Gun Manufacturing
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Industry Overview
The US firearms industry includes about 200 companies with combined annual revenue of $2 billion. The largest gun manufacturers are Remington Arms and Sturm, Ruger & Company. Other companies that manufacture more than 50,000 weapons annually are Marlin Firearms, OF Mossberg & Sons, Smith & Wesson, US Repeating Arms, Savage Arms, Beretta USA, and Hi-Point Firearms. Winchester Ammunition and Remington are major manufacturers of ammunition. The industry is highly concentrated.
Competitive Landscape
Demand, which has been flat for years, is driven partly by hunters and partly by weapon upgrades by police departments. The profitability of individual companies is closely linked to marketing. Small companies can compete effectively by producing premium-priced high-quality or decorative guns. Although automation has increased, the industry is still fairly labor-intensive: average annual revenue per worker is about $150,000.
Products, Operations & Technology
The industry produces about 3 million guns per year: 620,000 pistols; 320,000 revolvers; 1,300,000 rifles; and 700,000 shotguns. About 60,000 machine guns are made, principally for the government. Sturm Ruger is the only company with large sales in each of the four categories. Remington makes mainly rifles and shotguns; Smith & Wesson mainly pistols and revolvers; other companies specialize in one category. Within a category, a company may make guns of different caliber and style. The most popular pistol calibers are 9 millimeter; .45; and .22. The most popular revolver calibers are .357; .45; and .38.
Gun manufacture is similar to the manufacture of other metal products with moving parts that require precision machining and assembly. A typical gun contains between 50 and 100 parts. The precision parts are made from raw steel shapes using expensive computer-controlled machining stations. Because most manufacturers make several different models using the same machinery, production is in batches. Some manufacturers contract out all of their parts manufacturing to machine shops. Wood or plastic parts for stocks may be manufactured by outside contractors or produced in-house. Parts are assembled and finished by hand (sometimes with elaborate metal etching or other design work) and weapons are individually test-fired.
The technology used to produce guns is fairly standard, but requires sophisticated CAD and manufacturing (CAM) equipment. Because of the large number of parts required for each of dozens of gun models a company might produce, good inventory control systems are necessary. Computer systems are also used for the extensive documentation required to track each individual gun.