Colt Going Down? Market says ...

[Aragon]

they've been an artificially supported "zombie" corporation for a very long time. Eventuall, if things don't change dramatically, someone's gonna stick a fork in 'er.

Some would say that governmental supply entanglements have been keeping it going but I say that if it had been left to fail... It'd either go away based upon failed business practices/market awareness or be re-born as an independent and ultimately stronger entity.

Colt's needs three things:

Geographically relocate.
Develop a non-union work force.
Ignore any future lures of Federal contracts. These classically leave a trail of corporate wreckage in their wake as the corporate boards grow complacent at the Government's teat.

Todd.

It would be nice if Colt was moved to a lower cost locale with cheaper, non-union labor but it could actually do just fine in CT with UAW (cringe) labor.

What needs to happen is for "Colt" to die once and for all and for an entity to buy its assets at auction less its debts. Do the work-out -- Colt cannot service its debt and that's not going to change with a simple "restructuring."

A mix of private and mil work is actually healthy. Over reliance on mil work can lead to serious problems.

 

[Aragon]

For what it's worth, Ruger's non-union casting plant (heavy manufacturing) is located in Newport, NH about 130 miles from Colt in Hartford, CT.

Colt is about 65 miles from Ruger's HQ (and former manufacturing center) in Southport, CT.

Geographic location isn't what's holding Colt back. Neither is their unionized labor (although I doubt there are any advantages to being a union shop these days for Colt.)

 

[CoalTrain49]

I just bought a new GCNM a few weeks ago. I shot it that day. I plan to buy a new 70 Series GCNM as soon as I find one. I plan to shoot it right away. To heck, with keeping currently production guns unfired and speculating .

I hear you. Normally I wouldn't do that but I already have a GC that gets a lot of range time.

 

[CoalTrain49]

"Started?" It closed for two years after WWII.

Actually, Remington Rand built most of the 1911's in WW2 so Colt couldn't even take advantage of a market that demanded thousands of a model that they originally produced.

Guess they couldn't tool up fast enough and RR (a typewriter and shaver company) beat them at their own game. RR produced almost 1M 1911's for the gov't.

 

[Old Fuff]

In an unlikely move, the Old Fuff will rise to Colt's defense.

During World War Two the government designated that the company should make, in order of importance:

Browning air cooled/belt fed, 50 caliber machine guns.
Browning air cooled/belt fed, 30 caliber machine guns.
Browning BAR magazine fed, automatic rifles, caliber .30
Colt Model 1911A1 pistols, caliber .45
Colt Official Police/Commando revolvers, caliber .38 Special
Whatever other pistols and revolver that could be assembled using previously manufactured parts that had a viable place within the war effort.

On the other hand, Remington Rand only produced .45 pistols, and to their credit did an excellent job after a rocky start.

 

[Aragon]

"Started?" It closed for two years after WWII.

Actually, Remington Rand built most of the 1911's in WW2 so Colt couldn't even take advantage of a market that demanded thousands of a model that they originally produced.

"Actually" like I said, Colt closed for about two years at the end of WWII.

Guess they couldn't tool up fast enough and RR (a typewriter and shaver company) beat them at their own game. RR produced almost 1M 1911's for the gov't.

Colt was at plant capacity making guns during WWII -- including the M1911. Inferring they had unused shop space because they "couldn't tool up fast enough" is pure bunkum.

 

[Aragon]

In an unlikely move, the Old Fuff will rise to Colt's defense.

During World War Two the government designated that the company should make, in order of importance:

Browning air cooled/belt fed, 50 caliber machine guns.
Browning air cooled/belt fed, 30 caliber machine guns.
Browning BAR magazine fed, automatic rifles, caliber .30
Colt Model 1911A1 pistols, caliber .45
Colt Official Police/Commando revolvers, caliber .38 Special
Whatever other pistols and revolver that could be assembled using previously manufactured parts that had a viable place within the war effort.

On the other hand, Remington Rand only produced .45 pistols, and to their credit did an excellent job after a rocky start.

Absolutely... Thanks for the posting...

 

[RustyShackelford]

What's in a name?.....

If asked 100 Americans at random in nearly any section of the USA what are the 3 most common firearm makers they'd probably say:
Colt Firearms, S&W and Glock.

Why? Because the Colt brand(much like S&W) has a long & rich heritage in American culture. Right or wrong, it's very well known even to 1000s of non gun owners.

It sounds like if Colt circles the drain, it will be bought out & stream lined by some conglomerate or large corp that will scale back on the firearms/handguns then only fabricate the military & government contracts.

 

[Slamfire]

The Colt brand name has been cheapened. Colt sold its name and horse image to a cutlery company and now Colt and the prancing pony is stamped on cheap knives. I bought one of those knives, thought it might be associated with Colt, instead, it was not of high quality. Don't remember if the Colt name is being used on Chinese knives, but I would not doubt it.

