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October 19, 2015

Smith & Wesson's growth has given new life to Houlton

Photo / Dave Clough
Photo / Dave Clough
Scott Allen, plant manager at Smith & Wesson in Houlton, where 19 computer numerical control machines make handgun slides.
Photo / Dave Clough
Smith & Wesson makes millions of handcuffs.

Smith & Wesson

19 Aviation Drive, Houlton

Plant Manager: Scott Allen

Plant opened: 1966

Employees: 120

Smith & Wesson total net sales (FY2015 ended April 30): $552 million

Services: Manufacturing handcuffs, gun slides

Contact: 1-800-331-0852 (Springfield, Mass., headquarters)

www.smith-wesson.com

Smith & Wesson highlights

SOURCE: Smith & Wesson website

How Smith & Wesson became world's top handgun maker

1852: Founded through a partnership between Horace Smith and Daniel Wesson, who played a key role in ending the era of muzzle-loading firearms.

1857: First revolver made in Springfield, Mass. It included a "rimfire" cartridge with repeating action and an open cylinder, and was manufactured with interchangeable parts. The gun was adopted by the U.S. military, and high demand caused the company's 25-person workshop to move into a new factory and expand its workforce to 600.

1860s: Demand for company's revolvers increased during the Civil War, but dropped dramatically after the war due to the ensuing recession.

1873: Smith retired and sold his interest in the company to Wesson.

1899: Smith & Wesson introduced its most famous revolver, the .38 Military & Police.

1941: By 1941 the company's factory was fully dedicated to World War II production.

1946: C.R. Hellstrom became president of the company, the first person outside the Wesson family to run the company.

1960s: The company was still mostly controlled by the Wesson family, with some stock selling over-the-counter. For the year ended June 1965, it posted earnings of $1.5 million on sales of $10.4 million.

1965: The company was bought for $22.6 million by Bangor Punta Alegre Sugar Corp., a conglomerate based in Bangor with operations in railroads, foundry equipment and other items.

1970s: Under Bangor Punta's control, Smith & Wesson expanded into areas related to handguns and handcuffs, including riot-control equipment.

1977: The U.S. firearms industry grew slowly during the 1970s, but with its grip on the law enforcement market and its efficient, modern plants, Smith & Wesson was able to post operating profits of $18.4 million on sales of $84 million for the year ended September 1977.

1980s: The early 1980s marked the company's foray into making 9mm semiautomatic pistols for the U.S. military and law enforcement.

1984: Bangor Punta sold Smith & Wesson to Lear Siegler Corp. of California in January 1984. Smith & Wesson divested many noncore areas and focused on handguns, handcuffs and police Identi-Kits.

1986: For the fiscal year ended June 1986 the company reported operating profits of $14.1 million on sales of $116 million, down 41% from profits in 1982. Smith & Wesson again changed ownership in December 1986 when leveraged buyout specialist Forstmann Little & Co. led a group that took Lear Siegler private and created a new holding company called Lear Siegler Holdings Corp.

1997: In June 1997, UK conglomerate Tomkins Plc. bought Smith & Wesson for $112.5 million.

2001: In May 2001 Saf-T-Hammer Corp. bought Smith & Wesson for a mere $15 million.

2002: In February 2002 the company's name became Smith & Wesson Holding Corp., and remains so today.

2015: Smith & Wesson Holding Corp. (NASDAQ: SWHC) reported net sales of $552 million for fiscal year 2015 ended April 30, down almost 12% from a year earlier. However, things turned up in the fiscal first quarter ended July 31, when quarterly net sales were $148 million, up 12% from a year earlier.

SOURCE: Smith & Wesson website

Roadside stands of potatoes and signs for log home builders — staples of The County — line the route leading to an industrial park a stone's throw away from the Canadian border in Houlton. At the destination, a plain, flat-roofed building belies the high-tech machinery and manufacturing buzzing inside until one reads the sign at the entrance: Smith & Wesson, Houlton, Me.

