INDUSTRY NEWS: AUGUST 2004

By Robert M. Hausman

A record-setting attendance of 61,319 people attended the 2004 NRA Annual Meetings and Exhibits in Pittsburgh, Pennsylvania dubbed “Freedom’s Steel” April 16 – 18. This shattered the previous record set in Charlotte, North Carolina in the year 2000 by almost 10,000 attendees.

Many of the approximately 360 vendors reported being “astounded” by the waves of NRA members moving through the exhibit hall. The aisles in the exhibit hall were so crowded on Friday and Saturday morning that some said it was almost impossible to move through the hall. About 1 million of the NRA’s 4 million members live within 300 miles of Pittsburgh.

The keynote speaker this year was Vice President “Dick” Cheney, who portrayed President Bush and himself as champions of gun rights – and Democratic candidate John Kerry as a potential threat to gun owners.

“John Kerry’s approach to the Second Amendment has been to regulate, regulate and then regulate some more,” Cheney said, citing votes against the federal legislation that would have protected the industry from baseless politically-motivated lawsuits. Bush, Cheney said, “has shown you respect, earned your vote, and appreciates your support.”

Cheney, who spoke for about 25 minutes, carefully avoided mention of the federal assault weapons ban and magazine capacity limit law, which will expire in September unless renewed by Congress. The Bush Administration has gone on record in support of renewing the ban.

Kerry, in a statement issued before Cheney’s address, said “most voters don’t know that (Bush and Cheney) are standing against major police organizations and breaking their promise to renew the assault weapons ban.”

The ironically named Tom Mauser, whose son, Daniel, died in the Columbine High School killings five years ago and has since become an anti-gun activist, marched three blocks to the convention hall in his son’s shoes, but was denied entrance by security guards, on the grounds that the show was open only to NRA members. Mauser called the NRA “an organization with a Field & Stream magazine membership but with a Soldier of Fortune magazine leadership.”

Rousing Speeches

One of the high points of the NRA event for many attendees are the rousing speeches presented by the NRA leadership, and this year’s edition did not disappoint.

Chris Cox, Executive Director of the NRA’s lobbying arm, the Institute for Legislative Action, pointed out to the membership that Senator Kerry “has voted against your gun rights more than fifty times” and then challenged Kerry to “stop dreaming about Hillary hunting ducks with a rifle and go back to Boston for your hair dye and Botox treatments, because…you will never be the candidate of the NRA.”

NRA Executive Vice President Wayne LaPierre predicted that the obituary for the Clinton gun ban would be written on Sept. 14, noting, “…the sun will rise…It will be gone…and it will never again see the light of day.” Noting the power of NRA members as a voting bloc, LaPierre declared, “Let every anti-gun U.S. Senator and candidate hear my voice; never go to bed unafraid of what this body can do to your career!”

NRA Second Vice President Sigler invoked the anniversary of Paul Revere’s famous ride in his remarks, urging NRA members to sound the alarm. “If Kerry and (Sen. Ted) Kennedy had been around in 1775, America’s Minutemen would have been forced to fight the Redcoats with rocks and sticks and pitchforks,” he emphasized.

And NRA First Vice President Sandy Froman mentioned the importance of the 2004 election as it relates to Supreme Court appointments, warning that if Kerry is elected President, Charles Schumer, Hillary Clinton or Janet Reno may wear the black robes of the court.”

IWA 2004 Show Holds its Own Trade Attendance Same as 2003 but Slight Increase in Exhibitors

The attendance count for the recently concluded IWA & Outdoor Classics trade fair, western Europe’s largest sporting arms and hunting show, reveal a total of 27,000 trade visitors attended this year, compared to a count of 27,009 last year. There was a slight gain in exhibitors to 988 versus 966 in 2003.

Gabriele Hannwacker, IWA project manager, commented, “We’re more than satisfied. The high number of trade visitors shows us that the IWA is the leading global fair in its branch. Also remarkable is the extraordinary high number of attendees from abroad (defined as those coming from countries aside from Germany). Some 73% of exhibitors were from abroad and they came from nearly 50 different countries. Some 56% of the trade visitors came from 100 different countries.”

