The intrigue surrounding Glock

Business Week has published an article about the intrigue behind one of the most iconic handgun manufacturers of recent history. It is only a matter of time before the story of Glock hits the silver screen.

On the afternoon of a meeting scheduled at Ewert’s office near the tony Rue Royale in central Luxembourg, Glock was attacked in an underground garage. The hit man, a former professional wrestler and French Legionnaire named Jacques Pecheur, bashed the businessman on the head with a rubber mallet, a technique apparently aimed at making it look like the victim had fallen down and fatally injured himself. Glock, physically fit from daily swimming—often in the frigid lake abutting his home near Klagenfurt, Austria—fought back. When police arrived, they found Glock bleeding from gashes to his skull. Pecheur, 67, was unconscious.

The assassination attempt on Mr. Glock is well documented, but it remains to be seen how much of the tax evasion, extreme right wing connection and money laundering is fact and what is fiction.

I was interested to learn the estimated profit margin on the manufacture of Glock pistols.

the Glock costs relatively little to make. In a 1994 patent lawsuit in the U.S., Glock estimated its profit margin per pistol at 68%. The guns typically sell for $450 to $600 in U.S. retail gun stores.

The Glock 17 RTF: The Latest in the Glock line.

Glock is like the Apple Computers of the gun world. They have a less is more philosophy towards their product design and yet maintain high profit margins and market share.

The author of the above article actually spent from time behind a Glock pistol, as part of his research, with blogger Massad Ayoob (Hat Tip: SayUncle). I wish more journalists would try that.

Many thanks to Daniel Watters and LeisureGuy for the link.

UPDATE:

Forbes wrote two articles about the Glock saga back in 2003:

Thanks to Daniel Watters for the link.





Steve Johnson

Founder and Dictator-In-Chief of TFB. A passionate gun owner, a shooting enthusiast and totally tacti-uncool. Favorite first date location: any gun range. Steve can be contacted here.


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  • SpudGun

    So Mr. Glock is a money laundering, tax avoiding Nazi – perhaps he’ll run for political office, he’s got the right experience.

    I’ve never liked Glocks, they look and feel like bricks but I won’t say a bad word against them, especially as there are so many fanatical Glock nuts. Nice that you used a comparison with Apple Computers, as whenever you talk to a Glock nut, it’s like having the Mac / PC argument over and over again.

    I don’t wish to appear ageist, but a 67 year old hitman? Really? Was he murdering businessmen inbetween greeting people at the Vienna Wal-Mart?

  • Spud, you didnt read the article did you 😉 he vigorously denies that he is a extreme right winger.

  • SpudGun

    I apologize profusely – alledged money laundering, tax avoiding Nazi.:)

  • Vak

    For absolute irony, Pecheur should have tried to kill him with a glock.

    (actually, was any gun maker ever shot with one of his pistols ?)

  • Clodboy

    Funny this article comes up now… I recently posted a comment under the article on Saddam’s Glock why it was in no way surprising to find Middle Eastern dictators using them. Doesn’t change anything about the fact that it is a solid product, though.

    Spud: Vienna doesn’t have a Wal-Mart, or greeters, for that matter. In Austria, “being smacked in the back of the head with a rubber mallet” would really only be marginally worse than our established standards of customer service. 😉

  • Matt Groom

    Again, Nazis are only right wing if you are so far left that Communism is your center or “moderate” position.

    Avoiding taxes doesn’t make you a Nazi, it makes you smart. Anybody who pays more taxes than they absolutely has to is an idiot.

  • Matt Groom

    The whole article looks like one giant hit piece to me, I don’t give a damn what Glock does with his money, as long as he’s making political contributions to the right side.

  • CMathews

    68% percent huh? That’s a scam. I bought my Glock used so it was considerably cheaper. That margin is quite astonishing. Does anyone have a comparative analyses of Glock’s margin as opposed to another gun giant like Colt or Taurus?

