Diversification in the Gun Industry

Battenfeld

More and more companies in the shooting industry are diversifying their product catalogs. It seems that every time I turn around, one company or another has announced a strategic acquisition or expansion into areas beyond the company’s original focus.

Maybe that’s good, maybe that’s bad. I can certainly understand the desire to expand one’s product offerings in an effort to increase the bottom line. I wonder, however, if there are other influences beyond simple market pressures that are causing at least some of the companies to diversify. For example, there are certainly plenty of political pressures in the United States that make gun manufacturers question how much regulation is in the future. Regulation on the manufacturers – or owners – will have a clear affect on accessory makers as well.

Smith & Wesson has seemingly been quite aggressive in acquiring companies that are associated with the gun industry, and has made it clear in investor calls that these are moves that are profit motivated. But, with pickups of a flashlight maker, tool maker, knife maker and laser maker, I wonder if these could also be a long-term hedge against anti-gun legislation.

Magpul, long known for making AR accessories, diversified a bit more with the introduction of a complete clothing line. I had a chance to speak to Troy McMullen, Magpul’s director of apparel, recently. He made it clear that this is not a small “try it and see” venture by Magpul. He’s brought in experts from all over the apparel industry and they are serious about making performance clothing. Sports clothing would be a nice hedge against legislation that dries up the AR market.

Blackhawk has its roots in making military gear including plenty of firearms accessories. The company has also been involved in clothing for quite a while now. However, they’ve just launched a new line of clothing that is still designed to be functional, but, as explained to me by one of their executives, don’t scream “shoot me first!” Again, this could be opening up an avenue for the company to maneuver should things get uncomfortable in the gun world.

Vista Outdoor, Blackhawk’s parent company, has made larger diversification moves with the addition of companies like Bell, Bolle, Blackburn, CamelBak, Copilot, Giro, Jimmy Styks and others to the portfolio in recent years.

Diversification is considered prudent by many investment experts. Perhaps it makes sense for companies that depend on firearms to drive their bottom lines as well.



Richard Johnson

An advocate of gun proliferation zones, Richard is a long time shooter, former cop and internet entrepreneur. Among the many places he calls home is http://www.gunsholstersandgear.com/.


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  • Major Tom

    Now if only there was more diversification in the actual firearms models instead of making AR clones and Glock wannabes. Try something original, try something different.

    • Harry’s Holsters

      No money in it. Hard to beat an AR for $600ish from a known manufacturer. I’ve heard even colt is working on a striker fired handgun per an employee on a Larry Vickers FaceBook Live. Plus I’m not aware of another way to activate the primer besides striker or hammer. I believe the ATF nixed electric ignition for civilians.

      • QuadGMoto

        Remington developed an electrically ignited primer system. I don’t know if they still sell the guns, but the primers are definitely still available. It seems to be more a market failure than an ATF restriction.

        • Harry’s Holsters

          Wasn’t that a muzzle loader?

          • Aaron

            If i remember right it was a bolt action with expensive cartridges.

          • Harry’s Holsters

            You were right. Made from 2000-03. Maybe if was banned on semi guns due to ability to “hack” the circuitry of the FCG.

    • Bullphrog855

      wannabe-ception?

  • Black Dots

    This makes sense. The firearms industry has exploded since the AWB sunset, and more people have integrated their interest in firearms into other aspects of their lives. I think more firearms companies will try to transition to broader “lifestyle” brands. For example, if it continues with apparel development and outdoor training classes, I wouldn’t be surprised if, at some point, Magpul starts marketing itself as an “adventure” company that specializes in firearms accessories. Given the ever changing political environment, this diversification is a good idea.

  • Edeco

    Is society crumbling, Marty?
    No, it’s binding.
    -Cabin in the Woods

    Long story short, I don’t think they’re scared, they’re just in high cotton and mostly out of moves with small arms themselves. That’s my humble guess. Like I’ve been joking Rem should do a .39 magnum; it’d be awesome, but never catch on.

  • QuadGMoto

    However, [Blackhawk] just launched a new line of clothing that is still designed to be functional, but, as explained to me by one of their executives, don’t scream “shoot me first!”

    Their shirts remind me so much of shirts worn as part of a uniform that I think they’ve failed at that goal.

    • USMC03Vet

      I have some blackhawk sweatshirts. They are pretty good quality and were far cheaper than just a regular sweatshirt at a retail store. Trying to find non gaudy clothing is a challenge these days, so if they want to create more offerings I’m all for it.

  • If only Smith and Wesson would offer a diverse lineup of revolvers without holes on the left side of the frame. When even their website only shows the right side, you know something is wrong.

