Gunmaker Makes Good on Getting Out of Colorado

The new year got off to a bang with one of the country's biggest gun magazine manufacturers carrying through on its promise to get out of Dodge. Well, Colorado, actually.


Magpul Industries said it was moving its headquarters to Texas and its production facilities to Wyoming after its home state of Colorado passed new laws limiting the size of a gun's magazine to no more than 15 rounds. It follows the decision by several other industry manufacturers to leave for less hostile states following the passage of restrictive gun laws. PTR Industries moved to South Carolina from Connecticut, Stag Arms is mulling a similar move, and Kahr Firearms Group exited New York for Pennsylvania.

To be sure, the biggest gunmakers haven't packed up their kit yet, but even for those staying put, expansion plans are actively being considered for places other than where they're currently located. Connecticut-based Sturm, Ruger (NYSE: RGR  ) announced last summer that North Carolina would be home to its first major expansion in 25 years; Remington Arms, which has had a factory in Ilion, N.Y., for more than 200 years, is considering expanding manufacturing facilities in Tennessee; and Beretta stated that although it's not moving out of Maryland anytime soon, if it does expand, it's not going to be somewhere that hasn't "shown consistent, strong support for Second Amendment rights."

Although Texas Gov. Rick Perry made a much-publicized tour of out-of-state gunmakers like Connecticut's Colt and Mossberg facilities, trying to lure them to his state following the passage of tougher gun laws, they don't seem to be going anywhere yet, and Smith & Wesson (NASDAQ: SWHC  ) , which has been in Springfield, Mass., since 1852, similarly says it is staying put.

Of course, it's not so simple for an entrenched manufacturer like Smith & Wesson, Ruger, or Beretta to just pack up and leave, particularly in the midst of overwhelming demand for firearms. While both the FBI and the gunmakers say you can't extrapolate background checks conducted by the police agency as a one-for-one indicator of gun sales, it still provides a high-level view of the interest in buying a weapon.

The number of NICS checks the FBI performed did tail off in the second half of 2013, with six of the last seven months showing lower numbers than the year before, but last year still marked the greatest number of background checks ever conducted, or more than 21 million, a 7.7% increase from 2012.

That's borne out by the results of sporting goods retailers, too, with Dick's Sporting Goods and Cabela's both saying the category's torrid rate of growth has slowed significantly in the back half of the year. Yet the gunmakers still have a big backlog of orders to tide them over, so they're not done yet shooting out the lights, and President Obama's use of executive orders the other day to implement measures surrounding the mentally ill and firearms is going to keep demand at a fever pitch.

The firearms industry has always had a target on its back every time tragedy has struck, but they've now discovered that voting with their feet is an effective way to fight back. Magpul is the second company to abandon Colorado for Wyoming, as gunsight maker HiViz Shooting Systems is leaving Fort Collins for Laramie. With the support they've received from the gun community, it won't be the last time we hear of a manufacturer taking aim at the chance to relocate to more gun-friendly states.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 06, 2014, at 6:04 PM, KingOfPizza wrote:

    Good riddance. If they want to lay off 300 people to make a poiltical statement, maybe a place like Wyoming or Texas is more their style anyway.

    Nobody said they can't operate here. They just have to sell their >15 round magazines elsewhere. Moving out of state doesn't change that.

    Political statements are never, ever good business.

  • Report this Comment On January 07, 2014, at 5:35 PM, darthnatas wrote:

    Too late for sour grapes Kingpizza. Business moves where it is wanted. Enjoy the stagnation. Big-government States headed the way of Detroit. Economic growth headed to Texas.

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Rich Duprey

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Having made the streets safe for Truth, Justice and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. So follow me on Facebook and Twitter for the most important industry news in retail and consumer products and other great stories.


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