From the New Haven Register...

08/19/2006
Olin explains Browning choice
Steve Higgins , Register Business Editor

-NEW HAVEN — Olin Corp. said Friday it granted Browning the license to produce Winchester rifles because it has a lengthy track record in the firearms business.
"Browning is a long-established developer and marketer of firearms, and they are committed to the brand," said Ann Pipkin, spokeswoman for Missouri-based Olin. "We’re proud of our heritage, and we decided on Browning because we believe that’s the best decision for consumers."


The alternative was a newly formed Greenwich company named American Firearms Co. that promised to keep in the United States the manufacture of the famed Winchester models previously made in New Haven, models 70 and 94.

The New Haven plant was closed in March after 140 years here, putting 186 employees out of work.

Sources involved with the licensing negotiations have said Morgan, Utah-based Browning officials made it clear they plan to move production abroad, possibly to Russia or Portugal.

Browning officials did not return telephone calls for comment Thursday or Friday.

Dave Bichrest, 65, executive secretary of the Winchester Arms Collectors Association in Silsbee, Texas, said he wouldn’t buy a Winchester model made overseas.

"I don’t want anything to do with it," he said. "I’ll buy a used American model, at a higher cost, before I buy a brand-new one made in Russia, or any other country."

Still, Bichrest said many gun buyers, including some within the 2,000-member collectors’ group, would continue buying Winchesters made abroad if the quality is the same. He noted that many collectors already buy other, lesser-known Winchester models made in Japan, Portugal and other countries.

Bichrest said he believes Herstal Group, the Belgian company that owned U.S. Repeating Arms Co. in New Haven and also owns Browning, mismanaged the New Haven plant at 344 Winchester Ave.

"It was losing money, and there is no excuse for them to lose money on a Winchester," he said. "They couldn’t keep up with the orders they had. They didn’t even have the barrels on hand that they needed."

Michael Blank, the St. Louis gun manufacturer who started www.savewinchester.com in January, said, "I’m disappointed. The first goal was to keep it in the U.S. and keep some presence in New Haven, its historic home. We talked about distribution, warehousing, engraving (at the New Haven plant)."

Blank said he believes Olin, which makes ammunition for Winchesters and also receives royalties on the gun sales, was afraid to risk going with an untested company.

"It’s a risk-averse play, but that’s what’s been plaguing the industry. No one is taking any chances or doing anything new," Blank said. "They played it safe."

New Haven Economic Development Administrator Kelly Murphy said city officials will try to find another type of buyer for the 225,000-square-foot complex, built in the early 1990s across the street from the original plant. "Some other businesses have expressed an interest in the building," she said.

Steve Higgins can be reached at business@nhregister.com.

©New Haven Register 2006

change or die

quote:

Originally posted by fla3006:
change or die

agreed..

change is growth... where growth ends, decay begins.

let's face it, the market would pay a going rate, even a premium, for a winchester over a savage ... and the basic parts are all the same...

but savage's management is able to keep COGS+GA under WHOLESALE ... this is the simplest management101 thing... I think this should replace A=L+OE as the core equation in managerial accounting...


jefff

quote:

From the New Haven Register...

08/19/2006
Olin explains Browning choice
Steve Higgins , Register Business Editor

-NEW HAVEN — Olin Corp. said Friday it granted Browning the license to produce Winchester rifles because it has a lengthy track record in the firearms business.

Sources involved with the licensing negotiations have said Morgan, Utah-based Browning officials made it clear they plan to move production abroad, possibly to Russia or Portugal.

Bichrest said he believes Herstal Group, mismanaged the New Haven plant at 344 Winchester Ave.

"It was losing money, and there is no excuse for them to lose money on a Winchester," he said. "They couldn’t keep up with the orders they had . They didn’t even have the barrels on hand that they needed."

Blank said he believes Olin, was afraid to risk going with an untested company.

"It’s a risk-averse play, but that’s what’s been plaguing the industry. No one is taking any chances or doing anything new," Blank said. "They played it safe."

Steve Higgins can be reached at business@nhregister.com.

©New Haven Register 2006

So lets see here. We have a company that mismanaged a plant and couldn't keep up with orders because they didn't have barrels on hand. so the Olin group decided to license their same company's distributor to produce off shore as they've been around a long time. They didn't want to risk going with someone else.

Am I missing something here? This isn't making sense to me at all.

If there was so much business that Herstal couldn't keep up with orders??????

