Faced with tougher laws, gun industry heads south

“When you look at it — and it is ironic — the firearms industry was born in the Northeast. And they’re moving out in droves.”

By Jenny Hottle, Daily Record Business Writer
Friday, July 25, 2014
Originally posted on thedailyrecord.com

Beretta U.S.A. Corp., which earlier this week announced plans to move operations from Maryland to Tennessee, is just the latest firearms company to leave its home state for the South.

Officials from Beretta and other gun companies on the move attribute this trend to tightening gun control measures in Northeastern states. Southern states also are using tax incentives and other economic benefits to persuade these companies to pack up their operations and relocate.

The Northeast — in particular Connecticut, Massachusetts and New York — is the historic heart of the country’s gun and ammunition industry. Some manufacturers in the region, often known as the country’s Gun Valley, have been producing firearms since the 1800s.

But in the wake of mass shootings such as the 2012 shooting at Sandy Hook Elementary School in Newtown, Connecticut, some northern states responded by passing stricter gun laws. Since then, small and large gun companies have started turning toward the South, where they say looser gun restrictions and lower taxes create a better environment for business operations.

“When you look at it — and it is ironic — the firearms industry was born in the Northeast. And they’re moving out in droves,” said Johanna Reeves, executive director of the Firearms Import/Export Roundtable Trade Group in Washington. “Look at the politics of those states and how anti-gun they are.”

Kahr Firearms Group officials in 2013 announced the company’s decision to move its Blauvelt, New York, corporate office after the state passed the Secure Ammunition and Firearms Enforcement Act. The company had looked to expand operations in New York, but officials felt uncertain about how the act would affect business and decided to move to Pennsylvania instead.

“It had to do with the SAFE Act for sure, but more so with the way it was passed,” said Frank Harris, Kahr’s sales and marketing vice president. “No one from the New York state governor’s office asked us for any feedback or information about how this would impact our business. It’s hard enough to be successful in business today without this kind of uncertainty hanging over our head.”

Kahr’s main manufacturing office, located in Massachusetts, also faces uncertainty. Since the Sandy Hook shooting, state lawmakers have filed 60 gun-related legislative items that would limit gun licensing and sales and expand background checks on buyers. For now, Harris said, Kahr plans to continue operations in its Worcester, Massachusetts, office — but officials won’t guarantee how long they will stay.

“Massachusetts doesn’t want to harm the manufacturers, but harming our customers by making it more difficult for them with fines and fees — that does indirectly harm us,” Harris said.

Some gun-friendly states, such as Alabama, Georgia, South Carolina and Texas, have capitalized on the northern states’ stricter laws by actively recruiting firearms companies. These states attract companies with low taxes and financial incentives, said Stephen Clermont, director of research and policy at Every Child Matters, a nonprofit that has partnered with other organizations to curb gun violence.

Clermont said gun makers likely leave states for these financial reasons rather than because of gun laws.

But officials from several companies that expanded or moved operations in the South — including Remington Outdoor Company, Ruger and American Tactical Imports — said the law was a factor in their decision.

In Beretta’s case, company officials initially planned to expand to Tennessee for the production of new products and continue some manufacturing in Maryland. Jeff Cooper, Beretta U.S.A. Corp. general manager, on Tuesday said officials worried about the business’s future in Maryland after the state Senate in 2013 passed the Firearm Safety Act.

The state’s House of Delegates reversed some provisions on the bill, which would have prevented the manufacturing and import of firearms, but the company grew concerned that similar bills might pass in the future.

Reeves, who said she could not comment specifically on Beretta’s move, said she does not expect states that lose gun-related business to ease their restrictions. She said those states often enact policies with the expectation that they will lower violence and crime statistics.

“Criminals do not follow the law,” Reeves said. “These changes affect only law-abiding citizens and corporations. Citizens vote with their feet, and corporations can choose to leave.”

The drive for tougher gun-control laws in some states does not appear to have affected gun sales. If anything, gun sales and permit applications historically spike following high-profile shootings that have prompted the legislation.

It’s not just because people feel an increased need for self-defense, according to the firearms industry. Mass shootings lead to political debates about tightening gun control measures, which analysts say in turn drives people to purchase guns in anticipation of stricter laws.

For instance, the FBI said it recorded 2.78 million background checks in December 2012 — the month of the Newtown shootings — easily surpassing the mark set in November of 2.01 million checks, according to Reuters.

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