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Colt going out of business?

Discussion in 'General Firearm Discussion' started by BAMCIS, Nov 15, 2014.

  1. BAMCIS

    BAMCIS Eugene Well-Known Member

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  2. Bill Siegle

    Bill Siegle Oregon Active Member

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    Well the government contracts aren't there and years ago they basically told civilians to pound sand. About two years ago they finally started trying to tempt the civilian market, they showed up with old product that quite frankly, others already had and with better fit and finish IMHO.
     
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  3. timac

    timac Loading Magazines! Well-Known Member

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    Unions, destroying American businesses one at time.


    Report: Colt Firearms Could Default By Year's End


    by AWR Hawkins 14 Nov 2014

    On November 13 The Wall Street Journal reported that Colt Defense LLC "could default by the end of the year."
    Colt Rifle and pistol sales are sluggish and the company "is likely to miss a [$10.9 million] payment to bondholders" on November 17.

    According to WSJ, Colt is controlled by Sciens Capital Management LLC and has "$248.8 outstanding on the bonds as of June 29." On November 13 the bonds were trading at about 30 cents on the dollar. WSJ claims that even if Colt is somehow able to pay bondholders on time, it quickly faces another hurdle via a "$48.1 million term-loan agreement by Dec. 31."

    On top of this, Colt expects to report a "50 percent to 60 percent decline in operating income for the quarter [that] ended September 28."

    With income down but expenses remaining up, it should be noted that Colt workers are unionized--members of the United Auto Workers (UAW). So there are certain costs associated with the presence of unionization that are eating away at Colt's bottom-line as well.

    The automobile manufacturing implosion in Detroit and subsequent bailouts highlighted how the added union costs crippled makers like Chevrolet, Dodge, and Chrysler.
     
  4. RVTECH

    RVTECH LaPine Well-Known Member

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    Declining demand? For their guns maybe.
     
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  5. coctailer

    coctailer Portland, OR/Hastings, MI/Vancouver,WA I run with scissors.

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    People have been saying Colt is going under for the last 40 years.

    I'll believe it when I see it.
     
  6. The Heretic

    The Heretic Oregon Well-Known Member

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    Two words:

    Poor management
     
  7. BAMCIS

    BAMCIS Eugene Well-Known Member

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    Bingo!!!

    Add to that the needless governmental and environmental regulation. No wonder our manufacturing base is now located in Asia.
     
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  8. coop44

    coop44 Tacoma ,WA Well-Known Member

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    Bash unions all you want, just remember when you vote for education initiatives all you are doing is giving the largest, most extortionist unions, more power to dig into your wallet and burden the taxpayer with more debt. The real labor unions are nothing compared the education mafia.
     
  9. PlayboyPenguin

    PlayboyPenguin Pacific Northwest Well-Known Member 2016 Volunteer

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    Your ridiculously sheepish desire to side with corporate entities that blame a fair living wage for the demise of their poorly run and mismanaged companies aside, the gun industry as a whole is declining right now. The massive buys of two years ago were not new shooters like people pretended. They were from old shooters mass buying. Now the market is diminished. Ask any gun distributer how much product they are moving now. They will tell you they are moving guns at 1/2-1/3 the rate of five years ago before the boom.
     
    Last edited: Nov 15, 2014
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  10. Just Jim

    Just Jim Well-Known Member

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    I was reading they were 11 million behind on payment of their debt because the government is slow paying on their contract. I suspect if that is true it will be handled by the the courts.o_O
     
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  11. Caveman Jim

    Caveman Jim West of Oly Springer Slayer 2016 Volunteer

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    Bad management and government intervention with all kinds of ever changing regulations....
     
  12. Just Jim

    Just Jim Well-Known Member

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    Colt would have been better off if they would have pursued the civilian markets with greater enthusiasm. Smith&Wesson went broke and came back real well selling to the people. Colt put the wrong people in management,the new management will have to go after public sales.o_O
     
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  13. Flopsweat

    Flopsweat Slightly right of center Well-Known Member

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    We've long passed the day where the typical union was interested in what's "fair". The scales have tipped in the other direction and now most of them do little more than extort money from business owners. Also I like Colt but consider their ARs to be overpriced for what you get. Not surprised they're having trouble. Guns and ammo are dropping in price and will probably continue to do so now that the Dems have lost the Senate.
     
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  14. Martini_Up

    Martini_Up NW USA Well-Known Member

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    I like the vetting. When sales were red-hot, a lot of questionable companies jumped in and poor quality was abundant. When the market is saturated then those good companies will seek dedicated customers and a major way to get them is to have outstanding quality.

    Colt will have to improve it's quality or continue to circle the drain. Hopefully the 'family wage' union employees will understand this and begin earning their wage or even better, giving more that what they think they're being paid for. That's the mark of a truly successful company - employees eager to do the best they can and get paid on merit vs. fair share, whatever fair share is supposed to be. Then again that may be a dichotomy :)
     
  15. dobeman

    dobeman Hillsboro Oregon Bronze Supporter Bronze Supporter

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    It's not the first time the company was in financial trouble.
     
  16. Just Jim

    Just Jim Well-Known Member

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    Colt came out with a reintroduction of the New Frontier SAA. I waited a year then went full effort into buying one. I searched all over for anyone who had a NIB gun from a storefront and could not find one. I called Colt and asked them where they were shipping them and got a funky that could not help me.

    Gun brokers had lots of them for inflated prices but I could not buy one for retail... so I didn't buy one. Same with their 100 year anniversary 45s, they could have sold me one but they wouldn't get enough to market. No wonder they are failing in business.o_O
     
  17. PlayboyPenguin

    PlayboyPenguin Pacific Northwest Well-Known Member 2016 Volunteer

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    Really? Is that why the middle class is growing so quickly? Oh, wait...it is shrinking rapidly. Also, it seems wages have remained stagnant for decades while corporate earnings have skyrocketed. Seems like there isn't any evidence to back up your claim. Care to provide some? I love when gun people call anti-gunners sheep and then turn around and "baaah" for the corporate leaders of the right wing when they tell them they are lucky to get what they give them.
     
  18. Sstrand

    Sstrand La Grande OR Well-Known Member

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    Two scenarios:
    Maybe this is the reason the border patrol is pulling their ARs out of service. How much do suppose they will pay Colt for "inspecting/repairing them?" Will it be enough $$$ to keep Colt in business?

    You all remember when the government took GM away from the bond-holders and gave it to the unions.

    Sheldon
     
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  19. Outrider

    Outrider Oregon Active Member

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    Colt has many problems. Some are of its own making. One problem in particular was inflicted upon it by private equity firms.

    Between 2005 and 2009, Sciens Capital and The Blackstone Group loaded Colt with massive debt while taking distributions and paying themselves high management and advisory fees. Colt was in weak shape in 2005 and 2006 but each year Sciens and its affiliates took out at least $40 million from the corporation. In 2007, they did a leveraged recapitalization. The company borrowed $150 million and the private equity firms paid themselves over $130 million in dividends. In 2009, Colt borrowed another $250 million and this cycle repeated itself.

    Unfortunately, some private equity firms use their charter like a letter of marque. They buy solvent, functioning, but vulnerable corporations and then raid them for their value. Some may believe that “corporations are people” but what’s a corporation going to do when its owners have it cut them huge dividends that leaves the corporation hollowed out? In theory, a shareholder can sue on behalf of the corporation but in reality that’s expensive and usually not practical when the big stakeholders misbehave.

    It looks like Colt might have to go through bankruptcy proceedings and be reorganized.
     
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  20. Just Jim

    Just Jim Well-Known Member

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    Do you run a business?