Why U.S. Gunmakers Could Soon Face New Competition

[TrappedinCalifornia]

Why U.S. Gunmakers Could Soon Face New Competition

[Scratch705]

Cool. I like cz guns. Too bad we can't buy their new pistols in ca from a store at their affordable price but instead at inflated ripoff pricing from secondhand market

[C.G.]

Bit of a misleading headline. Colt is a US manufacturer so the fact that it was bought by CZ does not change anything as far as more or less competition for other US companies.

[TrappedinCalifornia]

Bit of a misleading headline. Colt is a US manufacturer so the fact that it was bought by CZ does not change anything as far as more or less competition for other US companies.

Did you even bother to read what was quoted, let alone the article itself?

CZ is saying that the Colt facility increases CZ's manufacturing capacity and that the two brands will work in conjunction with each other. Thus, it's not about Colt continuing to operate solely as Colt. It's about CZ now having access to Government contracts due to having manufacturing facilities within the U.S. Again, partially contained in the OP quoted portion...

..."CZG will gain an additional production capacity and expand its customer network in North America and other countries," he said. He also pointed out how "[t]hrough Colt, CZG will become a supplier to Mil/LE customers and armed forces in the United States, including [the] U.S. Army."... Under U.S. law, only companies manufacturing guns in the U.S. can compete for American military contracts. Owning Colt will allow CZG to enter its firearms in the U.S. military procurement competitions... Increased manufacturing capacity, however, plus the easier potential introduction of new CZG firearms made in the U.S. could win it additional law enforcement and civilian sales...

Thus, the "could" in the article title.

One of the things the article does downplay is that, currently, CZ is restricted vis a vis import/export laws. In fact, a few months ago, this appeared on their website... "Due to the contradiction of the interpretation of the export regulations, rimfire rifle magazines can not be exported temporarily from the European Union." Thus, when the article states...

...CZG is already competing with the two companies in these markets, meaning its effect on the competitive landscape is already priced in. Even with Colt's catalog added to its own, nothing in CZG's lineup is likely to revolutionize its civilian or police sales position...

What it doesn't note is that if CZ utilizes the 'additional' manufacturing capacity afforded by the Colt facilities to produce CZ products as well as select Colt products, such changes the 'math' that has to be priced in.

In short, don't just assume: "CZ bought Colt and, therefore, they will produce only Colt products."

[The Gleam]

CZ is saying that the Colt facility increases CZ's manufacturing capacity and that the two brands will work in conjunction with each other. Thus, it's not about Colt continuing to operate solely as Colt. It's about CZ now having access to Government contracts due to having manufacturing facilities within the U.S. ///

What it doesn't note is that if CZ utilizes the 'additional' manufacturing capacity afforded by the Colt facilities to produce CZ products as well as select Colt products, such changes the 'math' that has to be priced in.

Thereby the reasons I've been keeping an eye on the stock. Haven't bought yet, but a huge consideration as we seem to be approaching a cold-war atmosphere again.

[damon1272]

[The Gleam]

Colt stopped paying attention to what consumers or the market wants, as well as stopped paying attention to meaningful innovation, early 1980s. It's just all been downhill since then.

Only thing from Colt that caught my interest in the last 30 years were the Colt Z40 guns (ironically, CZs) and the recent Wiley Clapp series guns.

I thought the Lightweight short-barreled officer-sized Double Eagle guns were nice - these were the improved variation of the Double Eagles, the early guns being slapped together on Seecamp's work, but could have been executed better - and came 10 years too late. Poor timing. Nobody was going to consider a Double Eagle as Glocks and HKs were hitting the market.

But that's about it. No interest in the new Pythons or Anaconda. If Colt had been smart, they would have come out with an entirely new and more robust revolver, new name, new features, with a new form of trigger.

--

[C.G.]

Did you even bother to read what was quoted, let alone the article itself?

CZ is saying that the Colt facility increases CZ's manufacturing capacity and that the two brands will work in conjunction with each other. Thus, it's not about Colt continuing to operate solely as Colt. It's about CZ now having access to Government contracts due to having manufacturing facilities within the U.S. Again, partially contained in the OP quoted portion...