  • RP-in-TX

    I’m not a fanatical Glock nut (I don’t think so anyway), but I do adore the Glock 19. If I could only own one handgun it would be that one. It only has 34 parts, any of which can be changed out in 5 minutes with just a punch. It’s small enough to fit in a jacket pocket yet still carry 18 rounds. And it’s a real platform like the AR rifles. You can get so many different aftermarket options that you can make it do anything.

    It is a pretty elegant design, especially being invented by a guy who made his fortune manufacturing shower curtain rings.

    Having said that, the Ruger LCR will be my carry piece once I scrape up the bucks.

  • Komrad

    If any business can get 68% profit margins, that is one well run business.

  • Matthew

    I would say H&K is more like the Apple of the gun world. Expensive products, smaller market share. People don’t lust after Glocks like an H&K (or a MacPro) that they can’t afford.

  • jdun1911

    I did read the entire article. it just above piss poor reporting.

    Two pistols dominate competitive scene, 1911 and Glock. There are reason for this and it not just reliability. Glock grip angle is design to stop/limit the slight hand shift when shooting, hence giving better control and accuracies when doing rapid shooting.

    On the video, Massad Ayoob should have stated that Glock wasn’t the first pistol to have high cap. Browning HP had it and it was design in the 1930’s. So do many pistol before Glock. To most viewers they would get the impression that Glock was the first handgun to have high cap. That’s piss poor reporting.

    There are other reason why LEA decided to move toward Glock. I believe a major one of them is the trigger assembly without a manual safety. It is something that LEA was looking for a long time.

    Glock big break was the FBI contract after the Miami shoot out and their aggressive marketing in the civilians market. Unlike HK I think Glock understood that US civilians sells was the key to getting LEA contracts. Without civilians support they would have not been as successful as they are. Just look at HK as an example.

    You compare HK to Glock. I think everybody would agree that more HK products are shown in movies and games then Glock. I rarely see Glocks being held by the hero. Yet, Glock basically own the pistol market because they supports and market to the people that would buy guns, i.e. us.

    US news source should make a distinction between European and US right wing. To the US, European right wings are considered far left in the USA. The Democrats in the USA is more right wing then European extreme right wing. That kind of sad if you asked me.

    Overall I think BW is sensationalizing their reporting too much. Lot’s of US companies moved their money oversea, more so now then ever. The main fear is Obama going steal it all.

    Hell I wouldn’t put my money in the US banking system. The FDIC is out of money. No US banking is safe from collapse. The USA under Obama became a banana republic.

    • jdun1911, you should give him some credit! As far as reporting goes it is far ahead of the nonsense most reporters write.

      I agree with you regarding the technical points.

  • jdun1911

    CMathews,

    I’m surprised with the 68% margin. Very low in the gun market. I would expect at least 100%. So Glock is in the low end.

    Lets compare it with HK. Their pistol can go over 1k and they are made with the same plastic. 1k you can buy a good AR.

    Colt margin is higher then Glock, much higher. The name command a premium.

    Taurus, ship their parts to the USA from Brazil so you would expect the margin to be higher because of cheaper labor. Nothing wrong with that.

    The gun industry is one of the few industries that can get margin as high as illegal drugs. The accessories and part is where the really high margin are and not the production of the firearm itself. Make the product sexy and a must have via marketing. Then priced it at least 500% what it took to produce it. Good times.

    • jdun1911, 100%? You reckon? Although you make a good point about some of those firearms. I wonder if the difference is made up of import costs.

      Labor depends on how labour intensive the production is. I imagine taurus is, as you say, labour intensive production – minimum wage in Brazil is less than US$1.50/hour (at current exchange rate).

  • Matt Groom

    I also greatly admire Glocks for their simplicity and ease of maintenance and I agree with RP-in-TX that the Ruger LCP is the finest Kel-Tec clone on the market.