  • As a fan of craft beer and rye whiskey, I wish more of the old brewers and distillers had had sense enough to see the 18th Amendment on the wall and diversify into industrially related products early enough to ride out The First Prohibition. It’s good to see corporations finally learning from the mistakes of the past, it means that whenever the inevitable Volstead Gun Control Act is inevitably repealed after a decade of historically unprecedented increases in violent crime, firearm manufacturers will be ready and able to immediately resume production of necessary self defense tools.

    • jng1226

      I don’t see it happening once it’s inevitably passed (like 2 years from now) but I hope you’re right.

  • Does An Editor Work Here?!?

    Richard, no offense, but you have the basic idea exactly backwards.

    What is occurring is the opposite of diversification. It is called consolidation.

    When large companies buy small companies, this diversifies nothing. It shrinks the size of the industry, eliminates jobs (which is one reason the deals get made, as this increases profit) and reduces competition and risk to the incumbents of being displaced from their advantaged situation by market pressure from consumers or competitors.

    Diversification is when consumers un-bundle. For example if you had either Verizon or AT&T whatever selling you all your TV, cell phones and internet data for say $200/month… and you fired them, and diversified to having AT&T provide DSL, Sprint provide cell phone, and got your free digital TV over the air or streaming from Amazon and Netflix… that would be diversification. It often costs less but requires more time or effort to organize. It always increases competition and forces ALL of the companies involved to do a better job winning and keeping you business over time. This typically makes prices — and profits — go down in the short term, but makes for more competitive offerings and a more vigorous marketplace over time. This is good for capitalism.

    Conversely, consolidation is not. It reduces choice, eliminates competition, and will over time increase prices and profits and decrease innovation. By insulating the large companies (who are buying out their competition… why? so as to not have to compete with them for your money, while retaining your brand loyalty to their new subordinated ex-rival now-house brands) from reality. This is bad for capitalism.

    In the long run this dynamic is really bad for our country, the industry, and the pastimes and lifestyles we enjoy. If you disagree, please go back to the 80s and buy a crappy K Car from Detroit. That was a consolidated industry at its peak insulation from reality. Then try driving that crapbox every day, for 35 years until today. Conversely, there are plenty of Hondas on the road today all over America which still run and drive fine, and still get 30 mpg just like they did way back when Detroit was saying that was impossible magic and bad for American jobs besides. How’d that work out for Detroit, over time?

    Consolidation insulates large companies from having to do a good job, while continuing to make their owners and stockholders profits. This is often a way for a company that is out of talent, or new ideas, to artificially prolong its dominance or delay inevitable decay.

    Conversely, diversification exposes large companies to more competition and holds them accountable to the customer, and this in turn motivates them to try harder (for example: by lowering prices or making better stuff, ie re-invest in new technology, new ideas, new talent and remain innovative and effective) or fail. Either way that’s better for everybody and ensures we get better, cheaper stuff and faster.

    Which world do you want to live in?

    • I think you’re both right. Richard is right in how the larger companies are seeing the writing on the wall (potential gun restrictions), and what that could do to sales revenue. As such, like any wise business, they are moving with the times and seeking out “diversified” avenues to keep cash flow. That means buying up companies that offer items that will still sell in tough times, which is most often easier than starting yourself from scratch.

      Unfortunately, this “consolidation” often means job losses, and often a loss of creativity as well. The large grouping almost always reduces competition and creates conglomerates that are rarely as genuine and effective as the originals by themselves. Taking on too much can also cause all of the different brands to suffer – just look at ATK!

      It is the proverbial Catch-22. If the Bigs don’t “diversify” they run the risk of bankruptcy when their highly political and regulated products are restricted. If they move to survive and buy up the Smalls, they often kill the creativity of the businesses that support their original products and often make all of the brands suffer in the process.

      • huh?

        What do you mean “when” their products are regulated? Name a major firearms manufacturer in history that has gone bankrupt due to legal restrictions or regulations, please. Even one, anywhere on the planet, never mind in this country. Ever.

        You are a nice fellow, but your logic is fallacious. You are assuming there is a rational explanation- an external explanation that a rational observer would agree with. When in fact, the simplest (aachem) explanation is simple: greed.

        • Actually I said “restricted”. I acknowledged the industry is already well regulated. However, another AWB or even broader firearms ban would cause a far reaching ripple affect.

          Smaller firearms manufacturers may go under simply from having nothing to offer but what has become “banned”.

          As to greed – yes, there is obvious evidence of greed in this industry, like pretty much every field of business. But to throw the entire weight of these moves on greed is short-sighted. If you were the owner of a profitable business faced with regulatory changes that could significantly impact your income and existence, you would absolutely look at “diversification” options to remain profitable.