Colt & AR's

[bersaguy]

Well looks like Colt is throwing in the towel on AR 15's and not going to make any more for civilian use or purchase. Just hear that on the Evening News.

[Quavodus]

Yep, heard it the other day. You don't hear much from Colt anymore anyway.

[Garufa]

There is another discussion and a half going on about this but I’m not going looking for them.

Now that this week old news is going mainstream expect the media to have a field day over their victory.  I’ve seen it on Fox online and the ABC evening news tonight.

Here is Colt’s poorly worded statement:

https://www.colt.com/news/2630

 

Published 09/19/2019

Company Response to Questions about Colt Participation in Consumer Markets

 

WEST HARTFORD, Conn. (September 19th, 2019) – There have been numerous articles recently published about Colt’s participation in the commercial rifle market. Some of these articles have incorrectly stated or implied that Colt is not committed to the consumer market.  We want to assure you that Colt is committed to the Second Amendment, highly values its customers and continues to manufacture the world’s finest quality firearms for the consumer market. 

The fact of the matter is that over the last few years, the market for modern sporting rifles has experienced significant excess manufacturing capacity. Given this level of manufacturing capacity, we believe there is adequate supply for modern sporting rifles for the foreseeable future.  

On the other hand, our warfighters and law enforcement personnel continue to demand Colt rifles and we are fortunate enough to have been awarded significant military and law enforcement contracts.  Currently, these high-volume contracts are absorbing all of Colt’s manufacturing capacity for rifles.   Colt’s commitment to the consumer markets, however, is unwavering.  We continue to expand our network of dealers across the country and to supply them with expanding lines of the finest quality 1911s and revolvers.

At the end of the day, we believe it is good sense to follow consumer demand and to adjust as market dynamics change. Colt has been a stout supporter of the Second Amendment for over 180 years, remains so, and will continue to provide its customers with the finest quality firearms in the world.  

 

Very respectfully,

Dennis Veilleux, President and Chief Executive Officer

Edited September 19, 2019 by Garufa

[Garufa]

Analysis:  Colt simply can’t compete and never could, at least in the past few decades in the civilian market IMHO.  They thrive off government contracts and have done so since the company was founded.  

The media is, and will, portray Colt’s press release as saying that there are too many AR’s in civilian hands and that only the government should have them.

Edit:  The damage is done.

 

 

Edited September 19, 2019 by Garufa

[No_0ne]

1 hour ago, Garufa said:

Analysis:  Colt simply can’t compete and never could, at least in the past few decades in the civilian market IMHO.  They thrive off government contracts and have done so since the company was founded.  

The media is, and will, portray Colt’s press release as saying that there are too many AR’s in civilian hands and that only the government should have them.

Edit:  The damage is done.

 

 

Good analysis.  The simple fact is that Colt is so poorly run and managed, their only mode of survival is in government contracts, preferably (for them) the no-bid types ...

[MacGyver]

It’s worth noting for the record that over reliance on military contracts was what put them into bankruptcy last time.  

[m16ty]

You can't tell me the current anti-AR climate didn't have anything to do with their decision.     

Not that it really matters to me, because I've never been a fan of the Colt AR, but the optics of this is terrible, and even if they did have good intentions they are bound to know how this looks. 

[Morgan88]

I wonder if Colt is still teetering on bankruptcy and they finally had to do  something different.  Pull in the reins and make what is profitable.  Seems like everybody and their brother makes an AR style and for much cheaper. It would make sense to me the market would be soft for them. I will give them the benefit of the doubt and watch going forward how their financial situation goes.  At some point you gotta do something different?

 

Morgan88

[bersaguy]

Can't rememebr where I read it but it was an article from General Mathis to President Trump that our military was running extremely low on ammunitions and Small arms because OBama had put a freeze on the military buying anything war related during his first term and it was still in place. I heard that Trump sent an order to end the buying freeze imediately and told Mathis to rebuild our Military back to where it should be. This was back like Trumps 1st year as President. Well that would mean if they are back buying the military supplies again and must must be buying from somebody.....JMHO

[Erich]

There has been plenty of discussions of this over the last 10 days or so since this came out. Most of the left 'victories' dances are using paraphrasing of Colts original statement, then their updated statement. The left media portraying it as done and over for good. While other sources are using fuller statements and earlier discussions with Colt where it appears temporary. But as the heavy left biased mainstream media picks this up,  most folks are only getting the left slanted released. The industry side includes such statements as:

"Colt’s chief executive officer, Dennis Veilleux, says the company is not permanently ending production but believes there is already an adequate supply of sporting rifles on the market. "

Take it for what its worth. Time will tell exactly how long "the forseeable future" is. Is it forever, or months.

