Article View: ca.firearms
Article #613The Failure Of The Smith & Wesson Deal
From: Neil At Hollywood�.Hom
Date: Wed, 31 Jan 2001 01:49
Date: Wed, 31 Jan 2001 01:49
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http://www.msnbc.com/news/522692.asp?cp1=3D1&cp1=3D1&cp1=3D1&cp1=3D1
A Gun Deal's Fatal Wound
As a landmark pact to control gun sales falls apart, Smith & Wesson =
takes the hit
Feb. 5 issue - For more than 50 years, George Romanoff's family has =
been selling Smith & Wessons: .357 revolvers with hardwood handles, =
sleek pistols forged from blue and stainless steel.
SMITH'S VAUNTED HANDGUN line was easily the biggest seller at Romanoff's =
Pittsburgh-area store, Ace Sporting Goods-until last March. That's when =
the 149-year-old gunmaker signed a stunning agreement with the Feds to =
get out from under lawsuits, promising to impose strict new rules on all =
its dealers. Now those who wanted to keep selling Smith guns would have =
to keep computerized records of every sale and store all their guns-not =
just Smiths-in some kind of vault. And they'd have to limit their =
customers to one gun every two weeks. Romanoff was about to kick off a =
weekend sale-up to $50 off on Smith & Wessons-but he had to cancel it =
because his customers were furious over Smith's surrender to the enemy. =
To them, the new recordkeeping alone sounded like a first step toward a =
police state, and Smith was the government stooge. Since then, sales of =
the company's pistols have been so slow that Romanoff has slashed his =
inventory by a third. Now Smith & Wesson, reeling from a consumer =
boycott, wants him and other dealers to go along with a scaled-back =
version of the agreement. But Romanoff says there's no way he can keep =
selling Smiths if he has to accept the company's terms. Like his =
customers, he feels betrayed by Smith & Wesson's sellout; at the same =
time, it's as if he's turning his back on an old friend. "If Smith & =
Wesson goes under, it will be an extremely sad day for our industry," he =
says. "It's like a nail in our coffin."
=20
POWER IN THE GUN WORLD
The government's celebrated pact with Smith & Wesson was supposed =
to bring the secretive gunmakers to their knees, much like the assault =
on Big Tobacco. But a year later, the deal is all but dead-and the =
nation's largest handgun maker faces real questions about its survival. =
Analysts say its sales lag behind the rest of the struggling industry by =
at least 20 percent. "This is a critical time for us," says Ken =
Jorgensen, Smith's spokesman. "We need the dealers to sign this in order =
to go on and do business." How the deal became a disaster says a lot =
about power in the gun world-power that the people who buy guns wield =
over the people who make them. The Feds were sure that other gunmakers =
would follow Smith's lead, but the rest of the industry ran for cover =
instead. Smith & Wesson, meanwhile, ran face first into a gun lobby at =
the height of its power, and a gun culture hostile to change. "They =
entered into an agreement that was silly," says the NRA's Bill Powers. =
"Sooner or later you've got to pay for the mistakes of the past, and =
they're paying for them." =20
=20
A shifting political landscape didn't help. When Smith & Wesson =
signed the deal, the Clinton administration was threatening its own suit =
to force gunmakers to change their ways, and there were cries for new =
gun laws on Capitol Hill. It didn't last. The gun lobby played a key =
role in electing George W. Bush, and its leaders expect him to oppose =
more restrictions. The gunmakers, meanwhile, are hoping Bush will do =
what he did in Texas: sign a law blocking any city from suing the =
industry. The gun war remains hard fought, but the momentum has shifted.
Smith & Wesson's nightmare began in a Hartford, Conn., hotel =
room with a handshake between two uncommonly tenacious men: Andrew =
Cuomo, Bill Clinton's Housing secretary, and Ed Shultz, then Smith & =
Wesson's CEO. =20
More than 30 cities had sued the gun industry for the costs of =
violence on their streets. Cuomo had brashly stepped into the legal =
swamp, hoping he could be the guy to force concessions from an obstinate =
industry. Most gunmakers refused to negotiate. But Shultz, a =
plain-spoken farmer and onetime Army sergeant, figured Smith's legal =
bills would soon surpass its income. His British parent company, Tomkins =
PLC, wanted to get Smith out of the courts so it could sell the company.
