Posted on 05/24/2014 8:35:48 AM PDT by mac_truck
I recently had occasion to read through the S.E.C. 10Q filing for the newly formed Colt Defense, which is a limited liability corporation comprised of New Colt Holding, Colt Manufacturing, Colt Defense Technical Services, Colt Canada, Colt Finance, & Colt International among others.
The merged company has brought the manufacture of Colt long guns and Colt hand guns together into a single enterprise, however the company reported a loss in the most recent quarter and the sale of long guns was reported down more than 50% from a year ago (~24million in Q1 2014 vs ~52million Q1 2013).
Some of this decline may be attributed to the wind down of the conflicts in Iraq and Afghanistan, as well as greater competition for US military contracts.
Colt signed a 12 year lease deal with Osceola County Florida in 2011 for space which was intended to bring manufacturing jobs to central Florida. That property remains vacant and undeveloped and it is unclear whether the merged company plans to move there once the lease on its manufacturing plant in Connecticut is over in 2015.
Colt Defense has become highly leveraged as a result of its acquisition of New Colt Holding and is given a negative CCC+ rating by Moodys. Its revenue is down significantly from the same period a year ago, and there are covenant restrictions on how much new spending it can do. They do have increased sales on back order ($222 million Q1 2014 vs. $207 million Q4 2013), but much of that is government orders for spares.
The question really is whether Colt Defense and its iconic American brand can survive in this economic environment, or will they get purchased by a competitor with deeper pockets, or be forced to file for bankruptcy?
I call "BS". Current machine tools and metallurgy are cheap and vastly superior to 1960's and 70's technology. There are lots of very good and inexpensive guns today because of improved technology.
I own two Colts. One is a stainless Combat Commander. The other is a 4” Python with the nickle finish. The Python is a piece of jewelry. The Commander is a Series 80. Both are wonderful guns and I wouldn’t trade them for anything.
When it came time to purchase AR pattern rifles I didn’t even consider the Colt offerings. Crappy triggers and way over priced. I’ve seen dozens of AR rifles at ranges but I have never once seen a Colt. Rock Rivers are very popular here in IL. The quality on those is excellent.
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The American market for "boutique" handguns is limited, and Colt hasn't been on the cutting edge of handgun development since anyone still living can remember. They can make lovely "genuine Colt" (snicker) SAA and 1911 variants for those who have to have such things, but I don't see much potential for growth. There is always some market for Pythons, Detective Specials and 1851 Navies if they could make them as of old, but again, handguns like that are not what people are regularly buying and shooting these days, and most investors are sharp enough to know it.
As for the slump in long guns, their ARs really are the yardstick by which others are measured, and not priced much more than "just as good" (but really aren't) imitations. I suspect there are a lot of people who couldn't find/afford a Colt AR during this last buying frenzy, and they bought the lower-tier stuff that WAS available. These people are now cash-poor and sitting with a sub-par competitor's carbine tucked away in the closet. Colt's production may have finally caught up, but in the meantime, potential customers (including those suffering from buyer's remorse) are getting relentless blows to the pocketbook courtesy of Obama & Company. Bad bit of luck, that.
I should have known that. Thanks.
The 10mm seems a bit much for most uses. I recall the same issue with the .41 mag. There were full boat hunting loads and a reduced load. Police who tried them mostly used the hunting loads in their duty guns and didn't like the .41 becuse of it. A good idea that never caught on.
I have both an auto .45 and a .45 single action Ruger. I like them both, I think there’s a market for both.
Bersa makes a superior product in .32 acp and Colt could not match the price and possibly not the quality. It is truly a superior copy of the Walther PPK.
I’ve built several ARs with piston kits from various sources. The SOprey Defense is the best choice, with the least parts to fail, is darn near self cleaning, and works like a sewing machine ... approx. 2500 rounds through one I built on a 14 inch flash pinned gun.
You’ve obviously never seen the inside of a Colt revolver, much less the fit and especially the finish on a Python.
The metallurgy of the Python doesn’t enter into the issue. The metals used in the 60’s are largely the same metals being used today in firearms, with some additional options offered in the stainless alloys. AISI 4140 was plenty good enough back then and is still more than good enough today. if you want to case or color case a firearm, AISI 8620 is what you’ll likely be using.
The problem for Colt in replicating the Python is twofold:
1. The “bank vault lockup” of the Python (and the tighter lockup of Colts in general) was the result of hand-fitting several critical components in the Colt DA revolver design. The rebound bar in the Colt design was where it all came together, in a multi-faceted boss on the right side of the rebound bar which possessed a number of angles that timed the lockup and rebound of the lockwork. This is where Colt revolvers get their reputation for “finicky” lockwork. S&W made it easier to achieve an adequately tight lockup more cheaply with machined-to-size components by splitting their revolver actions into two springs. Colt’s design, using only one flat mainspring to power both the hammer and trigger rebound in the revolver, makes the fitting of tenths of a thousandths of an inch rather critical.
2. The finish on a Python, the legendary “Royal Blue” blue job, required polishing that cannot be done by machine. It has to be done by hand, and skilled hands at that. The things that amateurs look for in a polishing job is “is it shiny enough?”
The things that professionals look for in a gun polishing job is “are all the features and corners still there when that level of polish has been achieved?” You can tell when a hack polishes a gun for a blue job, any blue job. The corners, features and edges are all rounded off. They went to town with a damn buffing wheel and they blew off all the stuff that they didn’t know someone was looking for. The result is a gun with washed-out features to (in an extreme) what I would call a “melted” appearance.