Timing does not play to the 2A folks, Bad move on their part no matter how it unfolds.

[Erich]

16 hours ago, Garufa said:

Analysis:  Colt simply can’t compete and never could, at least in the past few decades in the civilian market IMHO.  They thrive off government contracts and have done so since the company was founded. 

Definitely. They current market is saturated and the price of any AR today confirms. Other name manufactures making similar product at half the price. They were smart to work on niche versions, but they were starting to slow.

Plenty of dealers have dropped them and no longer are stocking dealers given they are forced to by every product versus just the ones they want to sell.

I see another angle. Stop production, ride the wave of current sentiment and fear....then go back into production at higher prices with less units and boom...instant larger margins.

Now, the anti 2A stigma is something they will have to overcome. Whether this move is Springfield Armory level stigma or not....that'll be interesting. Plenty of folks love the pony, more than the crossed cannons me thinks.

Edited September 20, 2019 by Erich

[DaveTN]

Ya know… sometimes CEO’s are not worth the ridiculous salaries they are paid. Sometimes they think their customers are too stupid to understand what’s going on. Sometimes they think making stupid statements to shareholders will overcome the problem. That is what is happening at Colt.

Also....

How Colt Lost Its Big Contract To Sell the US Army Rifles (August 3, 2019)

https://nationalinterest.org/blog/buzz/how-colt-lost-its-big-contract-sell-us-army-rifles-71186
 

Quote

 

Belgium’s Fabrique Nationale (FN) and Colt have long been competitors on the American firearms market. For almost a century both companies have competed for military contracts, designers, and sales on the American civilian market. However, in the 2000s, FN dealt a blow that stung Colt: it won a contract to produce the M16 rifle and M4 carbine, designs that were almost inextricably linked to the Colt brand. The story of how FN regained a foothold in the American market in the 1980s and continues to remain a couple steps ahead of Colt to this day is one of clever corporate maneuvering and complacency on Colt’s part. Unfortunately for Colt, following its bankruptcy in 2015, it has not come close to even competing with FN globally.

The beginning of Colt’s downfall in the modern era began around the 1980s. FN began making inroads into the US military market again around that time, as a version of their gas-operated FN MAG was adopted as a vehicle coaxial machine gun in 1977, followed by the adoption of the FN Minimi as the M249 in 1984. FN had to build manufacturing facilities in the US to produce these guns, so they started competing for contract Colt had, notably the M16 rifle.

In 1988, FN beat out Colt on a tender to produce M16A2 rifles, undercutting Colt’s bid by $57.50 per rifle. Colt’s patents on the rifle had expired in 1983. However, Colt had one last card to play. Around that time, Colt was finishing up development of the XM4 Carbine, building on a long lineage of shortened AR carbines produced since the Vietnam War. The XM4 was adopted as the M4 in 1994, and would become Colt’s primary product throughout the global war on terror. However, Colt would not innovate significantly since then, and in 2013 FN grabbed Colt’s M4 contract, which they already partially lost to Remington Defense before.

However, Colt continued to stagnate in innovation, with their only real successful product in the meantime being the short lived M45A1 CQBP which was adopted by the U.S. Marine Corps in 2012. Unlike Colt Canada, a spinoff of Colt that developed monolithic upper receivers that saw wide purchases with special forces worldwide, Colt in the 2000s and 2010s was happy to sit on their existing product line.

This lead to their eventual bankruptcy in 2015, followed by a restructuring. The resurrected company has seen limited success, splitting another M4 contract with FN in 2018. But it still appears to be relatively non-competitive compared to FN, as the latter has alternate product lines but Colt still just has the M4 and variants of it.

A possible reason for Colt’s stagnation was put forth by Chris Bartocci, a former Colt employee. Bartocci argues that when Colt brought in William M. Keys as the CEO of Colt, Keys proceeded to mostly appoint other former Marine Corps officers as managers in the company. This lead to people who were good officers but bad corporate managers being put into place in Colt, leading to an overall lack of corporate vision.

While that may only be one man’s perspective, from the outside it’s clear that FN has eaten Colt’s lunch over the last few decades in the American market. If the “new” Colt wants to thrive, they need to find a way to innovate and develop new products. Colt has been notably absent in the latest next-generation rifle trials, but they could potentially shack up with other American defense names if they present themselves as a worthy partner.
 

 

Also...

I don’t remember exactly when it was (80’s maybe?), but didn’t Colt quit selling Revolvers and 1911’s to anyone but LEO’s? 

I hate to see this happen to any American company. They have an excellent product (including models they have discontinued); so it appears they need new management or at least some vision.
 

