Firearms Industry contributes in terms of jobs, tax revenue, and good corporate neighbors :: 03/27/2013

Stubborn Facts: The Gun Industry Employs Twice as Many Americans as GM (and That's Just the Beginning)

Mar. 26, 2013 8:59am Glenn Hall

• This article is part of a series on Guns in America that explores the use of firearms in our country and the debate over gun control. This is an editorially independent series sponsored by Tactical Firearms Training Secrets.

Guns are big business in America - so big, in fact, that despite making vastly more firearms than any other nation, the U.S. also is the largest importer of handguns, rifles and shotguns.

Demand is so high, that on top of the 6.54 million pistols, revolvers, rifles, shotguns and other firearms made in America in 2011, an additional 3.25 million were brought in from other countries, according to records of the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. Domestic production grew by 1 million guns from the 2010 volume and imports increased by half a million.

Source: ATF

All told, the firearms industry contributes more than $33 billion to the U.S. economy and supports about 220,000 jobs, according to the National Shooting Sports Foundation . That's more than double the North American payrolls of General Motors, which President Barack Obama called "a pillar of our economy" when he explained the decision to provide more taxpayer aid to help save the car maker in 2009.

Unlike GM, which employs 101,000 people in North America and 213,000 worldwide, the gun business is divided up among thousands of little companies with just a few big, recognizable brands like Ruger, Smith & Wesson and Remington. Big or small, companies making and selling firearms and ammunition provide jobs in every state. (Click here for a snapshot of the top U.S. gunmakers .)

In Idaho, for example, Republican Gov. Butch Otter considers the firearms business "an important piece of the economy" in his state, which is home to one of the largest U.S. ammunition manufacturers - ATK Sporting - and has been attracting gun-related businesses away from other states that have enacted stricter gun controls or raised corporate taxes. Idaho's firearms businesses generate $512.7 million in revenue and provide 3,116 jobs in the state, according to the NSSF.

"Our idea of gun control in Idaho is to use two hands," Otter joked during an interview with TheBlaze. "The gun industry doesn't need to be afraid of Idaho."

Still, politicians in states such as New York, which recently passed what Democratic Gov. Andrew Cuomo called "the toughest gun laws in the nation ," often make a distinction between support for gun control and opposition to firearms businesses and gun owners.

Cuomo has said he doesn't think New York's new laws will have a "significant impact" on Remington Arms, which was founded in Ilion, New York, and he has stated several times that the gun control measures he signed into law this year are "not about hunters , sportsmen or legal owners who use their guns appropriately."

The NSSF estimates that New York-based firearms businesses contribute more than $1.2 billion to the economy and employ almost 8,000 New Yorkers - jobs the state has fought to protect with $5.5 million in subsidies and grants since 2007, according to the Maine Center for Public Interest Reporting . Those subsidies were approved prior to Cuomo taking office last year.

As other states consider following New York's lead on gun control and the U.S. Congress debates stricter federal measures following the Sandy Hook Elementary School massacre in Newtown, Connecticut, the desire to prevent such tragedies will have to be weighed against the popularity of firearms among Americans and the potential impact on an industry that has been growing steadily, even through the recent recession.

Creating Jobs

The number of employees in the gun industry grew by more than 10% from 2008 to 2010, adding about 17,000 jobs, according to the NSSF. During the same period, the overall number of Americans with jobs declined roughly 6%.

The economic value created by the firearms industry also is increasing steadily, from $19.2 billion in 2008 to $27.6 billion in 2010 and reaching a record $33 billion last year, according to NSSF calculations based on wages and salaries.

Federal and state governments also benefit directly from the $5 billion in tax revenues the industry provides, including $2.54 billion in business taxes and $460 million in excise taxes to the federal government, plus $2.1 million in state business taxes, according to the NSSF.

The following chart shows the 10 states with the most jobs and revenue from the firearms industry:

The economic value calculated by the NSSF doesn't include sales of hunting and shooting accessories. A separate analysis by Congressional Sportsmen's Foundation found that America's 37.4 million hunters and fishers spent $90 billion in 2011 on equipment ranging from boats and bait to guns and land for their sport of choice. Hunters and other sportsmen also have provided nearly $1 billion in tax revenue that supports federal wildlife conservation programs.

Private citizens are the driving force behind the booming gun business, with 47% of American adults confirming in an October 2011 survey that they have a gun in their home or elsewhere on their property - the highest level in two decades, according Gallup .

Interest in hunting and shooting sports is growing, especially among younger generations, according to the National Shooting Sports Foundation, which estimates that sales of firearms and ammunition for hunting and shooting sports rose to a record $6 billion last year.

While dwarfed by mega-companies like ExxonMobil, which generated more than $450 billion in revenue last year, the sporting firearms industry's revenue is on par with other members of the Fortune 500 , including Hershey, Ryder and Avis. In terms of employment, the firearms industry would rank 21st on the Fortune 500 list, one notch ahead of GM, if all the independent gun-related businesses were rolled up into one.