Shultz and Cuomo talked in personal terms. "I have two =
5-year-olds and a 3-year-old, and I have a gun in my home," Cuomo told =
Shultz. "If you can make me a safer gun, I'll buy it." Shultz agreed to =
do that-and more. The 25-page pact was so sweeping that lawyers for the =
cities feared until the last minute that Shultz would back out. Once =
Smith signed, the assumption was that other gunmakers would inevitably =
follow the leader. Cuomo had no plans to take the Smith deal to a judge =
to enforce it immediately; he'd wait for other gunmakers to sign on =
first.
It would prove to be a long wait. In the gun world, where any =
small step toward new restrictions is seen as a giant leap toward =
tyranny, the deal exploded like buckshot. Shultz had expected a =
backlash, but nothing so visceral. The NRA immediately faxed ferocious =
alerts to its 3 million-plus members, calling Smith a British-owned =
traitor to the Bill of Rights. It was an election year, and Smith & =
Wesson had just given the gun lobby its rallying cry. Irate customers =
overwhelmed the switchboard at Smith's Springfield, Mass., headquarters =
and deluged Shultz with venomous e-mail.
=20
POUNDED FROM ALL SIDES
Soon Smith was getting pounded from all sides. In a business =
where Smith controlled more than a quarter of an ever-shrinking handgun =
market, competitors couldn't resist piling on. Brazilian-owned Taurus =
started giving away an NRA membership with every new gun, just to =
underscore its commitment to gun rights. Meanwhile, two new cities =
brought lawsuits against Smith & Wesson, despite pleas from the =
administration to leave Smith alone.
Those who tried to help Smith made matters worse. Two states, =
New York and Connecticut, launched antitrust investigations against the =
other gunmakers, accusing them of trying to run Smith out of business. =
Their lawyers sprayed subpoenas up and down New England's Gun Valley, =
which only served to make Smith & Wesson look like a government witness =
in a mob case.
By midsummer, Shultz had to close his plant for an extra two =
weeks and was planning to lay off 120 workers. Shultz told Cuomo he'd =
have to kill the deal if another gunmaker didn't sign on soon. Desperate =
for another ally, Cuomo set his sights on Glock, the nation's leading =
supplier of cop guns. Glock's general counsel, Paul Jannuzzo, had been =
in on the original negotiations but had passed on the deal at the last =
minute.
Now Cuomo took the extraordinary step of leaning on Glock's =
foreign owner instead. He had one of his aides call the U.S. ambassador =
in Vienna, Kathryn Walt Hall, who'd been a major contributor to the =
Democratic Party. She then took a message to 72-year-old Gaston =
Glock-Europe's answer to Samuel Colt. Hall told the wealthy gun baron =
that Cuomo wanted to see him alone: no lawyers. Glock was "polite but =
noncommittal," Hall recalls. He was willing to see Cuomo, perhaps, but =
not until his next trip to the United States in November. For Cuomo, =
that was too late.
The deal came undone, and, in a sense, so did the men who =
negotiated it. Cuomo and the Democrats were turned out of office, in =
part because gun owners felt deeply threatened. Shultz, meanwhile, left =
Smith & Wesson in September. Smith still hasn't given up on settling the =
lawsuits, however. With the federal deal officially abandoned by both =
sides, Smith has reached what it calls a "less onerous" version of the =
agreement, this time with the city of Boston. It's expected to become =
binding in February, which means that other cities can join if they want =
to, and any dealer nationwide who wants to sell Smith guns will have to =
abide by the new terms. But some large dealers say they can afford to =
drop Smith & Wesson; the name has lost its aura in the gun world, and =
customers aren't clamoring for its revolvers the way they used to. Smith =
& Wesson may yet reclaim its place as a proud symbol of the Old West. =
For now, it remains the unforgiven.
