Gunning for growth
By Edward Martin
Lost in the din of machine tools on the factory floor, clanking sounds from a corrugated-metal test chamber the length of a bowling lane are barely recognizable as gunshots. Inside, technicians place a rifle in a jig set up in an armored box and insert a special cartridge. They step away and close a heavy metal door that automatically pulls the trigger.
When it does, the rifle spits a bullet speeding faster than 3,000 feet per second crashing into a downrange snail trap, named for its curlicued internal passages. In a microsecond, the bullet scrubs off velocity until, in a matter of only feet, it plops harmlessly into a bin to be recycled. Plant manager Mickey Wilson steps outside the chamber, holding the rifle.
“We shoot every single gun before it goes to the customer,” he says. The first round is a super-powerful, 150% proof load. “We want to make sure it won’t blow up by giving it more charge than it would normally ever see out in the field.” More shots follow, called function testing. When it leaves the factory, the AR-556 rifle will be able to place bullets in a bull’s-eye the size of a quarter a football field away.
This is the birth of a gun at the Sturm, Ruger & Co. plant in Mayodan and part of one of North Carolina’s fastest-growing, least-noticed and most paradoxical industries. Direct and induced economic impact in the state from firearms manufacturing, sales and related activities totaled nearly $2 billion last year, including more than $540 million in wages, according to a trade-group study. Federal officials now license 364 gun manufacturers in North Carolina, from artisans turning out a few hand-crafted weapons annually to titans such as Ruger. That’s a 26% increase since 2013.
North Carolina is embracing its burgeoning gun business, while other states with historic ties to firearms manufacturing have gotten tougher on the industry. Fear engendered by the continuing toll of mass shootings, stoked by politicians and talk-radio and cable TV pundits, is driving sales, enabling gunmakers to overcome obstacles that would stop other industries in their tracks. Potentially devastating news, such as the 2012 shooting of 20 children and six adults at Sandy Hook Elementary School in Newtown, Conn., boosts demand as buyers anticipate gun bans or tighter restrictions.
“After Sandy Hook, I was 4,200 rifles back-ordered in two weeks,” says Andrew Barnes, who employs 25 people at his Apex gunmaking company, Barnes Precision Machine Inc. Ruger CEO Michael Fifer told stock analysts in February he’s encouraging wholesalers to build inventory ahead of the November elections. Polls suggest that the next president will be Hillary Clinton, whose support for some gun-control measures has prompted denunciations from the National Rifle Association. “The day after the election, it’s too late,” says Fifer, whose company is based in Southport, Conn., 30 miles from Sandy Hook in an area called “Gun Valley” because of its many manufacturers. “We’ll see a step up in demand if a Democrat wins, particularly so if they win the Senate.”
Charlotte gun-shop owner Larry Hyatt used to bank on hunting season and Christmas to draw traffic. “Now, we have the political season as the big driver of gun sales,” he says. “We don’t want to be political — we have customers of every age, background and political persuasion — but you have to be aware of the political part.”
Within a month of the Sandy Hook tragedy, New York stiffened its assault-weapon ban, cut the number of rounds a gun can hold from 10 to seven, froze state pension-plan investments in arms manufacturers and dumped its stock in Massachusetts-based Smith & Wesson Holding Corp., a publicly traded gunmaker founded in 1852. Soon, Connecticut followed with similar measures, including a new requirement for background checks. Four months after Sandy Hook, Maryland followed with a fingerprinting requirement and other tougher measures.
North Carolina took a different approach. In 2013, Gov. Pat McCrory signed laws expanding the locations where concealed-carry permit holders can have guns to include bars, restaurants, parks, funerals, parades and other venues. New laws also specify that gun permits are no longer public records, make it easier to obtain pistol permits and allow hunters to use silencers.
It isn’t just politics that is boosting Tar Heel gunmakers. Like the textile industry during the early 20th century, firearms are making the migration from the Northeast, the traditional seat of the gun industry, to the South, seeking lower labor, energy and raw-material costs. The 260 non-union workers at the Ruger plant — expansion plans call for increasing that number to as many as 400 — earn about $45,000 a year, plus benefits, roughly 25% higher than Rockingham County’s average annual wage, though less than in the Northeast. Ironically, Ruger’s Mayodan site formerly housed a plant owned by Greensboro-based Unifi Inc., one of North Carolina’s largest textile manufacturers. Unifi’s production now mainly is done outside the U.S., particularly in Mexico and Latin America.
Ruger, America’s largest gun manufacturer with similar plants in Arizona and New Hampshire, could produce upward of 2 million firearms this year. The company shipped about 1.7 million in 2015, down slightly from 1.9 million a year earlier, spokesman Ken Jorgensen says. Sales soared 26% in the first quarter of 2016 to $171.5 million.
