Firearms Financials

24 Feb

Blogging for Finance? Why not! My finance professor, Dr. Reilly White (aka Dr. Cleveland) was curious about my blogging for IMC assignments. Thus, here goes my first finance blog post! (drum roll please!)

An example of a high-capacity credit: mr.smashy via photopin cc

An example of a high-capacity magazine.
photo credit: mr.smashy via photopin cc

According to Jennifer Oldham’s article Colorado After Aurora Shows Hurdles to Gunbuyer Checks on Bloomberg, Colorado’s biggest manufacturer of high-capacity ammunition magazines, Magpul Industries Corp, is in the hot seat. It is under the microscope because it makes of the same product that was used in the Sandy Hook Elementary shooting, the Aurora movie theatre shooting, and the Virginia Tech shooting in 2007. High capacity magazines, or clips, increase firepower and are what causes shooters to pause to reload.

Proposed legislation from Democratic lawmakers is aiming to ban high-capacity mags in the state of Colorado. In response to the Colorado ban, Texas and South Carolina are inviting Magpul to relocate their business to more Republican states.

What does this mean from a financial perspective?

Currently, the gun business has provided more than 4,700 jobs to Colorado. The move to gun friendly states will not only cause a huge job migration, but Colorado will suffer an economic impact of $590.7 million. The job market would affect both manufacturing (employed 133,400 in December) and retail trade (employing 244,500 at the same time). According to the National Shooting Sports Foundation, in 2012 the firearms industry contributed $43 million dollars to state tax revenue.

“While the firearms industry’s contribution to the state’s $264 billion private-sector gross domestic product is small, it has a multiplier effect of two — meaning it creates a job somewhere else for each person it employs — that helped prop up Colorado’s struggling manufacturing sector.” –Gary Horvath, a Broomfield-based economist.

Despite the resolution in the coming years, this issue will remain constant conflict. Anti-gun legislation, a hot topic in Washington, has severe economic consequences for states. Along with a huge shift in revenues and employment, moving industries such as Magpul will also further the divide between states and legislators.

Source: Colorado After Aurora Shows Hurdles to Gunbuyer Checks


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