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The General American Economy Faces Ten Years of "Pay Back" for the Numerous
Past Sins of the Last 40 Years. However, Our Firearms Industry Will Have Upward
Growth and Sales Trends.
by Andrew Molchan
The immediate news is that the SHOT Show circus has come and gone. For me, it's always a good feeling when SHOT is over.
Befitting the circus that the SHOT Show was, a large part of it was in tents.
The SHOT Show had a massive amount of sickness. From the follow up calls
I've been making, it appears as if hundreds of people came down with sickness either at the Show, and/or immediately after. Scores of people ended up in the Las Vegas hospital and/or went into a hospital soon after returning home.
My wife (Kathy), and I, before the Show, had
planned on carefully pacing ourselves, and we didn't overdo it.We
were coming from a tropical swamp and going to a dusty, cold desert so we knew
we had to be especially careful. Las Vegas was cold, drizzly, dry, dusty and windy. The unfortunate SHOT Show "tent
people" had their food stands, etc, outside of the tents in the windy, cold drizzle. I wonder how many of them ended up in the hospital?
A large New York City based publisher had a party at the SHOT
Show, and the next day over a 100 people ended up in the hospital. One of AFI
clients, the day after they returned from SHOT, ten of their people went into
the hospital.
Las Vegas was
packed with people in for Super Bowl and the Mardi Gras weekend, plus the other three conventions that were in
town in addition to the SHOT Show. When you have hundreds of thousands of people packed together like sardines,
with everyone using the
same over crowed bars, restaurants, bathrooms and so forth, any kind of infectious sickness will
spread like wild fire.
One of the many "benefits" of
Reed's “excellent management” is that ONLY the SHOT Show exhibitors were in
tents. Only SHOT Show tent exhibitors had to go out into the rain to buy
overpriced hotdogs. The SHOT Show was the most expensive convention in Las
Vegas, but all of the other exhibitors from the other three conventions that were in Las Vegas,
were all on the inside of nice buildings. What's the saying? "Reed's SHOT Show costs are
fabulously expensive, but it's all worth it because the service is top
notch."
If you went to the recent SHOT Show, and
did not get sick, better luck next time. In two years, SHOT is back in Las Vegas. The 2010 SHOT Show will in part be in the Sand's basement parking garage.
Occasionally, somebody will ask why I dislike
Reed. One of the many reasons is that Reed is the world's largest supplier of information to
America's liability lawyers. I do not like American liability lawyers. I
think
America are being paid $20
an hour vs. $1 in China. However, few manufacturers want to deal with America's shit head legal system. America's legal system has made America uncompetitive on the world stage, and our national decline will continue until
we have fundamental legal changes.
When a private company hires Reed to gather
information about a competitor, or potential lawsuit victim, there's a line
where normal business information gathering ends and industrial espionage
begins. I'm not totally sure what Reed is doing because so many things
about Reed are secret. (i.e. like where the SHOT Show money goes.) However, Reed does collect very large amounts
of money for the information it finds and sells.
Reed (a British/Dutch conglomerate), just
announced their intention to pay 3.5 billion dollars ($3,500,000,000.00) for
one of When your real estate business includes things like
SHOT Show floor space with 1800% profit
margins, a billion dollars is no big deal.
Congress plays Mr. goody-two-shoes on the
surface by limiting the kinds of information that spook-agencies are supposed
to gather. Then Congress
looks the other way as the spook organizations hire private spy organizations to do what the government isn't supposed to
do.
Reed has both national and international
government "clients" who are very big, and are not especially keen on any kind of civilian
gun sales.
In my opinion, if Reed's objective was to extract $250 million dollars OUT of
the firearms industry every year, (the total 100% cost of everything connected to the SHOT Show), and
return almost nothing of
real value to America's and the world's private firearms owners, then Reed has been successfully achieving
that objective.
The good part is that several American
manufacturers have started to notice that the amount of "orders" coming out of the
SHOT Show is about what they would have received anyway. Several manufacturers have noticed that
although the SHOT Show is packed with hot bodies, the number of people with an
FFL really is only around 5000.
THE OVERALL AMERICAN ECONOMY WILL BE VERY DIFFICULT FOR MANY YEARS.