=20
=A9 2001 Newsweek, Inc.=20
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<DIV><FONT size=3D2><A=20
href=3D"http://www.msnbc.com/news/522692.asp?cp1=3D1&cp1=3D1&cp1=3D=
1&cp1=3D1">http://www.msnbc.com/news/522692.asp?cp1=3D1&cp1=3D1&a=
mp;cp1=3D1&cp1=3D1</A></FONT></DIV>
<DIV><FONT size=3D2></FONT> </DIV>
<DIV><FONT color=3D#cc0000 size=3D6>A Gun Deal’s Fatal =
Wound</FONT></DIV>
<DIV><FONT face=3DArial size=3D2><STRONG>As a landmark pact to control =
gun sales=20
falls apart, Smith & Wesson takes the hit</STRONG></FONT></DIV>
<DIV><FONT face=3DArial size=3D2></FONT> </DIV>
<DIV><FONT size=3D2>Feb. 5 issue — <FONT=20
face=3D"TIMES NEW ROMAN, GEORGIA, TIMES" color=3D#000000>For more than =
50 years,=20
George Romanoff’s family has been selling Smith & Wessons: =
.357 revolvers=20
with hardwood handles, sleek pistols forged from blue and stainless=20
steel.</FONT></FONT></DIV>
<DIV><FONT size=3D2></FONT> </DIV>
<DIV><FONT size=3D2>SMITH’S VAUNTED HANDGUN line was easily the =
biggest seller at=20
Romanoff’s Pittsburgh-area store, Ace Sporting Goods—until =
last March. That’s=20
when the 149-year-old gunmaker signed a stunning agreement with the Feds =
to get=20
out from under lawsuits, promising to impose strict new rules on all its =
dealers. Now those who wanted to keep selling Smith guns would have to =
keep=20
computerized records of every sale and store all their guns—not =
just Smiths—in=20
some kind of vault. And they’d have to limit their customers to =
one gun every=20
two weeks. Romanoff was about to kick off a weekend =
sale—up to=20
$50 off on Smith & Wessons—but he had to cancel it because his =
customers=20
were furious over Smith’s surrender to the enemy. To them, the new =
recordkeeping=20
alone sounded like a first step toward a police state, and Smith was the =
government stooge. Since then, sales of the company’s pistols have =
been so slow=20
that Romanoff has slashed his inventory by a third. Now Smith & =
Wesson,=20
reeling from a consumer boycott, wants him and other dealers to go along =
with a=20
scaled-back version of the agreement. But Romanoff says there’s no =
way he can=20
keep selling Smiths if he has to accept the company’s terms. Like =
his customers,=20
he feels betrayed by Smith & Wesson’s sellout; at the same =
time, it’s as if=20
he’s turning his back on an old friend. “If Smith & =
Wesson goes under, it=20
will be an extremely sad day for our industry,” he says. =
“It’s like a nail in=20
our coffin.”<BR> <BR>POWER IN =
THE GUN=20
WORLD<BR> The government’s =
celebrated pact=20
with Smith & Wesson was supposed to bring the secretive gunmakers to =
their=20
knees, much like the assault on Big Tobacco. But a year later, the deal =
is all=20
but dead—and the nation’s largest handgun maker faces real =
questions about its=20
survival. Analysts say its sales lag behind the rest of the struggling =
industry=20
by at least 20 percent. “This is a critical time for us,” =
says Ken Jorgensen,=20
Smith’s spokesman. “We need the dealers to sign this in =
order to go on and do=20
business.” How the deal became a disaster says a lot about power =
in the gun=20
world—power that the people who buy guns wield over the people who =
make them.=20
The Feds were sure that other gunmakers would follow Smith’s lead, =
but the rest=20
of the industry ran for cover instead. Smith & Wesson, meanwhile, =
ran face=20
first into a gun lobby at the height of its power, and a gun culture =
hostile to=20
change. “They entered into an agreement that was silly,” =