Thus, the "could" in the article title.

One of the things the article does downplay is that, currently, CZ is restricted vis a vis import/export laws. In fact, a few months ago, this appeared on their website... "Due to the contradiction of the interpretation of the export regulations, rimfire rifle magazines can not be exported temporarily from the European Union." Thus, when the article states...



What it doesn't note is that if CZ utilizes the 'additional' manufacturing capacity afforded by the Colt facilities to produce CZ products as well as select Colt products, such changes the 'math' that has to be priced in.

In short, don't just assume: "CZ bought Colt and, therefore, they will produce only Colt products."

I read it and came to a different conclusion than you. If it expands CZ's capacity then it could already have been expanded under Colt's management, had they chosen to do so, so from my point of view it is still no less or more competition. Had Colt decided to expand then I guess the headline would have been the same?

And as the writer wrote (and it is an opinion piece):

While CZG's growth projections are dramatic, police and civilian sales are unlikely to significantly move the needle in opposition to Smith & Wesson or Ruger's success, either. CZG is already competing with the two companies in these markets, meaning its effect on the competitive landscape is already priced in. Even with Colt's catalog added to its own, nothing in CZG's lineup is likely to revolutionize its civilian or police sales position.

Thus, the impact of CZG's expansion on American firearms companies should be minimal. However, for those investing in the firearms sector of consumer durables stocks, CZG itself might be worth watching as a bullish choice if it ever applies for and attains listing on the NYSE or Nasdaq.

So, that statement pretty much negates the title of the article.

Let's agree to disagree.

[Verdha603]

Colt stopped paying attention to what consumers or the market wants, as well as stopped paying attention to meaningful innovation, early 1980s. It's just all been downhill since then.

Only thing from Colt that caught my interest in the last 30 years were the Colt Z40 guns (ironically, CZs) and the recent Wiley Clapp series guns.

I thought the Lightweight short-barreled officer-sized Double Eagle guns were nice - these were the improved variation of the Double Eagles, the early guns being slapped together on Seecamp's work, but could have been executed better - and came 10 years too late. Poor timing. Nobody was going to consider a Double Eagle as Glocks and HKs were hitting the market.

But that's about it. No interest in the new Pythons or Anaconda. If Colt had been smart, they would have come out with an entirely new and more robust revolver, new name, new features, with a new form of trigger.

--

Exactly.

If anything I consider foreign gun companies getting in on some of the contracts and profits versus US-based gun companies to be a good thing; one of the most oft seen problems with US gun companies is that the large companies are willing to become technologically stagnant to pander to the customer base they had initially amassed (ie S&W with most of their revolver fans, Colt with their 1911 fans, Remington with their M700 and M870 fans) and pretty much pissing future profits away by letting smaller US based companies innovate and often times copy their ideas a couple years afterwards, specifically because they know their foreign counterparts aren't going to encroach on their market as much and the smaller companies aren't usually going to make as large an impact as the big names will.

Frankly the Colt company for the last 30 years has been almost a joke; their title as M16/M4 manufacturers for the government has fallen greatly now that FN produces a majority of those rifles now (on top of M249 and M240 production), most of their 1911's are overpriced for what your getting because they've been leaning on the stump speech of "Well that 1911 has the same features as ours (or more), but is it a Colt 1911?" for almost 20 years, their Colt SAA's are in a similar boat considering how they're often overpriced compared to the Italian imports, and when the company was so unwilling to accept that the striker/polymer market was a solid source of income to the point that the CEO in the early 2000's made a public statement that Colt would never design or sell a handgun of that type, they literally just pissed profits down the drain. Heck, even the likes of Smith & Wesson weren't that stupid and managed to make a tidy sum off their M&P lineup of polymer pistols.

[TrappedinCalifornia]

I read it and came to a different conclusion than you. If it expands CZ's capacity then it could already have been expanded under Colt's management, had they chosen to do so, so from my point of view it is still no less or more competition. Had Colt decided to expand then I guess the headline would have been the same?

And as the writer wrote (and it is an opinion piece):



So, that statement pretty much negates the title of the article.

Let's agree to disagree.