The plant at New Haven was plagued with costly labor-related problems and obligations to the city. Moving manufacturing operations eliminates these particular problems.

quote:

Originally posted by jeffeosso:

quote:

Originally posted by fla3006:
change or die

agreed..

change is growth... where growth ends, decay begins.

let's face it, the market would pay a going rate, even a premium, for a winchester over a savage ... and the basic parts are all the same...

but savage's management is able to keep COGS+GA under WHOLESALE ... this is the simplest management101 thing... I think this should replace A=L+OE as the core equation in managerial accounting...


jefff

Not that simple....Change can be good or bad and unprofitable growth is just a big mistake.

Big Box retailers have cheapend the market over a period of years for a price point...Many a company has fallen in this trap...

Some may consider this "expanding the market", others just move on to different offerings....

Ultimately, if management is unable to develope a different market, distribution channel, decrease the cost of manufacturing, etc, etc, it is doomed....what will work for one, will not work for all....and to play this game with the same old plan, is a plan for failure.

Herstal, either through poor management or the inability to affect change could not make it work in New Haven. Looks like they decided to blow it up and pick up the pieces...the only parts worth saving was the Winchester name and a few engineering drawings...

DITTO jjs! You hit da nail on da head!

Where does this leave USRAC and their other US manufacturing operations? Was Browning awared the entire Winchester license? There was time remaining on the USRAC/Olin license agreement. Did Olin judge USRAC to be in default but then awarded the license to USRAC's sister company?

I think Herstal decided that it liked Browning's "asset light" strategy much better than USRAC's "asset heavy" strategy and set out to recast the Winchester line as a marketing operation instead of a manufacturing operation.

USRAC's agreement with the city of New Haven stated that USRAC could not move the New Haven manufacturing operations to another location for a specified period of time. Furthermore, USRAC could only close the New Haven operation after providing 60 days notice.

It appears to me that the purported effort to "sell" the New Haven facility was a sham from the very beginning. USRAC/Herstal placed enormously high hurdles in front of potential buyers and stood in the way of direct negotiation between potential buyers and Olin Corp regarding a new license agreement. Now, it turns out, USRAC's sister company and Herstal subsidiary, Browning, is awarded the license to produce and sell Winchester arms. USRAC can close the plant and has no remaining obligations to the city of New Haven or the workers at the New Haven factory.

Over and over, USRAC/Herstal kept saying that Olin would only grant a license to an experienced firearms manufacturer who would keep production in place at the New Haven plant. Lo and behold, Herstal's subsidiary (with no manufacturing base whatsoever, ends up with the license and the ability to move production overseas.

I expect we'll see a lawsuit from the city of New Haven and the employees' union in very short order. Also, there were at least a few potential buyers who devoted some time and effort to preparing a bid and I doubt they are overly enthused about their unwitting participation in this charade. It's hard for me to find sympathy for either USRAC/Herstal or the employees who fought tooth and nail for the right to turn out low quality products while being overly compensated.

ForrestB,

Nicely put. I still need, however, to see the words "Model 70" and "Model 94" spelled out as a brand that will be included in this announcement. For all I know at this point, they might be discussing the future of the 1300, which could be made anywhere.

Jaywalker

In this POST over at the campfire Tom Turpin relays the agreement he's seen excludes the M70 and M94. Perhaps the deal on the table is to preserve the manufacture and sales of those Winchesters already made overseas.

More from the New Haven Register...

New Haven, Conn., fails to restart rifle plant
(New Haven Register (New Haven, CT) (KRT) Via Thomson Dialog NewsEdge)

Aug. 18--NEW HAVEN -- A determined effort to keep the famed Winchester rifle made in the United States was gunned down this week when Olin Corp. granted the license to Browning.
The city of New Haven had teamed up with the chairman of a Greenwich investment and consulting firm to buy the U.S. Repeating Arms Co. plant at 344 Winchester Ave., which was closed in March after 140 years making "The Gun That Won the West."

The move by Belgian parent company Herstal Group put 186 factory workers out of their jobs.

Stephen Oster, chairman of The Oster Group Inc. in Greenwich, had formed a new company, American Firearms Co., after reading about the shutdown.

Oster wanted to buy the Winchester plant from Herstal Group, but to do that he had to obtain the license to make the Winchester rifles from Missouri-based Olin Corp., which used to own the New Haven plant. Olin receives licensing fees from the sale of the rifles and also makes Winchester ammunition.

Over the last few months, Oster and the city's representative, Kevin Tierney, president of Workout Solutions Inc. in Guilford, had been negotiating with Olin to buy the license. But Utah-based Browning, another Herstal subsidiary, also wanted the license, which covers the models built in New Haven, including the revered Model 70 and Model 94. Browning already makes some lesser-known Winchester models.

