2013 Will Be A Great Year For Business – But With Challenges!
The firearms industry begins the new business year with a significant amount of momentum. Firearms sales were already setting records before they were propelled to even greater heights by the reelection of President Obama.
October was the 29th straight month of increased NICS background checks. Then, with the results of the national election clear, consumers began another buying frenzy.
The stock market also responded positively to firearms companies following the election, with Ruger shares increasing 9 percent and Smith & Wesson shares rising 8 percent from Election Day through the week’s closing bell on Friday.
Then came Black Friday, Nov. 23. Consumers stood in line at gun stores and set a single-day record for NICS background checks.
“We sold a gun every two minutes on that day, and happiness, smiles and excitement was the atmosphere,” said Miles Hall of H&H Shooting Sports Complex in Oklahoma City.
Yes, the industry is setting sales records in firearms, with other segments enjoying robust sales, also.
At the end of October, Ruger reported its third-quarter sales increased 47 percent over the previous year. Smith & Wesson reported its second-quarter sales were up 48 percent over 2011. Freedom Group reported its third-quarter sales were up 20 percent.
Are the record-setting sales of 2012 sustainable? While the over-the-top buying frenzy will subside, the momentum of 2012 will drive sales to impressive levels in 2013. That said, there are dangers ahead. Foremost is the “fiscal cliff” facing the nation. Then there is the reenergized anti-industry/anti-gun movement, driven by a president unfettered with getting reelected.
Business Has Never Been Better
What impact will the reelection of President Obama have on the industry?
“There’s a mixed bag,” said Steve Hornady, Hornady Manufacturing president. “The first thing is the election is over; let’s move on. Second, as far as any political activity in Washington, I don’t believe we’ll see any overwhelming threats against the industry because we have basically the same balance of power between the House, in control of the Republicans, and the Senate, in control of the Democrats. Neither side is going to let the other side do anything that looks like they may have won something.”
However, the industry should not become complacent.
“I think we have to be vigilant about regulatory assaults on us. This administration has demonstrated and has avowed that they are not particularly friendly to the firearms industry, and so I think there are some risks going forward that they could use executive powers of the government,” Hornady said.
From a business standpoint, Hornady forecasts another successful year.
“We were projecting a good year for 2013, regardless of who won. And virtually everyone who I talked to in this business has had exactly the same feeling. Business is good — not necessarily as a result of this election, but due to increased participation in the shooting sports. This is the best thing we have going for us — we have more people shooting than we’ve had in the past. That’s what is working for us,” Hornady said.
This increase in the “fun aspect” of shooting is a shift from the fear of the loss of firearms.
“There is no question that after the last election there was a certain amount of panic, but that’s a long time in the past.
Everyone was concerned that consumers were hoarding, hoarding and hoarding. Well, if they’ve been hoarding, they’ve been hoarding for the last four years, because business has never been better. And I will say that for every manufacturer in my segment — the ammunition and reloading side. Business has never been better for all of us,” Hornady said.
Send A Positive Message
Travis Hall, Browning president and CEO, said the industry must continue to work together to counter any anti-gun attacks.
“Although we have a competitive marketplace and we’re all working to make our companies successful, we need to come together,” Hall said. “One of the most important things we can do is present the shooting sports — hunting, target shooting, whatever it is — in a positive manner. If we’re positive — if we get out and share the shooting sports with people, show them what we call the ‘fun of the gun’ — that will have a major impact.”
Hall says that positive approach will produce positive results.
“The more people we can reach with that message, the more likely they are to contact their legislators when anti-gun issues arise,” Hall said. “There is a positive view in America right now about firearms. It’s fun. We’re conservationist. We’re safe, sane people, and that’s what we have to promote.”
While Hall strongly recommends presenting a positive message, he’s clear on how to respond to anti-industry attacks.
“When we have to, we stand together to fight for our Second Amendment, God-given rights, and we do what we have to do,” Hall said.
Avoid Getting Flanked
“I think everyone needs to keep their eyes wide open,” said Mark Kresser, president and CEO of Taurus International, regarding the next four years of the Obama administration. “There is an opportunity for us to be flanked if we’re not careful.”
Kresser said the past four years have been relatively easy for the industry.
“We’ve gotten maybe a little bit relaxed, because nothing significantly has impacted our business in a negative way. However, there are a lot of things that are teed-up that could cause us significant harm as an industry, and I think everyone needs to work very closely together,” Kresser said.
He strongly recommends supporting the NSSF and NRA.
“It’s absolutely imperative we fill their coffers and make sure we are ready. This is not the time for animosity among us as manufacturers. We all need to join arms,” Kresser said.
Kresser points to the importance of solidarity in the industry.
“We made it through some very difficult times many years ago. Now there’s a new generation of people who need to talk to the folks who were around then, and understand that everyone had to dig deep to make it through and to get to where we are today. Without organizations such as the NSSF and NRA, we may not have made it. So everyone needs to lock arms. We’re in this together, and we need to fight for the same common cause,” Kresser said.