HOWEVER,
THE TRENDS FOR OUR FIREARMS INDUSTRY ARE EXCELLENT.
This March 18th the Supreme Court will hear the arguments for and
against the 2nd Amendment. (See
"How To Survive the 21st Century" article in
this issue, and in last months February Industry Insights).The Court usually
issues their ruling two to four months after the hearing. That's June to August
2008. For years, I
have been 99% sure that the Supreme Court would eventually say that the 2nd
Amendment means what it says. It should have happened 20 years ago, but better late than never.
By my calculations, there are currently approximately 55 million adult Americans
living in areas where
firearms ownership is either totally prohibited, (Washington D.C., Chicago, San Francisco etc.) or in areas where
firearms ownership is very difficult (i.e. New York City, Philadelphia, Maryland, Cleveland, etc.). Approximately 35% of America's adult population lives in areas where firearms ownership is
either totally banned or highly difficult. So, when the Supreme Court says that the 2nd
Amendment means what it says, we, the
American firearms industry, have 55 million new, potential customers. THIS IS SIGNIFICANT, 55 million adults is as
large as the total population (adults and children) of England.
After the Supreme Court's ruling, the firearms sales floodgates will NOT
open immediately, and that's good. After the ruling, there will be a lot of questions
about what it really means. Does it mean you can open a gun store in San Francisco? Does it mean you can buy a gun in Las Vegas and bring it back to where you live in Los Angeles? There will be a "feeling out" period, and that's okay because it will spread out
the firearms sales increases over several years.
There are currently millions of
Americans who DO NOT want to be lawbreakers. In the many cities where gun ownership is banned,
millions of individuals who would like a gun do not want to break the law.
After the Supreme Court's ruling, many people in firearms restricted areas will feel better about owning a
firearm even if the immediate
details of the ruling's impact on local laws is not spelled out in detail.
Our firearms industry will have six
major, and very large, trends working its favor.
(1) Despite delaying actions by America's anti-freedom groups, after the Supreme
Court ruling more and more areas inside of
America will open up to firearms ownership.
(2) Young American's are already very
pro-firearms ownership. They are the future. They will be good customers for as far into the future as I can see.
(3) The trends that are making young Americans, and young people around the world, more pro-firearms are increasing.
(4) Worldwide, police forces are increasing
and up dating their firearms purchases. Seventy years ago, cops in the USA would buy one handgun and keep it for a
20-year career. Now, the American police update their small arms on a regular
basis, and the police forces
of the world are starting to do the same.
(5) Despite the local anti-gun laws, the rich
of the world have firearms. There's going to be a lot more rich people in the world, and more
firearms sales.
(6) The slow motion financial disasters that
will unfold in America over the coming dozen years will have an
upside for our firearms industry. Whenever there was a lot of free-floating anxiety in the air, firearms
sales increased. In
the coming dozen years there's going to be a lot of anxiety in both America, and the world.
WHY IS THE
GENERAL ECONOMY GOING TO HAVE A DOZEN BAD YEARS?
Washington does reflect America in general, and it does represent America. The majority of Americans have been (and
still are), clinging to lies, untruths, manipulations, delusions (i.e. anything
comfortable to believe is automatically labeled as "true"), and cover-ups.
The demagogy that
comes from the likes of Mrs. Clinton is a symptom of a widespread and deep rot.
A truly healthy society
wouldn't tolerate scumbags like the Clintons.
Consuming goods and services is a lot of
fun, but somewhere you have to PRODUCE something to pay for the consumption. "Consuming" by itself is NOT a
viable long-term economy. You can live on borrowed money and lies for a long time, but NOT
forever. For years, America has consumed more than it has produced, and
borrowed the difference. The financial chickens are going to start coming home.
The deficit between
what America consumes and what America produces will be (is now) coming out of
the value of the dollar. My
guess is that the US dollar will lose 50% of its value over the next dozen
years.
CURRENT NEWS
BLACK HILLS AMMUNITION is moving into a new
and larger factory a few miles distance from their current facility. Jeff and Kristi Hoffman, the owners of
Black Hills, take great pride in the quality of their Black Hills product. Even though Black Hills runs two shifts, six days a week, the highly popular Black Hills ammo has been backordered for years. Jeff
and Kristi Hoffman resisted expanding because they did not want to risk having even a tiny
interruption to Black Hill's super high quality. However, in early 2007 the back orders on some lines
of Black Hills ammo extended past a year. Expansion became a necessity. Look
for an article in American Firearms Industry in the next few months on
their new state-of-the-art facility.
