Guns & Ammunition Manufacturing in the US
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WWW.IBISWORLD.COM Guns&AmmunitionManufacturingintheUS October 2012 1 Bite the bullet: Continued conflict will support revenue, but subsiding fears will limit growth IBISWorld Industry Report 33299a Guns & Ammunition Manufacturing in the US October2012 NimaSamadi 2 AboutthisIndustry 14 International Trade 32 Industry Assistance 2 Industry Definition 16 Business Locations 2 Main Activities 33 KeyStatistics 2 Similar Industries 18 CompetitiveLandscape 33 Industry Data 2 Additional Resources 18 Market Share Concentration 33 Annual Change 18 Key Success Factors 33 Key Ratios 3 IndustryataGlance 18 Cost Structure Benchmarks 20 Basis of Competition 34 Jargon&Glossary 4 IndustryPerformance 21 Barriers to Entry 4 Executive Summary 22 Industry Globalization 4 Key External Drivers 5 Current Performance 23 MajorCompanies 8 Industry Outlook 23 Alliant Techsystems Inc. 9 Industry Life Cycle 25 Freedom Group Inc. 11 Products&Markets 28 OperatingConditions 11 Supply Chain 28 Capital Intensity 11 Products & Services 29 Technology & Systems 12 Demand Determinants 30 Revenue Volatility 13 Major Markets 30 Regulation & Policy www.ibisworld.com |1-800-330-3772|[email protected] WWW.IBISWORLD.COM Guns&AmmunitionManufacturingintheUS October 2012 2 AboutthisIndustry IndustryDefinition This industry manufactures small grenade launchers), small arms arms (including shotguns, rifles, ammunition, other ammunition and revolvers, pistols, machine guns and ordnance and accessories. MainActivities Theprimaryactivitiesofthisindustryare Machine guns manufacturing Shotguns manufacturing Rifles manufacturing Revolvers manufacturing Pistols manufacturing Gun magazines manufacturing Small arms ammunition manufacturing Ammunition (except small arms) manufacturing Grenades manufacturing Mines manufacturing Themajorproductsandservicesinthisindustryare Small arms Small arms ammunition Other ammunition Other ordnance and accessories SimilarIndustries 32592 ExplosivesManufacturingintheUS Manufacturers of blasting caps, detonating caps and safety fuses. 33641b SpaceVehicle&MissileManufacturingintheUS Guided missiles are similar to the industry’s ordnance products, such as mortars, rocket launchers and howitzers. AdditionalResources Foradditionalinformationonthisindustry www.atf.gov Bureau of Alcohol, Tobacco, Firearms and Explosives www.nra.org National Rifle Association www.nssf.org National Shooting Sports Foundation WWW.IBISWORLD.COM Guns&AmmunitionManufacturingintheUS October 2012 3 IndustryataGlance Guns&AmmunitionManufacturingin2012 KeyStatistics Revenue AnnualGrowth07-12 AnnualGrowth12-17 Snapshot $11.7bn 5.7% 3.5% Profit Exports Businesses $992.8m $4.4bn 465 Revenue vs. employment growth Federal funding for defense MarketShare Alliant 20 10 Techsystems Inc. 15 5 12.7% 10 0 Freedom Group 5 Inc. 6.4% −5 % change % 0 change % −5 −10 −10 −15 Year 04 06 08 10 12 14 16 18 Year 05 07 09 11 13 15 17 Revenue Employment SOURCE: WWW.IBISWORLD.COM p. 23 Products and services segmentation (2012) KeyExternalDrivers Federalfunding fordefense 22% Other ordnance and accessories 27% Trade-weightedindex Small arms Localandstate governmentinvestment Worldpriceofsteel Crimerate 25% Other ammunition 26% p. 4 Small arms ammunition SOURCE:SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM IndustryStructure Life Cycle Stage Growth Regulation Level Medium Revenue Volatility Medium Technology Change Medium Capital Intensity Medium Barriers to Entry Medium Industry Assistance Medium Industry Globalization High Concentration Level Low Competition Level High FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 33 WWW.IBISWORLD.COM Guns&AmmunitionManufacturingintheUS October 2012 4 IndustryPerformance ExecutiveSummary | KeyExternalDrivers | CurrentPerformance IndustryOutlook | LifeCycleStage Executive The Guns and Ammunition state and local law enforcement agencies Summary Manufacturing industry has grown also grew during the five years to 2012, strongly during the five years to 2012. due to the sustained threat of terrorism. The industry was in decline until the start Meanwhile, civilian gun sales spiked due of the decade, when the 9/11 terrorist to concerns about potential law changes attacks renewed demand for industry by the Obama administration and fears products. In addition, political over a possible increase in crime due to uncertainties combined with a the poor economy. foundering economy contributed to With demand for industry products unprecedented industry growth during surging over the past five years, domestic the five years to 2012. Over the period, manufacturers have been unable to revenue is expected to grow at a rate of completely satisfy domestic demand, so 5.7% per year on average, with revenue consumers