Smith & Wesson Corporation
Address:
2100 Roosevelt Avenue
Post Office Box 2208
Springfield, Massachusetts 01102-2208
U.S.A.
Toll Free: 800-331-0852
Telephone: (413) 781-8300
Fax: (413) 747-3677
http://www.smith-wesson.com
Statistics:
Wholly Owned Subsidiary of Tomkins PLC
Incorporated: 1857 as Smith & Wesson, Inc.
Employees: 1,300
Sales: $125 million (1999 est.)
NAIC: 332994 Small Arms Manufacturing; 336991 Motorcycle, Bicycle, & Parts Manufacturing; 51121 Software Publishers
Company Perspectives:
At the foundation of our success throughout the last century-and-a-half is the reputation for dependability and quality our products and services have earned worldwide.
Company History:
Smith & Wesson Corporation is the world's leading manufacturer of handguns. Among the company's best known products over the years have been the .22 rimfire revolver (Model 1), which became a worldwide success in the mid-1800s; the .38 special revolver (Model 10), a 20th-century model used extensively by police forces; the .44 Magnum revolver made famous by Clint Eastwood in his Dirty Harry movies; and the line of .357 Magnums, which, according to the company, became the most popular line of revolvers of all time. Smith & Wesson also sells handcuffs, bicycles designed for law enforcement use, and law enforcement software and systems, such as the Automated Suspect IDentification System and Identi-Kit software, through which an electronic composite drawing of a suspect can be matched against a database of mug shots to identify and rank possible suspects. Apparel and other nongun products affixed with the company logo are sold through several company-owned retail outlets in the United States. Smith & Wesson was purchased by U.K. conglomerate Tomkins PLC in 1987.
Mid-19th-Century Origins
The history of Smith & Wesson begins in the 1850s with a partnership between Horace Smith and Daniel B. Wesson. Smith was born in 1808 in Cheshire, Massachusetts. His father, a carpenter, moved the family to Springfield, Massachusetts, four years later, taking a job in the U.S. Armory. After finishing his public school education at age 16, Smith joined his father at the Armory as a gunsmith's apprentice. He gained expertise in the manufacture of guns through the 18 years he spent at the Armory. In the 1840s Smith worked for a number of gun manufacturers and spent three years running his own gunmaking concern. In 1851 he patented an improvement on the breech-loading rifle. He next took a position at Allen, Brown & Luther, a rifle barrel manufacturer based in Worcester, Massachusetts. It was there that he met Wesson.
Born in 1825 in Worcester, Wesson worked on the family farm and attended school until the age of 18. He then apprenticed himself to his eldest brother, a gunsmith. After completing his apprenticeship in 1846, Wesson worked as a journeyman gunsmith before taking over his brother's business after his death in 1850. Soon thereafter, he joined Allen, Brown & Luther.
This was still the era of the muzzle loaders, firearms that had to be reloaded with loose powder, ball, and primer. Through their partnership, Smith and Wesson played a key role in the ending of the muzzle-loading era. They formed their first partnership, the Smith & Wesson Arms Company, in 1852, working to perfect a lever-action pistol with a metallic cartridge and a new repeating action, for which the partners received a patent in February 1854. According to Smith & Wesson historian Roy G. Jinks, "The fire power of this lever action pistol was so impressive, that in 1854 when the gun was reviewed by Scientific American, it was nicknamed the Volcanic since its rapid fire sequence had the force of an erupting volcano."
The repeating action of the pistol was not entirely successful and when the Norwich, Connecticut-based company encountered financial problems, Oliver Winchester stepped in as a new investor. The factory was moved to New Haven, Connecticut, and the company name was changed to Volcanic Arms Company. In 1855 Smith retired while Wesson accepted a position as superintendent of the company. Wesson soon departed as well. The company later adapted the 1854 patent to rifles, creating the Winchester repeating rifle, which became world famous. In 1866 this firm changed its name again, to the Winchester Repeating Arms Company.
Meanwhile, in 1857 Smith and Wesson joined in a new partnership and began manufacturing the first Smith & Wesson revolver ("Model 1") in Springfield, Massachusetts. This revolver was based on a patent the partners had received in August 1854 for a central-fire metallic cartridge, which contained not only powder but also a lubricant located within the case between the powder and the ball. The revolver included what was called a "rimfire" cartridge (later known as the .22 rimfire), featured repeating action and an open cylinder, and was manufactured with interchangeable parts. Its unique design helped make it an enormous success, including its adoption by U.S. military authorities. When demand exceeded the capacity of the firm's small, 25-person workshop, Smith & Wesson built a new factory in central Springfield on Stockbridge Street near the Armory, and expanded its workforce to 600. Improving on the original model, the company soon introduced the Model 2, which featured a .32-caliber cartridge.