says the NRA’s Bill=20
Powers. “Sooner or later you’ve got to pay for the mistakes =
of the past, and=20
they’re paying for them.” <BR> </FONT></DIV>
<DIV><FONT size=3D2> A =
shifting=20
political landscape didn’t help. When Smith & Wesson signed =
the deal, the=20
Clinton administration was threatening its own suit to force gunmakers =
to change=20
their ways, and there were cries for new gun laws on Capitol Hill. It =
didn’t=20
last. The gun lobby played a key role in electing George W. Bush, and =
its=20
leaders expect him to oppose more restrictions. The gunmakers, =
meanwhile, are=20
hoping Bush will do what he did in Texas: sign a law blocking any city =
from=20
suing the industry. The gun war remains hard fought, but the momentum =
has=20
shifted.<BR> Smith & =
Wesson’s=20
nightmare began in a Hartford, Conn., hotel room with a handshake =
between two=20
uncommonly tenacious men: Andrew Cuomo, Bill Clinton’s Housing =
secretary, and Ed=20
Shultz, then Smith & Wesson’s CEO. =
<BR> More than 30=20
cities had sued the gun industry for the costs of violence on their =
streets.=20
Cuomo had brashly stepped into the legal swamp, hoping he could be the =
guy to=20
force concessions from an obstinate industry. Most gunmakers refused to=20
negotiate. But Shultz, a plain-spoken farmer and onetime Army sergeant, =
figured=20
Smith’s legal bills would soon surpass its income. His British =
parent company,=20
Tomkins PLC, wanted to get Smith out of the courts so it could sell the=20
company.<BR> Shultz and Cuomo =
talked=20
in personal terms. “I have two 5-year-olds and a 3-year-old, and I =
have a gun in=20
my home,” Cuomo told Shultz. “If you can make me a safer =
gun, I’ll buy it.”=20
Shultz agreed to do that—and more. The 25-page pact was so =
sweeping that lawyers=20
for the cities feared until the last minute that Shultz would back out. =
Once=20
Smith signed, the assumption was that other gunmakers would inevitably =
follow=20
the leader. Cuomo had no plans to take the Smith deal to a judge to =
enforce it=20
immediately; he’d wait for other gunmakers to sign on=20
first.<BR> It would prove to =
be a long=20
wait. In the gun world, where any small step toward new restrictions is =
seen as=20
a giant leap toward tyranny, the deal exploded like buckshot. Shultz had =
expected a backlash, but nothing so visceral. The NRA immediately faxed=20
ferocious alerts to its 3 million-plus members, calling Smith a =
British-owned=20
traitor to the Bill of Rights. It was an election year, and Smith & =
Wesson=20
had just given the gun lobby its rallying cry. Irate customers =
overwhelmed the=20
switchboard at Smith’s Springfield, Mass., headquarters and =
deluged Shultz with=20
venomous e-mail.<BR> <BR>POUNDED =
FROM ALL=20
SIDES<BR> Soon Smith was getting =
pounded=20
from all sides. In a business where Smith controlled more than a quarter =
of an=20
ever-shrinking handgun market, competitors couldn’t resist piling =
on.=20
Brazilian-owned Taurus started giving away an NRA membership with every =
new gun,=20
just to underscore its commitment to gun rights. Meanwhile, two new =
cities=20
brought lawsuits against Smith & Wesson, despite pleas from the=20
administration to leave Smith=20
alone.<BR> Those who tried to =
help=20
Smith made matters worse. Two states, New York and Connecticut, launched =
antitrust investigations against the other gunmakers, accusing them of =
trying to=20
run Smith out of business. Their lawyers sprayed subpoenas up and down =
New=20
England’s Gun Valley, which only served to make Smith & Wesson =