 

[MacGyver]

Sciens Capital - the private equity group that has the majority stake in Colt doesn't care the first thing in the world about the 2nd Amendment.

They care about maximizing the money they can squeeze out of the place.  That's it.

It's the reason they separated off the consumer division from the defense division and left the former to languish back in 2005 when they took it over.

It's the reason they used over $100M of the debt they originally raised to pay distributions to the private equity investors.

It's the reason that they almost didn't come out of bankruptcy in 2016 - because Sciens Capital had a hard time raising the capital cushion their other lenders required.

They're not innovating.  They're simply trying to ride that pony for as long as they can before it's finally worthless.

[E4 No More]

23 minutes ago, MacGyver said:

Sciens Capital - the private equity group that has the majority stake in Colt doesn't care the first thing in the world about the 2nd Amendment.

They care about maximizing the money they can squeeze out of the place.  That's it.

It's the reason they separated off the consumer division from the defense division and left the former to languish back in 2005 when they took it over.

It's the reason they used over $100M of the debt they originally raised to pay distributions to the private equity investors.

It's the reason that they almost didn't come out of bankruptcy in 2016 - because Sciens Capital had a hard time raising the capital cushion their other lenders required.

They're not innovating.  They're simply trying to ride that pony for as long as they can before it's finally worthless.

That's it for all corporations.

[MacGyver]

13 minutes ago, E4 No More said:

That's it for all corporations.

Certainly when it comes to private equity, yeah - that’s pretty much it.  

Lord knows y’all have lived that story.  

[No_0ne]

35 minutes ago, MacGyver said:

Sciens Capital - the private equity group that has the majority stake in Colt doesn't care the first thing in the world about the 2nd Amendment.

They care about maximizing the money they can squeeze out of the place.  That's it.

It's the reason they separated off the consumer division from the defense division and left the former to languish back in 2005 when they took it over.

It's the reason they used over $100M of the debt they originally raised to pay distributions to the private equity investors.

It's the reason that they almost didn't come out of bankruptcy in 2016 - because Sciens Capital had a hard time raising the capital cushion their other lenders required.

They're not innovating.  They're simply trying to ride that pony for as long as they can before it's finally worthless.

Yes, the various iterations of hedge fund and private equity entities who have owned Colt for many years have been very adept at using other people's money to squeeze any remaining capital from the company, with no regard to innovation, vision or market dynamics.  I suspect that ride is nearing the end, and once these current government contracts expire Colt will either be sold off or just allowed to cease operations altogether ...

[peejman]

1 hour ago, MacGyver said:

because Sciens Capital had a hard time raising the capital cushion their other lenders required.

Could this be it?  Colt hasn't been relevant in the AR market for at least a decade and is generally a financial disaster. Banks have been putting a pinch on gun companies. Did some bank executives tell Colt they'd give them a better loan rate if they outwardly bow out of the "EBR" market as a political statement?  

 

1 hour ago, MacGyver said:

Certainly when it comes to private equity, yeah - that’s pretty much it.  

Lord knows y’all have lived that story.  

Yeah....   

[MacGyver]

36 minutes ago, peejman said:

Could this be it?  Colt hasn't been relevant in the AR market for at least a decade and is generally a financial disaster. Banks have been putting a pinch on gun companies. Did some bank executives tell Colt they'd give them a better loan rate if they outwardly bow out of the "EBR" market as a political statement?  

 

Yeah....   

This was prior to their exit from bankruptcy in 2016.  I expect at this point, they've got the financing they've got.

Short of us getting in a shooting fight with Iran or hard times befalling FN, I don't see them as terribly relevant.

Remington has stepped up their AR game and has won contracts of late, too.  They fought and won the Colt & FN award in 2016 - noting that the DoD hadn't taken into account Colt's financial situation.  The courts agreed. They also won a decent carbine contract last year.

[btq96r]

They aren't in the mix with low cost products like PSA, Anderson, S&W, nor are they in the top tier of "buy once, cry once" alongside the likes of BCM, Daniel Defense, Noveske.  Best to just keep what they have in good storage and wait for the next panic period to offload inventory. 

[No_0ne]

6 hours ago, peejman said:

Could this be it?  Colt hasn't been relevant in the AR market for at least a decade and is generally a financial disaster. Banks have been putting a pinch on gun companies. Did some bank executives tell Colt they'd give them a better loan rate if they outwardly bow out of the "EBR" market as a political statement?  

 

Yeah....   

I doubt that any bank reluctant to provide financing to Colt is refusing due to outside influence - Colt's owners have a long history of raiding equity from the company and hanging investors and financiers out to dry in the process.  Why would any thinking company or individual want to throw any more good money after bad into Colt ...