Gun Makers Find Greener Pastures Down South

By Matthew Rocco        Photo: Reuters

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In the wake of new regulations in their northern home states, gun makers are going to the Carolinas, Alabama and other areas in the South for a place to open up shop.

Legislators in some states pushed for bans on the type of rifle used in the Newtown, Conn., school shooting in December 2012. New York and Maryland each passed laws that prohibit certain types of semi-automatic rifles and capped the size of magazines, while Connecticut also restricted the number of rounds for a single magazine.

All three of those states are home to familiar names in the gun industry, some of which threatened to seek out expansion opportunities in other states or move their operations entirely.

Remington Outdoor, the parent company of Marlin, Bushmaster and other brands, is the latest to announce an expansion down South. Its flagship brand, Remington, is the oldest gun maker in the U.S. and has a manufacturing base in Ilion, N.Y.

Earlier this week, the company formerly known as Freedom Group detailed plans to open a plant in Huntsville, Ala. Remington Outdoor expects to create more than 2,000 jobs in Huntsville over the next decade to meet growing demand for its products.

Chairman and chief executive George Kollitides said demand for Remington Outdoor’s products is at a “historic high.” The Madison, N.C.,-based company, which has 19 locations in the U.S., plans to be up and running in Alabama within 18 months. Its total workforce had grown to 4,200 employees by the end of 2013, compared to 2,400 in 2008.

Based on data from the National Shooting Sports Foundation, adjusted NICS background checks last month declined 45.8% from a record 1.79 million checks in January 2013. However, a figure of 970,510 was still good enough to mark the second highest January ever.

Late last year, Ruger began manufacturing at a third facility located in Mayodan, N.C. The company is headquartered in Southport, Conn., but does all of its manufacturing outside of the state.

Ruger’s two other plants in Prescott, Ariz., and Newport, N.H., employ a combined total of roughly 2,000 workers. The new North Carolina location created around 450 jobs, according to Ruger’s vice president and general counsel Kevin Reid.

Reid said the company had “a whole list” of criteria when considering where to expand operations. Ruger wanted a modern facility that needed little rehab, was close to an airport and had access to a skilled workforce.

And of course the plant had to be in a gun-friendly state. Connecticut wasn’t on the list of possibilities, Reid noted. He also said moving its 30 or so workers out of Southport is unlikely.

“We don’t have many folks there,” Reid said. “For us to supplant those people, it doesn’t make much sense.”

Saying Goodbye to Gun Valley

A long history of gun making in Connecticut and Massachusetts has earned them the nickname of Gun Valley. With companies increasingly looking further west and south to make firearms, those states have the most to lose.

According to a NSSF report last year, Connecticut alone would lose 1,768 jobs, $13.5 million in business tax revenue and $450 million in economic activity if Colt, O.F. Mossberg & Sons and Stag Arms were to move all manufacturing out of state.

Smith & Wesson (SWHC) and Springfield are two of the most prominent rifle and handgun makers in Massachusetts. Savage Arms, which was acquired by Alliant Techsystems (ATK) last year, also calls the state home.

North Haven, Conn.-based O.F. Mossberg & Sons, is in the midst of adding manufacturing capacity at its existing factory in Eagle Pass, Texas, said spokesperson Linda Powell.

Another Connecticut gun maker, Stag Arms, is searching for a second home to expand. Stag Arms was ready to add a fourth factory building in New Britain, but the company put those plans on hold once the state began debating further restrictions on its specialty, modern sporting rifles.

“With the way the laws went in Connecticut, we decided to do expansion out of the state,” Stag Arms President and CEO Mark Malkowski said. The company has new products being developed and is already nearing capacity at its current location.

Texas and South Carolina have been the most aggressive in pursuing Stag Arms, which is keeping in touch with states and economic development groups.

“An expansion of this size doesn’t happen overnight,” Malkowski added. Wherever Stag Arms moves it will likely create around 450 jobs. “We know we want to expand out of state.”

Demand for the AR-15 rifles made by Stag Arms has risen sharply in recent years, and Malkowski said a New York-compliant rifle is boosting the company’s sales in the Empire State. The new rifle was made without features specifically prohibited by the law New York passed last year.

A union official blamed that law for driving Remington to open a new plant in Alabama. Fran Madore, president of United Mine Workers union that represents most Remington employees in Ilion, N.Y., told The Post-Standard that New York’s SAFE Act “has been a terrible thing from the beginning.”

“You’d think New York would be doing everything to keep us. Instead, it passes a law that cripples us,” he said.

Greener Pastures

Beretta, which makes the U.S. military’s standard-issue sidearm, the M9, has its U.S. headquarters in Maryland. As a bill making the company’s 13-round 9mm pistol magazines illegal neared passage, Beretta warned lawmakers that any additional regulations would play a role in where Beretta operates.

Last month, the Italian company added itself to the list of gun makers seeking greener pastures, unveiling plans to build a new plant in Tennessee this year. In 1990, Beretta moved one of its factories to Virginia when Maryland passed a round of gun laws.

Colorado-based Magpul, known for its magazines and gun accessories, recently made good on a promise to leave the state if a limit on magazine capacities passed. Magpul said early this year it will relocate to Texas and Wyoming.

Kahr Arms purchased 620 acres in Pike County, Penn., to move its corporate offices from Pearl River, N.Y. It also anticipates adding manufacturing operations in Pike County.

Putting down roots in another state can pay dividends in more ways than one, as many firearm owners actively look to support companies in gun-friendly states.

“There are people who are very passionate about where companies are located,” Malkowski explained. “At the same time, picking up and moving multiple factories is a very difficult task.”

Malkowski said Stag Arms will choose a location based on the available workforce, in addition to local gun laws.

“We want to be in a state where they won’t pass a law in the middle of the night that puts us out of business,” he added. “With an expansion, it gives us an opportunity to see what it’s like to operate in another state. It definitely could lead to a headquarters move.”

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