Late 19th-Century Growth
During the Civil War, demand for Smith & Wesson revolvers increased further and helped establish the company as one of the top gunmakers in the United States. Following the war, however, sales fell to just a few guns per month as the ensuing depression hit Smith & Wesson hard. To drum up new sales, the partners established sales agencies in England, France, and Germany. They also exhibited their wares at the international exhibition in Paris in 1867, resulting in large contracts with several European and South American countries, as well as Japan and China. The Russian government alone placed an order for 200,000 revolvers. With a larger international market secured, the company proceeded to introduce its first large caliber gun, a .44-caliber revolver, the Model 3. This gun proved popular around the world and in the American West.
In addition to making improved models based on their own inventions, Smith and Wesson also purchased patents from other inventors. One of the most important of these was a design by William C. Dodge that automatically emptied shells from a gun--a patent Smith & Wesson bought in 1869. In July 1873 Smith sold his interest in the company to Wesson and retired. He died 20 years later, leaving no direct descendants. Wesson carried on as the sole principal for ten years before bringing his two sons on board as partners in 1883. Four years later, Wesson patented a safety revolver designed to prevent accidental firing. Smith & Wesson in 1899 introduced its most famous revolver, the .38 Military & Police, also known as the Model 10--a gun popular with law enforcement officials for nearly the entire 20th century. After Wesson died in 1906, the company he cofounded continued to be owned and managed by members of the Wesson family well into the 20th century.
New Models and War Contributions in the First Half of the 20th Century
The early decades of the 20th century were marked by the introduction of the N frame line of revolvers. This line featured a new larger frame, and first appeared in 1908 with a .44-caliber S&W Special cartridge. The N frame revolver received international notice during World War I, when Smith & Wesson supplied 75,000 N frame revolvers to the British government. The 1930s saw the debut of the K-22 Outdoorsman, a model designed for the competitive shooter, and the .357 Magnum, a more powerful handgun designed for law enforcement officers. The .357 marked the debut of the Magnum line, which became famous later in the century.
During World War II, Smith & Wesson supplied arms to the United States and its allies; by 1941 the company was entirely dedicated to war production. By war's end, the company had supplied more than 1.1 million .38 Military & Police revolvers.
In 1946 C.R. Hellstrom was named president of Smith & Wesson, becoming the first person outside the Wesson family to run the company. Three years later Smith & Wesson completed construction of a new and much larger factory in Springfield. Among the first new models to roll off the assembly lines were Model 39, the first U.S.-made 9mm double-action pistol, and Model 29, the legendary .44 Magnum.
Bangor Punta/Lear Siegler Era, 1965--87
By the mid-1960s Smith & Wesson reigned as a leading maker of handguns, with an emphasis on revolvers used in law enforcement, and had also begun to sell handcuffs. It was still largely in the hands of the Wesson family, with some stock selling over the counter. For the year ending in June 1965, the company posted earnings of $1.5 million on sales of $10.4 million. During 1965 Smith & Wesson introduced Model 60, an all stainless steel revolver. Late that year, the firm's era of independence came to an end with its acquisition by Bangor Punta Alegre Sugar Corp., a conglomerate based in Bangor, Maine, with operations in railroads, textiles, foundry equipment, sewage disposal systems, yacht manufacturing, commercial finance, grain elevators, and other areas. Bangor Punta paid about $22.6 million to gain control of Smith & Wesson.
Under Bangor Punta ownership, Smith & Wesson expanded its product line into areas related to handguns and handcuffs in the 1970s. For the law enforcement market, Smith & Wesson began selling riot control equipment, night vision apparatus, breath-testing instruments, police car lights, and sirens. Another new law enforcement product was the Identi-Kit software program which helped investigations create facial composite drawings of suspects. In the sporting market, Smith & Wesson began offering its dealers a full line of products, including ammunition, holsters, and long guns. By the late 1970s about 25 percent of the company's sales were for nongun products.
