It ain't your grandfather's gun business: intense government scrutiny, relentless anti-gun assaults, increased imports and an erratic economy—they've all changed the U.S. firearm business!

Shooting Industry, July, 2004 by Russ Thurman

Today's firearm business is significantly different from 10 and 15 years ago. Yes, firearms still move through the same basic pipeline, but what is in the pipeline is different, along with how it's sold. And, the marketplace is in many ways vastly different. While there have been eras in the industry's history marked with upheaval, it's unlikely any of them would rival the period from the early '90s to today.

During the '90s, the industry underwent an extraordinary amount of government scrutiny. New laws and regulations, antigun lawsuits and an intense demonization of the industry were the business of the day. The sale of firearms was on an erratic roller-coaster, setting near records one year, plummeting the next. (See graphs and charts, pages 39 and 40.) Within the industry, some companies underwent vast changes, others went out of business and the number of gun dealers dropped dramatically.

Yes, it was an era of change.

The Changing Landscape

The election of President Clinton in 1992 energized the antigun movement. The movement had a new champion. Within his first year in office, the president attacked FFL holders, signed into law the Brady Act and, in 1994, enacted the Assault Weapons Ban. Remember Handgun Control Inc.? In the Clinton Administration, HCI could do no wrong, and their many spin-offs waged a successful campaign in demonizing guns and gun owners.

President Clinton's White House memorandum of Aug. 11, 1993, directed the Treasury Secretary to reduce the number of FFL holders. From August 1993 to December 1996, the number of O-1 FFLs dropped from 282,952 to 191,486, a loss of 91,466 dealers. In March of this year, there were 51,107 (O-1) FFLs. In reality, that's closer to the number of "real" gun dealers. Gone are the kitchen table dealers. Is that good or bad? That's still debated in the industry. (See chart, page 40.)

The '90s also saw a shift in anti-gun tactics, with major cities, beginning with New Orleans, La., filing lawsuits against manufacturers. The unprecedented lawsuits sought to hold manufacturers responsible for the criminal misuse of firearms. The legal maneuver prompted the industry to fight back as a group. This was a first for the industry and the Hunting & Shooting Sports Heritage Fund is one of the most significant positive landmarks to come out of the last decade.

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One of the major effects of the Brady Act was the establishment of the National Instant Criminal Background Check System (NICS). NICS conducted its first checks in 1998 and even NICS officials admit the system was clumsy. Today, while NICS may not be the most popular aspect of the gun business, most dealers give the system high marks for efficiency.

From November 1998 through April 30, 2004, NICS conducted 47,219,642 background checks and denied 363,049 purchases--an approval rate of 99 percent. The majority of NICS denials are for criminal history. (See chart, page 38.)

NICS data also provides some useful information on the buying habits of customers. Friday is the most popular day for gun buyers to visit gun shops, followed by Saturday. Sunday is by far the worst day to sell a firearm. However, this could indicate many gun shops are closed on Sunday. (See chart, page 42.)

Is there really a summer doldrums? Yes, according to NICS data. The number of background checks remains fairly constant from January through March, then there is a drop-off. The doldrums continue through July with a predicable climb to October, a slight dip in November and a jump in business through the end of December.

A Declining Customer Base

In the '90s, the industry's customer base declined. Several factors contributed to the fall-off, including effects of the antigun movement, entertainment competition and fewer places to shoot and hunt. In the hunting category, there are one million fewer hunters today then there were in the '90s.

A great deal has been done in the past five years to counter the decline in new customers, and the industry is beginning to see a slight turnaround. However, much more must be done.

Big box outlets continue to pressure gun dealers, as they have all independently owned businesses. Many gun dealers close their doors once a mega-mart opens nearby, but other have learned to flourish in the shadow of mass merchandisers.

In the '90s, the Internet also changed the industry. While the industry was slow to embrace the new technology, it's now a vital business tool. Today's customers, with instant access to vast amounts of information, are smarter. When customers enter a gun shop, they know a lot about the products they want to buy. That can be good or bad, depending on the dealer's knowledge.

Through the Internet, customers also know how much products cost and will "shop the price." Despite the promise of personal service and expert advice, many customers are only interested in the lowest price tag.

Global Marketplace

The U.S. firearm business reflects the growing influence of the global marketplace and foreign trade. Firearm imports have long exceeded the number of exports by U.S. firearm manufacturers. However, there has been a dramatic change over the past decade. While imports from foreign manufactures have grown virtually every year, U.S. exports continue to decline at an alarming rate.