Walter Hufnagel, a member of NuernbergMesse management (the show’s venue), stated, “There is no comparison to this show. No other trade show has more international importance. Exhibitors and retailers enjoy this special business character. IWA means business.”

The annual world trade volume in the firearms industry is estimated to be about 4 billion Euros, with another 1 billion Euros spent on ammunition.

Germany has more than 2 million shooting club members with 1.5 million of them belonging to the German Shooting Association. More than 20% of them are women. There are about 340,000 German hunters. About 61 million Euros worth of ammunition is sold in Germany each year, with about 38 million of those sales being in imported ammunition.

In the countries comprising the European Union, there are about 10 million hunters. Hunters in the EU are estimated to spend about 12.8 billion Euros on hunting and shooting related articles annually.

At this year’s IWA, there were twelve national pavilions, including from the U.S.A., Russia, Italy and Spain. The IWA Goes Outdoor stage show was again presented with professional models showing products, mainly apparel, five times each day. The New Product Center showcased innovative new items close to the stage show. Next year, the Police Academy in Munster, Germany will organize the first conference on firearms and equipment at the exhibition grounds on the day before IWA opens.

Since 1996, the World Forum on the Future of Sport Shooting Activities has held its annual general meeting during the exhibition. Three European professional firearms associations, including the Association of German Gunsmiths hold meetings at IWA.

A new traffic management system was in place in Nuernberg this year which greatly aided fair attendees. Electric signs on the adjacent autobahn directed attendees not only to the show but also gave information on which parking lots had space availability.

Some attendees at the fair’s annual “get together” party curtailed their consumption of beer this year due to concerns that the Nuernberg police department was targeting party goers for possible drunk driving offenses. One Austrian sales executive commented that roadblocks were set up near the messes and that all vehicles passing would have to stop while a breathalyzer test was administered to drivers, without grounds for reasonable suspicion of drunk driving.

However, a spokesman for the Nuernberg police department admitted that road blocks are often set up in the city for drunk driving enforcement, but denied that IWA show attendees were being targeted.

IWA Knife Award

A total of 72 knives from 30 different manufacturers competed in this year’s IWA International Knife Awards.

Two American producers won prizes – Columbia River Knife & Tool won in the Designer Knife category with its Snap Lock R.S.L. and Gerber Legendary Blades was the winner in the Outdoor Knife category for its Freeman folder. The German maker Eickhorn also took a prize for its Skipper knife design due to its novel safety features.

According to the results of an independent survey taken during the show, 97% of exhibitors reached their target audience, while 88% forecast positive post-show business. Some 83% of exhibitors have decided to exhibit again in 2005, while 15% are “thinking about it.”

To help stimulate retailer sales, the associations of German gunsmiths and that of German gun manufacturers offered seminars during the show on how to offer bank financing to consumers purchasing high-ticket items.

H-S Precision Wins FBI Rifle Contract

Ending a long search, the Federal Bureau of Investigation (FBI) has chosen H-S Precision, Inc. of Rapid City, SD as supplier of their new sniper rifle. The chosen model is the H-S Precision Pro-Series 2000 HTR (Heavy Tactical Rifle) in .308 Winchester.

This marks the first time that the FBI has purchased sniper rifles from an outside source. Previously, staff armorers built rifles for the Bureau in-house. The Pro-Series HTR was selected after months of rigorous testing, including a 5,000 round endurance test. The HTR passed with no failures.

The Pro-Series 2000 HTR rifle is built in the U.S. using components produced by H-S Precision, and includes a vertical grip, fully-adjustable stock, a Pro-Series 2000 short action with detachable magazine, a match-grade stainless steel fluted barrel and scope mounts. The balance of the complete package such as the scope, case and other parts are all produced in the U.S. as well. The HTR rifle is also available to other law enforcement agencies as well as the civilian market.

Ruger’s Net Sales/Income Dip in 1st Qtr.

Sturm, Ruger & Co., Inc. has reported first quarter 2004 net sales of $40.2 million compared to $41.1 million in the first quarter of 2003, and net income of $3.9 million or 14 cents-per-share compared to $4.5 million or 17 cents-per-share in the first quarter of 2003.