  • Mang

    Fascism has ‘right’ and ‘left’ aspects. It is neither classically conservative nor classically liberal. Nazism combined some of the government intervention, economic control and a little bit of a social safety net (for ‘aryans’) of socialism with the xenophobia, militarism and ‘values’ enforcement of the right. In terms of politics today and what is considered right and left wing, it makes more sense to call Haider a right wing politician.

    Amazing article, thanks for posting it. Still wading through it.

    • I agree that being far right does not make a person a nazi. Being a nazi ( / white supremacist) has little to do with left/right and more to do with racism, hatred and evil. Lets keeps the discussion focused on the company, not politics.

  • Mang

    Good point on Glock vs. HK on realizing civilian sales are key to LE sales, jdun…

  • Matt Groom

    Socialism, especially National Socialism, is left wing exclusively. Nazism is Socialism, period. Fascism and Nazism are NOT the same thing, and Fascism is ALSO SOCIALISM. Show me a Right-Wing Socialist and I’ll show you a dictionary. USSR= Union of Soviet SOCIALIST Republics. Which wing were they? The word ‘Soviet’ can most closely be translated as meaning “Bureaucrat”.

    “…the xenophobia, militarism and ‘values’ enforcement of the right.”
    Yes, none of these things ever existed in any form until the advent of western culture, correct? Please. The Nazis weren’t xenophobic, they were racist. The Soviets certainly weren’t militant, were they? No, all those May Day parades with ICBMs on display in Red Square were actually Piñatas full of candy for the children of the world. When Khrushchev slammed his shoe on the podium and shouted “We will CRUSH YOU!” he meant with a big warm bear hug, not nuclear annihilation, right?

    The Nazis were not “White Supremacists” because they killed plenty of white people. They were “Aryan Supremacists”, Aryan being a completely made up concept. Being a White Supremacist, or any kind of racist, does not make you a Nazi, it just makes you stupid. Nearly every White Supremacist I’ve ever met was VERY Left wing.

    The Nazis were the NEW thing when they took control, therefore they were not ‘Conservatives’ because they were not preserving an existing order or culture. They were not in favor of Democracy or private property or Civil Rights, so they were not classical Liberals, the beleived in the supremacy of the state and of government control of EVERYTHING. They did not believe in a free market system, but they were a lot more realistic than the Soviets were early on.

  • Phil Wong

    Well, I went through the Glock Armorer’s Course many years ago, so I guess I can also be a Glock “Apologist”…

    Retail buyers complain about 68% reported profit margins as if they are somehow fairly entitled to buy goods at only 10%-30% above the cost of manufacture…that business model only works for industries where a manufacturer is constantly turning over a high volume of units, every day/week/month/year. Since the latest serial-number-prefix I’ve seen was an “M-series” that implies that total production of Glock pistols since the very beginning in 1982-83 is right around 9 million units(and counting).

    Sure, 9 million $500 pistols over 27 years sounds like a lot…but, by comparison, how many $800+ desktops and laptops has Dell produced since they started business in 1985? I’m guessing that 9 million units would be ONE good year for Dell – and just what is Dell’s profit margin, anyway?

    Of course, that “excessive” 68% profit margin is what actually has to pay for each and every one of the multifarious costs of “overhead” – I’m pretty sure that Glock is not subsidized by either the Austrian or U.S. governments, apart from the continuing purchases of pistols(which have to be competed for and bid on against all the other major gun manufacturers).

    Furthermore, there are certain “hidden” costs which have to be budgeted for when a gun manufacturer sets its unit price – for example, the 6%(IIRC) excise tax that BATFE collects from every gun and ammo manufacturer that goes into the Pittman-Robertson fund, which funds wildlife conservation programs across America. Also, I seem to recall reading somewhere(probably in relation to the HUD lawsuits and settlement with S&W) that every gun manufacturer automatically builds in an extra +/-20% margin into the unit price of every gun they make, which goes into a “war chest” that pays for the cost of fighting unmeritorious civil lawsuits.

