INDUSTRY NEWS

By Robert M. Hausman

Richard Dyke, owner of Bushmaster Firearms, Inc. in North Windham, Maine, sold his 28-year-old firearms manufacturing company in late April for an undisclosed sum.

The new owner is Cerberus Capital Management, L.P., a company that has $18 billion in investment assets. Dyke, 72, will remain involved in the business as a member of the board of directors.

Dyke said he sold Bushmaster, which did $65 million in business last year, for the good of the company, his family and the stockholders. “Bushmaster has the potential of becoming a $200-million-a-year company. For the Dyke family to lead that, a little voice told me that it was just time to turn over the reins for the benefit of everyone,” Dyke said. “I just know a company like Cerberus has the ability to do the things Dick Dyke doesn’t have the means to do.”

The new owners say they are dedicated to keeping Bushmaster and its 95 employees at the Windham, Maine Business Park. Dyke said he owns the park, and Bushmaster has signed a five-year lease for the property. Bushmaster’s second manufacturing facility, located in Lake Havasu City, Nevada, where the recently purchased Carbon-15 line is produced, will also stay open.

Little will change for Bushmaster’s employees. John DeSantis will continue as the chief executive officer, and Richard Thurston and Allen Faraday will continue in their current roles as senior executives of Bushmaster. The workforce will see little in the way of change as well.

“We have very good people who work here and Cerberus knows that,” Faraday said. “Having lost Dick (Dyke) as a boss and having a new owner has created some anxiety but the more they get to know the new employer, the more that nervousness is settling down. There are no plans for change. The goal is to grow and the new owners are dedicated to that.”

Faraday said Cerberus usually doesn’t invest in companies the size of Bushmaster. But, Faraday said, “Cerberus is excited about Bushmaster’s potential. They hope to double or triple sales in the next five or six years. And we believe those are realistic goals.”

Cerberus is not new to the arms arena. The company, which Dyke describes as a hedge fund that buys previously established companies in hopes of growing them, has many contacts in the military logistics field. However, this is Cerberus’ first foray into firearms. It already supplies items to military bases and provides logistical support for the military.

Dyke, a well-known entrepreneur, has started more than 40 businesses during his career. Bushmaster is one of his most successful ventures. Dyke bought Bushmaster 28 years ago, moved it to Portland, Maine and then to Windham and built it into a worldwide leader in rifles and pistols. The company’s products are used by civilians, military and police forces around the world.

When Dyke purchased the company in 1978, Bushmaster provided small-arm survival pistols used by Air Force pilots when they went down in combat. Dyke turned the company into a top-tier gun manufacturer specializing in target shooting and military applications.

Meanwhile Dyke has secured office space in North Windham. He, and his son Jeff, are already looking at new investments around the state.

Year 2004 U.S. Firearms Manufacturing Statistics

Firearm production statistics for American manufacturers during the year 2004 are now available from the FB Library.

Note: government statisticians compile handgun statistics into broad caliber categories. For example, .22 caliber statistics include .17 caliber handguns; the .50 caliber pistol category includes all pistols chambered for cartridges larger than 9mm (the preceding category) up to and including .50 caliber.

During the year, pistol production totaled 728,511 units, revolver production totaled 294,099 units, rifle production totaled 1,325,138 units, shotgun production totaled 731,769 units and total production of firearms classified as miscellaneous was: 19,508 units.

Pistols exported from the U.S. during 2004 totaled 14,959 units, revolver exports totaled 24,122 units, rifles exported totaled 62,403 units, shotguns exported totaled 31,025 units and miscellaneous firearms exported totaled 7,411 units.

For purposes of this report, “production” is defined as: firearms, including separate frames or receivers, actions or barreled actions, manufactured and disposed of in commerce during the calendar year. They do not include totals for firearms manufactured by individuals for their private use.

Sturm, Ruger & Co. emerged as the top pistol manufacturer in 2004 with production of 99,002 units. Smith & Wesson finished in the number two slot in pistol production with 89,427 units. Bryco Arms was in third place with manufacture of 87,767 units. Beretta U.S.A. Corp. finished in fourth place for the year with 84,714 pistols. Beemiller, Inc. was in fifth place with production of 76,570 pistols. Other significant pistol producers included: Kel-Tec CNC Industries, Inc. with a total of 59,815 units, SIG Arms, Inc. produced 36,241 units, Kimber Mfg. Inc. produced 44,806 units and Arms Technology, Inc. produced 23,175 pistols.

By caliber, pistol production during 2004 broke down as follows: up to .22-caliber: 211,473 units; up to .25-caliber: 10,140 units; up to .32-caliber: 32,435 units; up to .380 caliber: 68,291 units; up to 9mm: 182,493 units; up to .50-caliber: 223,679 units.

