As Bottom Falls Out of Market, Handgun Production Hits 30-Year Low

The American handgun market has dropped off so steeply that some industry experts worry it may never fully recover.

Observers and critics cite a number of factors for the decline, including tougher rules for purchasing handguns, a possible growing disenchantment with firearms due to the stream of horrific workplace and school shootings, and the fact that Americans may already own all the handguns they need.

The handgun business is "a dying industry," declares Cameron Hopkins, editor-in-chief of American Handgunner magazine.

"It seems to me like everything's wrong with the handgun industry," says Dave Tinker, founder of the Firearms Business newsletter.

Combined production for domestic and overseas handgun sales tumbled by 52 percent between 1993 and 1999, according to an Associated Press analysis of the latest data from the Bureau of Alcohol, Tobacco and Firearms.

And industry experts foresee more rough going in the future for the country's 50 handgun manufacturers, many located in New England's Connecticut River Valley, where firearms have been made since George Washington established his armory there during the Revolution.

Handgun imports also are way down, ATF figures indicate.

Among the possible factors:

— The market may be saturated. Handguns aren't like cars that wear out in a few years or have built-in obsolescence. John Rosenthal, chairman of Stop Handgun Violence, says makers have "oversaturated the male market and failed in engaging women." Larry Flatley, who runs specialty manufacturing for Smith & Wesson handguns, prefers to call it a "mature industry."

— The number of licensed gun dealers has plummeted — 104,000 today, down from a peak of 284,000 in 1992. The decrease came after the ATF, hoping to eliminate small-time dealers selling guns out of garages and basements, toughened certification requirements.

— Stiffer rules for buyers. The Handgun Violence Prevention Act of 1993 — the Brady bill — imposed nationwide background checks on buyers. Industry officials believe some potential gun-buyers have stayed away because they consider the checks intrusive. "I don't know anybody else that buys anything else that has to be scrutinized by the FBI to buy it," says Bob Morrison, vice president of Miami-based handgun maker Taurus International Manufacturing.

— The crime rate is down. Last year's national murder rate hit a 33-year low. Burglary fell 10 percent just since the previous year. "Most people who buy handguns do so for self-defense, so the handgun market is far more responsive to at least the public perception of the prevalence of crime," says Dennis Henigan, legal director of the Center to Prevent Handgun Violence.

— The shooting sprees that have made front-page headlines may have eroded public acceptance. Philip Cook, a Duke University expert on the industry, says that "having handguns in your home is no longer seen as something that's your personal business."

Separate from the ATF numbers, the number of handguns produced for the military also is down dramatically. The latest figures from the Defense Department show that average yearly handgun purchases from 1993 to 2000 fell 80 percent compared to the previous eight-year period.

Greg Fetter, a defense analyst in Newton, Conn., attributes the drop to "the smaller armed forces and the greatly diminished threat" in the post-Cold War era.

Experts forsee the handgun industry now becoming more specialized, supplying mainly police, as well as some hunters and target shooters.

"I think the era of the mass marketing of handguns is going to end," says Tom Diaz, a Violence Policy Center analyst who once was a handgun instructor in the military.

"You're not going to have the size of the market you had in the '70s and '80s ever again," says Dave Simard, who oversees Smith & Wesson's police products other than handguns. "It's just a different world."

The crash does not extend to shotgun and rifle production, which rose by about 8 percent between 1993 and 1999 to 2.8 million annually, ATF figures show.

The handgun decline follows about 30 years of growth, fueled initially by worries about crime and civil disturbances in the turbulent 1960s. Another expansion came as violent crime surged during the crack cocaine epidemic of the 1980s. The market cooled during the recession that coincided with the first Bush administration, but recovered and reached a historic peak before the steep decline began.

The 1.3 million handguns manufactured in 1998 was the lowest figure in 31 years. Production bounced back somewhat in 1999, but industry executives say that only interrupted, but did not stop, the slide.

As handgun sales declined, a shift in strategy by gun control advocates also has taken a toll on the industry.

For decades, gun control advocates concentrated on lobbying Congress and state legislatures to change the laws to restrict who could purchase guns and what kinds of guns they could buy. Then, in the late 1990s, gun control advocates added a new strategy — suing gun manufacturers.

Since 1998, 32 cities and other government bodies have sued, accusing gunmakers and sellers of negligence by producing guns prone to accidents and doing too little to keep weapons away from criminals and children. The suits sought reimbursement from gunmakers for the high costs of policing violence and of treating gunshot victims.

Some suits were dismissed, but others remain active. If the gunmakers should lose some of them, liability could run into billions of dollars.

"All we need is one victory," says Attorney General Eliot Spitzer of New York, one of the states that has sued. "That could change the industry."

Colt Manufacturing, one of the most venerable companies in the industry, decided to virtually leave the retail handgun business in 1999, largely because of the lawsuits. The Hartford, Conn., company now focuses its handgun marketing on soldiers and police, and on selling replicas of its historic firearms to collectors.

Smith & Wesson, long the industry leader, tried a different strategy. Rather than fight in court, the Springfield, Mass., manufacturer negotiated a government settlement, agreeing last year to include safety locks on all its guns, as well as to a series of other safety features and marketing changes.

When the other gunmakers decided not to follow Smith & Wesson's lead, gun advocates blamed the company for selling out, and its sales suffered.

However, even before the agreement, Smith & Wesson's business was withering, its handgun production falling from 680,717 in 1995 to 343,064 in 1998, according to ATF figures.