    What consumers should be considering instead, is whether a highly durable, highly reliable, accurate, easy-shooting, rust-proof handgun that also happens to be nationally(if not globally) supported by a network of armorers/gunsmiths and a robust, widespread aftermarket accessories industry is worth paying $500/each at retail…and, guess what, roughly 9 million consumers worldwide have done exactly that. Sure, if Glock wanted to, they could cut their profit margin in half and totally take over the “budget gun” market from Kel-Tec, Hi-Point, Ruger and Taurus…but would it be the SMART thing for them to do? I’m thinking that rather than lose 50% of their profit margin to gain, at best, 30% more market share, Glock would rather keep their niche as the median-priced “volkspistole” that everybody knows about and that has become a de facto industry standard to which all their other competitors are compared…

    • I personally don’t have a problem with a company making a huge profit margin. If profit margins were low we would not see the vast number of new gun designs launched every year. I love this industry for it.

      Apple, for example, has incredibly high margins. They don’t bother with low margin products (except the iTunes Store, but that is used to sell more ipods).

  • jdun1911

    Yeah over 100% at least.

    Plastic guns frames are easy to produce. Make a mold, pour melted plastic in it and wait. It is a very inexpensive process to manufacture.

    Eyeballing it, it looks like the same amount of plastic is used on handguns as it does for Pmag. Pmag sells for $14 retail so the material plus molding process probably runs $2 max for a complete magazine.

    I won’t name names, but this product has been talked on AR15 from time to time. It’s a product that work and solved a fundamental problem that occurs in AR15 SBR.

    CRANE found a way to fix the problem inexpensively. It cost around 2 cents each at the local hardware store. A private held company ran with the idea but changes the shape and marketed as a must have for $10+ retail. Both work the same but you got a lot of morons buying the $10+ version and frown on people that use the .02 version. What do you think the margin for that product?

    I’ll send you the link Steve.

  • SpudGun

    Hmm, a far right Austrian? Why would I automatically link that with the modern Nazi party? I’m wacky that way.

    As for keeping this away from politics and strictly on a corporate level, it sounds like some mighty fishy business dealings to me when elderly hitmen with rubber mallets are sent after you.

    I would also imagine that his alledged tax avoidance wasn’t strictly legal either. But why should anyone pay tax anyways, soldiers, cops and fire fighters should work for free.

    As for Mr. Glock, his profit margins are good and that’s the only real way to measure an individual’s worth isn’t it? Bernie Madoff also made a lot of profit for himself, you guys must love him also.

    • SpudGun, nobody is arguing that breaking the law is a good thing. This blog is not the place to discuss tax law, capitalism vs. socialism, or politics in general. Please read the comment policy. With 75% of visitors coming from the states, the political leanings of most here are, including me, are more conservative than in your country. Please respect that.

      Everybody: lets get back on topic. Feel free to discuss Mr Glock and Glock the company, not Political Science.

  • CMathews

    Jdun,

    Thankyou for the enlightenment. Your are right about plastics, excuse me, “polymers” being cheap. I did some molding at my previous college. That 68% just seemed like an awful lot to me, that why I asked for a comparison. H&K also had apple-like fanboys haha

  • Matt Groom

    Don’t worry, Steve, this one’s politics free.