These statistics are for 74% of manufacturers. Some 26% of licensed manufacturers did not file reports for the year in time to be included in this summary.

Suit Dismissal Based on Industry Liability Law

A California judge’s recent dismissal of a suit against industry firms marks the first time that the new federal Protection of Lawful Commerce in Arms Act (PLCAA) has worked as intended, to end a lawsuit.

Federal District Court Judge Audrey B. Collins used the PLCAA as the basis for dismissal of a reckless “public-nuisance” lawsuit against firearm manufacturer Glock and distributor RSR. In doing so, Judge Collins became the first judge in the country to use the new law to counter the anti-gun lobby’s attempts to hold the lawful firearm industry responsible for the acts of criminals.

The suit sought to blame Glock and RSR for the criminal actions of white supremacist Buford Furrow. In 1999, Furrow shot and killed postal worker Joseph Ileto, and wounded three children at a Jewish Community Center in Grenada Hills, California, after illegally acquiring firearms.

What is not often reported is that, while a Glock pistol was used in Furrow’s heinous crime, the gun was originally sold to a police department, which subsequently sold it to a licensed dealer, who in turn sold it to a collector, who finally sold it to Furrow. Glock was being targeted, but did nothing illegal, and RSR never owned, sold, or possessed the firearm.

“It is fitting that this case was the first ever dismissed based on the PLCAA because the facts made this case the poster child for passage of common sense legal reform,” said Lawrence G. Keane, Senior Vice President and General Counsel for the National Shooting Sports Foundation.

Gunmakers Say They Will Leave Illinois if Ban Becomes Law

Some Illinois gun manufacturers say they will leave if state lawmakers approve a ban on “assault weapons.”

The threats came as a House panel approved legislation to ban the weapons, even though the proposal’s prospects appear bleak in the Senate following comments by Senate President Emil Jones, D-Chicago.

In a press conference before the House Executive Committee’s 9-3 vote in favor of the ban, the gunmakers said they would pull up stakes and take 750 jobs with them if the ban is OK’d.

“If this passes, we’re out of town,” said Dennis Reese, co-owner of Springfield Armory in Geneseo, one of four gun makers located in the Rock River Valley town of 6,400 residents.

“Our only course of action would be moving out of state,” added Mark Westrom, president of ArmaLite Inc., another Geneseo gun manufacturer.

Significant Military Contracts Awarded

A pair of delivery orders worth about $159.2 million from the U.S. Army Field Support Command, Rock Island, IL has been issued to two firms.

ATK’s Alliant Lake City Small Caliber Ammunition Company L.L.C. in Independence, MO received a delivery order amount of $133.9 million as part of a $300.45 million firm-fixed-price contract for small caliber ammunition services. Work will be performed in Independence, MO and is expected to be complete by Sept. 30, 2007. This was a sole source contract initiated on Oct. 5, 2005 (DAAA09-99-D-0016).

Second source prime supplier General Dynamics Ordnance and Tactical Systems Inc. in St. Petersburg, FL received a delivery order amount of $25.3 million as part of a $196.44 million firm-fixed-price contract (W52P1J-05-G-0002) for production of .50 caliber ammunition. Work will be performed in St. Petersburg, FL, and is expected to be complete by Aug. 23, 2010.

In other contract news, small business qualifier Knight’s Armament Co. in Titusville, FL received a delivery order amount of $31 million as part of a $110.8 million firm-fixed-price contract for the Modular Weapon System in support of the M16A4 Rifle and M4 Carbine. The U.S. Army Field Manual specifies that adding the Rail Accessory System (RAS) turns the weapon into the M4 MWS or Modular Weapon System.

Work will be performed in Titusville, FL and is expected to be complete by the end of the fiscal year – Sept. 30, 2006. This was a sole source contract initiated on Feb. 1, 2006 by the Army Tank-Automotive and Armaments Command at Rock Island, IL.

Center Industries Corp. in Wichita, KS received a contract extension that calls for the production of 980,000 more ammunition magazines for the M16 rifle and M4A1 carbine. More than 80 of the 248 people who work at the plant will be involved in fulfilling the contract, which the company has had since 1997. About 75% of Center Industries’ workforce is disabled.

Center has a number of quality-related certifications, and holds a 100% quality rating with the US Department of Defense with over 1.3 million parts shipped. Center Industries expects to have sales in excess of $22 million in 2006, and also does work for the state of Kansas, Spirit AeroSystems and Cessna Aircraft Co., among others.

The author publishes two of the small arms industry’s most widely read trade newsletters. The International Firearms Trade covers the world firearms scene, and The New Firearms Business covers the domestic market. He also offers FFL-mailing lists to firms interested in direct marketing efforts to the industry. He may be reached at: FirearmsB@aol.com.