Ruger Expands production, buys third factory – Up to 10 new gun lines

Sturm, Ruger & Co. is gearing up to manufacture up to ten new lines of firearms with the purchase of a manufacturing facility in North Carolina.  The plant will be Ruger’s third manufacturing facility.

The new facility will produce completely new gun lines, not mere variations on existing lines according to statements made by Michael O. Fifer, Ruger’s president and CEO, during the company’s annual shareholder meeting on April 30.  It was in that meeting that Fifer publicly announced the company was searching for the site for a third firearms factory.

New Guns

Ruger has not made any announcements on what new guns will be manufactured at the new plant.  However, there is a lot of speculation the company is planning on introducing a new line of shotguns.  When asked directly, Fifer declined to comment about what guns may or may not be made there.

Long guns have sold very well for Ruger.  Fifer specifically mentioned the Gunsite Scout Rifle and the American Rifle as exceeding expectations.  Fifer said the company had to double production of the American Rifle this year to meet consumer demand.

The SR-556 line of AR-style rifles have sold well for Ruger, but in the past, Fifer seemed hesitant to expand production of the modern sporting rifle line.

Fifer stated that Ruger currently has several “substantial” new gun products on hold due to limited production space and the company’s difficulty in finding qualified engineers for the new gun design teams.  The teams utilize designers to develop the firearm along with experienced manufacturing engineers who ensure the guns can be efficiently produced.

The new facility will “really lubricate” the process of bringing new guns to market Fifer said.

At the April 30 meeting, Fifer highlighted the importance of finding a location with a quality, existing facility that Ruger could get up and running quickly.  Additionally, he stated it was important that the community have a workforce with skilled labor and engineers.

The Facility and Labor Force

Ruger seems to have found the ideal location in Mayodan, NC, and is expecting to finalize the purchase this month.  That would give the company up to four months to bring one of these new guns online in time for the SHOT Show 2014 in January.

The 221,600 sq. ft. facility is a former textile plant that has been unused since 2007.  There is little work needed to bring the plant online Fifer said in the company’s August 1 earnings call.

The Mayodan plant sits on more than 50 acres, which would allow for additional expansion by Ruger at a later date.

Statements by Fifer on April 30 suggest about 50 employees will be hired immediately and up to 100 by year’s end.

Fortunately for Ruger, Mayodan has a good labor force and the state appears to be welcoming the company with open arms.  So far, the company has held two job fairs and the response has been excellent.

“[The] caliber of potential employees is impressive,” said Fifer.

Ultimately, the Mayodan facility could employ up to about 500 – 700 people, with roughly 100 each year being added until the company reaches that number.  That would be close to Ruger’s Prescott facility that employs around 750 people.

The Bottom Line

While there is much speculation on what Ruger will produce at the new factory, there is little doubt that Ruger is expecting the new plant will help the company expand its offerings and its bottom line.  For the first six months of 2013, newly introduced products made up more than 30 percent of Ruger’s firearms sales.

According to Ruger’s numbers, the company’s sales increase exceeds that of the overall firearms industry, suggesting they are increasing market share.  If the company continues to introduce popular products, they could take an even larger slice of the pie.

New products are the single best return on investment according to Fifer.  If true, the new Mayodan plant stands to be one of the best investments Ruger has made.

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