Star Spangled Bangers

Sporting a gun trade like no other, the US-of-A are currently enjoying  a fiscal boom. Roger Williams explains the state of trade across the Atlantic

There are more licensed firearms dealers than coffee shops, grocery stores or pharmacies in the United States. 325 million people live in the US and they own, on average, more than one gun each. The state of Pennsylvania alone, has more gun shops and licensed gun holders than the whole of Western Europe.

If you include firearms dealers, gun manufacturers, collectors and importers, there are 33 per cent more participants in the gun market than there are in schools in the US.

The scale of the country is difficult to put in perspective for someone in the UK. The US is 3.8 million square miles. Alaska alone is 663,000 square miles; this is six times the area of Great Britain. Alaska’s population density is one fifth of Cumbria’s, which has the lowest population density in England.

The state of California alone is the sixth largest economy in the world. With a just over half the population of the UK, it has economy which in size is 80 per cent of that of the UK and it is growing almost three times as fast.

The US is a great market for shooting products but there is really no such thing as doing business with the US. The United States of America, is just that, a collection of states with a federal system. Each state is a separate entity with its own procedures. States have different sales taxes and different income taxes. They have different laws and these can impact demand for certain products and, importantly, must be taken into account when you are based in one state and sell to another.

This is not to say that there are protectionist laws that hinder inter state commerce. These were outlawed a long time ago at the time of the “New Deal’ in the thirties. Congress, through its interpretation of the ‘commerce clause’, said that inter state trade cannot be restrained. Despite this, to do business in firearms in different states means you must consider the implications of developing your business in a specific state, as state laws vary considerably and some do offer reciprocity and some are more liberal than Federal law.

Product liability, labelling laws and regulations can vary by state, so it pays, especially at the start, to consider finding a ‘partner’ in the US who can import your product. Partners like this have developed real expertise and it is knowledge that is not easily acquired.

Running foul of the US Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) can be not just expensive but could involve a federal crime and prison, as some UK firearms dealers have learnt to their cost. ATF is the law enforcement agency in the US Department of Justice. It covers, amongst other things, the illegal trafficking of firearms, the enforcement of Federal firearms laws and the regulation of the importation of firearms. All imports must be imported by a registered firearms dealer.

The agency’s web-site is comprehensive but big. Knowledge of how to deal with ATF is immensely valuable. Even for UK companies importing from the US, it is key to ensure you are well-advised, to ensure you are dealing with the ‘right’ licensed entity and not to get ensnared in ‘trafficking’. For items that are not part of a firearm nor high technology associated with firearms, worries and the oversight of the ATF is less troublesome. However, despite the popular press idea that anyone can buy anything in the US, trading in regulated products can be a minefield.

In my experience, small errors, sometimes only in consumer labelling or packaging can turn out to be expensive to rectify. Additionally, they can involve the inability to get hold of your shipment as it gets stuck at the US border. Worse still, your goods can be refused entry to the US. The good news is that there is considerable help at hand. The UK Government has a number of programmes to help exporters and the US is well-covered.

No serious foray to export to the US or import from it, should go ahead before visiting SHOT Show, the world’s biggest exhibition of guns and firearms. The UK Gun Trade Association offers a wealth of knowledge and help. Participation in their scheme at SHOT Show to exhibit your product initially, is definitely a sensible idea.

If you are aware of all this and are already importing or exporting and are far enough along that you are considering a US branch or subsidiary, then the selection of where, which state and what form your business will take in the US is a decision which will not be cheaply changed. I know of many distributors that have taken the plunge and some that have set up on a greenfield basis. Two, I know well, have done this with considerable success and have not looked back.

Establishing yourself in the US, where your ‘US partner’ operates has been a natural thing to do and is something that makes obvious sense. It my experience, it pays to come to an agreement with that partner, on the transition from where you started, to a permanent base that you want in the US.

If possible, the purchase of your US partner’s business can be a good route but buying that partner out completely, is generally foolish if it is a smaller operation in which the owner’s input is key. In such a situation, ensuring he retains a significant stake and has an incentive in success of the new US business is important.

If your partner has a substantial organisation, well-run and staffed, then this, while involving much greater capital outlay, can be safer to buyout, as your knowledge-management-loss risk is smaller.