    @ Phil Wong

    I’m not sure where you get your numbers for market share from, but according to the NSSF, and the ATFs annual guns sales index, they’re almost certainly wrong. The very notion that a single company could simply seize control of the entire pistol market is ludicrous. I seriously doubt that Glock could sell their pistols for less than a High Point, or even a Kel-Tec and still have the presence they have in the industry.
    If Glock reduced their prices, they would sell more pistols, but they would not gain a larger percentage of the market share, because no matter how much you may love your Glock 26 it is mammoth compared to a Kel-Tec P3AT or various clones, and a P-32 is smaller than that. If everybody wanted to carry around a 9mm pistol that was the size of a Micheal Crichton (R.I.P.) Novel, they would. I would personally perfer to carry something that I can carry in my pocket, and ain’t no Glocks that meet that description. Maybe if I started wearing baggy pants….
    It may also surprise some of you to find that many people out there think Glocks are HIDEOUS and wouldn’t buy one for ANY amount of money. Some people think Plastic is worthless as a firearm material, and won’t buy a gun that’s made from it. Most people think Glock triggers SUCK, which is a cogent observation. Some people don’t like Semi-autos as much as they like Revolvers, myself included in ALL of those categories, but I’m sure that people like myself only make up, like, 1% of the market. That’s why so many 1911s are still being sold, right?
    Glocks are easy to work on? So are Chinese Motorcycles. Do you think people buy guns exclusively because they’re easy to modify? Why put $200 worth of parts into a $400 gun when you could buy a gun that cost $550 and already has everything you want in it, like a good trigger and METAL SIGHTS?
    At some point, a product can become “Too Cheap”. If it’s so good, why does it cost so little? What’s wrong with it? What corners are they cutting? They old adage “You get what you pay for” is true more often than not, and people are suspicious of something that suddenly plummets in price.

  • SpudGun

    Steve, I apologise for making this a political discussion and for having an opinion different to your other visitors.

    • SpudGun, I did not have a problem with you having a difference of opinion, but simply asked you to respect those that do. I expect that from everyone on this site.

  • Clodboy

    Right/Left-semantics aside, I can assure you that Glock’s political connection, the late Jörg Haider, isn’t the kind of politician this blog’s readership would like.

    We are talking about a man who personally visited Saddam Hussein (or, as some voices in the Austrian media gleefully allege, one of his body doubles) right before the invasion of Iraq, and whose recent funeral was attended by Saif Qadaffi, son of Lybia’s all-beloved leader.

    I actually think that Haider’s former party being the only pro-gun voice in the country should be reason enough for everyone else to start stocking up on weaponry too, because these guys are the last I’d entrust with protecting Austria when TSHTF 😉

  • jdun1911

    Steve,

    I have no problems with companies making huge profits. My cousin and I from time to time take about starting our own firearms accessory business. The amount of money that can be make in that area is insane as long as you have a good marketing department.

    CMathews

    If you want to make money fast like a drug dealer and be legal, the firearms accessory business is the place to be. Pimping your products as a must have or you’ll become a loser has always work in this business.

    For the record I like Magpul. They are like the US version of HK. The difference is they don’t sell their products way overpriced, just overpriced and very good customer service.

    Magpul started as a mom and pop shop in 1999 with one product magpul. On the back of good marketing skills it became very successful. They marketed their product as must have and if you don’t you will die a horrible death in combat or make believe combat.

    They understand that a strong support for and loyalty from civilians will lead to law enforcement/military contracts in the future. Just as Glock did.

    You got magpul fanboys suggesting a legal defense fund to help fight back an ARMS lawsuit. That’s what I called brand loyalty to the max.

    http://www.ar15.com/forums/topic.html?b=2&f=124&t=179232&page=1

  • HK_USP_45

    Not to turn this into a political column instead of a gun column, but the problem with the way many associate politics is that it is a single linear line of left and right. But it’s not. It’s more like the + sign looking graph where the center is 0 and it has negative numbers and positive numbers going left and right, but it also goes up and down. Communism is to the far left, and socialism next to it. Facism is to the far right, but it’s not on the same plane as what we call conservative in America. Conservatives in our country are traditionalist, and many are religious. Fascism is anti-tradition, and anti-religion, amongst other differences.

    jdun1911 is on the right track about European conservatives being different than American, but it’s not so simple, since it varies from system to system over in Europe. Right-wing and Left-wing are pretty much the same everywhere, but there is a difference in the term “conservative” and “liberal.” For example in Russia, a conservative is someone who believes in the old Soviet system, which is actually left-wing communism. A liberal is someone who believes in western government. Every country and system has a different definition of most political terms, but left-wing and right-wing are pretty much the same everywhere. But as I said, left and right isn’t on a linear scale.