The tightly guarded, windowless plant off a secluded back road is a bellwether, not merely a showcase of modern manufacturing. A few miles away, in nearby Madison, more than 190 senior executives and others work at the headquarters of rival Remington Outdoor Co., parent of brands such as Remington, Marlin, Bushmaster and H&R.
Less conspicuous are dozens of smaller manufacturers such as War Sport LLC in Robbins, a Moore County hamlet started by a gunsmith in the early 1800s. The 25-employee company has continually expanded since opening in 2010, now producing “thousands per year,” marketing director Chris Davis says. Some of its rifles retail for more than $3,000.
Bear Creek Arsenal LLC in nearby Sanford turns out more than 3,000 military-style sporting rifles annually, according to data from the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives in Charlotte. In Elizabethtown in Bladen County, Del-Ton Inc. reported that it manufactured more than 10,000 mostly sporting rifles last year.
No company epitomizes native Tar Heel gunmaking better than Barnes Precision in Apex. After graduating from Northwood High School in Pittsboro, Andrew Barnes earned an associate degree in machine-tool technology in Mesa, Ariz. Barnes Precision started in 1992 with one manual machine tool, working for research-and-development customers at nearby Research Triangle Park and an archery manufacturer. When that work dried up, Barnes shifted to guns, which now make up three-quarters of his volume. The company operates at full capacity, shipping as many as 400 rifles a month to dealers nationwide. “Look at Ruger. They’re probably producing 400 a day. But we feel like we’re on the cusp, ready to hit it big.”
Barnes is a plain-spoken firearms advocate who lives on part of the Jordan Lake-area farm where he grew up. He refuses to market at gun shows, turned off by panic and survivalist sales tactics often practiced there. “I’m not going to sell our product on the basis of, ‘Go buy a Barnes Precision rifle and a 50-gallon barrel of pork and beans and bury them in your backyard because somebody’s going to take your guns away.’” Instead, his rifles are prized by match shooters and others for their accuracy and reliability.
Concealed-carry laws such as North Carolina’s are boosting demand for small revolvers and pistols that can fit comfortably in a purse or coat pocket. Permits have soared from 211,946 in 2011 to more than 512,000, State Bureau of Investigation agent Beth Starosta-Desmond in Raleigh says, citing the ease of obtaining permits.
The ATF says Tar Heel gunmakers produced more than 60,000 handguns in 2014. Most were made by Pineville’s Para USA LLC, a unit of Remington Outdoor that has since moved to Alabama.
The gun, however, that’s fueling the greatest explosion of firearms manufacturing is a lightweight, “Star Wars”-like military rifle that debuted in the 1960s during the Vietnam War. The M16 replaced the heavier, slower-shooting, wooden-stock M14. Skeptical soldiers at first derided it. “You can tell it’s swell, it’s Mattel!” they mocked, echoing the toy-maker’s 1960s advertising. Nevertheless, it has become one of the world’s most widely produced guns, with more than 9 million in circulation, including its M4 carbine derivative. At the Ruger plant, one production line makes a .22-caliber pistol and another makes small-caliber, bolt-action rifles, but three churn out high-powered, semiautomatic rifles based on the civilian version of the M16, called the AR platform. AR stands for its original manufacturer, ArmaLite, and not the politically charged terms “assault rifles” or “automatic rifles.”
“The AR-style, modern sport rifle is the most popular rifle on the market today,” says Davis, the War Sport executive in Robbins. “It’s got low recoil and it’s very accurate. It’s like Legos for grown-ups. You can change and modify it, and more or less customize it to fit your needs.” Virtually all small Tar Heel gunmakers such as Barnes, Bear Creek, USA Tactical in Statesville and others base their core rifles on the AR model.
The AR has also become the poster child of anti-gun forces, through its association with mass shootings. Remington’s Bushmaster AR-15, for example, was used by the Sandy Hook killer and, in 2002, by two snipers who killed 10 and wounded three in a three-week series of random shootings around the Washington, D.C., beltway. One shooter has since been executed, and the other is in prison. Another AR was used in a Colorado theater shooting that left 12 dead and 58 wounded in 2012. And the Russian-made AK-47 has become a symbol of global terrorism.
Gun manufacturers contend the weapon’s wide availability explains its use in such killings, not its inherent characteristics. Critics, however, point to its high-capacity clips and ability to be fired as rapidly as the shooter can pull the trigger, though not in fully automatic mode.
In early 2013, behind closed doors in Raleigh and Rockingham County, the deal that brought Ruger from Connecticut to Mayodan began taking shape soon after Sandy Hook. At least three other states — South Carolina, Texas and Florida — also courted Ruger’s new plant, reflecting a full-scale bidding war for gunmakers.