People who think that hand fitting and polishing can be replicated by machine are the same people who buy vastly over-priced guns, and then are disappointed when they learn what to actually look for in a high quality gun. Machines can’t get into the nooks and crannies, machine-finished guns aren’t finished on the insides, etc.
There’s a reason why the market of high-end guns is narrow - there’s just not that many people who know their ass from a warm rock when they’re looking at a gun. People who appreciate the highest levels of quality are looking for quality in very specific areas of a gun, and then they don’t see that quality and attention to detail, they won’t pay up.
There is. I like the Ruger product line. It is a well-made product, and they get their prices down by extensive use of investment casting.
This is where I get a giggle out of the ‘forged vs. cast” endless debate by gun people. Ruger makes investment case guns. They finish-machine and polish the castings, and Ruger’s castings are hell for strong. Look at Ruger’s single action revolvers, as an example. They’re some of the strongest, most affordable SA revolvers out there. About the only thing stronger is the Freedom Arms product.
Ruger’s products are so strong that reloading manuals often call out loads specifically for the Ruger SA’s, especially in .45 Colt.
You’re absolutely right.
The 10mm was a riff by Jeff Cooper off the .41 Mag, which was Elmer’s fondest dream realized.
Both Elmer Keith and Jeff Cooper put too much emphasis on the idea of a cop taking long range (like 50 yard) shots with a handgun. Today’s cops can barely hit anything at seven yards, so equipping them with a long-range handgun just means that more people, animals and property downrange are in more substantial danger.
The 10mm and .41 are both excellent cartridges, but they’re really now consigned to the limited number of people willing to pony up the money for the high-end handguns to handle them, and the practice needed to use them competently.
Personally, I wish that S&W would put out a product in stainless that holds five rounds of .44 Special, with, oh, a 3” barrel. For me, that would be an ideal CCW revolver.
Colt was never the same after they bowed the knee to the unions.
I had the same thought. Colt also made the 1991A1 in .40S&W. I tried playing around with various components, mags, barrels, recoil springs, extractors, etc., but could never get the .40 to feed reliably from the mag, best case scenario, usually at least one stovepipe of per magazine. I was hoping to have a 10mm/.40/.357 Sig combo set up with the same slide and frame, but abandoned the idea when I couldn't get the .40 to work reliably.
The problem for Colt is that the margins aren't as good for commercial long guns as they are for the military versions, and of course commercial sales cannot match military' sales for volume. The other problem is the 'build to order nature of their products which takes both time and money to produce.
What Colt needs is a large military order from a country that values quality and performance over price, and maybe wants to distinguish itself from its neighbors.
Mmmm... no, not really... the margins depend on being able to control the ability of competitors to make a functionally identical weapon at a better price.
In economic terms, “rent seeking” is how Colt used to make money on the M-16/M-4. They held the rights to what is called the “technical package” on the M-16, all the specifications of how the gun was made, finished, tested, etc. The government didn’t set all the compliance data, the Colt technical package did.
As long as Colt could control that, they could control what the government paid for them, since Colt effectively gamed their way into being a single-source bidder on the contracts by requiring any competitive bidder to add $X to their bid on each gun to account for the cost of licensing the Colt technical package.
AR’s and M-16’s/M-4’s are now a commodity item. Everyone knows how to make them. Improvements are being made all the time, by a large (and increasing) number of vendors. Colt will never again achieve the level of margins they enjoyed throughout the 70’s to 90’s in making guns for the DOD on contract.
Margins for commercial long guns are good, depending on your market.
For example: Compete with Remington and Mossberg on a no-frill,s cheap-assed pump shotgun? Margins not so good.
Compete with the Italians on side-by-sides and O/U shotguns? Oh, there’s a nice margin in there for those who want to compete.
The reason why is that the .44 Rem Mag is what everyone thinks they “need” in a .44.
The last thing I’d want to carry concealed is a .44 Mag. Lots of noise, flash and recoil that I don’t need.
The .44 Special, like the .45 Colt, is a grand older cartridge with nice low pressures, lots of flexibility and the ability to launch really heavy bullets. I think a 5-round, stainless revolver in either round would be the bee’s knees for CCW.
Sadly, everyone appears to be chasing the plastic semi-auto market these days.
Gross margin is the difference between revenue and cost before accounting for certain other costs. Generally, it is calculated as the selling price of an item, less the cost of goods sold.
Colt has a better margin on its military long guns than on its commercial long guns. This information comes from their own literature.
Nothing they make other than the Colt Python can’t be found at other companies cheaper and better.
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A 586/686 with a trigger job is as good or better ,, my model 10 (full PPC custom) rocks.
Other companies do better “AR” rifles ,, S&W has always been the wheelgun king and Ruger kills Colt in pistols ...
I’m in Orlando and was hoping for a job at Colt when they announced Osceola (Kissimmee) ..
Colt probably doesn’t have anyone on their staff that can do it, but they can be trained.
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Outsource to the Philippines ,, they have top notch companies there that private label arms for US companies ... paying $10 a day for skilled assembly gets product on the shelves and Colt in the black.
I thought Taurus was making a 44 special Tracker but they may have dropped it. I know of a guy (non-reloader) with a SS three inch 41. He does not like the blast and recoil but carries it when backpacking in the sticks. He figures that if he needs it for real recoil and such ain’t what he will be focused on :<)
I also would like a stainless 44 as you described but with a heavier barrel than a Bulldog.
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