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-   -   AR manufactures (http://www.firearmstalk.com/forums/f20/ar-manufactures-11502/)

J33Nelson 03-03-2009 02:26 PM

AR manufactures
 
I have a question. How do all these companies stay in business? I don't mind so many companies making great guns but will all of these companies be able to survive in this economic climate? These are just companies off the top of my head.

Alexander Arms
Armalite
Barrett
Bushmaster
Colt
DPMS
Knights Armament
Les Baer
LWRC
Remington
Rock River
S&W

I know there are a ton more but how do all these companies stay profitable?

Dillinger 03-03-2009 02:37 PM

Seriously?? Have you checked the AR market lately?? :p

Half the companies on that list are so far behind on back orders that it will be 6 to 8 MONTHS before a rifle purchased today will be delivered to the owner.

The other half are only a couple of months behind and taking orders daily because of the pending AWB II

Les Baer doesn't care about making a ton of weapons, he has been living off his name and reputation for a long time. The 1911 market is his bread and butter, which he does quite well and I am sure, has no problem making the monthly mortage payment on Thunder Ranch. :D

JD

J33Nelson 03-03-2009 05:09 PM

Sales and demand for ARs are very high right now but how long will / can that last. Will their be enough demand to keep all of these companies profitable or will we see some of these companies fail? In our economy everything is supply and demand and if the demand decreases just a little I think some of these companies may tank. Any thoughts?

Dillinger 03-03-2009 05:43 PM

First thing you have to consider is the backlog -which is enormous at the moment. Then you have to factor in that, cost wise, companies are getting, probably, 20% to 40% MORE for their parts and rifles now then they were getting last March. That is a monster increase in cost.

I have an AR that I built a couple of years ago for like $769 ( I looked up the invoice in the shop the other day ) and could EASILY sell it for $1200 today without optics....

Once the ban goes into effect, the companies will offer ban compliant weapons and keep moving forward.

You might see Ed's Transmission and AR shop close down, but the big makers of AR's have a revenue stream for years to come just based on the demand. You get one rifle, then you want a different, special purpose upper, or a new fore end, or a new stock, or a whole new gun for the spousal unit should SHTF.

The low tide for AR's was 3 years ago, when there was no threat. Now they are sitting fat, dumb and happy....

JD

mpd8488 03-03-2009 06:25 PM

Quote:

Originally Posted by J33Nelson (Post 77585)
Sales and demand for ARs are very high right now but how long will / can that last. Will their be enough demand to keep all of these companies profitable or will we see some of these companies fail? In our economy everything is supply and demand and if the demand decreases just a little I think some of these companies may tank. Any thoughts?

If you want to examine it from an economic standpoint we should look at whether they have decided to expand their factories. These companies are typically running day and night shifts, mandatory overtime, etc, and are still not able to keep up with demand. If they thought that demand was likely to remain high (I don't and I'll explain why below) they would be in the process of upgrading and expanding their factories so they could churn out more AR's. Expanding their factories would allow them to keep up with orders, but if demand falls back to its previous levels these companies will start losing money because they wouldn't be selling enough AR's to keep the machinery running at profitable level (and even if they could keep the new machinery profitable, it wouldn't be as profitable as their previous level of manufacturing capability).

I don't believe that demand will remain this high and I suspect that neither do the people running those firms. If another AWB gets signed into law, well, their customer base is severely reduced and demand for new AR-15s and receivers will be next to nothing for any company that doesn't have government contracts. The demand for other parts will also be reduced because only a limited number of people who already own ARs will be eligible to buy them. If another assualt weapons ban doesn't get passed, then people will stop worrying about a ban and demand will fall anyways. Either way this is a temporary spike in demand, and even if it continues for months more, it may not be enough to justify a massive investment in expanding their manufacturing facilities.

Since they don't seem to be doing much capital investment, I think these companies will ride out the recession just fine. They may not make as much money once demand falls, but hey, who is?

bkt 03-03-2009 08:40 PM

I'm not sure I understand the problem. When you look at it from a consumer point of view, and I know some folks here may be shocked at this news, buying an AR-15 variant isn't high on the to-do list normally. The companies that exist cater to a certain market with a certain size under normal conditions.

The concern over the economy, foreign threats, illegal aliens, terrorism, and Katrina-esque "thugs gone wild" concern, the market has actually increased recently for these items and won't go away any time soon.

So what's the problem?

dog2000tj 03-03-2009 10:17 PM

Quote:

Originally Posted by Dillinger (Post 77615)
You might see Ed's Transmission and AR shop close down, ........

Noooooo ... Not Ed's Transmission and AR shop? :eek:

Sorry, couldn't resist.:p

Seriously, I'm sure since most companies, if not all, survived the 1st AWB that they can survive a 2nd AWB. Plus, with the country riding a freight train into the abyss I doubt a new all ecompassing AWB will get passed anyhow.

Dillinger 03-03-2009 10:20 PM

Quote:

Originally Posted by dog2000tj (Post 77751)
Noooooo ... Not Ed's Transmission and AR shop? :eek:

Sorry, couldn't resist.:p

.

LOL

Where the hell you been dog?? There is a contest in the Bunker you should sign up for....

JD

matt g 03-03-2009 10:40 PM

Quote:

Originally Posted by Dillinger (Post 77615)
You might see Ed's Transmission and AR shop close down...

Bwahahaha...

The nicest AR rifle that I've ever handled was one of our M16A1s when I was with the National Guard. It was manufactured by Hydramatic. If you're not a car guy, Hydramatic is GM's automatic transmission branch.

dragunovsks 03-04-2009 01:28 AM

How do car companies stay in business? Most people have preferences on what they'll buy. Just like some people won't drive a Ford, others won't buy a rifle from a certain company.


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