We can agree to disagree, but I still contend that you're missing something important. I initially read it similarly to the way you are attempting to portray it; but, such a reading left me confused until I went back and read it again. It's why I quoted the portions I did in that it's a bit awkwardly worded.

What the article is noting are differing market niches. Note what the company president said: "CZG will become a supplier to Mil/LE customers and armed forces in the United States." That's a specific market niche. Then note the last portion of the quoted segments; i.e., that portion you are choosing to emphasize... "While CZG's growth projections are dramatic, police and civilian sales are unlikely to significantly move the needle in opposition to Smith & Wesson or Ruger's success, either..." Those are different market niches.

The 'competition' isn't referencing civilian or even police sales. It's touchstone is the military sales niche, something that's more plainly stated in the Reuters piece from a couple of weeks ago... Czech gunmaker bets on riding Colt into new markets...

...Colt, with plants in the United States and Canada, will give CZG the capacity to expand production beyond its main factory in the Czech Republic and allow it to compete in U.S. military contracts because it will fulfil "Buy America" regulations requiring U.S. production...

In 2020, the United States accounted for 66% of the Czech gunmaker's annual revenue, mainly sales to individuals and police departments of guns under its CZ (Ceska Zbrojovka), Dan Wesson and Brno Rifles brands...

"We ... will be thinking how to make sure the brand is even bigger than it is now and introduce it to wider (markets)...

Phrased another way, what CZ is looking to do is expand their sales into the military market niche; something specifically noted at the beginning of the OP article: "CZG's ownership of Colt and production of firearms at Colt factories will allow it to compete for U.S. military contracts under the Buy American Act." That is why there was a 'prefatory' statement to that which you quote and are emphasizing as evidence to support your contention...

Neither Smith & Wesson nor Ruger have large-scale contracts with the U.S. Army or any other service branch. CZG's takeover of Colt's military supply role won't affect either company's business in this regard. Increased manufacturing capacity, however, plus the easier potential introduction of new CZG firearms made in the U.S. could win it additional law enforcement and civilian sales.

Just realize that "police" sales don't represent the entirety of "law enforcement" sales and, as was specifically noted in the piece, S&W and Ruger aren't major players in the military niche. Likewise, they plan to expand in the civilian market given that they are no longer hindered by supply chain issues, including import/export laws. Of course, as the article notes, a lot of the planned 'expansion' is dependent upon...

..."the U.S. civilian demand remains robust and keeps rising, and second, CZG adds further production capacity either through its own [capital expenditures] or through additional acquisitions that are well executed."

Thus, as the title suggests, U.S. Gunmakers Could Soon Face CZ becoming a more formidable competitor. Think about all the support the company gets just on this site now from firearms, largely, produced overseas.

So, it's not about the article contradicting itself. It's about understanding what it was awkwardly attempting to convey. But, I supposed we can agree to disagree on that too.

[PogoJack]

An improved VZ58 Made in USA.

[TrappedinCalifornia]

Colt stopped paying attention to what consumers or the market wants, as well as stopped paying attention to meaningful innovation, early 1980s. It's just all been downhill since then.

Only thing from Colt that caught my interest in the last 30 years were the Colt Z40 guns (ironically, CZs) and the recent Wiley Clapp series guns.

I thought the Lightweight short-barreled officer-sized Double Eagle guns were nice - these were the improved variation of the Double Eagles, the early guns being slapped together on Seecamp's work, but could have been executed better - and came 10 years too late. Poor timing. Nobody was going to consider a Double Eagle as Glocks and HKs were hitting the market.

But that's about it. No interest in the new Pythons or Anaconda. If Colt had been smart, they would have come out with an entirely new and more robust revolver, new name, new features, with a new form of trigger.

--

Exactly.

If anything I consider foreign gun companies getting in on some of the contracts and profits versus US-based gun companies to be a good thing; one of the most oft seen problems with US gun companies is that the large companies are willing to become technologically stagnant to pander to the customer base they had initially amassed (ie S&W with most of their revolver fans, Colt with their 1911 fans, Remington with their M700 and M870 fans) and pretty much pissing future profits away by letting smaller US based companies innovate and often times copy their ideas a couple years afterwards, specifically because they know their foreign counterparts aren't going to encroach on their market as much and the smaller companies aren't usually going to make as large an impact as the big names will.