 

[ColtPythonElite]

I have one of those cheap knives. The place that sold it to me had knives with Ford, Chevy, John Deere, International and about every other American icon on them. I am certain they were all foreign made....No big deal...If someone wants to buy my name and stick it on novelty items, it's for sale.

 

[wojownik]

If asked 100 Americans at random in nearly any section of the USA what are the 3 most common firearm makers they'd probably say:
Colt Firearms, S&W and Glock.

Why? Because the Colt brand(much like S&W) has a long & rich heritage in American culture. Right or wrong, it's very well known even to 1000s of non gun owners.

Agreed. The Colt namebrand is one of those unique icons that may be the company's single most valuable asset.

A reasonable comparison here may be the bankruptcy of "Hostess" and the iconic brandnames and products that companies carried: Wonder Bread, Twinkies, etc. Yes, talking about Twinkies and 1911s in the same post. A dream come true for me.

Anyway, Hostess Brands sought Chapter 11 bankruptcy protection, shut down its plants and then began liquidation proceedings. Flowers Foods (Tastycake) picked up the bakeries and brands like Wonder Bread. A private equity firm picked up the assets and brands for Hostess (Twinkies, Ding Dongs, Ho Hos, etc...). There was a third transaction as well.

Point being that there could be a single or multiple acquirers of Colt, depending on what liquidation strategy is approved by the courts and creditors. Of course, there would likely be only one Colt name to be acquired - someone might pick up the brandname and some assets. Someone else might pick up the bulk of the assets, but no brandname. But, bottom line, its the name that is the valuable commodity in any Colt liquidation.

It sounds like if Colt circles the drain, it will be bought out & stream lined by some conglomerate or large corp that will scale back on the firearms/handguns then only fabricate the military & government contracts.

Not sure I agree. They may be bought out and streamlined, or sold off piecemeal by the creditors, with one entity acquiring the name, other acquiring assets. Whatever strategy works to get the most for the creditors, who will assuredly be in the hole in virtually any realistic scenario.

Speculating for fun, Beretta would be an interesting candidate, again. The SAA line complements Berettas, and the Colt name would complement well. The black rifle business might be interest to Beretta, for LE, DoD and civilian markets. Beretta does not have a 1911 line, of course, and that could be another commercial focus. But, maybe they don't want to deal with one - the 1911 business could end up being a separate tranaction to a different buyer, hypothetically.

 

[RustyShackelford]

Colt .45 .....

I disagree with part of the last post.
I personally don't see the 1911/1911a1 popularity extending past 2020/2025 or so.
As the older gun owners & veterans fade away(as Gen Douglas MacArthur stated ) a bigger push will move to polymer frame semi auto models like the M&P, XD, Glock.
Most gun owners or even casual shooters would associate Colt more than any other brand re: 1911a1 series pistols.
If you asked anyone on the street what a Colt .45 was, about 75/80% would probably say a military pistol or the 1911. A few may say the western SAA .45 caliber but western culture & cowboy imagery hasn't been in vogue in the US since the 1960s/1970s.
Colt could realistically sell the 1911a1 series rights or patents to a 3rd party like FN America or maybe Beretta USA but I doubt they'd have any strong interest.
Even Python .357magnum or D series .38spl DA revolvers would only appeal to a small niche market or collectors. The handguns would run about $1200.00-2000.00 too Id bet easy....

 

[ColtPythonElite]

I personally don't see the 1911/1911a1 popularity extending past 2020/2025 or so.

That's funny right there. Thanks I needed a good belly laugh all day.

 

[RustyShackelford]

Laugh all you want....

Let's see what's what in 2025.
I would bet sales/use of 1911s/1911a1 models will be about half or so of what they are now.
For context Id read Hamiliton Yam's recent article on why he switched from a 1911 .45acp to a Smith and Wesson M&P 9x19mm as a sidearm.

RS

 

[ColtPythonElite]

Never heard of Hamilton Yam. Heard of some dude named Hilton Yam, though.

 

[RustyShackelford]

That's it...

I always mix that name up, .
Pat Rodgers another top cadre and retired NYPD officer says he now carrys a M&P 9mm full size over a 1911a1 .45acp too.

 

[Aragon]

...It sounds like if Colt circles the drain, it will be bought out & stream lined by some conglomerate or large corp that will scale back on the firearms/handguns then only fabricate the military & government contracts.

No conglomerate or large corporation is going to buy Colt. The negative publicity from making guns makes that a huge no-no. One of three things would happen with the assets of Colt:

1. Sold to a current gun maker. Beretta? Browning/FN? Remington?

2. Sold to a wealthy individual or partnership of wealthy individuals into guns.

3. Bought by a faceless "investment group."

 

[RustyShackelford]

True....