have increasingly relied on increasing 8.2% in 2012 to $11.7 billion. imports to fill that gap. In fact, over the five years to 2012, imports grew at an average rate of 3.6% per year to $2.8 Growth will let up slightly, as fears about billion. The United Kingdom and Germany, in particular, have benefited rising crime and stricter laws subside from the United States’ renewed love of guns. This trend is expected to continue in During the past five years, the wars in the future, with net exports declining from Iraq and Afghanistan ushered in a about $1.6 billion in 2012 to $1.3 billion in substantial increase in the amount of 2017. Despite the industry growth that military spending by the government, occurred from 2007 to 2012, growth is resulting in an increase in purchases of expected to moderate over the next five the industry’s military-related products. years due to subsiding fears about Enduring conflicts in these regions and potential rising crime rates and gun law US troop surges caused the amount of changes. During the five years to 2017, revenue earned from the sales of these revenue is projected to grow at a rate of products to grow. The budgets of federal, 3.5% per year on average to $13.9 billion. KeyExternalDrivers Federal funding for defense and ammunition due to fears about their The US government and, specifically, its own safety. This driver is expected to Department of Defense are major decrease during 2013. purchasers of industry products. As the amount of expenditure allocated for Trade-weighted index these items increases, sales and revenue The trade-weighted index (TWI) typically grow as well. Government measures the strength of the US dollar funding for defense is influenced by relative to the currencies of countries fears of terrorism. As the fear of with which it trades. Because exports terrorism increases, the government account for a moderate portion of increases funding of federal, state and industry revenue and imports account for local law enforcement agencies to a growing portion of domestic demand, protect against or respond to these the TWI can significantly affect sales threats. This factor results in more gun volumes. This driver is expected to and ammunition purchases. Consumers increase during 2013, indicating a also increase their purchases of firearms potential threat to the industry. WWW.IBISWORLD.COM Guns&AmmunitionManufacturingintheUS October 2012 5 IndustryPerformance KeyExternalDrivers Local and state government investment manufactured. Demand is usually continued Growth in government spending on state sufficient to overcome any price and local agencies generally coincides increases imposed; therefore, revenue with increased funding of law typically increases when steel prices rise. enforcement. When law enforcement This driver is expected to increase during funding increases, gun and ammunition 2013 and is a potential opportunity for purchases grow as well. This driver is the industry. expected to decrease slowly during 2013. Crime rate World price of steel As the crime rate or the fear of it Purchases of raw materials, such as steel, increases, people purchase more guns form a large component of the average and ammunition for self-protection. firm’s cost structure. The ability for Therefore, a rising crime rate positively manufacturers to pass on price increases affects the industry. This driver is depends upon the specific product being expected to decrease slowly during 2013. Federal funding for defense Trade-weighted index 10 90 5 85 0 80 −5 Index % change % 75 −10 −15 70 Year 05 07 09 11 13 15 17 Year 04 06 08 10 12 14 16 18 SOURCE: WWW.IBISWORLD.COM The Guns and Ammunition Manufacturing aggressive growth during the five years to Current industry has experienced strong growth 2012, though, due to the United States’ Performance over the past five years. Despite the involvement in sustained military economic fallout generated by the global conflicts abroad. Other driving factors financial crisis, guns and ammunition have include an increased need for local, state proved to be items that many people and federal law enforcement because of believe they cannot live without. the threat of terrorism and heightened The industry experienced revenue consumer demand due to uncertainty growth during the recession from 2007 regarding federal gun law changes. As a through 2009, but revenue dipped 2.5% result of these factors, revenue is in 2010 to $10.5 billion as consumers’ expected to grow at an average annual recessionary fears about rising crime and rate of 5.7% to $11.7 billion in the five more restrictive gun control laws years to 2012, with an increase of 8.2% subsided. The industry experienced expected to occur from 2011 to 2012. WWW.IBISWORLD.COM Guns&AmmunitionManufacturingintheUS October 2012 6 IndustryPerformance