Frankly the Colt company for the last 30 years has been almost a joke; their title as M16/M4 manufacturers for the government has fallen greatly now that FN produces a majority of those rifles now (on top of M249 and M240 production), most of their 1911's are overpriced for what your getting because they've been leaning on the stump speech of "Well that 1911 has the same features as ours (or more), but is it a Colt 1911?" for almost 20 years, their Colt SAA's are in a similar boat considering how they're often overpriced compared to the Italian imports, and when the company was so unwilling to accept that the striker/polymer market was a solid source of income to the point that the CEO in the early 2000's made a public statement that Colt would never design or sell a handgun of that type, they literally just pissed profits down the drain. Heck, even the likes of Smith & Wesson weren't that stupid and managed to make a tidy sum off their M&P lineup of polymer pistols.

Innovation comes in many forms. Likewise, what you, personally, may or may not be interested in isn't necessarily indicative of what "the market" is demanding. It's not that either of you is entirely wrong, it's that you disagree with the direction Colt decided upon rather than it being the primary source of their 'bad' decisions.

What Colt did was to rest on their laurels, selling 'tradition' and casting changes such as MIM parts as 'innovation' in their manufacturing. Unfortunately, that sent the wrong message to customers, particularly when your primary marketing is 'tradition' and the pricing remains, comparatively, high for what you get. In that sense, the 'bad' decision was, in many respects, a seeming contradiction in their marketing which tied to lowering the cost of production, but not passing those lower costs on to consumers so as to remain competitive, price-wise, in the stores. What they were telling customers is that they were paying for a 'traditional Colt,' while not actually producing a 'traditional Colt' (except, perhaps, for a few out of their custom shop), but still charging for that 'traditional Colt.'

It's just like the new Pythons. There has been considerable interest in the Pythons by a certain segment of the market. It showed with the steep rise in prices for used Pythons. Had Colt not 'tweaked' things while still pricing it 'high' compared to other revolvers on the market, the anticipation which evidenced itself would, perhaps, resolved into a better fruition in sales. (Sales not being all that bad as it is; but, with somewhat 'mixed' reviews as many are comparing the 'new' to the 'original' and finding it 'not quite the same or as good.')

In a sense, what Colt failed to perceive was how an 'acceptable quality' 1911 and AR-platform firearm that was affordable became a market priority for the larger market. The conundrum for Colt was in producing something that would be perceived as 'lower quality' (at a lower price), but still being able to keep their 'reputation' as an high-end producer of quality firearms. This led to further bad decisions and delays in directly confronting the issue. They didn't want to 'abandon' their market niche, but they couldn't figure out how to address a changing, broader market.

It's something that's happened in other industries as well. Once divided into companies which specialized in specifics, beginning in the 1980's and 1990's, companies began to emerge which tapped into each of the specialty markets. They didn't attempt to dominate those markets so much as draw from a segment of them. Add the segments from a variety of niches together and you have a potential powerhouse in terms of sales.

The result was that the specialty niches were no longer viable unto themselves and it forced the specialty manufacturers to diversify, if they could. The problem they ran into was how to compete. How could they continue to with their niche while drawing from other niches? In the end, for many, it simply exacerbated the losses from their pre-existing niches in that they no longer focused on them, but weren't quite up to the mark in the other niches, at least not sufficiently so as to draw or draw back those consumers.

As I said, it became a conundrum. In a very real sense, what happened was a 'revolution' which moved consumers from a tendency toward brand loyalty to one of product or product-type loyalty. (It was an offshoot of the generic vs. brand-name wars; something which continues in various markets even as we post in this thread.) The problem for the 'new' powerhouses is in how to continue tapping the market niches and while product innovation (e.g., striker/polymer) can carry you for a time, sooner or later, the next product innovation is going to be required and such is not always possible in the time frame the market appears to be dictating. Such is particularly true of a single company and given the ever-increasing 'hurdles' associated with firearms, even the industry can find itself challenged.