Tierney and Oster said Thursday they believe Herstal plans to have Browning make the two famous models through March 2008, then transfer production overseas, most likely to Portugal and Russia. Union agreements signed by Herstal prevent the company from moving production overseas until after March 2008.

Browning officials have denied allegations the company plans to eventually make the New Haven models overseas.

"We wanted to keep Winchester in America, made by an American company," Oster said. "We were quite surprised and ... disappointed that Olin chose this route. We did our best."

Oster, who was backed by several Wall Street private equity firms, said he planned to build a state-of-the-art manufacturing facility within the United States, and to keep at least some parts of the Winchester operation in New Haven.

On Thursday he offered to continue to help New Haven find a buyer for the plant, even though it looks like it won't be a gun manufacturer at this point.

A spokeswoman for the city said city officials will continue trying to find a buyer.

Tierney said he has asked Browning to consider transferring the license to American Firearms -- at a huge premium -- but has not received a positive response.

The city received two bids for the plant by the June 23 deadline, Tierney said, adding that one, by an existing firearms manufacturer, was rejected because the offer was to buy equipment and inventory only, not the 225,000-square-foot USRAC building. Oster submitted the second bid.

"American Firearms made an offer to buy all of the real estate, equipment and inventory, and received a conditional acceptance from USRAC (based on obtaining the license from Olin)," Tierney said. "American Firearms then informed Olin that it was prepared to pay more money for the license than Herstal would, and was prepared to guarantee it with letters of credit from the bank."

Tierney said Olin officials indicated they thought it might take American Firearms too long to get up and running, even though American Firearms estimated it would need only a year to get production started.

During the negotiations, "Herstal indicated it was their long-term intention to produce these firearms overseas, most likely in Portugal and Russia," Tierney said.

Tierney, who co-founded a Web site called www.saveWinchester.com in April, said the site has received 8.9 million hits from 53 countries. A survey on the site showed 95 percent of respondents felt Winchester should remain in America, he said.

"Apparently Olin did not feel that going overseas will affect the buying public's decisions," said Tierney. "Herstal apparently believes the firearm public is totally indifferent as to whether Winchesters are made in America, Portugal or Russia.

"We're not so sure of that. The kinds of people who have been calling the Winchester Web site may take umbrage that Olin did not allow a true American company the opportunity to keep an American icon in this country."

To see more of New Haven Register, or to subscribe to the newspaper, go to http://www.nhregister.com.

Copyright (c) 2006, New Haven Register, Conn.

what I find amazing is the libs in conneticut can't figure out why noone wants to make the gun in New Haven anymore, It seems like noone interested in the companies operations wants anything to do with the New haven or conneticut politics, the libs have themselves to blame, its just funny to see them scrambling and scratching their heads

All one can do is vote with your dollars.

quote:

cummins cowboy: what I find amazing is the libs in conneticut can't figure out why no one wants to make the gun in New Haven anymore, It seems like no one interested in the companies operations wants anything to do with the New haven or conneticut politics

Exactly. Herstal owns both Browning & USRAC. By moving operations from one subsidiary to the other, it eliminates uncompetitive labor-related costs, payoffs to the city and other shakedowns, and various local regulatory & political problems.

The mayor of New Haven, John DeStefano, is a hard-core gun control liberal. He's running for Governor of CT and is being endorsed by Danny Glover, Al Sharpton, and Jessie Jackson - none of whom live in CT but turned out to cheer him on. This tells me all I need to know about the guy and why it would be tough to be a firearms manufacturer in New Haven.

quote:

Originally posted by fla3006:

quote:

cummins cowboy: what I find amazing is the libs in conneticut can't figure out why no one wants to make the gun in New Haven anymore, It seems like no one interested in the companies operations wants anything to do with the New haven or conneticut politics

Exactly. Herstal owns both Browning & USRAC. By moving operations from one subsidiary to the other, it eliminates uncompetitive labor-related costs, payoffs to the city and other shakedowns, and various local regulatory & political problems.

I see it the same way. You move the manufacturing from one branch of a company to another branch of the same company. Nothing has changed except they were able to use the shell game to get out of their commitment to manufacture in an extremely high tax, anti-business, neo-communist state.

I don't see how anything has changed. Browning and USRAC are one and the same. When I called for warranty service on my M70 stainless 300 WSM a couple of years ago the woman who answered the phone answered with "Thank you for calling Browning".