When looking just at the businesses tracked by the ATF, America's gun industry includes 5,441 firearms makers, 1,895 manufacturers of ammunition, 48,676 dealers, 7,075 pawn brokers, 59,227 collectors and 811 importers. Just looking at the dealers, firearms outlets outnumber car dealerships almost 3 to 1 and outnumber Starbucks stores by more than 4 to 1.

Small, Independent Businesses

The far-flung nature of the gun industry obscures the role the industry plays in the economy, said Jake McGuigan, the director of government relations for the National Shooting Sports Foundation.

"There are a lot of smaller manufacturers that support a very large base of suppliers," McGuigan said. "These kinds of small, independent businesses are really the backbone of the U.S. economy, not the GMs, Wal-Marts and other big businesses."

The relatively small-scale operations in the U.S. firearms industry are also highly sensitive to the regulatory and economic landscape, as well as pressure from their loyal customers who tend to be extremely opposed to increased gun control measures, McGuigan added.

A 2011 ATF report noted that the number of federally licensed firearms businesses dropped by more than half from "a high of more than 286,000 in April 1993 to a low of 102,020 in March 2000, likely due in part to the increase in license fees and requirements to comply with state and local law implemented in 1993 and 1994."

The decrease occurred after the U.S. Congress passed the Violent Crime Control and Law Enforcement Act of 1994 - the so-called federal assault weapons ban. Gun dealers saw the biggest declines, falling to 48,676 by 2011 after peaking at 248,155 in 1992, according to the ATF . Licensed ammunition manufacturers also started disappearing after 1994, with 1,895 in 2011 compared with 6,068 in 1994 and a peak of 13,318 in 1983, ATF records from 1975-2011 show.

Tanya Miller was married in January 2013 at a shooting range. Photo Credit: AP.

Through it all, however, the number of firearms manufacturers kept growing, reflecting the strength of consumer demand. After expanding by a hundred or more businesses each year for most of the past three decades, the number of licensed firearms manufacturers shot up in recent years to 5,441 in 2011 from 2,959 in 2009 and 2,144 in 2004, when the federal assault weapons ban expired.

Most Guns Made in U.S. Are Sold in U.S.

The disproportionate domestic demand for guns is another key difference between the firearms industry and many other American manufacturers.

Comparing again with GM, the carmaker sells only about 30% of its vehicles in the United States, while just about every gun made by a U.S. company is sold in America. Of the 6.54 million guns made in 2011 (up from 5.5 million in 2010), and only 296,888 were sold in export markets (up from 241,977 in 2010), ATF records show.

In all, almost 9.4 million new guns were sold in America in 2011 when domestic and imported firearms are combined, an increase from 8 million in 2010. After adding in resales of guns made in prior years, which the Small Arms Survey estimated at 1.5 million for 2010, the total number of guns sold in a given year gets close to 11 million.

The 25-year survey estimated that 2,228 U.S. companies produced more than 106 million firearms from 1986-2010.

Source: ATF

Other highlights from the Small Arms Survey's findings include:

• From 1980 to 2010 the industry went through severe business cycles, with reported production levels both declining and rising by 50 per cent within very short time periods, possibly posing severe challenges to the management of firearms firms.
• The majority of producers are relatively small in scale, with only a small percentage of firms-between 1.3 and 7.5 per cent, depending on firearms category-producing more than 100,000 weapons per year.
• Production of firearms for domestic, non-military use is highly cyclical, particularly for the pistol segment of the market, having oscillated between 3 million and 5.5 million firearms per year since 1980.
• The composition of the firearms supply sources has changed markedly. In 1989 about 80% of firearms came from domestic sources; this figure fell steadily to between 55% and 65% in the late 2000s.

Foreign Threats

While the domestic firearms industry regained some ground lost to foreign competitors in recent years, the volume of imported firearms remains near record levels, led by Brazil with 846,610 firearms sold in the U.S. in 2011, followed by Austria (522,638), Germany (313,528), Italy (254,901) and Russia (216,293), according to ATF records.

Foreign-made firearms captured more than 40% of new firearms sales in 2009, though the market share slipped back to 34% in 2011 as domestic production ramped up.

When domestic and imported firearms are combined, the supply of guns available for sale in the U.S. rose to a ratio of 2.7 new firearms for every 100 people, compared with 2.7 firearms per 100 people in 2008 and 2.3 guns per 100 people in 1989, according to the Small Arms Survey. When all of the roughly 270 million existing guns are included, the ratio is closer to 90 firearms for every person in America.

The kind of demand from the general populace to support sales at those levels - along with the jobs, revenue and taxes generated by the firearms industry - suggest to firearms advocates like Idaho's Gov. Otter that the push for new gun control laws won't destroy the firearms industry.

"I think it's here to stay," Otter said.