What is often described as 'stagnation' is, in reality, something which is perceived as a no-win scenario by the companies themselves. Sitting in the cheap seats, it's easy to say they should just invest in the new market, that they should innovate, etc. When you are responsible for a company, its image, to stockholders, et al., it ain't always 'easy.' Add in 'nefarious actors' who gain the reins of power and end up with an entirely 'different agenda,' well...

I think this is where many are hopeful with regard to companies such as Colt and Remington (and Marlin and...) The first step is in reestablishing an image and perception of 'quality.' As many note on this site, they'd pay a little more for the 'name' so long as the quality is there. The second step is in keeping it "a little more" rather than an exponential jump. The third step would be in finding a way to tap into the diversified consumer market which is, currently, more product than brand loyal in that the 'brand name' will bring you some initial sales, but given that the brand names aren't what they were and the changes in the market, there are likely reasons CZ is indicating they intend to push more toward military and law enforcement sales than in the civilian market at the moment.

[C.G.]

We can agree to disagree, but I still contend that you're missing something important. I initially read it similarly to the way you are attempting to portray it; but, such a reading left me confused until I went back and read it again. It's why I quoted the portions I did in that it's a bit awkwardly worded.

What the article is noting are differing market niches. Note what the company president said: "CZG will become a supplier to Mil/LE customers and armed forces in the United States." That's a specific market niche. Then note the last portion of the quoted segments; i.e., that portion you are choosing to emphasize... "While CZG's growth projections are dramatic, police and civilian sales are unlikely to significantly move the needle in opposition to Smith & Wesson or Ruger's success, either..." Those are different market niches.

The 'competition' isn't referencing civilian or even police sales. It's touchstone is the military sales niche, something that's more plainly stated in the Reuters piece from a couple of weeks ago... Czech gunmaker bets on riding Colt into new markets...



Phrased another way, what CZ is looking to do is expand their sales into the military market niche; something specifically noted at the beginning of the OP article: "CZG's ownership of Colt and production of firearms at Colt factories will allow it to compete for U.S. military contracts under the Buy American Act." That is why there was a 'prefatory' statement to that which you quote and are emphasizing as evidence to support your contention...



Just realize that "police" sales don't represent the entirety of "law enforcement" sales and, as was specifically noted in the piece, S&W and Ruger aren't major players in the military niche. Likewise, they plan to expand in the civilian market given that they are no longer hindered by supply chain issues, including import/export laws. Of course, as the article notes, a lot of the planned 'expansion' is dependent upon...



Thus, as the title suggests, U.S. Gunmakers Could Soon Face CZ becoming a more formidable competitor. Think about all the support the company gets just on this site now from firearms, largely, produced overseas.

So, it's not about the article contradicting itself. It's about understanding what it was awkwardly attempting to convey. But, I supposed we can agree to disagree on that too.

OK, let's try this: Colt has a finite capacity of production it cannot exceed because it only has a certain amount of facilities or factories; although it may not be operating at peak level right now there have been times where it has been operating at full bore. So unless CZ expands the current factory facilities it cannot produce more guns than Colt had the ability to produce so the impact on US manufacturers will be the same whether Colt is owned by Colt, CZ, or other entities.

I do agree with you that the article is contradicting itself and is awkwardly written, which was part of why I wrote my first post. BTW, thank you for your roll eyes emoji, I will wear it as a badge of honor, I supposed.

[TrappedinCalifornia]

OK, let's try this: Colt has a finite capacity of production it cannot exceed because it only has a certain amount of facilities or factories; although it may not be operating at peak level right now there have been times where it has been operating at full bore. So unless CZ expands the current factory facilities it cannot produce more guns than Colt had the ability to produce so the impact on US manufacturers will be the same whether Colt is owned by Colt, CZ, or other entities.

I do agree with you that the article is contradicting itself and is awkwardly written, which was part of why I wrote my first post. BTW, thank you for your roll eyes emoji, I will wear it as a badge of honor, I supposed.

Which, as I posted, was precisely what the article noted...

Of course, as the article notes, a lot of the planned 'expansion' is dependent upon...

