Move as much as a display counter in your store, and some customers will complain. But this gives you a chance to interact with them when they ask, “Where do you keep the [fill in the blank] now?”
Major moves to an entirely new address, though, are more complicated than shifting merchandise between aisles. Big moves require a considerable amount of planning, time and expense. A major move isn’t to be taken lightly. That’s as true for manufacturers as it is for retailers. Imagine hauling CNC machines, industrial lathes and thousands of boxes of inventory across the country — not to mention the human cost of personnel displacement, hiring and training.
Much has been said recently about the move of a number of firearms and accessory manufacturers — perhaps “migration” is a better term — from a state considered unfriendly to business or to firearms to a more welcoming environment. The cradle of firearms manufacture in the U.S. was primarily, though not exclusively, the Northeast: Smith & Wesson in Massachusetts, Colt in Connecticut, Remington in New York and many others. Who has moved and why would they commit to such an enormous interruption in commerce?
Since the December 2012 shootings in Newtown, Connecticut, several states have passed what many consider to be draconian firearms legislation — restrictive for customers and increasingly regulatory for gun businesses. The manufacturing response has been, “Call U-Haul.”
Beretta USA, for example, is moving manufacturing and research and development 550 miles west from Accokeek, Maryland, to Gallatin, Tennessee, due in part to the likelihood of new state-mandated restrictions on the company’s ability to build guns in Maryland. Beretta is investing $45 million in Gallatin and will create about 300 jobs in Tennessee.
The decision to move was difficult, said Executive Vice President Franco Gussalli Beretta.
“We are not a company that builds a manufacturing facility every day,” he said.
As part of the expansion search, Beretta looked at hundreds of sites across 22 states and, in 2013, visited 80 locations in seven states. Engineering and construction firms have been hired and the facility will become operational in mid-2015.
Beretta General Counsel and Vice General Manager Jeff Reh said it wasn’t only economic incentives that gave Tennessee the edge.
“The pro-Second Amendment attitude of the Tennessee citizens and the pro-business attitude of the state [made Gallatin] the perfect place,” Reh said. Twenty-five years ago, Beretta moved one of its factories to Virginia when Maryland passed an earlier set of gun restrictions.
In 2013 Kahr Firearms Group announced it would leave New York because of the Secure Ammunition and Firearms Enforcement, or “SAFE,” Act. Kahr purchased 620 acres in Pike County, Pennsylvania — barely 60 miles from company headquarters in Blauvelt, New York. Corporate staff has already contracted for homes there. Plans are to build a new factory by 2019, moving manufacturing from Worcester, Massachusetts.
Kahr Vice President of Sales and Marketing Frank Harris said it wasn’t the SAFE Act so much as its passage “in the middle of the night” that prompted his company’s move.
“You wake up the next morning and ‘Boom!’ That was it,” he said. “We just felt like, gee, if they can do this, what can they do next? It’s not just the SAFE Act, but the uncertainty.”
Connecticut’s Stag Arms has also considered relocating. Stag Arms founder and President Mark Malkowski agrees that it’s harder to predict how states will come down on guns.
“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 said. A move would affect about 450 jobs.
“An expansion of this size doesn’t happen overnight,” Malkowski added, “but we know we want to expand out of state.”
A criterion for relocation is surely to move in among friends. A hostile community — or one which places little value on your presence and contribution — is one to leave behind as soon as possible.
Accessory maker American Tactical Imports recently moved from Rochester, New York, to Summerville, South Carolina, much to the delight of the state’s governor, Nikki Haley.
“We celebrate American Tactical Imports’ decision to invest $2.7 million and create 117 new jobs in Dorchester County,” she said.
Despite local news coverage that ATI “shafted New Yorkers” in the move, company President Tony DiChario said that “the people of South Carolina have welcomed ATI with open arms.”
Tim Allen, COO of Fort Smith, Arkansas’ Chamber of Commerce, said the area was “celebrating” the ground-breaking for Umarex USA and Walther Arms. He called their arrival a “great success story.” Fort Smith Mayor Sandy Sanders added the town was “honored to have such a great corporate citizen.”
A public statement praising Beretta USA’s move to Gallatin from Tennessee Governor Bill Haslam said it was a “great day for Tennessee.”
“We believe that our brand as the state of Tennessee has taken on new luster because Beretta has chosen to locate here, and we are forever grateful,” Haslam added.
Richard Fitzpatrick, CEO for accessory maker Magpul Industries — which recently moved to Wyoming and Texas — said politics and business factored into the decision to relocate.
“Moving operations to states that support our culture of individual liberties and personal responsibility is important,” he said. “This relocation [from Colorado] will also improve business operations and logistics as we utilize the strengths of Texas and Wyoming in our expansion.”
Remington has a history of moving. Out of Connecticut and into Arkansas in 1986. Into Georgia in 1987. Into its Madison, North Carolina, headquarters in 1996. Into a new firearms plant near Mayfield, Kentucky, in 1997. Investing in a state-of-the-art plant in Huntsville, Alabama, in 2014.
Remington Chairman and CEO George Kollitides claimed it wasn’t New York’s SAFE Act that caused the company to build in Huntsville, Alabama.
“In reviewing proposals, we looked at two sets of criteria. The first was quite simple: workforce quality and availability, pro Second Amendment position and pro-business environment,” he said. “These criteria eliminated a number of states immediately. Once we had a core group of states that met our basic needs, we focused on the economics of the proposal and availability of a quality facility, versus a green field, as timing was an important factor.”
Ruger may be headquartered in Southport, Connecticut, but it manufactures elsewhere — Mayodan, North Carolina; Prescott, Arizona; and Newport, New Hampshire. Its Connecticut workforce is about 30 people, but it employs nearly 2,500 elsewhere, said Kevin Reid, vice president and general counsel.