  • Matt Groom

    Conservative= One who is primarily concerned with perserving an existing social order and culture. In America, this is Liberalism.

    Most people who describe themselves as “Liberals” in America are anything but. They are more accurately described as “Progressives” and better described as “Progressive Socialists”, because their own measure of “Progress” is the advancement of Socialist ideals and the subversion and suppression of Liberalism and the existing social order.

    Again, in America, this social order is not Liberalism or Democratism but Liberal Democratic Republicanism. Those who seek to prevent the errosion of this social order are called “Conservatives”.

    There is not now, nor has there ever been, nor could there ever reasonably be from the perspective of someone who lives and thinks as an American should of be a “Right Wing” or “Conservative” Fascist in the United States. These two ideas are contrary to eachother and cannot become allies in different nations or cultures. Conservative is more flexible, since Conservative is one who preserves the existing social order. One who seeks a return to the old ways, such as Communists in the former Soviet Union are not “Conservatives” but “Regressionists”.

    If you insist on using the terms “Left and Right Wing” then you’re acknowledging that they exist on a two-dimensional scale. If this is true, then its a scale of the amount of government a system possesses. If Anarchy, the total absence of government or religious authority of anykind, is Zero, then Totalitarian Theocratic Dictatorships, like Communism, is 100. That means that on the Left side of the scale is 100, and on the right side is 0. All points in between would dictate the level of government intervention in the lives of citizens that that system provided. Libertarianism could be called 20, Democratic Republicanism could be called 30, Fascism could be called 70, Nazisim could be called 80, etc.

  • HK_USP_45

    Matt,

    Nice explanation, but most political theorists have moved away from the single, linear plane since the 1950s. The Nolan chart shows a x axis which is government control of economy, and a y axis that is government control of government freedom. This is what I was referring to. This is why I was saying that american conservatism is not the same as Fascists, and isn’t on the same plane. And this is where anarchy comes in, anarchy is not to the right, or left, it’s actually at the top (libertarianism), and dictatorships are at the bottom (authoritarian). Anarchy and dictatorships don’t really have anything to do with economic control, it’s irrelevant and can be free market or state controlled. However, they do have direct impact on personal freedoms. Obviously in a anarchy you have as much personal freedom as you want, and with a dictatorship you’re told which type of cereal to eat for breakfast.

    I didn’t say I insisted on using left wing or right wing, I’m just saying those are vague terms that have mostly the same meaning in most places.

  • jdun1911: Actually, personally-owned Glock pistols were not approved for use by FBI agents until many years after the Miami shootout. The FBI’s adoption of the Glock 22 and 23 for general issue came even later. I believe the DEA was one of the first Federal agencies to approve the Glock.

  • Spiff

    I have had my Glock 17 since 1985 and have fired everything from sub-sonic to +p++AP through it, and loaned it out to 3 metro-police departments to experiment with – it has never jammed with decent ammo and proper (and some improper) shooting skills! It’s as reliable as the tried and proven 1911, that’s the reason I carry it.
    The Glock 20, 10mm, was the answer to the FBI’s Miami “shootout”. It is one of the few pistols I have shot that you could use a 6 o’clock hold on at 50 yards and tear the bullseye out!
    I don’t understand why folks pick on Gaston Glock for making, and trying to keep, his earnings when we have politicians in public office who don’t pay taxes, and who have become millionaires while in office without anyone caring!
    Carry on Gaston, carry on!
    Spiff

  • Mang

    Glocks are the most reliable pistols, perhaps the most reliable firearms, in the world. You can’t argue with that. I’d like to own one someday. But if the company really is run by a cheat and a fascist… I just don’t want to support a son-of-a-bitch, you know? Sigh. Maybe I’d buy one used, and thus not support the company directly.

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  • Yale

    I wonder if any of the real housewives of Glock mess will make it in the movie.