Industry News: June 2001

By Robert Hausman

With a show floor stretching nearly a mile long, and exhibitors filling a record-breaking 486,200 net square feet of floor space, the 2001 SHOT SHOW was a reaffirmation of the strength of the nation’s small arms industry.

Overall attendance was 25,291, which included 12,857 retailers, 11,234 exhibitor personnel, and 1,200 press professionals. Buyer registration was down 6.8% from the Atlanta show in 1999 and more than 20% below record attendance numbers in Las Vegas.

The record-breaking exhibitor space of 486,200 net square feet easily surpassed the 465,600 of last year’s show. More than 447,000 square feet has already been sold for the 2002 SHOT SHOW at the Las Vegas Convention Center, February 2-5.

Exhibitors reported steady retailer traffic at their booths and strong sales throughout most of the show, which ran January 11-14 at the New Orleans Convention Center.

Exhibitor Comment

“We’ve had another great show,” said Bob Morrison, executive vice president and COO of Taurus International Manufacturing. Those comments were echoed by most exhibitors, who said business was good and not affected by a lower than normal turnout of attendees. “We did fantastic business with the buyers who were there,” Morrison added.

Reports of a slowing economy may have caused some buyers to be more cautious than in past years, but sales nevertheless reflected a genuine optimism in the year ahead. “Historically, our industry does fairly well when the economy slows down, so even if that’s what ultimately happens, I believe we’ll all be fine,” observed Steve Hornady, president of Hornady Manufacturing and chairman of the Hunting and Shooting Sports Heritage Foundation.

“People were here to do business,” said Art Wheaton, vice president and general manager of worldwide sales at Remington. “I’m conservatively optimistic about the year ahead. Those with good products and good marketing plans will have a good year. The ones who don’t have those things – won’t.”

“Those of us who have attended numerous SHOT SHOW’s may lose sight of the tremendous international market which the SHOT SHOW offers to our exhibitors,” said Robert T. Delfay, president of the National Shooting Sports Foundation. “I spoke with one new exhibitor during the closing minutes of the show who struggled to find the words to explain how successful the show had been for his new company. “We came here with an idea and are going home with a promising company,” he said.

Many other first-time exhibitors were equally pleased with the show. Andy Nelson chose the SHOT SHOW for the premier of a new product. “It was a big gulp for us to come here financially, but the response we received went beyond my most optimistic expectations,” said Nelson. “The excellent media exposure alone has returned our investment.” Nelson said he plans to double his booth space at next year’s show.

“The show was fantastic for us,” said Shari-Lyn Fix, vp/sales at H&R 1871. “The interest in our products has been great. We’ve gotten a lot of new leads and return customers. This has been one of the better shows for us.”

The Marlin Firearms Co., which was named by S.H.O.T. Business magazine as the Manufacturer of the Year, reported sales were good. “We noticed buyers are being conservative this year, but our usual orders were good,” said Tony Aeschliman. “We were pleased with the show.”

State of the Industry Report

The show featured a well-attended “state of the industry report” at which Delfay explained that, “the foundation is in place.” to empower all segments of industry to determine their own future.

“How many rifles, shotguns, ammunition, reloading dies, telescopic sights and apparel will be sold next year is not already preordained by some nay-sayer, some demographic trend or some anti-gun politician,” Delfay said. “We can impact these sales this year and next. The foundation is in place to do this.”

Among the blocks in the “foundation” that Delfay and other speakers described are the industry’s multi-faceted efforts in public outreach, participation, political action and legal responses to municipal lawsuits.

“As proof of the industry’s strength and growth potential, you need to look no further then the nearly one mile-long floor of this 23rd annual SHOT SHOW – once again the largest in our history. It is an extraordinary success and a tribute to your association, to our industry and to the strength of what we stand for. The foundation for growth is in place,” Delfay emphasized.

As usual, the SHOT SHOW attracted many organizations associated with the shooting sports. “This is good exposure for us,” said US Biathlon Team Summer Program director Mark Sheppard. His purpose in exhibiting at the show was to raise awareness about and generate support for both summer biathlon and traditional Olympic biathlon. An electronic shooting simulator at the USBA booth allowed attendees to test their skills with a biathlon rifle.

The SHOT SHOW also featured well-attended seminars that brought together firearms retailers and representatives from the Federal Bureau of Investigation and the Bureau of Alcohol, Tobacco & Firearms to discuss important issues. These included the National Instant Criminal Background Check System and “Don’t Lie for the Other Guy,” the joint NSSF- ATF developed program that helps prevent illegal straw man purchases. More on these seminars will be presented in future “Industry News” columns.

The SHOT SHOW continues to grow and its success in New Orleans mirrors the overall strength of the small arms industry. “Twenty-three years ago, another trade show did not share our industry’s vision about the future of the shooting sports and so we left that show and started our own,” said Delfay. “Today, that other show no longer exists, but the SHOT SHOW is the largest show of its kind in the world and the 35th largest trade show in the US. We attribute that to hard work, great products and a growing industry unity – all of which were on display at the SHOT SHOW.

Litigation Update

In other news, the arms industry has won several victories recently in its battle against the lawsuits filed by various municipalities. The U.S. District Court for the District of New Jersey, sitting in Camden, has dismissed the Camden County Board of Freeholders’ (“the County”) attempt to sue Colt’s Manufacturing Co. and 15 other firearms manufacturers.

