LugerForum Discussion Forums - View Single Post - Colt bails out of the civilian AR-15 market

mrerick · 09-22-2019, 09:50 AM

I'll cross post this research from another forum I participate in. I looked into the facts behind Colt's decision.

When these older manufacturing companies design a product, they also design in an expected level of profit from selling each one of them.

They calculate their own internal costs (labor, materials, stocking etc...) and then project a price point at retail and wholesale that will cover manufacturing and distribution profits.

But, thanks to technology, the world has changed and Colt obviously has not changed with the world.

They can make the profit that they need by selling and supporting a $1,500 rifle. They cannot do so for $350 rifles.

Nimble and aggressive competitors entered the market based on military specifications for the parts, an expanded supplier chain for raw materials, automation and numerical machine control for the machining steps, and comprehensive automated testing.

I've never been there, but I expect you'd see the difference touring Palmetto State Armory's suppliers, their final assembly facility and their warehousing (which I expect contains few finished goods, and lots of just in time staged in-process parts).

PSA has let interested journalists in to see their facilities:

https://www.ammoland.com/2018/11/amm...armory-part-1/

here's one on Daniel Defense:

https://www.guns.com/news/2019/04/05...defense-videos

This article shows Colt during WW-II:
https://www.ammoland.com/2018/10/col...s-image-vault/

Here's an article with a few factory photos from Colt in Hartford:

Colt's Manufacturing Company | Hendon Publishing

http://www.hendonpub.com/tactical_re...turing_company

And a video showing the M1911a1 line: (go about 20 minutes in for a view of the actual factory in operation)

https://www.youtube.com/watch?v=Eij9GxSaIYw

The last video is from the UAW talking about how union employees manufacture Colt products:

https://www.youtube.com/watch?v=sePV00uei1k

In the case of Colt, it's not just labor, it's union labor. And it's a lot more manual union labor than a modern automated factory requires. Does that account for a $1,000 difference in price? I doubt it.

When you manage a company the way it's "always been done" and someone pops up with a much more efficient approach, you can get left in the dust of the marketplace. When you find that almost everyone else has a much more efficient approach, you have a real problem.

One response is to find a customer (the US tax payer, government agencies, and foreign governments) that are willing to pay your price for the "value" you deliver. I expect that is Colt's current plan.

09-22-2019, 09:50 AM	#13
mrerick Super Moderator - Patron LugerForum Life Patron Join Date: Dec 2009 Location: Eastern North Carolina, USA Posts: 3,900 Thanks: 1,372 Thanked 3,094 Times in 1,503 Posts	I'll cross post this research from another forum I participate in. I looked into the facts behind Colt's decision. When these older manufacturing companies design a product, they also design in an expected level of profit from selling each one of them. They calculate their own internal costs (labor, materials, stocking etc...) and then project a price point at retail and wholesale that will cover manufacturing and distribution profits. But, thanks to technology, the world has changed and Colt obviously has not changed with the world. They can make the profit that they need by selling and supporting a $1,500 rifle. They cannot do so for $350 rifles. Nimble and aggressive competitors entered the market based on military specifications for the parts, an expanded supplier chain for raw materials, automation and numerical machine control for the machining steps, and comprehensive automated testing. I've never been there, but I expect you'd see the difference touring Palmetto State Armory's suppliers, their final assembly facility and their warehousing (which I expect contains few finished goods, and lots of just in time staged in-process parts). PSA has let interested journalists in to see their facilities: https://www.ammoland.com/2018/11/amm...armory-part-1/ here's one on Daniel Defense: https://www.guns.com/news/2019/04/05...defense-videos This article shows Colt during WW-II: https://www.ammoland.com/2018/10/col...s-image-vault/ Here's an article with a few factory photos from Colt in Hartford: Colt's Manufacturing Company \| Hendon Publishing http://www.hendonpub.com/tactical_re...turing_company And a video showing the M1911a1 line: (go about 20 minutes in for a view of the actual factory in operation) https://www.youtube.com/watch?v=Eij9GxSaIYw The last video is from the UAW talking about how union employees manufacture Colt products: https://www.youtube.com/watch?v=sePV00uei1k In the case of Colt, it's not just labor, it's union labor. And it's a lot more manual union labor than a modern automated factory requires. Does that account for a $1,000 difference in price? I doubt it. When you manage a company the way it's "always been done" and someone pops up with a much more efficient approach, you can get left in the dust of the marketplace. When you find that almost everyone else has a much more efficient approach, you have a real problem. One response is to find a customer (the US tax payer, government agencies, and foreign governments) that are willing to pay your price for the "value" you deliver. I expect that is Colt's current plan. __________________ Igitur si vis pacem, para bellum - - Therefore if you want peace, prepare for war.