The industry is enjoying substantial firearm sales at a time when U.S. retail is suffering from an economic slump. Just how long such business will continue is in question. The latter part of 2008 remains murky, with companies bracing for a drop-off of sales and the impact from possible gains by anti-gun elements on the political front.

U.S. manufacturers, distributors and dealers continue to report “solid” firearm sales, primarily in the handgun and “black rifle” markets.

According to the FBI National Instant Criminal Background Checks System (NICS), there was a 9.1 percent increase in background checks during the first five months of 2008, as compared to the same period in 2007. While impressive on its own merit, the increase is significant, since 2007 was a record-setting year for background checks.

During January through May 2008, consumers underwent 4,831,693 background checks, an increase of 403,003, as compared to the same months in 2007. Despite the impressive numbers, company executives see challenges ahead.

“What does the rest of the year look like? I think it’s going to be a very challenging year, because, for our average customer, when gas costs $4 or more a gallon, when milk costs twice as much as it did a year ago, and the other micro factors are pressuring how much free discretionary money people have to spend, something has to give. I think it’s going to be a very challenging year in the domestic hunting and sports shooting market,” said Tommy Millner, Remington CEO.

There are bright spots, however, that will likely continue, according to Millner.
“The domestic law enforcement and homeland security markets are growing significantly,” Millner said.

Also contributing to the anxiety is “the prospect of further Democratic gains in the House and Senate and the prospect of a Democratic president,” Millner said.
At the same time, Millner cites the industry’s abilities to face such challenges.
“On the plus side, we are unified, we are well-organized and we all understand how to fund and fight,” he said.

ATF’s Annual Data

The ATF’s 2006 Annual Firearms Manufacturing and Export Report, the latest data from the agency, reveals a rebounding industry. U.S. manufacturers produced 3,614,452 firearms in 2006, a 12.3 percent increase over 2005, and the largest number of guns manufactured since 2000.

In 2006, Remington Arms Co. again was the number one U.S. firearm manufacturer, out-producing other companies by nearly 150,000 firearms. It was the sixth straight year the company ranked number one on the Top 25 U.S. Manufacturers list (page 30).

“First and foremost, it makes me very proud that U.S. manufacturing of firearms is still vibrant, alive, healthy and thriving. Secondly, and of equal importance, is my pride in the hard work of a lot of people that added up to this kind of success. I’m proud of our team,” Millner said.

Remington manufactured 598,888 firearms, producing the most rifles and shotguns in the U.S. in 2006 (page 36).

Smith & Wesson, for the second straight year, posted the most aggressive growth of U.S. manufacturers. In 2006, S&W had a 46.4 percent increase in production, which placed the company in the number two position of U.S. manufacturers.

Marlin also posted notable numbers in 2006, with 226,761 rifles made, placing the company in the number two position of U.S. rifle manufacturers (page 36).

In foreign trade, U.S exports in 2006 jumped a staggering 78.6 percent (page 38), with 333,499 firearms exported — this on top of the 18.7 percent increase in 2005.
“The international businesses in sporting and the military/L.E. markets are booming because of a weak dollar,” Millner said.

Remington exported 58,431 firearms in 2006; however, the number one U.S. exporter was Beretta USA, with 78,810 guns.

U.S. imports increased 21 percent in 2006 and 19 percent in 2007 (pages 40-42). Brazil continues to hold the number one importer position with 441,038 firearms imported in 2006 and 697,369 in 2007.

2006 U.S. Production

The top U.S. manufacturers in 2006, the numbers of firearms they produced and their change from 2005 were:
• Remington Arms: 598,888 (-2%)
• Smith & Wesson: 450,390 (+46.4%)
• Ruger: 417,943 (+1%)
The top handgun manufacturers:
• Smith & Wesson: 445,740 (+44.9%)
• Ruger: 216,269 (+18%)
• Sig Sauer: 90,107 (-1.2%)
The top rifle producers were:
• Remington: 304,721 (+.8%)
• Marlin: 226,761 (+10.4%)
• Ruger: 196,472 (-10%)
The top three shotgun companies:
• Remington: 294,167 (-4.8%)
• Mossberg: 225,909 (+13%)
• H&R 1871: 87,268 (+.4%)
The 1,403,329 handguns manufactured in 2006, a 30-percent increase, was the largest number of pistols and revolvers produced since 1997.

Pistol production rose 27 percent in 2006 and revolver production jumped 39.3 percent.

Rifle production increased 4.6 percent in 2006, after a 6.74 percent rise in 2005.
In shotguns, 2006 production increased a modest .7 percent, which, nonetheless, was a welcomed change from the 3-percent decrease in 2005.

U.S. Exports, Imports

The top three U.S. exporters for 2006, the numbers of firearms exported and the percentages of change from 2005 were:
• Beretta USA: 78,810 (+4,897%)
• Remington: 58,431 (+22%)
• Smith & Wesson: 35,035 (-8.2%)
In 2006, the top importers were:
• Brazil: 441,038 (+20%)
• Austria: 330,156 (+14%)
• Italy: 257,691 (-1.6%)
The Battle For 2008
The firearm industry is impressive in its resiliency and ability to thrive in the toughest of economic times. However, such success will be greatly challenged during the fall buying season, and compounded by uncertainty on the political front.

As noted in this report last year, the industry will be “greatly tested in 2008.”