Record U.S. Gun Production

[Tim Nunan]

http://www.bloomberg.com/news/2014-02-2 ... issue.html

U.S. gun makers led by Sturm Ruger & Co. and Smith & Wesson Holding Corp. (SWHC) churned out a record number of firearms in 2012, government data show, continuing a trend of robust production during Democratic presidencies.

More than 8.57 million guns were produced in 2012, up 31 percent from 6.54 million in 2011, according to data released this week by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, which has been tracking the statistics since 1986.

Almost as many guns -- 26.1 million -- were produced during Democrat Barack Obama’s first term as president as during the entire eight-year presidency of his Republican predecessor, George W. Bush, the ATF data show.

Advocates on both sides of the gun-control debate said manufacturers were meeting demand fueled by concerns among gun owners that Democratic presidents are more willing to limit firearms sales than Republicans. After years of steering clear of the issue, Obama pressed unsuccessfully last year for stricter gun measures in the wake of the 2012 massacre at an elementary school in Newtown, Connecticut.

The production boom has resulted in strong sales and profits for gun companies, including Sturm & Ruger and Smith & Wesson.

“Barack Obama is the stimulus package for the firearms industry,” said Dave Workman, senior editor of Gun Mag, a print and online publication of the 2nd Amendment Foundation, a gun-ownership rights group. “The greatest irony of the Obama administration is that the one industry that he may not have really liked to see healthy has become the healthiest industry in the United States.”

Expanding Collections

Brian Malte, senior policy director of the Washington-based Brady Campaign to Prevent Gun Violence, said gun-rights groups “demonized” Obama during the 2008 and 2012 presidential campaigns, leading many gun owners to buy more firearms.

“We see the percentage of households owning guns declining,” he said, “and that indicates that those who already own guns are buying more of them.”

Other factors may also be driving gun demand, including Supreme Court decisions striking down gun restrictions, a spread of laws allowing people to carry concealed weapons and the increasingly popularity of sport shooting, said Mike Bazinet, spokesman for the National Shooting Sports Foundation, a trade organization that represents gun and ammunition manufacturers.

“It defies any simple characterization,” he said.

A White House spokesman, Matt Lehrich, declined to comment.

The 2012 manufacturing figures were the most recent ones released by ATF as part of its annual Firearms Manufacturing and Export Report. Just 3.4 percent of the firearms covered in the 2012 data were exported.

Democratic Presidents

Obama isn’t the only Democratic president to see a spike in gun production. More than 33 million firearms were manufactured during Democrat Bill Clinton’s two terms, which was more than the 28 million produced during Bush’s presidency. Just over 16 million firearms were manufactured during Republican George H.W. Bush’s single term.

Clinton antagonized gun-rights groups by pressing for stricter gun control. He signed legislation mandating background checks on firearm purchases and a ban on assault weapons. The ban expired in 2004.

Obama largely avoided the debate during his first term and campaigns. He decided to back tougher firearms restrictions after 20 children and six adults were slain at Sandy Hook Elementary School in December 2012 by a gunman wielding a semiautomatic rifle.

FBI Data

Those proposals, which would have blocked the sale and possession of more than 100 types of assault weapons and expanded background checks, stalled in Congress in April. Since then, the gun-buying fever has somewhat ebbed, according to FBI data on background checks.

Background checks for gun sales dipped in December and January versus the same months from a year earlier. Even so, the number of background checks conducted during those months were the second most for any December or January on record.

The FBI data, a proxy for sales figures, also indicate that the firearms industry enjoyed a solid 2013. More than 21 million background checks were conducted last year, up 7 percent from the 19.6 million in 2012, according to the FBI. Those figures are records and represent increases of at least 19 percent over the 16.45 million checks performed in 2011. Not every background check leads to a gun sale, and a single background check may be used for multiple purchases.

Strong Sales

Smith & Wesson, based in Springfield, Massachusetts, reported record sales of $588 million for the fiscal year that ended April 30, up 43 percent over 2012. Shares reached $14.99 on Jan. 10, the highest close since 2007. According to the ATF data, the company produced more than 1.1 million firearms in 2012, a 32 percent increase over 2011.

Sturm Ruger, the largest publicly traded gun maker, reported net sales of $506.4 million during the first nine months of 2013, a 45 percent jump from the same period in 2012. The company, based in Southport, Connecticut, said its profit was up 67 percent. It manufactured more than 1.6 million guns in 2012, nearly a 50 percent increase over 2011, according to ATF data.

Shares of Sturm Ruger rose 31 percent in the past year as of yesterday, compared with a 19 percent gain for the Standard & Poor’s 500 index. Spokesmen for both firearms makers did not respond to phone messages seeking comment.

During a conference call in November to discuss the third-quarter company’s results, Chief Executive Officer Michael Fifer pointed to the 2014 mid-term elections as a possible fresh catalyst for demand.

‘I’m sure the politicians will go at it on both sides and they’ll talk about guns and that’ll spur gun sales again,’’ Fifer said