With the affirmation of the 2nd Amendment
coming on-line this summer, and the expanded ammo sales that will bring, AFI expects the ammo business to be good
for several years. As
the world's economy slows down, and continues to slow in 2009,AFI
is predicting some lower prices for copper starting in late 2008. That should help increase net profit
percentages for ammo companies in 2009.
BAE, British Aerospace Enterprises, purchased
Armor Holdings Products Group this last summer. Armor Holdings had problems, the
same kind of problems that I've seen "conglomerates” have for the last 40
years. Lazy managers think
that being "big" imparts some kind of magical advantage all by
itself. Lazy managers don't
realize that "big"
is only an advantage if your leverage your size to your advantage. For example, if you have $100 million in
sales, you can spend one million dollars at the firearms retailer level and be
"real big" in America's gun stores. A small company, with $1
million cannot afford to be "real big" at the dealer lever. However,
what's happened many times over the last 40 years is that "big"
companies "cut costs" and do not do anything (or almost nothing) at
the dealer lever. That puts them on the same fighting level as every small company. However, the small companies are usually
faster and more nimble. Conclusion, the "big" company ends up in
financial trouble because the managers surrendered their advantage of being big. Not using it is the same as not having it.
"Big" means being "big" in the gun stores where the
customers live.
An example of the above is McDonalds. Anyone can make a hamburger. Anyone with $20,000 can open a hamburger
stand. However, McDonald's
managers understand that being "big" means nothing unless you
leverage that bigness. McDonalds
spends one million dollars a DAY on advertising, $360 million dollars a year.
Spending a million dollars a day on promotion is something a little hamburger
stand can't do, and that's why McDonalds will drive that little stand out of business.
Coca Cola, Wal-Mart, and so forth all do the
same thing. I
could run down a list of once big companies that thought that being
"big" was an end it itself: High Standard, Leisure Group, Colt, Ithaca, Redfield,
Dan Wesson Arms, AYA Shotguns, Star Firearms, SKB Shotguns, Armor Holdings and
so forth. Most of the above companies put their sales in the hands of the
distributors, and when they did that they destroyed their size advantage.
THE US NAVY has just announced the successful
test firing of their new Railgun. The new gun has a muzzle velocity of 7600
feet per second. The
Navy said they can hit a target 200 nautical miles away, and the projectile
still has a velocity of 5400 feet per second when it impacts. The gun and projectile have no
explosives. The shell is
made from a special hard metal that can punch straight through ships such as
big heavy cruisers. The Navy went on to say that the new guns would make their ships more battle
resistant because the new guns
require no explosives whatsoever. The ship's dangerous
ammo magazines will thus be eliminated. For more information contact The Navy at: navyvisualnews@navy.mil or you can
call 703-614-9154.
So, do you think there's a deer Railgun in our firearms industry future? I don't know, a rifle that could shoot for 20 miles has some serious
safety issues. On the other hand, a military rifle that could easily shoot through the sides of buildings two
miles away is something to think about.
Military small arms and artillery have
been fundamentally the same for 120 years. However, smaller and mobile Railguns
would significant change platoon and company level tactics. Mobile Railguns would give the infantry (and guerilla/insurgent forces)
a significant advantage over tanks and helicopters.
The Navy's Railgun
brings into question the future viability of all kinds of weapons systems: aircraft carriers (how do you intercept
several incoming 7000 fps projectiles?) jet bombers (big Railgun
auto weapons shooting into the sky), and so forth.
ANDY'S
VIEWPOINT ABOUT THE ELECTION
One of the reasons why I left the Democratic
Party 30 years ago is because the Democrats, like the old communists, started
to subvert the meaning and use of language. A large part of our thinking, reasoning,
ethical judgments, and strategic planning is done with language in our minds. When you let the Devil corrupt your
language, you start to corrupt everything in the society.