North Carolina, Rockingham County and Mayodan put together an incentives package for Ruger that could top $15 million. Fifer and other company executives said Connecticut’s growing disaffection for gunmakers had them looking elsewhere for expansion. Gun demand was soaring, fueled by the two election victories of President Barack Obama, whom the industry regards as anti-gun; the cumulative effect of mass shootings since 2002; and tough post-Sandy Hook gun laws. “New England is pushing gun companies out,” says Mark McCoy, managing partner at Carolina Arms Group LLC, a small handgun-maker in Mooresville. The migration was on.
North Carolina’s credentials as a gun-enthused state are solid, without Texas-like fanaticism. About 41% of N.C. households own guns, ranking it 23rd among 50 states and Washington, D.C., and its 500,000-plus concealed-carry permits rank it 11th, a Pew Research study in 2014 shows. Guns & Ammo magazine ranks it the 19th most friendly state, based on its laws. “The Southeast has become a hotbed because it’s more firearms-friendly,” adds Davis, the War Sport marketing executive. “The regulation is a lot lighter than in the Northeast.”
North Carolina offers other enticements. In Troy, demand for the two-year gunsmith degree program at Montgomery Community College has soared in the last decade, says director Mark Dye. The school has offered the classes since 1978. “I don’t know if the bubble will eventually pop, but right now, the industry is doing well, and we’re doing well,” he says.
McCoy and Hyatt, who employ Montgomery graduates, describe it as the nation’s best. It is one of four schools endorsed by the National Rifle Association. The program, which can train about 35 students a year, now has a three-year-plus waiting list of more than 180, Dye says.
Ruger picked Mayodan because “it was the best building, with the best available workforce in a state or region that’s supportive of our industry and business in general,” Jorgenson says. “The general public in Rockingham County is overwhelmingly supporting of firearms. Guns are part of the fabric in the area’s rural culture, and there’s benefit to having employees that are enthusiastic about what they’re working to create every day.”
To be sure, North Carolina has had to fight for its share with other Southern states fond of firearms. More than a half dozen mostly Northeast gunmakers have received more than $120 million in state and local incentives in the last 10 years — the most since 2013 — in bids to entice them to move or expand, says a spokesman for the Newtown, Conn.-based National Shooting Sports Foundation Inc., the primary firearms-industry trade group. North Carolina has won some battles, such as Ruger and smaller startups, but lost others.
In Madison, Remington, formerly known as Freedom Group, accepted nearly $70 million in incentives from Alabama to create a new manufacturing complex in Huntsville. It dismissed more than 100 workers at a factory in its birthplace, Ilion, N.Y., and then-CEO George Kollitides in 2013 bluntly told legislators the company was expanding elsewhere because of new laws “affecting the use of our products.”
Spokeswoman Jessica Kallam says Remington is consolidating manufacturing in Huntsville, and the complex will ultimate employ 2,000 or more. That consolidation cost North Carolina 65 jobs when pistol maker Para’s plant near Charlotte was absorbed by the Remington brand in 2015 and moved to Huntsville.
Remington considered North Carolina for the new manufacturing complex, confirms a North Carolina Department of Commerce spokeswoman, including possible sites in Mecklenburg, Catawba, Union, Cabarrus and Gaston counties. Remington won’t say, but local officials speculate that competition with Ruger for labor explains why Rockingham County wasn’t considered. Those same officials now fret that Remington might also move its headquarters to Alabama, pointing to layoffs of 41 sales and other employees in October. Established in Madison in 1996, the headquarters houses executive offices, finance, accounting, customer service and other functions. “At this point, so far as I know, we have no intentions of moving the remaining departments,” Kallam says.
Beretta U.S.A., an Italian gunmaker that supplies the pistols used by American armed forces, also teased North Carolina before locating a $45 million plant in Gallatin, Tenn., in 2014. Company officials riled by a new Maryland gun law that restricted weapons to 10 rounds — its basic military handgun holds 15 — toyed with a number of Tar Heel sites, including one in Alamance County, before choosing Tennessee, which offered more than $10 million in incentives. The company’s namesake CEO was explicit: Concentrate the search, Ugo Gussalli Beretta told subordinates, on “the most consistently pro-Second Amendment states in the country.”
North Carolina was among 44 states that bid for PTR Industries Inc., which moved about 50 employees to Aynor, S.C., in 2013 from Connecticut, company officials said. Connecticut’s new gun laws made it illegal to sell some of its guns there, the company said.
On a recent spring day, a sizable part of the migration had come to rest in Mayodan, on the factory floor of a former textile plant. There’s little or no talk of politics, only a factory hustling to meet demand. Expansion is already underway.
Wilson stops by a glass display case in a small lobby. In it is the first gun to roll off the assembly line here on Nov. 1, 2013, a black-finished .22-caliber American Rimfire bolt-action rifle. Ruger had closed on the building only 60 days earlier, but, the plant manager says, the quick turnaround was made possible by local contractors and others eager to see the gun industry gear up in North Carolina.
“We joke that this gun cost us $5.5 million to make,” Wilson says. “The rest have been a lot cheaper.”