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. Of course, the plant also needed to be in a gun-friendly state — and on that score, Connecticut did not qualify.
On the other hand, moving its 30 headquarters employees was not a consideration. “For us to supplant those people,” Reid said, “it doesn’t make much sense.”
Mark Gurney, Ruger’s director of product management, suggested another angle.
“For us to pull up and move would give Connecticut Governor Dannel Malloy a victory,” he said. “Ninety-six percent of our state taxes are paid outside Connecticut. Ruger contributes very little money to Connecticut’s state coffers.”
In 2012, Walther Arms, a subsidiary of the century-old German small-arms manufacturer Walther Sportwaffen, announced that it would locate its new import, warehousing and distribution facilities in Fort Smith, Arkansas. It was a logical choice because Umarex USA, created in 2006, already operated a facility there.
Umarex and Walther are children of the same parent — Germany’s PW Group — and operations in the U.S. are managed by a single president and CEO, Adam Blalock. Blalock noted that co-location with Umarex made good financial sense.
In April, Steyr Arms became operational in its new 33,000-square-foot facility in Bessemer, Alabama, a move from Northeast Birmingham to Southwest Birmingham. Steyr is a wholly owned subsidiary of Steyr Mannlicher and the sole U.S. importer of Steyr, Merkel and Anschutz firearms.
Steyr CEO Scott O’Brien noted that the company had “been searching relentlessly for a permanent American home” since Steyr Arms was incorporated in 2008.
Center Of The U.S.
Perhaps it made little difference a generation ago, when postage stamps, for example, were about half the price they are today, but with skyrocketing transportation costs it is understandable that a manufacturer would locate with a thought to the cost of shipping to wholesalers and retailers.
The Walther/Umarex building in Fort Smith, Arkansas’, Chaffee Crossing Industrial District is 4 miles from the airport and 6 miles from the Interstate. It is an easy distribution point for their FedEx shipping contract.
Remington closed its ammunition plant in Bridgeport, Connecticut, in 1986 and built a new facility in Lonoke, just east of Little Rock, Arkansas. This site, Remington officials maintain, was chosen because it was close to the “geographic center of the sporting ammunition market.” (But a year later, Remington built a clay targets plant in Athens, Georgia, which is nowhere near the center of U.S. clay target shooting.)
And as more and more foreign gun manufacturers are selling to U.S. customers, American distributors need port access and the ability to move shipping containers quickly to warehouses.
ATI imports German Sport Guns; CAT Laser Aiming Devices from Spain; Cavalry shotguns from Turkey; guns from the Philippines and other gear made off-shore. President Tony DiChario noted that Charleston, South Carolina, has the deepest port in the southeast and this makes importing easier.
Although he remained in New York, marketing manager Shane Dale said the majority of the ATI move is complete. A few employees had moved south, while others transferred to affiliated AmChar Wholesale in Rochester, New York.
A Right-To-Work State
Unions also factor into firearms manufacturers’ moves. Half of U.S. states have right-to-work laws, and in broad terms, that means a worker can’t be forced to join a union or pay union dues, even if a union represents every worker in a plant. States that are not right-to-work cluster in the Northeast and the West Coast; the others, whose workers are often anti-union, cluster in the South and West. Business interests lobby enthusiastically for right-to-work legislation.
Thomas Holmes, professor of economics at the University of Minnesota, claims in a paper for the CATO Institute that the term “business friendly” is disguise for a right-to-work state.
“Right-to-work states historically have pursued a number of other smokestack-chasing policies, such as low taxes, aggressive subsidies, and even, in some cases, lax environmental regulations,” he writes.
Frank Madore, president of the United Mine Workers union that represents Remington employees in Ilion, New York, said the company’s addition of a new plant in Alabama was “a terrible thing from the beginning” while still blaming the anti-business, anti-gun climate in New York for Remington’s move to the South.
Adam Blalock credits Arkansas’ business-friendly right-to-work policies as one of the considerations in developing the Umarex-Walther facility in Fort Smith.
And O.F. Mossberg is in the midst of adding manufacturing capacity at its existing factory in Eagle Pass, Texas, said public relations manager Linda Powell. Eagle Pass is less than a mile from Mexico, and Texas is a strong right-to-work state.
Likewise, Magpul Industries reacted immediately to Colorado’s interference with its business model. The state’s legislature limited magazine size — and Magpul, whose major products include AR-15 magazines and accessories, began pulling out.
Its plan is to construct a 100,000-square-foot manufacturing, distribution and shipping center in Cheyenne, Wyoming. Its headquarters will move to Texas. Texas and Wyoming are right-to-work states, and the governors of both states — Rick Perry in Texas and Matt Mead in Wyoming — supported the moves with financial incentives.
Magpul Chief Operating Officer Doug Smith said: “Magpul made the decision to relocate in March 2013 and has proceeded on an aggressive but deliberate path. These dual moves will be carried out in a manner that ensures our operations and supply chain will not be interrupted and our loyal customers will not be affected.”
Magpul plans to “transition” 92 percent of its workforce outside of Colorado by spring 2015 and will maintain only limited operations in Colorado.
Mark Gurney, director of product management in Ruger’s New Hampshire facility, said a move “had to be in a right-to-work state.” That was “nonnegotiable” and Mayodan, North Carolina, qualified.
Although there is a low presence of unionized workers in New Hampshire, there were other considerations: wages, utilities, taxes, state incentives and general friendliness to firearms. Ruger’s considerations were “a package” and Mayodan had a pool of former textile workers who understood factory work and were delighted to be working … and working for Ruger.