What does Donald Trump have to do with the bankruptcy of Remington, the oldest arms manufacturer in the United States?

What does Donald Trump have to do with the bankruptcy of Remington, the oldest arms manufacturer in the United States?

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More than half of the small arms and ammunition used by the Allied troops during World War II came out of their factories.

Also many of the rifles, carbines and pistols that were used during the American Civil War.

Founded in 1816, Remington is the oldest arms company in the United States.

After more than 200 years of existence it has just declared bankruptcy.

The company accumulated a debt of US $ 950 million and had suffered a 27% drop in sales during the first 9 months of 2017 , which translated into operating losses of US $ 28 million.

Paradoxically, the previous year had been especially favorable for its industry: in 2016 11 million firearms were manufactured in the United States, a substantial increase in relation to the 3.6 million manufactured in 2006.

So, how do you explain the decline of the company?

Debt

In 2007, Remington was acquired by investment firm Cerberus Capital Management, captained by billionaire Stephen Feinberg, a fervent supporter of current US President Donald Trump.

Remington typewriter.Copyright of theGETTY IMAGESimage
Image captionRemington ventured into the typewriter market at the end of the 19th century.

Since then, the company accumulated the huge debt that has led to the declaration of bankruptcy in order to close an agreement with its creditors.

In that last period the company had already gone through other difficult times like the one that occurred after the Sandy Hook massacre in 2012, when Adam Lanza, a 20-year-old man, killed 20 children and 6 adults in a school in Newtown (Connecticut).

Lanza carried several weapons, including a Remington Bushmaster AR-15 assault rifle, which meant a blow to the image of the manufacturing company.

A few days after the incident, Feinberg unsuccessfully tried to sell the company, which has since faced a lawsuit by family members of the victims who consider Remington partially responsible for what happened.

Sales

But in 2016 things were going well.

Gun caliber .36Copyright of theGETTY IMAGESimage
Image captionA .36 caliber pistol, a model initially used by members of the United States Navy.

For that period, the company reported an increase in sales of 7% compared to 2015.

Operating expenses were reduced from 25.3% to 16.1%, while achieving a favorable net income of US $ 18.9 million, which contrasted sharply with the losses recorded in 2015 of US $ 135.2 million.

One of the keys to the company’s rebound was a proper name: Hillary Clinton. Those who love firearms feared that the eventual arrival in the White House of the then Democratic presidential candidate could lead to greater restrictions on their trade.

In his campaign rallies, Clinton’s rival, Donald Trump, fueled that fear and presented himself as a “true friend” of the National Rifle Association.

That speech seemed to influence sales. Between December 2015 and December 2016 the number of criminal record checks was skyrocketed in the United States , a prerequisite for purchasing a weapon.

Then, Trump won the elections and, paradoxically, his victory does not seem to have been good for arms sales.

Donald Trump.Copyright of theGETTY IMAGESimage
Image captionTrump campaigned as a “friend” of firearms lovers.

“The luck of the company (Remington) was hit after the election of Donald Trump because the defeat of Hillary Clinton erased fears among gun lovers about the possibility of losing access to them .” Sales fell and dealers stopped make orders when they are full of unsold inventory, “Bloomberg wrote in an analysis.

In spite of everything, the history of 201 years of Remington, company that also became known for having manufactured knives and typewriters, will not end now.

When declaring bankruptcy, an agreement was announced to transfer control of the company to its creditors, who will also provide a US $ 100 million loan to temporarily guarantee the financing of the operations .

Speaking to Bloomberg, the president of the Independent Association of Firearms Owners, Richard Feldman, was optimistic about the future of the sector.

“Almost all the giants end up falling during the cyclical changes in the industry, I suppose if the Democrats resurface this November (in the legislative elections of the United States), the actions of the arms companies will increase again with them,” he predicted.

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