The 1970s was a period of slow or no growth for the U.S. firearms industry, which faced a host of problems, concisely summarized in a 1978 Business Week article: "skyrocketing product liability costs, highly restricted export markets, burgeoning labor and materials costs, an aging plant and skilled labor force, foreign gunrunning scandals, the recurring threat of federal gun controls, diminishing hunting grounds and shorter hunting seasons, stiff competition from imports, and, recently, competition from foreign companies manufacturing firearms in the U.S." While Smith & Wesson was not immune to these problems, it was, according to Business Week, "the envy of the industry," because of its grip on the law enforcement market and its efficient, modern plants. The company was also highly profitable, posting operating profits of $18.4 million on sales of $84 million for the year ending in September 1977.
In the early 1980s Smith & Wesson began making 9mm semiautomatic pistols for the U.S. military and for law enforcement agencies seeking more powerful weapons to do battle with heavily armed criminals. In January 1984 Santa Monica, California-based Lear Siegler Corporation acquired Bangor Punta, giving Smith & Wesson a new parent. Under the direction of Lear Siegler, whose primary holdings were in the manufacture of aerospace and automotive parts and systems, Smith & Wesson divested numerous noncore areas in order to concentrate on its main areas of strength: making and selling handguns, handcuffs, and police Identi-Kits.
In spite of the divestments, Smith & Wesson was a company on the decline in the early to mid-1980s. Its entry into the semiautomatic handgun market was the move of a follower, not a market leader. The U.S. units of two foreign gunmakers, Austria's Glock GmbH and Italy's Beretta SpA, had led the introduction of semiautomatic weapons into the U.S. market. With overall sales of guns remaining flat, the new competition not only ate away at Smith & Wesson's market share, they also cut into its sales. It was also becoming clear, as summarized by Charles E. Petty writing in American Rifleman, that the quality of Smith & Wesson guns was on the decline. Although sales had surpassed the $100 million mark by the early 1980s, growth slowed by the mid-1980s and profits were down. For the fiscal year ending in June 1986, the gunmaker reported operating profits of $14.1 million on sales of $116.1 million. The profits figure represented a decline of 41 percent from the level in 1982.
Tomkins Era, 1987 On
It was in this troubled state that Smith & Wesson would once again see its ownership change hands. In December 1986, leveraged buyout specialist Forstmann Little & Co. led a group that took Lear Siegler private in a $2.1 billion LBO, with a new holding company created called Lear Siegler Holdings Corporation. As was typical of 1980s LBOs, the new holding company quickly sought to sell off noncore assets to pay down the debt incurred in the buyout. Smith & Wesson was one of the companies identified as noncore, as Lear Siegler Holdings intended to concentrate on its aerospace and automotive operations. Among the firms bidding to acquire Smith & Wesson was fellow firearms maker Sturm Ruger & Co. Prevailing in the end, however, was U.K. conglomerate F.H. Tomkins PLC (later simply Tomkins PLC), which paid $112.5 million in June 1997 to purchase Smith & Wesson.
Tomkins saw in Smith & Wesson "a company with a good name and market position with a strong potential for growth through management achievement," according to Robert Muddimer, as quoted in American Rifleman. Muddimer, who was installed as interim president of the gunmaker, said that Tomkins' initial goal was "to enhance quality, and to service the market in terms of quality and accuracy with a blend of new technology and traditional gunsmithing arts." In recognition of the company's problems with the quality of its products, Tomkins set out to make improvements by modernizing the design and manufacturing process through the addition of computer-aided design equipment and a host of high-tech manufacturing apparatus. Tomkins also instituted a much more rigorous testing process. Already by mid-1989 the new equipment and programs had helped significantly lower the rate at which guns were being returned for warranty repair. For automatic pistols, the return rate had fallen from 6.3 percent to a record low of 1.2 percent, while only two percent of Smith & Wesson revolvers were being returned for service, halving the previous rate of four percent.
Although Tomkins was clearly aware of the declining quality of Smith & Wesson guns prior to its purchase of the company, the British firm came to believe that Forstmann Little had misled it about a jamming problem in a line of L-frame .357 Magnum revolvers. In 1994 Tomkins sued Forstmann Little for damages and indemnification.
Meanwhile, the Tomkins-led Smith & Wesson was showing a renewed vigor in the area of product development. In 1988 the company launched an improved, third-generation line of semiautomatic pistols. With interest in gun ownership increasing among women, Smith & Wesson introduced the LadySmith line of handguns in 1989. Under the leadership of Ed Shultz, who became president in 1992, Smith & Wesson introduced the Sigma Series of pistols. Debuting in March 1994, the Sigma Series was the company's first line to feature plastic frames. Glock sued Smith & Wesson over the design of the Sigma, alleging patent infringement and other charges, leading to a 1997 settlement whereby Smith & Wesson agreed to make a multimillion-dollar payment to Glock and to slightly modify the Sigma pistols.
