Daniel Defense Layoffs: Despite Las Vegas Massacre, Gun Maker Suffers Under “Trump Slump”

Daniel Defense layoffs
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Daniel Defense, one of the largest privately owned firearms manufacturers in the country, is cutting about 100 jobs, according to those affected and social media posts. The Daniel Defense layoffs come amid what the gun industry is calling the “Trump Slump”—a decline in gun sales since the election of President Donald Trump.

Daniel Defense LayOffs: 100 Employees Cut

A former Daniel Defense employee who was affected by the cuts told Recoil that the layoffs were “very unexpected.”

“All of us were handed a blanket packet that explained everything,” they continued. “The paperwork didn’t even have my name on it. All they said about my job was that my position was being eliminated. There was no severance package; we were just fired.”

Another anonymous employee said the people affected by the  Daniel Defense layoffs are left with few options due to a non-compete clause in their contracts.

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“We all had to sign a non-compete,” they told Recoil. “I think the non-compete I signed was for two years. The outgoing talk and paperwork didn’t specify the non-compete being lifted. It’s unfortunate for a lot of people who don’t have skills outside of the industry.”

Daniel Defense’s sales reportedly numbered around $73.0 million in 2016. It was also said to have a gross profit of 35% and 279 employees. Those numbers are all likely to fall due to the Trump Slump.

The Daniel Defense layoffs are taking place at an inauspicious time for the company. It is moving into a newly built 300,000-square-foot facility down the road from its current location in Black Creek, Georgia.

Las Vegas Massacre Could See Gun Sales Rise

Despite the Trump Slump, the gun industry may benefit from an uptick in firearms sales following the Las Vegas massacre this past week that left 59 people dead and over 500 wounded. When the nation previously experienced similar tragedies due to gun violence, gun sales often spiked as a result.

In December 2015, following the San Bernardino, California shooting that killed 14 people and the November 2015 Paris attacks that left over 100 people dead, gun sales jumped by 62%.

The Pulse nightclub shooting in Orlando, Florida that claimed 49 lives boosted firearm sales by 20% in the summer of 2016.

Investors are already banking on increased sales for the gun industry following the Las Vegas shooting. For instance, American Outdoor Brands Corp (NASDAQ:AOBC), formerly Smith & Wesson Holding Corp, gained four percent in the week following the shooting.

Trump’s Impact on Gun Industry Sales

The Trump Slump is neither particularly new nor unique to this president, but the gun industry is still reeling after years of record-high sales.

Firearm sales usually jump when the U.S. is headed by a Democratic president and government, often due to the perception that liberal politicians will make it harder to buy and own guns. In the case of former President Barack Obama, people even feared that guns may be repossessed.

While gun restrictions of substance have never been passed and then-President Obama didn’t enact any sweeping legislation looking to heavily restrict, ban, or confiscate guns, the threat in and of itself has been enough to spur gun sales.

Many advertisements during the Obama presidency painted him as a gun-hating liberal bent on confiscating or heavily restricting weapons.

Hillary Clinton, when she ran for president, was the target of a similar campaign, portraying her as an anti-gun politician whose victory would spell trouble for the gun industry and gun owners. During that election, firearm sales spiked to record-breaking levels.

Contrary to belief, the Obama industry was a huge boon to weapon sales. The gun industry reported that it grew by 158% from 2008 to 2016. The National Shooting Sports Foundation reported that the total economic impact of the firearms and ammunition industry in the U.S. rose dramatically from $19.1 billion in 2008 to $49.3 billion in 2015. The number of full-time jobs related to the gun industry also saw a steep rise, jumping from about 166,000 to almost 288,000 in that same time period.

With those perceived threats now firmly in the past, however, the reality of the Trump Slump has taken hold.

American Outdoor Brands registered a fall of nearly 40% in its quarterly net sales, ending July 31. The decline amounts to a $78.0-million loss in overall sales, with the drop drawing closer to $100.0 million year-over-year when you take into account firearm-related revenue only.

Other manufacturers and sellers have registered similar downturns.

The FBI National Instant Criminal Background Check data, an index that tracks how many federal firearm-related background checks were conducted every month, shows that there were about 16.3 million checks performed this year through August, compared to about 27.5 million background checks in 2016.  Extrapolating to the end of the year and 2017 is on pace to have about 24.5 million checks, amounting to a nearly 11% year-over-year decline. The 27.5 million checks in 2016 represented an all-time high.

Background checks don’t necessarily peg directly to gun sales, as these numbers don’t take into account the number of firearms being sold per transaction. However, they’re still a good indicator that far fewer guns are being bought this year compared to last year.

While 24.5 million checks still represent a good year for gun purchases, this number marks the first decline in 14 years.

 

Sources

The Gun Industry Says It Has Grown 158% Since Obama Took Office,” Forbes, April 12, 2016.

Why Donald Trump Is Bad for Gun Sales,” Fortune, September 11, 2017.

Daniel Defense Lays Off Large Percentage of Its Workforce,” Recoil, October 5, 2017.

What Las Vegas massacre could mean for gun industry,” We Are Iowa, October 3, 2017.

 

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