Talk To People
Lane Tobiassen, Crimson Trace president, said countering anti-industry attacks begins with supporting the legislative efforts of the NSSF and NRA-ILA.
“We must make sure everyone in government knows the consequences of acting against the Second Amendment,” Tobiassen said. “That’s not going to stop them completely, of course, but we have to double down on our message and effort.”
Tobiassen also recommends promoting the positive aspect of firearms.
“As an industry, we must work together more than ever, and also present a positive message about gun ownership and shooting. Take people shooting. Support the NSSF’s First Shots program. Don’t take these things for granted,” Tobiassen said.
Personal involvement in countering anti-gun efforts is vital, Tobiassen said.
“What I do is talk to people about the guns I like to shoot. So, talk to people about going shooting, even those people you don’t associate with all the time. If they hear us talking about it — if they see everyone in the industry and everyone around the industry in a more positive light — that can only help us,” Tobiassen said.
Facing Anti-Gun/Anti-Industry Issues
The president’s reelection presents new challenges for the industry; however, there are also opportunities, according to Steve Sanetti, NSSF president and CEO.
“We will doubtless see many changes in the leadership and staffing of many federal departments and agencies, and their philosophies and willingness to work with America’s firearms and ammunition industry will be tested,” Sanetti said.
“We have seen many initiatives to make our industry more competitive on a global basis with nations that, ironically, do not permit widespread personal ownership and enjoyment of firearms, yet allow their manufacturers to readily export to the U.S. and other nations,” Sanetti said. “This disparity will have to be addressed, since both political parties have vowed to make American industry more competitive in the face of a shrinking world.”
International firearms control rules are also a concern, Sanetti said.
“Proponents of the UN Arms Trade Treaty will attempt to resurrect this effort, and both the proposed International Small Arms Control Standards and the ‘UN Programme of Action to Eliminate the Illegal Traffic of Small Arms in All Its Aspects’ must be carefully watched,” Sanetti said. “Conversely, the ATF will likely issue proposed or amended regulations concerning imports of firearms, ammunition, components and accessories. These bear careful watching — particularly as the recreational shooting sports continue to evolve, and the kinds of firearms used by law-abiding Americans for legitimate uses continue to change.”
Sanetti points out that the attacks on traditional ammunition and its components will continue, as will the push to force manufacturers to adopt microstamping. In addition, Sanetti said other “failed proposals” might be resurrected.
“These might include restrictions of semiautomatic firearms, their magazines or other accessories, various ammunition purchase restrictions and attacks upon gun shows,” he said.
Despite all the anti-industry possibilities, Sanetti sees plenty to be positive about in 2013.
“We will see increased efforts to promote opportunities for hunting and all the shooting sports, such as the Families Afield program, increasing momentum to remove Sunday hunting bans, and renewed efforts to enact the Sportsmen’s Package group of some 20 bills currently languishing in Congress. The legislation will increase opportunities and public access for hunting and shooting ranges, further clarify the legitimacy of traditional ammunition, permit the importation of lawfully taken hunting trophies, and further fund conservation efforts to sustain wildlife populations for all to enjoy,” Sanetti said.
For more information on these and other issues, visit www.nssf.com/industry.
Southwick: Consumers Need A Place To Shoot
Rob Southwick, president of Southwick Associates, is an expert in tracking consumer trends. How does he see 2013?
“The economy in the short run should continue to see steady growth — assuming the ‘fiscal cliff’ issue, which might derail the slow and fragile growth we’re seeing, is avoided,” Southwick said. “In the longer term, addressing federal debt will become more important if people are to have the discretionary income to regularly enjoy hunting and shooting sports. Any economic uncertainty should help maintain sales of handguns and other self-defense products.
“Much of the unprecedented growth in our industry relates to increasing interest in modern sporting rifles, or AR platforms. These enthusiasts are also contributing significantly to growth in ammo sales. There’s nothing on the radar at this time showing a potential slowdown.”
Beyond politics, what challenges is the industry facing?
“In regards to maintaining sales growth, with the increase in the number of new shooting enthusiasts, they need a place to shoot. Ranges, both indoor and outdoor, will be needed to give our customers a convenient place to shoot,” Southwick said. “Recent NSSF research shows that when the most convenient shooting opportunities are more than 30 minutes away, shooting-sports participation drops significantly.
“Thanks to the hard work of those fighting for firearms owners and future owners, the challenges we’ve seen in the past are being reduced, such as the difficulty in getting kids to hunt for the first time, overcoming legal restrictions on sales of various types of firearms, etc.”
What does Southwick think the industry and dealers need to do to meet those challenges?
“Work together to provide our customers a place to shoot. The industry is fully capable of meeting the demand, and barring any new legal challenges, just allowing people a place to enjoy their firearm purchases will become more critical as the U.S. population grows,” Southwick said.
What is Southwick’s forecast for consumer spending in 2013?
“We’ll see continued gradual increases, if our elected leaders can avoid mishandling the ‘fiscal cliff’ issue,” Southwick said.
For additional insight and data from Southwick Associates, visit www.southwickassociates.com.
By Russ Thurman
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