How America’s Oldest Gun Company Ended Up in Bankruptcy in 2018
In 1816, Eliphalet Remington put together his first rifle with the help of a gunsmith in upstate New York. One Civil War, two World Wars, and altogether 200 years later, the company Remington started in the early nineteenth century filed for bankruptcy.
At a glance, it might appear that the February 2018 massacre at Florida’s Marjory Stoneman Douglas Florida High was a direct cause of Remington’s troubles. However, America’s oldest gun manufacturer faced several other problems — some of which stemmed from a different mass shooting six years earlier.
Here’s why Remington risked going out of business in 2018 after over two centuries of firearm production.
1. A 30% sales decline in 1 year.
It doesn’t matter how well-established a company is. If sales fall off a cliff one year, it will have to respond. In Remington’s case, sales plummeted some 30% in 2017, compared to the prior year’s numbers.
That led Remington to tell its investors about $7.4 million in negative operating cash flow, Fortune reported.
Next: Remington sounded the alarm in January 2018.
2. Remington’s mountain of debt
While the Parkland shooting shined a spotlight on every major gun company, Remington saw its potential bankruptcy looming after counting the 2017 numbers. In January 2018, analysts didn’t think the company could refinance its $950 million in debt, Reuters reported.
But the events in Parkland the following month meant finding investors would get even harder.
Next: The Parkland shooting made Remington an undesirable commodity.
3. After Parkland, Remington became radioactive.
If Remington had trouble finding investors early in 2018, the situation became close to impossible following the Parkland massacre. Survivors from the shooting became national figures advocating for gun control laws, and companies caught in the crossfire were frequently on the losing end of student-led boycotts.
Shortly after the March for Our Lives on Washington and across the country, Remington announced it would file for bankruptcy. According to Bloomberg, 30 lenders declined to provide the gun maker with financing in light of the negative publicity.
Next: Remington’s ties to Sandy Hook played a bigger role in the bankruptcy.
4. The Sandy Hook shooter used a Remington-made rifle.
While Remington struggle to find financing to avoid going out of business, the 2012 Sandy Hook Elementary School shooting had a direct impact on the company’s finances. Adam Lanza, the Sandy Hook shooter, used a semi-automatic rifle manufactured by one of Remington’s brands to murder first-grade children in their classrooms.
Family members of the dead later brought a lawsuit against Remington, which has been proceeding through the courts in the past years. It also led financiers to shy away from the gun company.
Next: Bankruptcy may not protect Remington against Sandy Hook lawsuits.
5. The lawsuit will proceed.
Even though some believed the terms of the lawsuit might change following the bankruptcy, attorneys for the Sandy Hook families said they expected little impact on the litigation, The New York Times reported. (The case currently is in the Connecticut Supreme Court.)
Eventually, a decision on behalf of the families could prove liability on the part of gun makers.
Next: It’s a private capital affair.
6. It’s no family business.
As fans of fading, iconic American brands size up the Remington bankruptcy, it’s important to note that Cerberus, a private equity firm, has controlled the company since 2007. (In classical mythology, Cerberus is a hideous, multi-headed dog.)
It’s not as if Eliphalet Remington and his sons are going under after supplying the state militia with arms. Those days are long gone.
Next: The Trump administration has been bad for gun sales.
7. The Trump slump
When people thought President Obama would crack down on gun sales, it led to a feeding frenzy on the arms market. Even though no major gun legislation made it through Congress in Obama’s two terms, that fear was enough to get firearms makers a boost in business.
Since Trump became president, the NRA has had a hard time convincing people lawmakers would soon come for their guns. (Trump was the beneficiary of $30 million in gun-rights donations in 2016, which was unprecedented for any politician.)
In a word, Trump’s been bad for the gun business.
Next: This may be Remington’s best (and only) hope for survival.
8. Another gun company might be Remington’s last hope.
With banks and investment firms shying away from connections to gun makers, it may take another firearms manufacturer to keep Remington going. In April, Bloomberg reported Sturm, Ruger & Co. showed interest.
Meanwhile, the push for new gun control legislation has once again boosted firearms sales in America. For Remington, it’s already too late, but the products and brands it’s famous for will likely not go away anytime soon.
Check out The Cheat Sheet on Facebook!