 49%. Another, undoubtedly more accurate, way to track private firearm ownership is to rely on the National Instant Background Check System (NICS) that was initiated with the passage of the Brady Act of 1994. (The background check is required for gun purchase or permits.) The NICS numbers, as cited by Shooting Industry, indicate that gun ownership is flourishing. In May of 1999, for instance, the number of NICS background checks performed was 576, 272. In May of 2007, that number was 803, 051. The rise is even more notable when one considers that the May 2007 numbers are closer to those normally associated with the peak buying season in the autumn. Neither a survey nor the NICS, of course, is a perfect system, as they do not account for firearms already in the household or those that were illegally obtained. Nonetheless, one can accurately glean some ownership trends from such data.

Excise taxes, calculated as a percentage of wholesale receipts, are yet another way to assess activity within the small arms industry. According to Shooting Industry, excise taxes demonstrated a 5.6 increase in sales for all firearms from 2005 to 2006. Handguns did especially well, posting a 21.94 increase in 2006 over the previous year. Indeed, the Business Wire noted that Research and Markets reported the industry's overall 2006 revenue at approximately $2,150,000,000, with a gross profit of nearly 36%.

A vital point about the small arms industry, however, is the ongoing influence of the global marketplace and foreign trade. For many years, U.S. firearm exports have been eclipsed by the number of imports. Shooting Industry pointed out that in 2003, for example, the value of gun exports was $42 million and the value of imports was $380 million, creating a trade deficit of a whopping 84%. While that was not necessarily a negative situation for such industry participants as importers, distributors, and dealers, it certainly posed a problem for U.S. manufacturers. Nor, given the popularity of foreign-made weapons, was the trend apt to reverse itself anytime soon. Manufacturers addressed the challenge in several ways, including cutting costs, making better guns, and, most interestingly, adding foreign-made firearms to their own product offerings. The Remington Arms Company jump-started matters in 2004 with its introduction of a line of Russian-made shotguns. It went on to add others, and competing companies began to follow suit. Results of the manufacturer's efforts were quickly realized — U.S. exports rose 18.66% in 2005 and imports fell 2.2%. The top three exporters in that year were Remington, Smith & Wesson, and Sturm, Ruger and Company. The primary importing countries were Brazil, Austria, and Italy. On the other hand, the Business Wire reported that Research and Markets cited both exports and imports were on the rise in 2006.

As alluded to above, the political climate also has a tremendous impact on the small arms industry. An excellent example of this is the dramatic reduction in the number of licensed gun dealers through the end of the twentieth century. According to the Christian Science Monitor, there were about 245,000 licensed dealers in the United States in 1996. By 2006, that number had dropped nearly 80%. The decrease was clearly attributable to tightened government firearm regulations that had been put in place during the Democratic administration of former U.S. President Bill Clinton. The Brady Act, and new zoning and reporting requirements for dealers were among those changes. Gun control advocates heralded the downsizing as a victory against crime, while the pro-gun side maintained that the measures had simply driven out individuals who had received licenses in order to buy guns at wholesale prices. The crux of the matter does not lie in which position is correct, however. Instead, the point is that the decrease did take place and politics played an integral role in that process.

Finally, a discussion of the small arms market must include mention of two distinct factions within its domestic confines — private citizens and law enforcement. No numbers were available to express the exact percentage of buyers within these markets, but there is little question that one may be at least partially offsetting the other. Particularly in the wake of the September 11, 2001 terrorist attacks on the United States, the government budget for small arms is expanding, according to the New York Times, as quoted in the International Herald Tribune. Part of that budget includes, of course, weaponry for soldiers, which is outside of the scope of this essay. However, government agencies are also investing more money into guns and homeland security. It follows that police forces, especially in major cities, are doing so as well. Thus, it may be that any increases in small arms sales owe more to law enforcement than to the civilian market.

