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Weapons Industry

Why Gun Sales Are Faltering

The firearm industry marches to its own drummer. It thrives when manufacturers and retailers—together with the voluble National Rifle Assn.—convince heat-inclined consumers that tougher gun control is on the way.

That paradox of declining gun sales in an era of relative gun friendliness was on display at the NRA's annual meeting in Charlotte, N.C., on May 14-16. Keynote speaker Sarah Palin, during a raucous sold-out rally at the Time Warner Cable Arena, tried to stoke fears of regulatory oppression. Still, she conceded that President Barack Obama and his allies have avoided the gun issue.

"If they thought they could get away with it, they would ban guns and ammunition and gut the Second Amendment," Palin said. Instead, Obama has taken flak from anti-gun activists for refusing to spend any political capital on firearms.

Gun and ammunition sales grew 8.9 percent in 2009 to $10.4 billion, reports research firm IBISWorld. Some of that growth came from huge military ammo buys to supply troops in Iraq and Afghanistan. A lot of it, however, reflected the purchase of guns and bullets by consumers who feared Obama would restrict sales later. This year, with anxiety over gun control easing, the industry will experience a 5.7 percent revenue decline, figures IBISWorld.

Still, the outlook isn't entirely bleak for gunmakers and sellers. From 2011 to 2015, the industry will grow at an annual rate of 3.7 percent, IBISWorld analyst Nima Samadi predicts. That's down from an estimated annual pace of 6.9 percent for the five-year period ending Dec. 31, 2010.

The bottom line: Even as industry revenue levels recede this year, there's potential for modest growth through 2015.

Barrett is an assistant managing editor and senior writer at Bloomberg Businessweek. His new book, Law of the Jungle, tells the story of the Chevron oil pollution case in Ecuador.

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