Sturm Ruger under siege looks to expand
By Leslie Gevirtz
NEWPORT, N.H. (Reuters) - Sturm, Ruger & Co, the only publicly
traded U.S. small arms maker, thinks it can weather the firestorm
of lawsuits that cities and private citizens are aiming at the
industry and still expand its market share.
The Southport, Connecticut-based company, marking its 50th
anniversary this year, makes rifles, shotguns, pistols and
revolvers. It also manufactures golf clubs for Ping and Big
Bertha clubs for Callaway.
The firearms industry is coming under legal attack from a growing
number of cities including Chicago, New Orleans, Miami and even
neighboring Bridgeport, Connecticut, for allegedly failing to
provide adequate safety features on guns.
Sturm Ruger is also among the defendants in a New York City case
in which crime victims seek to hold handgun makers responsible
for gun violence.
''It's the gun's fault for existing and it's the gunmaker's fault
for making the gun,'' sneered William Ruger Jr., chief operating
officer and the son and namesake of Sturm Ruger's chief
executive. ''It really has more to do with the people, than the
guns. It's easier to blame the manufacturer than have people take
responsibility for their actions,'' he said.
''These are criminals after all and it seems to me that they
should be prosecuted under the laws that already exist. We comply
with every regulation, every law in every state.''
CITIES FOLLOW PATH BLAZED IN TOBACCO SUITS
Cities, following the path state attorneys general blazed in
pursuing the tobacco industry, allege that the defendants -- 30
weapons makers and 15 distributors -- take advantage of weak
gun-control laws, especially in Southern states.
Chicago and the New York claimants argue that the industry
produces more guns than the legitimate market needs and the extra
weapons end up in the hands of criminals in Northeastern states
with stricter gun-control laws, their lawyers say.
Other cities such as New Orleans, Miami and Bridgeport argue that
the weapons themselves are unsafe. But the Rugers bristle at the
suggestion that any of their 50 models of firearms are of poor
quality or in any way defective.
The smell of melting wax, used to make molds for the rifle and
handgun parts assembled at the New Hampshire factory, permeates
Ruger's utilitarian office, as does a Yankee sense of frugality.
There is no waste to be seen in this factory that makes weapons
selling for upward of $1,500.
The only sign of excess, perhaps, is the filigree and carving on
some of the special rifles. Sturm, Ruger's are American guns made
from American Black Walnut or U.S.-made laminates, grips from a
business in nearby Hopkinton, New Hampshire, and steel poured
from its own foundry.
The philosophy that has governed their production is Ruger
Senior's intention to build products ''to a standard so I would
want it even if it was made by our competitors.''
The gunmaker provides lockable revolver and pistol cases as
standard equipment with its handguns. It offers customers who
have older models of its six-shooters a free conversion kit to
prevent accidental discharges. It runs advertising saying the
''right to bear arms'' it claims the Constitution guarantees also
carries the responsibility to use those weapons responsibly.
'ARMS FOR RESPONSIBLE CITIZENS'
And Ruger Junior said it has all been done without any
governmental prodding or regulations. The company's motto is
''Arms Maker for Responsible Citizens.''
Unlike the tobacco industry, the gun industry does not have deep
pockets. Handgun sales, which soared in 1993, 1994 and 1995, have
been flat or declining since.
Sturm, Ruger, which will report its earnings this month, expects
to show about $150 million in revenues from weapons for 1998.
Total revenues are expected to exceed $200 million.
Industry analysts estimated that the No. 1 U.S. handgun maker,
Smith & Wesson Corp., based in Springfield, Massachusetts, and a
unit of British conglomerate Tomkins Plc., would have about $140
million in revenues.
''The gun industry is a mature industry. It was mature about 100
years ago,'' Morgan Keegan & Co. analyst David Guthrie said.
''Basically Ruger is a metals casting company. It is
conservatively run. There's no debt on its balance sheet. It's a
solid company.''
He said he had had it as a ''hold'' stock for several years.
Ruger Junior expects to report record long-gun sales in 1998 and
near-record sales of the same items in 1999 and says he wants to
''expand our market share'' in the new millennium.
The solid balance sheet means the acquisition of a smaller
competitor is ''a possibility. But it would have to be a friendly
deal. I don't know that any of them have an interest in being
acquired,'' he said.
He also speaks of the titanium casting equipment that Sturm,
Ruger has nurtured. It is titanium, with its natural resistance
to salt-water corrosion, lightness and strength, that makes the
Big Bertha golf club so popular.
''You can have a larger striking face and still have the right
weight,'' he explained.
The company has also begun to make titanium implants for medical
devices, but because of liability insurance questions it has
restricted itself to those intended to be permanently installed,
Ruger said.
And it is also making hammers from the metal. ''What we're trying
to do -- and what I think the golf industry is trying to do -- is
bring titanium into the home. ... We're generally optimistic
about it.''
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