January 1998

Walloon Closes FN Herstal Acquisition

The Walloon regional government has closed its deal to buy FN Herstal, the financially-troubled small arms manufacturing company that had been on the market for several months, from French-owned defense conglomerate Giat Industries.

Union employees at FN’s Liege, Belgium plant voted by a 54 percent margin to accept the deal, although it will likely mean fewer hours per week for them. The regional government, which owned 8 percent of FN, vetoed Giat’s planned sale of the unit to Colt’s Manufacturing Company because it feared a loss of jobs. The region paid approximately $82 million for the FN operation, the same price that was offered by Colt’s.

Few sources can say for certain what the finalized deal means for FN subsidiaries FN Manufacturing, U.S. Repeating Arms Company and Browning Arms. Throughout the long and somewhat protracted negotiations, it was believed USRAC and Browning would be spun off by the new owner, but Walloon has given little indication that it wants to do that.

Some observers say Walloon is not inclined to sell either unit, noting that the new owner particularly likes the USRAC plant in New Haven, Connecticut despite the fact that the company has posted serious losses for the past several years.

Giat said earlier this summer that its own financial difficulties, not to mention FN’s, would not have been as severe had it not incurred so much debt in building the facility.


Rimfire Rifle Markets
To Gain More Competitors

The .22 rimfire market, which has been traditionally strong segment despite some slippage in 1997 that saw chain store prices on certain models fall below $100, will get little more crowded next year.

At least three companies have new .22 semiautomatics scheduled for 1998, although their markets haven’t fully developed at this point. They’ll all have to compete against established market leaders Sturm, Ruger & Company, Marlin Firearms and Remington, each of which controls a major share of the distributor and chain store trade.

Most of the competition from the new offerings will be price-oriented. Brazilian manufacturer Mag-Tech, a division of CBS, is offering its new autoloader to distributors for $49 FOB Brazil or $61 landed in the U.S. The company’s marketing efforts on the gun have just started, but wholesalers say they aren’t excited about buying as many as 2,000 units of anything at this time. Mag-Tech also has bolt action rimfire rifles available. KBI’s Charles Daly line has similar rifles, Philippine-made guns that sell to distributors in the mid-$70 range.

Henry Repeating Arms Company says it plans to begin shipping its version of the Armalite AR-7 Survival rifle that was last marketed a few years ago by Charter Arms and Survival Arms. The Henry version is being manufactured on new tooling, but all parts are interchangeable with the older version. Henry, the Brooklyn-based company owned by Lew Imperato, acquired the rights and trademarks to the gun a few months ago.

Overall, the long gun business appears likely to be stable to slightly improved for 1998. Most of the companies involved are maintaining the status-quo, including keeping the same marketing programs they began in 1997.

Several companies are giving cowboy action shooting products a push, although that market area seems to have slowed down a bit in the last few months. Stoeger, European American Armory and Gibbs are all offering coach shotguns that will retail for comparatively low prices.


Weatherby Adds Handgun
To Product Line

Weatherby Inc., out of the handgun business since 1981, plans to introduce a silhouette/hunting pistol in 1998.

The pistol, called the Mark V CFP (centerfire pistol), is based on Weatherby’s Mark V rifle action and uses a rear grip pistol stock made of multi-layer laminates. It utilizes a chrome moly receiver with a 15-inch fluted, stainless steel free-floating barrel. The gun holds four rounds (3+1) and will be chambered for .22-250 Remington, .243 Winchester, 7mm-08 Remington and .308 Winchester.

“Until it was discontinued in 1981, Weatherby’s silhouette/hunting gun had earned a reputation as one of the most collectable and shootable centerfire pistols ever made,” said sales vice president Brad Ruddell.

He added that the new pistol should appeal to whitetail deer hunters or varmint shooters, as well as silhouette competitors. The gun will be made in the United States.


ATF To Issue Rules On
In-Line Muzzleloading Rifles

The Bureau of Alcohol, Tobacco and Firearms is expected to rule that in-line muzzleloading rifles, which have been one of the few bright spots in the market this year, are to be classified as firearms.

The decision shouldn’t exactly come as a surprise, because companies that asked for a determination in the past were told to treat their version as firearms but the lack of a published rule always left a gray area. Market observers are sure the ruling will have an impact on the trade, but few will speculate about the long-term ramifications of new rules.

Blackpowder arms have traditionally been exempt from the provisions of the 1968 Gun Control Act, an exemption that has helped the guns find a major market among the catalog companies. ATF’s ruling, which should be published within a month, removes that market advantage by determining that the in-line primer cap is in fact a “modern ignition system” subject to all the paperwork considerations.

Bolt action muzzleloaders have apparently been around since 1993, when a sample was submitted to ATF for approval. That gun was based on a Czechoslovakian Model 1924 bolt action rifle that had been modified by installing a .50 caliber muzzleloading barrel with a percussion nipple at the breech. The bolt and striker were modified, via a notch cut in the right side of the receiver ring, to fire a percussion cap on the nipple. ATF classified the rifle as a firearm subject to the 1968 GCA and all the related paperwork because it “incorporated the same action (frame/receiver) of a firearm.”


Colt’s Secures Army
M4 Carbine Contract

Colt’s Manufacturing Company, Inc. has been granted a U.S. Army contract for 24,000 M4 carbines, bringing to a close a fight with FN Manufacturing and the military that started last year.

Colt’s had gotten a smaller, no-bid contract for the rifles about a year ago, but FN contested the decision and the Army rescinded the deal. That prompted the Connecticut congressional delegation to seek an investigation of the contract process used in that deal. They also wanted to determine whether the Army had released Colt’s proprietary information to other companies, including FN. The Pentagon determined last summer that the Army could cancel the contract, but also noted that the Army and Navy had failed to protect Colt’s technical data.

The contract award, which will bring Colt’s a little more than $3 million in the first year, is worth more than $12 million. Colt’s will produce 500 units a month, an amount the company says will keep the line efficient. Industry sources said that particular production line was designed to comfortably handle 1,500 guns a month and could go significantly higher.

This is not the only battle Colt’s has joined over its technical data in recent months. The Connecticut firm is also in a dispute with the Canadian government and defense contractor Dimaco for allegedly violating technical data rights. The argument, which hasn’t been settled, reportedly involves Dimaco’s sale of rifles to an American firm, Firearms Training Systems (FATS).

A licensing agreement between the Canadian government and Colt’s reportedly prohibits sales to American companies. The question being raised in discussions, sources said, is whether the items bought by FATS are rifles or simulations that don’t meet such criteria.


Beretta Opens Second
U.S. Gallery Store

Beretta USA has opened its second Gallery retail store in the United States, this one in the exclusive Highland Park section of Dallas, Texas.

The company said the Dallas site was chosen because the city is home to one of the largest fashion and apparel centers in the country. Top-line clothing and accessories are major parts of the units. Dallas also has a large shooting community, including a strong demand for the high dollar guns Beretta features at its retail stores.


New Firm To Market
Hunting Theme Action Figure

Two Midwestern outdoorsmen are introducing an action figure they call “Hunter Dan,” a toy they believe will teach children hunting safety while they’re having fun. Initial production from their newly-formed Heartland Toys Company features Hunter Dan as a deer hunter, complete with camouflage clothing, boots and a blaze orange safety vest. He also has a rifle, binoculars and a tree stand.