I just read an article on Bloomberg Business week (link). I found it to be fascinating and depressing at the same time. There was so much of its history that I didn’t know about. After reading the article it seems like the company has always been and continues to be cursed by incompetent leadership that consistently exhibits extremely poor decision making skills. It’s almost as if the people in charge are mental copies of Alan from “The Hangover”. This article also brings to mind the cluster fudge going on with their expansion into Florida. First they buy the facility, then they try to back out of it, only commit back to it after strong arming by the State, and still as far as I know haven’t really done anything with it.

As for what I see, there are a couple of things that I got out of it. Even though privately held, Colt needs a corporate leadership enema. In addition to what is already covered in the article they have done other things like trying to buy manufacturer LWRC. If I ran my company like this I would have been run out of town a long time ago.
Though it would mean the end of an era and history would be lost, moving out of Connecticut has to be on the table. This will take a level of courage and foresight that appears to be absent from the Colt leadership but they need to seriously considering moving. As far as I can see moving would only be beneficial. Go to a non-union state and lower your employment costs. Moving, while costly, also has other benefits. Following the lead of other manufacturers such as Beretta, Kahr, and Remington, if they move to a state that is more firearms friendly those states usually have a more tax friendly environment which would enhance their profits. The moves would also mean modern facilities. A move does not necessarily mean a new custom built facility. There are existing vacancies in the commercial / industrial real estate market. Either way a move to an existing or new facility will result in lower operating costs and gives rise to the possibility of greater efficiency.
At the same time a move comes with the perils. Moving would result in losing experienced machinists because I don’t see Colt offering to transfer personnel. However with an investment in job training and a merciless quality assurance staff such dangers can be mitigated or even eliminated. In fact, why not partner with Mike Rowe (of Dirty Jobs fame) and his mikeroweWorks foundation? Mike Rowe has done a fantastic job creating a foundation whose whole purpose is to mentor and provide scholarships to people to learn skilled trades such as a machinists, draftspersons, tool and die, and metal work. Having a pool of trained individuals with these skills, which admittedly are in short supply, and are coming from accredited training programs and schools are the exact type of skills that Colt would need to make a move successful.
There is the issue of Bankruptcy. It’s an option that needs to be discussed. On the one hand someone could come in, buy the company at a fire sale price and turn it around. However I feel that bankruptcy needs to be avoided. I have a feeling that if anyone was willing to buy the company the end result would be that Colt would be sold off in bits and pieces and the company would become a historical foot note.
Finally Colt needs to find the capital for R&D and come up with something new. All too often I hear people saying that they are looking for that “perfect pistol” after all. Colt would be in one heck of position to make that happen. Other that the M1911 and a few others pistols they don’t have anything to be beholden to Like Glock. They have a blank slate to bring something new and exciting to the market. Look at how well that worked for Smith and Wesson with their M&P line. I think this is an opportunity they need to go with.

Having said all that, my thoughts are based on the content of the article. Is the article way off base and my conclusions are therefore wrong? What are your thoughts on the article and your take on the implications and ramifications? I would love to speak with someone who has inside side knowledge of the company and find out if the article is accurate or a hit piece. Is Colt still, after all these years, stuck in the mentality of GM from the 70s and 80s? Putting aside the M4 rifle and other military firearms, has the quality and reliability improved of their products improved over the years to any appreciable degree? Is there any hope for this company or do is it destined for bankruptcy in the near future? Is bankruptcy Colt’s only hope? Would going down that road be beneficial to Colt allowing them so fix and emerge stronger from the financial situation they are currently in? If bankruptcy is to be could a white Knight investor save it? Is there any single investor or fund any out there who could be that white Knight? I think it’s a safe bet that the freedom group as a “savior” would probably be a disaster. Look at what they have done to Remington and AAC alone. Besides, Cerberus is still trying to dump The Freedom group. Supposing that someone or group could buy Colt, who would head and make up the new leadership? Where would that person come from? Is the new management to be found in Detroit, Silicon Valley, Houston and the oil industry or some other place? I wish I had the answers as I would hate to see this American icon go the way of TWA and being bought and dismantled or Enron which simply went out of business.