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How the U.S. gun industry became so lucrative
2. While private citizens still make up the bulk of gun purchases, the industry is also heavily reliant on sales to government agencies.
Back in the late 1990s, the gun industry was actually facing decline, as the economy was humming along and crime fears were subsiding. Then Sept. 11 hit. Thanks to new counter-terrorism measures, law enforcement agencies and the U.S. military started buying up weapons at a faster pace, reviving the industry. Today, government agencies make up 40 percent of industry revenues:
That’s not necessarily good news for the gun industry in the years ahead. States are now paring back on budgets and law enforcement agencies are slowing down their purchases. IBIS World projects the gun industry to grow slightly more slowly in the next five years than it did in the last five.
Case in point: In a recent filing with the U.S. Securities and Exchange Commission, for instance, Smith & Wesson noted as one of its “risk factors” that it had yet to secure a long-term contract with the U.S. military. “As a result, 89.0% of our net firearm sales remain in the sporting goods distribution channel.”