Key Producers / Manufacturers

According to the U.S. Census Bureau's Current Industrial Report series, there were 177 small arms manufacturing companies in the United States in 2002. Most were located in Texas, Connecticut, Pennsylvania, and Massachusetts, with California and Wisconsin close behind. As is the case with many mature industries, the small arms business had undergone its share of upheaval throughout the years. The venerable Winchester factory, for example, closed its doors in March of 2006. Colt's Manufacturing had seen various owners and undergone bankruptcy proceedings. Others, such as Springfield Armory, no longer bore any real relationship to their storied pasts. Nonetheless, familiar brands remained among the top manufacturers of 2005. Those included Remington, Ruger, Smith & Wesson, Marlin, and Mossberg.

Some of the leading small arms manufacturers are profiled below.

Marlin Firearms Company. Founded by John Mahlon Marlin in 1870 in New Haven, Connecticut, Marlin makes rifles. Such famous characters as sharpshooter Annie Oakley and cowboy movie actor Tom Mix were Marlin fans. The company was bought by a syndicate and became the Marlin Rockwell Corporation in 1915, but came into a new family legacy in 1924 when it was bought by Frank Kenna for just $100 (and a large mortgage). The Kennas still owned Marlin in 2007. In 2000, the company acquired H&R 1871, the biggest manufacturer of single-shot shotguns and rifles in the world. Marlin was the third top maker of rifles in 2005.

O.F. Mossberg & Sons. The second largest producer of shotguns in 2005, Mossberg was founded in 1919 by Oliver F. Mossberg. It began making .22 rifles in 1922 and introduced its shotgun line in 1957. Since that time, shotguns have been a primary focus of the company. Mossberg is headquartered in North Haven, Connecticut.

Remington Arms Company. Begun in upstate New York in 1816 by Eliphalet Remington, the strictly long-gun company is now located in Madison, North Carolina. It claims to be one of the oldest continuously operating firearm manufacturers in the United States, as well as the sole U.S. producer of both guns and ammunition. 2005 saw its fifth consecutive year as the top U.S. manufacturer of firearms.

Smith & Wesson. Perhaps most famous for introducing the .44 magnum popularized by actor Clint Eastwood in the movie Dirty Harry, Smith & Wesson's august past has been more checkered than most. It was founded, after a failed initial partnership, by Horace Smith and Daniel B. Wesson in Springfield, Massachusetts in 1856 and run by Wesson's descendents until 1967. A long history of innovation and profit was notably marred in 2004 when the company's then-chairman was discovered to be a convicted felon and accounting irregularities were investigated. By 2005 however, it was back on top as the leading U.S. manufacturer of handguns, and 2007 saw its turnaround strategy of product expansion and acquisition (Thompson/Center Arms) bear fruit as profits soared 41%.

Springfield Armory, Inc. As noted earlier, the original Springfield Armory was the first national armory in the United States. It was in operation until 1968. The name was adopted by Robert Reese in 1974, when he founded a firearms manufacturing company in Geneseo, Illinois. Springfield ranked third among the leading handgun producers of 2005.

Sturm, Ruger & Company. The number two producer of both handguns and rifles in 2005, William Batterman Ruger opened for business in 1949 after working as a gun designer for the original Springfield Armory. (Alexander Sturm provided the $50,000 stake.) Although a relative latecomer to the small arms business, Ruger quickly established a reputation as an industry leader with an enviable balance sheet. The company makes rifles, shotguns, pistols, and revolvers, and is the only leading U.S. small arms manufacturer that is publicly held.

Finally, the Austrian-based semiautomatic pistol maker Glock bears special mention as the small arm of choice for many — particularly police officers. Other notable manufacturers include Savage, Kimber, Beretta, Beemiller, and Bushmaster.

Materials & Supply Chain Logistics

The basic materials required for small arms manufacturing are fairly straightforward. They include iron, steel, copper, and aluminum, as well as various plastic products and fastening devices such as bolts, nuts, and screws. At least as important as the raw materials necessary to production are the technical design and, often, the artistry of the weapon. Many guns, for instance, are elaborately engraved to be aesthetically pleasing. Others rely on trademark innovations to set themselves apart. Accuracy, reliability, and safety are further important considerations, depending on the nature of the weapon (target shooting vs. self-protection, for example). In short, the small arms business depends less on the manufacturing materials involved than the expertise behind it.