Id say; true true true but I disagree that no one would buy a company that makes guns.
Bad PR or press can change. If the $$$ or profits were there, someone would scoop Colt up.
I'm not a business or military small arms guy but Colt could be bought by a gun industry firm or group with strong 2A interests or private $$$.

RS

 

[HorseSoldier]

Disney might not, but I don't see many other companies sweating their brand being associated with guns (especially one primarily catering to the .mil).

Kind of a questionable either/or premise, though, I think -- seems like everyone these days is ultimately owned by some shadowy investment group.

 

[Aragon]

Id say; true true true but I disagree that no one would buy a company that makes guns.
Bad PR or press can change. If the $$$ or profits were there, someone would scoop Colt up.
I'm not a business or military small arms guy but Colt could be bought by a gun industry firm or group with strong 2A interests or private $$$.

RS

No way will a large, established firm buy Colt if they're not already in the business. Given the bad press (deserved or not) it simply wouldn't be worth it.

There's also the issue that the Colt name is worth A LOT -- the bad press and a high price at auction make it even less likely that an established "conglomerate" would buy Colt. Finally, there's the track record of gun makers performing rather poorly when part of a large company -- S&W/Bangor Punta history come to mind along with Colt's own past experiences.

A gun company with deep pockets and little overlap with Colt might buy the assets to Colt if the price were right. FN (along with Browning) licenses the Winchester name from Olin and has made that work so maybe a company like FN which is no conglomerate.

 

[Aragon]

Disney might not, but I don't see many other companies sweating their brand being associated with guns (especially one primarily catering to the .mil).

Kind of a questionable either/or premise, though, I think -- seems like everyone these days is ultimately owned by some shadowy investment group.

I do. I can't think of a single sporting goods/outdoor goods company that would want to be associated with guns that's not already associated with guns who would have the means to buy Colt.

Deserved or not, being associated with guns is very uncool in many places.

 

[B!ngoFuelUSN]

For what it's worth, Ruger's non-union casting plant (heavy manufacturing) is located in Newport, NH about 130 miles from Colt in Hartford, CT.

Colt is about 65 miles from Ruger's HQ (and former manufacturing center) in Southport, CT.

Geographic location isn't what's holding Colt back. Neither is their unionized labor (although I doubt there are any advantages to being a union shop these days for Colt.)

It's not the location nor the unions. It's four things:
Commodity product: the 1911 and the AR are commodity products. Made by many with little value in variation, the ability to generate margin with a commodity is often a function of efficiency. Thus:
Old manufacturing facilities: Colt has not invested in modern manufacturing facilities. To be competitive building what they sell they need close to cutting edge manufacturing techniques to lower their costs and raise their quality without human intervention. And if they did, they may not need as many employees but those that they would employ would have to be highly skilled.
Government sales: despite what you read, particularly for less than cutting edge products, it's very hard to make money on government contracts. Lots of people make money up and down the line ensuring that the governments costs are high but that doesn't mean lots of profit goes to the vendor. Between MFN (most favored nation) deals and other ways to squeeze a small or mid-size manufacturer, it's not a great business. And if its a big part of your business its even tougher.
Bad management: it seems pretty clear that the last rounds of management didn't have the company's success in mind. Heavy refinancing with little to no modernization of facilities or investments in new products or marketing. It seems like a money pump to turn sales and refinancing in to profits for the executives. It's a real pity.
But that is business. Both in the U.S. and elsewhere in the world. That is, there is both good and bad. But this one smells like toast.
That the government won't prop them is no reflection on the current president and his administration. It's because it would be a very bad investment.
Someone will buy the name, just as they did Springfield. It won't impart any sense of value to me.
B

 

[4v50 Gary]

I'm glad you decided not to dip into it. I'd stay away from any bonds right now.

 

[Gaucho Gringo]

If the cheap non union labor that works for you can not afford to buy the products that they produce, what happens when you run out of customers. Henry Ford who was closet fascist, realized this. After all, how many people are there to sell your product to if the majority of the population can not afford to buy it? It is a very limited market unless people have the money to buy them. Once the market is sated, your sales and your company go to hell in a hurry. Henry realized this and paid his workers almost double the going rate at the time and was laughing all the way to the bank when he was called a communist for doing so. Whatever his faults and they were many, he at least realized this fact. I could go on and on but this is a gun forum, not a social injustice forum. And yes I had my own business for 3 years.

 

[RustyShackelford]

Aragon's remarks...

I disagree with the statements from Aragon.
Guns and shooting sports accessories have boomed in the last ten years or so.
1000s of new gun owners & CCW holders are out there now.
Guns or related industries may not be "popular" with everyone but a well run company could bring Colt back to a profit.