Okay, something to keep in mind - Oster has an axe to grind - he wants to own the Winchester brand, so his analysis may or may not be colored by that desire. Second, Browning said:

quote:

Browning officials have denied allegations the company plans to eventually make the New Haven models overseas.

The 70 and 94 may still move overseas, but I don't see the smoking gun yet.

Jaywalker

quote:

Originally posted by Jaywalker:
Okay, something to keep in mind - Oster has an axe to grind - he wants to own the Winchester brand, so his analysis may or may not be colored by that desire. Second, Browning said:

quote:

Browning officials have denied allegations the company plans to eventually make the New Haven models overseas.

The 70 and 94 may still move overseas, but I don't see the smoking gun yet.

Jaywalker

excellant point!!! That is his side of the story. I don't see anything wrong with moving the plant to a labor friendly state in the south, such as texas.

Let me say up front that I love Winchester rifles, especially the lever guns, and am sorry to see them go.

HOWEVER, this is no more of a tradgedy than Winchester's own business practices were for more than a century. Ever hear of Spencer rifles? Burgess rifles? Whitney rifles? They were all fine rifles. Winchester bought them all out, along with others, and closed down all their factories to eliminate them as business competitors.

How about Colt lever-action rifles? They were an excellent product, probably better than the Winchesters of the day. Winchester negotiated a "no-competition" agreement with Colt, whereby Winchester would not enter the pistol business, if Colt abandoned the rifle business. Result? The employees making Colt lever rifles lost their jobs...and America lost a very fine rifle.

Burgess alone held hundreds of patents on firearms design; some fully merited marketing, others not. But, except in the few instances they were applied to existing Winchester products, all that potential died on the vine thanks to Winchester's business practices.

So, somehow, it may be fitting that the Winchester rifle business is dying by application of the same approach.

Also, one might look to our whole country as the source for some of the labor costs Browning inherited by buying Winchester(USRAC). The 60 days notice of plant closing is NOT solely a Connecticut idiosyncracy. Federal law requires employers of 50 or more employees to give their laid off employees 60 days paid notice anytime a plant closing occurs. That has been Federal law for almost 20 years now. The owner(s) can give pay "in lieu" of notice and close a plant immediately, but the 60 days pay still has to be given to each and every laid off employee.

Most companies prefer to have the employees work for that 60 days to recoup some of the costs, but others do not.

Labour law also guarantees employees the right to unionize, and absolutely requires companies to engage in "good faith" bargaining with any union(s) the employees vote to join or form. That bargaining is not stupid management, it is the law. And one of the facts of bargaining recognized by pretty much all labor relations experts is that "Companies get the unions they deserve".

At the bottom line, this is nothing more than capitalism at work. There are many great points to the capitalist system. The major one is that it gives businesses the freedom to succeed. But, it also gives them the freedom to fail. C'est la vie.

Winchester pretty much died along time ago, we just didn't notice. Yea USRA did the best it could, they did bring back the CRF M-70 and it sold well, but with like a lot of Winchester Firearms, they were loosers as far as money gose. The simple fact of the matter is that it became expensive to do business in Connecticut, and it had been for a long time, prior to WW-II in fact. WW-II was a big shot in the Arm for the New England Gun Makers, but they were not able to adapt in the post war era, all you have to do is look at Ruger, funny how a post war Up start would be the only one left standing. Besides Savage, I gave a savage bolt rifle a long look over the other day, well they do make money on them, they look well hard to get use to but its a fact of life. The Problem in a nut shell is a changing consumer market, the hunting and shooting sports in general are not as popular as they once were. Winchester like a lot of companies tried to be all things to all people, it never works. Maybe making 94's and M-70 in limited runs every year, properly finished and well made and at the real cost maybe the way to go. My guess,nope.

I saw Lee Iacocca on TV explaining how the big three were getting whipped by Japanese who built in the US.

He said that the difference between an outdated factory with an aging and union work force in an inner city with crime, high taxes, and toxic clean up costs was thousands of dollars per car compared to bulldozing a corn field in a rural state that gave 20 years of no taxes and hiring young non union workers.

I have built a new house, and I have remodeled a house. It is easier to start over.

The world markets are changing how business is being done and you are either competetive or you fold. The larger the company, the harder it is to change and unions do not help the situation one bit. Unions drag out the decisions that must be made for survival and most of the time when they get the plan together its already too late.

Every large corporation has:

A. Either gone through this.

B. Is going through this.

C. Will be going through this.

Now does anyone wonder why most everything is made somewhere else? We still have not learned from the foreigners that change must happen quickly.

I too am sickened that Winchester manufacturing is going overseas like many other people. America needs to wake up.