As illustrated by the import/export disparity noted in the Market section above, guns can be, and are, manufactured all over the world. In this respect, especially with regard to imports, cost may become more in alignment with expertise. Just as with domestic manufacturers however, this possibility depends largely on the maker - a Glock, for example, would hardly be considered a cheap import. Thus, while costs also come into play when looking at supply chain logistics, where the weapon is made ultimately matters very little.

Distribution Channel

Small arms manufacturers generally get their products to consumers through retail outlets. Those outlets primarily consist of gun dealers, sporting goods stores, and broader-based, "big box" retailers such as Wal-Mart. Retailers must possess a federal license, as outlined above. Most major manufacturers also maintain websites with information that includes firearm offerings, dealer/retailer locations, and accessories that can be purchased directly from the maker online. Accessories may include gun stocks and barrels, collectibles, and apparel.

A subset of the gun dealer faction involves the highly charged retail category known as gun shows. Gun shows are temporary exhibitions held in such public spaces as shopping malls, hotels, or stadiums. In addition to weapons, gun parts, ammunition, knives, collectibles, and gun literature are often found for sale. The controversy surrounding gun shows stems from the NICS provision of the Brady Act, which only applies to those in the business of selling firearms and, thus, holding a license. Unlicensed vendors have no obligation to conduct the NICS background check required of licensees. The underlying assumption in this loophole is that private citizens have a right to sell or trade weapons from their own collections, much as they sell their cars without going through a car dealership. The concern, however, is that potential buyers who would be denied if a background check were conducted can bypass that problem by patronizing an unlicensed dealer. Debate about the issue continues, as do gun shows.

Key Users

Small arms purchases can loosely be divided into five categories - hunting, competitive and target shooting, self-protection, law enforcement, and collecting. Although the ranks of hunters have been decreasing over the years, public support for hunting appears to be on the rise. According to the Pittsburgh Post-Gazette, the number of hunters dropped 4% from 2001 to 2007, while the number of those who disapprove of the sport has fallen from 22% in 1995 to 16% in 2007. States, anxious to maintain or increase hunting license revenues in order to keep up conservation efforts, are banding together with gun groups to reverse the declining trend. Prime among such campaigns are those aimed at attracting young people and families to the sport.

Competitive and target shooting also have their aficionados. The NRA alone sanctions approximately 10,000 shooting tournaments per year and conducts over 50 national championships. The National Shooting Sports Foundation (NSSF) estimates that there are about 17 million active target shooters in the United States. Those involved in sporting clays grew by 8.4% from 1998 to 2005.

For the reasons delineated in the Market section above, it is difficult to estimate how many gun owners purchase weapons for self-defense. Reason Magazine, however, cited Gallup Polls of 1999 and 2000 that placed the percentage of private owners who have firearms for protection against crime at 65%.

A major outlet for small arms is law enforcement. Once the domain of the revolver, Colt and Smith & Wesson had the market tied up for many years. Ruger and others eventually joined the fray, but the law enforcement market was drastically changed when greater criminal firepower prompted departments to switch to 9 mm handguns in the 1980s. This brought in overseas competition, of which Glock rose to prominence. By the turn of the century, Glock enjoyed a market dominance of over 70%.

Finally, there is the collector, who appreciates weaponry primarily for its artistic or investment value. As with many of these users, this objective in gun ownership may overlap with other interests. The collector may also enjoy target shooting, for instance. Or a police officer might hunt rabbits in his spare time. Thus, it is not uncommon for a gun-owning household to have more than one small arm.

Adjacent Markets

The small arms industry supports an array of other markets. Prime among these is, of course, ammunition. Federal data showed 110 ammunition manufacturing companies operating in the United States as of 2002. It was over a billion dollar a year industry at the time, and supported nearly 7,000 employees.