look like a=20
government witness in a mob =
case.<BR> =20
By midsummer, Shultz had to close his plant for an extra two weeks and =
was=20
planning to lay off 120 workers. Shultz told Cuomo he’d have to =
kill the deal if=20
another gunmaker didn’t sign on soon. Desperate for another ally, =
Cuomo set his=20
sights on Glock, the nation’s leading supplier of cop guns. =
Glock’s general=20
counsel, Paul Jannuzzo, had been in on the original negotiations but had =
passed=20
on the deal at the last =
minute.<BR> =20
Now Cuomo took the extraordinary step of leaning on Glock’s =
foreign owner=20
instead. He had one of his aides call the U.S. ambassador in Vienna, =
Kathryn=20
Walt Hall, who’d been a major contributor to the Democratic Party. =
She then took=20
a message to 72-year-old Gaston Glock—Europe’s answer to =
Samuel Colt. Hall told=20
the wealthy gun baron that Cuomo wanted to see him alone: no lawyers. =
Glock was=20
“polite but noncommittal,” Hall recalls. He was willing to =
see Cuomo, perhaps,=20
but not until his next trip to the United States in November. For Cuomo, =
that=20
was too late.<BR> The deal =
came=20
undone, and, in a sense, so did the men who negotiated it. Cuomo and the =
Democrats were turned out of office, in part because gun owners felt =
deeply=20
threatened. Shultz, meanwhile, left Smith & Wesson in September. =
Smith still=20
hasn’t given up on settling the lawsuits, however. With the =
federal deal=20
officially abandoned by both sides, Smith has reached what it calls a =
“less=20
onerous” version of the agreement, this time with the city of =
Boston. It’s=20
expected to become binding in February, which means that other cities =
can join=20
if they want to, and any dealer nationwide who wants to sell Smith guns =
will=20
have to abide by the new terms. But some large dealers say they can =
afford to=20
drop Smith & Wesson; the name has lost its aura in the gun world, =
and=20
customers aren’t clamoring for its revolvers the way they used to. =
Smith &=20
Wesson may yet reclaim its place as a proud symbol of the Old West. For =
now, it=20
remains the unforgiven.<BR> =20
<BR> =A9 2001 Newsweek, Inc.=20
<BR></FONT></DIV></BODY></HTML>
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X-Google-Language: ENGLISH,ASCII X-Google-Thread: 10a039,abd06973964d61db,start X-Google-Attributes: gid10a039,public X-Google-ArrivalTime: 2001-01-30 17:49:02 PST Path: arc1-ca.pugleaf.net!supernews.google.com!sn-xit-02!sn-xit-01!supernews.com!newshub2.rdc1.sfba.home.com!newshub2.home.com!news.home.com!howland.erols.net!feed2.news.rcn.net!rcn!newsfeed1.earthlink.net!newsfeed.earthlink.net!newsmaster1.prod.itd.earthlink.net!newsread2.prod.itd.earthlink.net.POSTED!not-for-mail From: "Neil At Hollywood�.Hom" <replyfromyou@spam.email.com> Newsgroups: ca.firearms Subject: The Failure Of The Smith & Wesson Deal Lines: 392 MIME-Version: 1.0 Content-Type: multipart/alternative; boundary="----=_NextPart_000_0024_01C08AE4.69E70BE0" X-Priority: 3 X-MSMail-Priority: Normal X-Newsreader: Microsoft Outlook Express 5.50.4522.1200 X-MimeOLE: Produced By Microsoft MimeOLE V5.50.4522.1200 Message-ID: <gaKd6.338$106.49238@newsread2.prod.itd.earthlink.net> Date: Wed, 31 Jan 2001 01:49:00 GMT NNTP-Posting-Host: 216.244.19.191 X-Complaints-To: abuse@earthlink.net X-Trace: newsread2.prod.itd.earthlink.net 980905740 216.244.19.191 (Tue, 30 Jan 2001 17:49:00 PST) NNTP-Posting-Date: Tue, 30 Jan 2001 17:49:00 PST Organization: EarthLink Inc. -- http://www.EarthLink.net