Why Firearms Sales Increased After Shooting in Tucson

Tragedy, violence, tough economic times and the election of liberal politicians tend to have a counter-intuitive effect on the American handgun industry.

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In the aftermath of the Tucson tragedy that left nine people dead and several others, including Rep. Gabrielle Giffords (D-Ariz.) seriously wounded, sales of firearms increased, including the same type of Glock handgun used by shooter Jared Loughner.

The jump in sales, according to Federal Bureau of Investigation data, is a common result in the aftermath of such events.

“We think that some people might opt to carry guns with a permit as a result of (the) shooting in Arizona,” says Larry Pratt, executive director of Gun Owners of America, a non-profit lobbying organization.

While there have been new calls from gun control organizations following the Tucson shooting, at present no state has an outright ban on firearms, including handguns, while permits and registration requirements continue to vary from state to state.

But even cities with strict gun laws, such as New York City, have seen an increase in permit applications following the tragedy in Arizona.

The election of President Obama in November 2008 helped contribute to the sale of a record 9 million handguns in 2009, according to data from the National Shooting Sports Foundation, and a 26.1 percent increase in total production from the previous year to meet the increased demand. What's more, background checks rose from 12 million to 14 million.

Indeed, after two years of extremely robust sales, the U.S. firearms industry expects business to level off in 2011, but not decline.

"“The back door gun bans are what the administration is doing.They couldn’t get anything worse through Congress, and that causes concern that worse could happen. People are going to stock up.”" -Gun Owners of America, Larry Pratt

Except for a few downturns, the industry has seen steady growth over the last 40 years, says says Andrew Molchan, director of the Professional Gun Retailers Association.

Smith & Wesson Holding Corp. reported last month that its fiscal 2011 sales rose by 1.5 percent, slightly below the company's forecasts, which could reflect the improving economy.

“Generally people are optimistic for the coming year," says Larry Keane, senior VP and general counsel for for the National Shooting Sports Foundation, whose organization puts on the annual Shooting, Hunting, Outdoor Trade Show, SHOT, which is being held in Las Vegas this week.

Though the U.S. firearms industry gets a lot of attention, it is neither big nor lucrative.

"There are businesses in the United States that are bigger than the entire firearms and ammunition industry," says Molchan. "Most of the companies in this industry would be considered small manufacturers and small businesses. Aside from a few manufacturers, the profits just aren’t that spectacular.”

Sales hit $5 billion in 2009. There are about 300 companies in the industry, but it is dominated by the five biggest—including Remington, the subject of a CNBC investigative report —which boast a majority of the market for both guns and rifles. Publicly traded companies include Smith & Wesson andSturm Ruger .

The Internet has seen an increase in firearms dealers, but there are restrictions and sales typically go through holders of a federal firearms license, which include local shops and dealers.

“Our sales were up [in 2010],” says Richard Johnson, co-founder of GunsForSale.com. “As 2011 goes, we are certainly hopeful but there are a lot of threats on the horizon. Our biggest concerns are a further deteriorating U.S. economy.”

Those threats also include more restrictive legislation, which given the shift in control of the House of Representatives to the traditionally gun-friendly Republican Party, is unlikely.

But with a liberal Democrat still in the White House, the industry remains on guard.

“I don’t know how much gun owners are going to lessen up until Obama is gone,” says Pratt, who adds while there haven’t been the efforts to actually ban firearms directly, such as reimplementation of the assault weapon ban, there have been so-called “back door gun bans.”

Some experts say these could include the Environmental Protection Agency’s attempt to ban lead ammunition last summer, and even the State Department's efforts to block the return of American made M1 Garand rifles from South Korea – where traditionally these firearms are sold as surplus to the Civilian Marksmanship Program. Where there is talk of bans, there tends to be increased sales.

“The back door gun bans are what the administration is doing,” says Pratt. “They couldn’t get anything worse through Congress, and that causes concern that worse could happen. People are going to stock up.”