Other adjacent markets range from specific firearm accessories, including scopes, holsters, gun racks, and cleaning equipment, to corollary hobby and professional supplies for reloading and gunsmithing, to broader sporting equipment and accompaniments such as binoculars, camping gear, pocket knives, and GPS systems. Along the way and in between run everything from eye/ear protection to decoys to clothing to targets to shooting rests to duck calls.

Another, less quantifiable influence, is the crime rate and/or other perceived threat to the U.S. citizenry. For the reasons cited above, these factors are hard to translate into reliable statistics. A good example, nonetheless, is the surge in weapons sales after the attacks of September 11, 2001. Tangible or not, self-defense is a mighty motivator among the gun-buying public.

Research & Development

Much of the recent research and development surrounding the small arms industry focuses on safety and crime control. It should be noted that not all of this investigation is being undertaken by the manufacturers themselves, but by such independent institutions as the New Jersey Institute of Technology (NJIT) and the National Institute of Justice (NIJ).

One of the more interesting of these researches is the quest for a so-called smart gun that would only function in the hands of an authorized user. Colt, Smith & Wesson, and the forgoing independent institutions are among those who have explored the possibilities of such a firearm. The idea behind the development of a smart gun is to prevent gun deaths in such situations as children playing with firearms or police officers who have their own weapons turned against them by suspects or criminals. The various technologies looked into have included biometrics (reading unique body signatures) and radio frequency devices. A prototype was introduced at the NJIT in 2004, but commercial availability remained in the future as technology was fine-tuned and political debate continued over the viability and necessity of safe guns.

Another intriguing and, of course, controversial development was a technology known as "micro-stamping" that would stamp a firearm's make, model, and serial number onto shell casings every time the gun was fired. Applicable to semiautomatic weapons, as revolvers retain their casings in their chambers, California's state assembly passed a bill in 2007 that would require such technology on all semiautomatic pistols sold in the state beginning in 2010. The premise in this case was to provide a further means of evidence gathering for law enforcement. Predictably, pro-gun advocates objected and gun-control fans cheered. It was not made clear how such technology would be useful in the case of illegal, unregistered weapons.

Current Trends

Today's trends in small arms manufacturing, from new research and development efforts to the incorporation of foreign-made weapons into domestic product lines, are largely fueled by the saturation level within the industry and the consequent quest for fresh markets. Although a fairly stable market continues to exist, as discussed above, the maturity of the industry and the inherent nature of firearms combine to offer manufacturers a continuing challenge in finding new customers. For instance, given the shelf life of most small arms, a gun owner often has no real need to replace an existing weapon. He or she may covet the latest thing, but, unlike, say, the instance of a broken refrigerator, there is no necessity to buy a new one. Thus, gun makers must work harder than a software company, for example, to keep their products moving. Developing smart guns and cultivating young shooting enthusiasts are but two avenues toward that goal.

Target Markets & Segmentation

While markets and segmentation with the small arms industry have been largely covered in the forgoing discussion, the role of women should be given special attention. According the NSSF, 16%, or over 3 million, of all active firearm hunters in 2005 were female. That same year, 23%, or 5 million, target shooters were women. These figures alone certainly make women an attractive target market for gun makers, but there is another consideration that gives them even more allure — the youth market. That is, as the industry attempts to maintain its longevity by reeling in another generation of avid consumers, there are hardly better champions it could have than the mothers, grandmothers, and even aunts, of that next generation. By involving more women and, by hopeful extension, families in small arms pursuits, gun makers can see a saturated market base become fraught with potentialities.

Related Associations and Organizations

• Brady Campaign to Prevent Gun Violence, www.bradycampaign.org
• National Rifle Association (NRA), www.nra.org
• National Shooting Sports Foundation, www.nssf.org
• United States Fish & Wildlife Service, www.fws.gov
• United States Practical Shooting Associations, www.uspsa.org
• Violence Policy Center, www.vpc.org

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