In doing so, the court rejected all three remaining legal theories advanced by the County as the basis for its lawsuit – including claims of public nuisance, negligent entrustment and negligence in marketing and distribution. All of the County’s other claims had been abandoned or dismissed earlier, including claims of strict liability and fraud.

District court Judge Jerome B. Simandle dismissed the lawsuit on December 5, finding the County “lacks constitutional standing to assert its negligence claims because its injury – increased governmental costs – is too attenuated from the distribution policies of the manufacturers, and the negligence-based claims therefore fail to allege that the County’s expenditures are caused by or fairly attributable to the defendants’ negligence.”

Judge Simandle also dismissed plaintiffs’ allegation that defendants’ businesses represented a “public nuisance” on the grounds that “the County has sought to extend the limits of public nuisance law so far as to eliminate the requirement that the defendants control or participate in the harm to be abated” and noted that the County had “failed to state a viable theory for linking the defendants with the criminal acts that constitute the end harm.”

The judge noted, “ While the court does not fault the County for seeking new and creative methods of combating gun-related violence within its borders, public nuisance law does not sweep so broadly as to impose liability on manufacturers of a legal product, who follow relevant regulations, and who do not control or participate in irresponsible secondary and tertiary acts that are more directly responsible for the end harm.”

The District Court of New Jersey in Camden is one of the latest to rule against plaintiffs in the rash of litigation by city and other governments against makers and sellers of firearms in more than 20 pending lawsuits around the country.

Other recent decisions include: City of Chicago v. Beretta U.S.A. Corp. et al, No. 96 CH 15596 (Cir. Ct. Cook County, Il, Sept. 15, 2000), notice of appeal filed (dismissing plaintiff’s First Amended Complaint with prejudice for failure to state either a negligent entrustment or public nuisance claim under Illinois law) and Mayor James H. Sills, Jr. and City of Wilmington v. Smith & Wesson Corp. et al, CA No. 99C-09-283-FSS (N.J. Super. Ct. New Castle County, Dec. 1, 2000,) motion for reargument pending (under Delaware law, City’s negligent distribution and marketing and unjust enrichment claims dismissed; City found to have no independent public nuisance claim).

Carlton S. Chen, general counsel of Colt’s Manufacturing Co., Inc. noted these decisions reinforce the views of several other courts – including courts in Miami, Bridgeport, Cincinnatti and Detroit that also dismissed similar suits by other municipalities or most of the purported support for such suits. A suit by the City of Camden is pending.

Meanwhile, U.S. District Judge Berle N. Schiller has dismissed the City of Philadelphia’s lawsuit against gun manufacturers, stating that the city was trying to control members of the firearms industry through litigation, because it was unable to do so by imposing new ordinances.

Schiller cited the 1995 Pennsylvania Uniform Firearms Act and a 1999 amendment to the Act, as well as judicial precedent in his decision.

He stated: “Under Pennsylvania law and by unequivocal Pennsylvania Supreme Court precedent, the power to regulate firearms within the state now lies exclusively with the state legislature.”

Schiller also stated that the 1999 amendment was specifically intended, “to prohibit this very case.” City Solicitor Kenneth I. Trujillo said the city is “quite likely” to appeal.

The judge in the Wilmington, Delaware case, meanwhile, has issued a split decision. The court in the City of Wilmington case against the industry, dismissed the city’s marketing, distribution and public nuisance claims, but will permit the city to try to prove its general negligence claims. The court also denied the industry trade associations’ separate motions to dismiss.

Gunmaker Smith & Wesson has announced a settlement with the City of Boston. According to Boston Mayor Thomas M. Menino, the agreement is “a pact to reduce illegal guns.” In turn, S&W will be dropped from that city’s lawsuit against the firearms industry. According to the Mayor’s media release, the key components are:

S&W handguns will be sold with external safety locks. Within two years, its handguns will have an internal locking device.

– S&W will commit 2% of its annual firearms sales revenues to developing technology that will allow handguns to be used by only authorized persons.

– S&W will only do business with dealers and distributors who will track their inventory, secure S&W firearms, and train employees who handle or sell S&W firearms.

– Dealers will make no sales of S&W firearms at gun shows unless all sales by any seller are made after completion of a background check and a valid firearms license is shown.

– S&W handguns will be re-designed to effectively preclude an average 5-year-old from operating them. Such design changes include raising the pressure needed to pull the trigger and adjusting the mechanics so they are too large for an average 5-year-old’s hands to operate.

– S&W’s pistols will have either a magazine safety disconnect or a chamber load indicator.

– S&W will provide warnings about risks of firearms with each firearm that it sells.

Mayor Menimo said the city had no intention of dropping its case against the other manufacturers unless they also agreed to this same settlement.

The San Francisco Board of Supervisors has approved an ordinance to hold firearms manufacturers and retailers financially responsible for injuries and deaths resulting from their products, even though the firearms are not defective.

Saying the legislation, “should serve as a model for other jurisdictions,” Supervisor Alicia Beceril, who introduced the measure, said it would apply to all gun makers, dealers and importers who would be liable for “all direct and consequential daamges” of injuries and deaths in the city that result from their firearms. The ordinance would allow, for example, a robbery victim to sue the maker of a gun that was used in the crime or permit the family of a suicide victim to sue.

The new law exempts firearms with an “internal personalized safety feature, and cases where the victim was shot by the police or shot committing a crime.”