Chairman William B. Ruger, Jr. commented, “While firearm shipments were consistent with the prior year, the start of shipments of many of our highly-demanded new models during the latter portion of the quarter is quite encouraging. The restyled New Ruger 10/22 rifle debuted in the first quarter, as did shipment of our Gold Label side-by-side double shotgun.” Sales of models chambered for the high-velocity new .204 Ruger cartridge were also cited as being especially strong.

Ruger reiterated the company’s ongoing commitment to firearms innovation, “At the 2004 NRA show in Pittsburgh, we introduced even more new product offerings for this year. Three new Mark III rimfire pistols, featuring the Ruger Mark III Standard model, a redesigned Ruger Mark III 22/45 pistol, and a .17 Mach 2 rimfire pistol. Additional new firearm models are also scheduled for introduction later in 2004. This will be our strongest year of new product introductions in quite some time.”

In turning his attention to the company’s investment castings business, Ruger said, “Although our castings sales decreased 12% from the prior year, we are committed to this technology as our castings expertise is instrumental in our ability to continue to meet the steady demand for new firearms products.”

Ruger emphasized the strength of the company’s balance sheet, “At March 31, 2004, we remain debt free, with $51 million of cash and short-term investments.” Gun sales came to $36,138,000 (89.8% of sales) in the first quarter of 2004, versus $36,483,000 (or 88.7% of sales) in the first quarter of 2003. Castings sales were $4,099,000 (or 10.2% of sales) in 2004’s first quarter, versus $4,649,000 (or 11.3% of sales) in the same quarter of 2003.

Historical Review

In a review of recent developments, it is noted the firm hired four firearms engineers for its product design staff in 2003. During the Safari Club International Show last January, the gunmaker announced the opening of the Ruger Studio of Art and Decoration, which employs four firearms engravers.

In looking at the sales results over the past five years, as detailed in the firm’s 2003 Annual Report, firearms sales have actually declined on an annual basis each year since 1999.

In 1999, net firearms sales totaled $188,564,000. In 2000, net firearms sales were $166,415,000; in 2001, the total came to $147,622,000; while in 2002, the total net firearms sales declined to $139,762,000; and in 2003, the figure dropped further to $130,558,000.

Net castings sales have shown a similar decline. In 1999, net castings sales stood at $53,100,000; while in 2000 the total dropped to $36,239,000; in 2001 the figure slipped further to $26,708,000; while in 2002 it dropped to $21,825,000 and in 2003 net castings sales were $17,359,000.

The company explains that firearms unit shipments for 2003 decreased 2.4% from 2002, as shipments of all product families declined significantly in the first half of the year. Shipments during the latter half of 2003, especially in the fourth quarter, improved due in large part to the introduction of several new product offerings.

Revolver shipments benefited from the popularity of the New Model Single Six revolver in the .17 HMR caliber and the 50th Anniversary Ruger New Model Single Six revolver. Pistol shipments reflected strong demand for the MK-4NRA, a .22 caliber pistol commemorating company founder, William B. Ruger, and rifle shipments benefited from the popularity of the Ruger 40th Anniversary 10/22 Carbine. However, a change in mix from higher priced products to lower priced products resulted in the further decline in sales versus unit shipments.

In 2003, the company instituted a distributor sales incentive program which allowed rebates of up to 1.5% if certain annual overall sales targets were achieved. This program replaced a similar sales incentive program in 2002. From May 1, 2003 to September 30, 2003 (a typically slow time of year for sales) the gunmaker offered a consumer-driven sales incentive program for certain centerfire pistols. From August 1, 2002 through November 30, 2002, a similar consumer sales incentive program was conducted. Sales incentive rebates remained consistent as a percentage of sales in 2003 and 2002.

In regard to the decline in castings sales, shipments of titanium golf club heads to Karsten Manufacturing Corp. decreased $7.4 million in 2003 compared to 2002. There are no future shipments expected to Karsten.

Capital expenditures during the past three years averaged $3.6 million annually. In 2004, the company expects to spend about $8 million on capital expenditures to continue to upgrade and modernize equipment at its manufacturing facilities.

Robert Hausman is the publisher of the small arms industry’s two most widely read professional trade newsletters, The New Firearms Business which focuses on the domestic U.S. industry and The International Firearms Trade which brings readers news of the industry in Europe. To request a sample copy of either publication, send an e-mail to: INTLFT@aol.com.