Roger Williams investigates the controversial nature of the America firearms industry and reports on a gun culture like no other.
Doing business in the USA means that you encounter a series of superlatives, most of which relate to size. The USA is the biggest market in the world for sporting guns.
Gun stores had revenue of about $11 billion in 2018. Gun and ammunition manufacturers had revenue of $17 billion, with the majority of that revenue coming from arms sales to the U.S. and foreign governments. There are more guns in the US than people. In one state alone, there are more guns shops and more hunters than in the whole of Europe.
Nearly every American speaks English or at least a version which you can understand easily. That’s the good news because, on the other hand, the legislation and lawsuits surrounding and the administration of the sale and purchase of guns is unlike that of any other country.
Additionally, vast distances can be a barrier to profitable trade and a plethora of state and federal regulation, can place a high bar to establishment and growth of any US-wide business.
The US economy is the largest in the world. One state alone, California, is the fifth largest economy in the world. US citizens are wealthy, on average ranking second in the world to the Swiss.
Certainly the measures taken to address the coronavirus pandemic have taken a toll on these statistics. It may take a while for the industry and inventiveness of its citizens to enable the US to regain the economic position it held before the coronavirus but few would bet against the US.
The US and its citizens are not outward looking. Nearly 60 per cent of the population do not have a passport. Local newspapers in cities away from the coasts, carry much less international news than their counterparts in other western countries. American concerns about ‘overseas’ centre on the lives of military personnel, who might be their sons, daughters or spouses.
This inward-looking characteristic may stem in part from the size and diversity of the US population, itself brought about by immigration to avoid repression, disease or poverty. This bias is reflected in the relative size of US exports.
They constituted 12 per cent of GDP last year; compare this to China (17 per cent), Germany (47 per cent) or the UK (30 per cent). While the US cannot survive in a trade vacuum, there continues to a desire to bring home jobs and to avoid the monetary and political costs of sending soldiers overseas.
This stated ambition of the Trump administration has in part resulted in US trade sanctions and tariffs imposed on countries, companies and individuals, most particularly on China, Russia, North Korea and Iran.
The US is the worlds largest exporter of small arms according to the Small Arms Survey. Its scale of production comes in part from its own internal demand, particularly from its armed services which contractually require ‘Made in America’.
When the US Military hand gun contract passed from the famous US-maker Colt to Beretta, it was only possible because Beretta produced their guns in Maryland and latterly Tennessee.
This requirement to make guns for the military in the US was met again when the new contract was awarded last year and production moved to Sig Sauer which manufactures principally from plants in Exeter and Newington in New Hampshire.
It is not just handgun production that is impacted by military demand. Rifle production has seen a substantial swings and movement between producers which impacts rifles adopted by civilians in the US.
Although originally designed for military applications the AR-15 was adopted by hunters and the civilian gun enthusiasts with such alacrity that some estimate it reached at times half of rifles sold at gun shops.
Up to 2017, US gun production had seen massive growth helped particularly in years when gun control legislation was deemed likely because of the potential for an election of a Democrat to the White House.
The scale of US production is impressive. More than four million rifles were produced in 2016 alone and an estimated 70 million firearms in the prior eight years (see above).
In the year of peak production in 2016, the National Rifle Association estimated that 25 per cent of all rifles produced in the US were AR-15 type or other semi-automatic rifles.
While gun production numbers are not yet published for 2018 and 2019 by the US Bureau of Alcohol, Tobacco and Firearms, other data shows that by 2019 year end, after a small rise in 2018, the percentage of US Households having at least one firearm had fallen to 37 per cent – its lowest level since 2013:
Year | % of US Households
2011 – 45
2012 – 43
2013 – 37
2014 – 42
2015 – 41
2016 – 39
2017 – 42
2018 – 43
2019 – 37
It would seem that while the proportion of households with guns has fallen, gun enthusiasts are continuing to buy additional firearms. Small Arms Analytics & Forecasting (SAAF) estimates total firearm sales were 13.9 million firearms in 2019.
“The industry ended the 2019 year with sales of about 100,000 more units than for the whole of 2018 (13.9 vs. 13.8 million units),” SAAF Chief Economist Jurgen Brauer explained in a press release in January this year.
He continued: “While unit sales during 2020, being a U.S. presidential election year, may increase again (even absent politics, we estimate to about 14.4 million units), it is unlikely that the industry will return to its 2016 sales high of 16.6 million units. One trend that will continue, however, is of the U.S. as a ‘handgun nation’.
“Since 2014, annual handgun unit sales have handily outpaced annual long-gun unit sales in 2019 by nearly 2.3 million units.”
The volatility of the business of producing guns in the US is substantial. This volatility comes from the sheer size of military contracts; the overlap of defence and sporting guns; the impact of legislation; litigation and the volatility of demand itself in the US following mass-shooting or change of administration.
The volatility has led to bankruptcy for some manufacturers. Demand is impacted by mass shooting such as those in 2019, in Las Vegas and the memory of other shootings, at Sandy Hook and Parkland. These sad events have brought also the debate about gun control back to fore in the upcoming November Presidential Elections.
Next month we will look at some specific US producers, retailers and distributors of firearms and consider the purchase and sale of sporting guns in the US.
More from Roger Williams
- Currency trends w/ Roger Williams
- Roger Williams explores trade sanctions
- Roger Williams explores benefits of trade deal with Switzerland
- Roger Williams on possible trade partnerships with the Netherlands
- Roger Williams on the rise of online retail