Is the Firearms Industry in Complete Disarray?
This is a question I'm asked almost daily. It is a mess in some respects, for understandable reasons. While President Donald J. Trump is very, very good for the Second Amendment, through the lens of the short-term, the firearms industry is a bit of a mess. While the Obama administration was ineffectual at fighting crime, the Obama administration was quite effective at harassing the Constitutional rights of American citizens. The result was hoarding and panic-buying, for it is clear that Obama had an undeclared war on the Second Amendment.
Hillary Clinton promised not just more of the same, but her ridiculous lies threatened to set fire to the Second Amendment for good. It was Hillary Clinton (and Bernie Sanders) that delusionally claimed the firearms industry had immunity from litigation. Anyone knows, or should know, that if you make stepladders, lawnmowers, or firearms, you are going to get sued constantly.
Firearms industry professionals had to guess what the 2017 would be and many just guessed wrong. You might think that anyone who wants an Armalite rifle by now would have at least eleven of them? Yet, despite the large number of Armalite platform rifle manufacturers out there, Savage Arms decided to belated join the group. The parent company of Savage Arms and Federal Ammunition and Bushnell (and several other companies) is Vista Outdoors.
Marketwatch reported, on January 12, 2017: “Vista Outdoor Inc.'s stock VSTO, +3.01% plunged 17% toward a record closing low in active morning trade Thursday, after the maker of guns, ammunition and other outdoor sports products said an increasingly challenging retail environment will force it to record a "material" asset impairment charge.” This is doublespeak for writing off worthless goodwill and the like. It gets worse: “RADNOR, Pa., Jan. 26, 2017 /PRNewswire/ -- The law firm of Kessler Topaz Meltzer & Check, LLP announces that a shareholder class action lawsuit has been filed against Vista Outdoor Inc. (NYSE: VSTO) ("Vista" or the "Company") on behalf of purchasers of the Company's securities between August 11, 2016 and January 13, 2017, inclusive (the "Class Period").”
There have been other developments as well. The Turkish lira has been tumbling since the failed coup attempt, and continues its plummet. The Turkish lira hit a record low against the U.S. dollar (3.73 to the dollar) and the Euro on January 9, 2017 and remains close to this absurdly low level. Turkish firearms and components just got a whole bunch cheaper.
That forces manufacturers to source parts from Turkey, if they want to be competitive in the marketplace with those who already do, or source even more components and sub-assemblies. Again, the net result tends to favor the consumer.
The same is true with components for reloaders and cost-effective rimfire ammunition. The many years of hoarding and the self-inflicted wounds of panic-buying have diminished, so now we can expect good, old-fashioned competition again for your buying dollars: a good thing for the consumer.
Self-defense segments continue to rise, as does gun use for both protection, hunting, and target use by the fairer sex. Armalite platform rifles are commonly used for hunting more and more and that is on the rise as well.
The great unknown remains the economy. If the stagnation of the last decade is shed, and consumers have more discretionary funds available for hunting and target shooting, both of those areas will increase as long as it becomes affordable for the plurality of Americans. Cheap is rarely good and good is rarely cheap. Our perception of affordability is tethered to our own perceptions of discretionary funds.
Copyright 2017 by Randy Wakeman. All Rights Reserved.