..."the U.S. civilian demand remains robust and keeps rising, and second, CZG adds further production capacity either through its own [capital expenditures] or through additional acquisitions that are well executed."

Thus, as the title suggests, U.S. Gunmakers Could Soon Face CZ becoming a more formidable competitor. Think about all the support the company gets just on this site now from firearms, largely, produced overseas.

So, it's not about the article contradicting itself. It's about understanding what it was awkwardly attempting to convey. But, I supposed we can agree to disagree on that too.

I didn't say the article was contradicting itself. In fact, I specifically said it's NOT about the article contradicting itself. That's your, basic contention. I acknowledged that the article was awkwardly put together. (I don't think we want to go down the road on typos, do we?)

The rolling eyes emoji has to do with the fact that you are overly focused on the civilian/police niche statement (which was referencing S&W/Ruger) without acknowledging the military/"law enforcement" angle the company president specifically prioritized and as further reinforced by the Reuters piece. In other words, the 'awkwardness' comes from the author's attempt to clarify that the potential competition wouldn't necessarily be (at least immediately) in the civilian/police sectors of the market, but in the military/law enforcement sectors and, with a renewal of military/law enforcement sales, aided by additional investment either through expansion/acquisition, civilian/police competition would/could become more robust.

Further, you appear to continue premising your argument on the production at Colt remaining, specifically, the same or very similar to what it was prior to CZ's acquisition of the company. Thus far, I've seen nothing to indicate that's "the plan" or is set in stone. In fact, given the renewed emphasis CZ appears to be putting on the military/law enforcement angle, it's unlikely to remain the same as "it was."

As you indicate, we could argue about this until the cows come home. All I'm pointing out is that my, uh, 'interpretation' is based on what the article(s) is/are actually saying. You seem to be infusing... other things. Care to share the sources for those other things, such as where Colt isn't going to change what it produces to meet the demands of a changed emphasis being brought to the company by new owners? Put another way, while Colt may or may not be able to produce more guns than it currently does, where does it say they will be producing the same guns, in the same numbers, they are currently producing?

[C.G.]

Which, as I posted, was precisely what the article noted...



I didn't say the article was contradicting itself. In fact, I specifically said it's NOT about the article contradicting itself. That's your, basic contention. I acknowledged that the article was awkwardly put together. (I don't think we want to go down the road on typos, do we?)

The rolling eyes emoji has to do with the fact that you are overly focused on the civilian/police niche statement (which was referencing S&W/Ruger) without acknowledging the military/"law enforcement" angle the company president specifically prioritized and as further reinforced by the Reuters piece. In other words, the 'awkwardness' comes from the author's attempt to clarify that the potential competition wouldn't necessarily be (at least immediately) in the civilian/police sectors of the market, but in the military/law enforcement sectors and, with a renewal of military/law enforcement sales, aided by additional investment either through expansion/acquisition, civilian/police competition would/could become more robust.

Further, you appear to continue premising your argument on the production at Colt remaining, specifically, the same or very similar to what it was prior to CZ's acquisition of the company. Thus far, I've seen nothing to indicate that's "the plan" or is set in stone. In fact, given the renewed emphasis CZ appears to be putting on the military/law enforcement angle, it's unlikely to remain the same as "it was."

As you indicate, we could argue about this until the cows come home. All I'm pointing out is that my, uh, 'interpretation' is based on what the article(s) is/are actually saying. You seem to be infusing... other things. Care to share the sources for those other things, such as where Colt isn't going to change what it produces to meet the demands of a changed emphasis being brought to the company by new owners? Put another way, while Colt may or may not be able to produce more guns than it currently does, where does it say they will be producing the same guns, in the same numbers, they are currently producing?

Sorry, somehow I missed the negation of your statement regarding the contradiction. But as you have said we could argue about this until cows come home, you have your take on things, as I have my take. All of this is hypothetical, is your crystal ball better than mine (or the analysts or the CZ investors)? Within the framework of the article, you take the optimistic side and I take the pessimistic side, only time will tell which turns out to be true. As a side note, I am glad that CZ bought Colt and I will not argue against the statement that CZ itself will see a growth in its revenue.