Both Mrs. Clinton and Mr. Obama
are always using the word "equal," but they are using the word "equal" like
communists everywhere in the 20th Century used the word. For communists, the world "equal"
is a justification for the ruling power elite in a government to forcibly steal
other people's property. Supposedly to make everyone property
"equal." The Devil created the communist meaning of "equal"
that Mrs. Clinton and Mr. Obama now use so liberally.
The "equal" that was (is) used by Jesus in the Bible is about
treating people (everyone) equal. For Jesus, "equal" was equal before
the law (the essence of our US Constitution). In the Bible, when Jesus talks about "equal"
it's about having your heart and actions treat people as "equal."
Jesus was very much against the kind of
government power and property confiscation that Mrs. Clinton and Mr. Obama (with the Devil on their shoulders) are preaching. Stealing property is NOT
"equal," and it's not Christian. If you had to bring Christianity down to one sentence
it would be, "Threat
others as you would like them to treat you."
The world is God. The universe is God.
"Nature" is God. God's world has a lot of "natural" unequal. It's not our place to question God. The Devil
tells humans that they have the power to physically change God's world, and the Devil's advice always ends in evil.
A person who only grows to 4 feet tall
is not going to be an NBA basketball star no matter how much government "equal"
is lavished on that individual. We have to resist the Devil when the Devil tells us that we should
question God's master plan. The fact the we humans
don't always understand what God is doing only means that we humans don't
understand, but God does. Jesus never said, "Use government power to make
everyone property equal." The fact is that God's world is full of physical
unequal. What Jesus said was
to treat everyone, both in our hearts and in our actions, as "equal"
in worth. The corrupted meaning of "equal" as used by
the Democrats, and the old communists is Devil
inspired.
Another current well-used example of the
corruption of words is Mrs. Clinton's constant use of the word,
"Change." The word "Change" connected to the Clintons is a total oxymoron. Honest words to describe the Clintons would be, "Decay, polluted, moldy, corroded, and
rotten." If President,
one of the things Mrs. Clinton said she wants to do is to build a museum to the
Woodstock Festival. There's no need, the Clintons are already living museums to the
1960's.
America's problems of the 1960's are not America's problems of 2008. Unfortunately for the future of America, both Mrs. Clinton and Mr. Obama both have their minds back in the 1960's. They are both fighting yesterday's wars for
yesterday's objectives. Both of them fanatically refuse to deal with the
current 2008 serious issues in a serious way. Mrs. Clinton and Mr. Obama both have the same core 1960's philosophies, "If
it feels good, then it must be right."
What "feels good" to a robber does
not feel good to the victim. What might "feels good" to a pilot
dropping bombs, that does not "feel good" to the women and children
on the ground. Jesus
said you must have justice for ALL, and righteousness for ALL, and EVERYONE has to "feel good" about what's
happening.
FIREARMS MARKETING ADVICE FOR NOW
Back in 1994 there were 260,000
people/companies with FFL's. That has gone down to
about 55,000.The basic 55,000 has been the same for about six years. Every month 1000 FFL's
are not renewed, and 1000 new people/companies are added. There is a lot of
"internal" movement within the FFL list, but the gross number has been about the same for
the last six years.
After the Supreme Court re-establishes the
2nd Amendment, there's
going to be increased growth in the number stores selling firearms. From late 2008 to 2011 we are projecting the
addition of 5000 real gun stores.
A "stocking dealer" who's been in
business for 20 years already is set in his ways. However, the 5000 new gun stores will be very
open and fluid for their first
few years in business.
ONLY American Firearms Industry magazine
(AFI) covers 100% of the FFL holders. Only AFI rotates through ALL of the FFL holders. As a
new feature, AFI is going to start to compare current FFL lists with the recent
past ones to identify the brand new FFL holders, and in late 2008 start sending
AFI issues to all the new dealers. This is a tremendous marketing advantage to AFI's advertisers. AFI will get its advertiser's message to the new
dealers FIRST.
In 1890, a newspaper reporter asked a very
old General Sherman, one of the most successful generals in the Civil War,
"What was the secret
of your military victories?" General Sherman leaned back in his rocker and said, "It was the same as all of
Napoleon's early battles. I got there fast, I got there first – and with the
most."
This year, and through 2009 to 2010, AFI is going to get its advertisers to
the new dealers, "Fast and first." AFI is the only magazine that covers all of the FFL
holders.
the best,
Molchan
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