In January 1998 Smith & Wesson began selling bicycles designed specifically for police work. During the late 1990s the company also opened up eight retail stores around the United States, selling apparel and a variety of other nongun products affixed with the company logo. This latest diversification away from guns came at a time when gun sales remained stagnant. Americans already owned approximately 230 million guns, which last for a long time, dampening demand. Other reasons given for the sales stagnation included a decreasing interest in hunting and falling crime rates, the latter of which might have been resulting in decreased demand for self-protection weapons. At the same time, the gun industry was under an increasing legal assault, with more and more municipalities suing gun manufacturers alleging negligence in the manufacturing, marketing, and distribution of guns. These suits were somewhat similar to the largely successful suits brought against the tobacco industry in the late 1990s. The potential for large liability judgments, along with increasing calls for stiffer federal gun control measures, gave added impetus to Smith & Wesson's and other gunmakers' moves to diversify. For its part, Smith & Wesson aimed to increase its sales of nongun products to 50 percent of overall sales, which would be a substantial increase over the 18 percent level of the late 1990s. Despite the seeming turnaround engendered by Tomkins, Smith & Wesson's future was shrouded by the potential for increased gun control measures and liability judgments.
Further Reading:
"Bangor Punta Plans Bid to Buy Stock of Smith & Wesson," Wall Street Journal, October 7, 1965, p. 19.
Barrett, Paul M., "Attacks on Firearms Echo Earlier Assaults on Tobacco Industry," Wall Street Journal, March 12, 1999, pp. A1, A6.
----, "Gun Industry Seeks to Shut a Trade Group," Wall Street Journal, June 7, 1999, pp. A3, A6.
----, "Uneasy Gun Makers Add Gentler Product Lines," Wall Street Journal, March 25, 1999, pp. B1, B10.
Carr, Robert E., "Women's Market Is Not Gun-Shy: S&W," Sporting Goods Business, March 1989, p. 29.
Fried, Joseph P., "Gun Marketing Is Issue in Trial Against Makers," New York Times, January 6, 1999, pp. A1, B7.
Fuhrman, Peter, "A Conglomerate of His Own," Forbes, February 27, 1995, pp. 106+.
Furchgott, Roy, "Packing Heat--and a Big Wheel, Too," Business Week, March 9, 1998, p. 6.
Hull, Jennifer Bingham, "Lear Siegler Inc. Agrees to Buy Bangor Punta," Wall Street Journal, December 13, 1983, p. 2.
Humphreys, Noel D., "Dangerous Deal: How a Fast Sell-Off Haunts an LBO Firm," Mergers & Acquisitions, November/December 1994, pp. 39+.
Jinks, Roy G., History of Smith & Wesson: No Thing of Importance Will Come Without Effort, North Hollywood, Calif.: Beinfeld Publishing, 1977, 290 p.
"Lear Siegler Holdings Says It Will Sell Units, Posts Loss for Quarter," Wall Street Journal, February 19, 1987.
Maines, John, "Can Females Be Friends with Firearms?," American Demographics, June 1992, pp. 22+.
Maremont, Mark, "A Raider's New World," Business Week, June 15, 1987, pp. 49--50.
O'Connell, Vanessa, and Paul M. Barrett, "Firearms Firms, Amid Rising Litigation, Take Steps to Reduce Criminal Gun Use," Wall Street Journal, July 22, 1999, p. B10.
Petty, Charles E., "Inside Smith & Wesson," American Rifleman, August 1989, pp. 46--49, 85--86, 94.
Stevenson, Richard W., "Smith & Wesson Is Sold to Britons," New York Times, May 23, 1987, pp. 33, 35.
Taylor, Roger, "Too Big for Its Own Good?," Financial Times, January 17, 1998, p. FTM5.
Thurman, Russ, "S&W and Glock Settle Suit," Shooting Industry, June 1997, p. 62.
"Why the Firearms Business Has Tired Blood," Business Week, November 27, 1978, pp. 107, 110, 112.
Widem, Allen M., "Smith & Wesson Aims Its Mace at the Public," Advertising Age, May 31, 1984, pp. 3, 53.
Source: International Directory of Company Histories, Vol. 30. St. James Press, 2000.