It is here that the Springfield, Mass.-based firearms and restraints maker, founded in 1852, set up the Houlton factory in 1966. The Houlton facility bought its most recent location in 1980 and expanded it to its current 36,000 square feet in 1994. Its 120 employees have made millions of handcuffs, leg irons and other restraints in 15 different models, plus a large but undisclosed number of handgun slides.

"We are one of the larger employers in the area," says plant manager Scott Allen, who has worked at the plant since 1995. Larger employers in the area include Walmart.

The rise of the plant in the far reaches of Maine is no Houdini act. While the factory did have a glitch in November 2013, when it eliminated 37 jobs as it shifted its focus to making lighter weight, polymer-frame handguns instead of full metal ones, it has continued to grow its handcuff and gun slide businesses. About a year ago it made another change from assembling guns to just making slides for them.

Production of handcuffs and other restraints hit 6.5 million cumulatively in 2010 and is about 8 million now, Allen says. He would not disclose the number of gun slides made, but said the factory makes more slides than handcuffs.

"Two-thirds of the factory's workforce makes slides and the other one-third make handcuffs," he says. The handcuffs are made on two, eight-hour shifts five days a week. The slides are made on state-of-the art computer numerical control, or CNC, machines that run every day.

The layout of the factory tells the story of the production output of the two businesses. On one side, 19 CNC machines turn out gun slides. The machines are controlled by computer software specifically set to make each type of slide, and are monitored by staff to assure they are running correctly. The other side looks like more traditional manual manufacturing, with machines that stamp out the various parts of each handcuff, which are then put together by workers.

The carbon and nickel-plated cuffs at one point are shipped to Springfield to get shined, and then sent back to Houlton for final assembly. The handcuffs are bought mostly by police and the military, although they can be purchased by the public in other stores. Allen says the handcuffs comply with National Institute of Justice guidelines for materials strength and dimensions.

Ironically, the handcuffs all use the same key, which also works in the handcuffs of competitors like Peerless Handcuff Co. of West Springfield, Mass. "Handcuffs are meant as a temporary restraint, and a supervisor is with the detainee, whose hands are cuffed behind their back," Allen says. He adds that the handcuffs have a ratcheted closure, so they are not as easy to pick or get free from as one would imagine from watching movies.

The handguns, which are assembled in Springfield, also are sold to police and military customers. But they also can be bought at stores like Cabela's and Kittery Trading Post for prices ranging from $400 to $700.

The Houlton factory runs a truck to Springfield loaded with gun and handcuff parts three times a week. It's an eight-hour drive one way.

Parent company Smith & Wesson Holding Corp. (NASDAQ: SWHC) reported net sales of $552 million for fiscal year 2015 ended April 30, down almost 12% from last year. Firearm division net sales were $531.2 million, a decrease of 15.2% from last year.

Things turned around in the first quarter of FY2016 ended July 31. Quarterly net sales were $148 million, up 12% from the first quarter last year. Firearms division net sales of $134 million rose by close to 2% from the comparable quarter last year.

The company's share price tends to rise and fall with news of mass shootings, which act to increase sales to buyers who want to avoid possible new gun restrictions. Sales then decline when the memory of the incidents isn't as fresh, according to Wall Street experts.

Skilled tech jobs

While other companies in Houlton, like Bison Pumps, have a few CNC machines, Smith & Wesson has bay upon bay of them to churn out the high-precision gun slides. As Allen sees it, that means skilled jobs with good wages.

"We run the same machines and parts in northern Maine as in Springfield and at the same rate and productivity," he says.

It takes from 12 to 24 months to design a gun with a proper working design, perfect quality, durability and that will sell at a good price, Allen says.

"There is a lot of engineering on the front end of the injection moldings," he adds.

The poly-frame police gun weighs about 30 ounces, which is 10 ounces less than a steel gun. It also costs about $300 less, he says. Even that difference in weight can make a difference for a law enforcement officer, whose utility belt can weigh 25 pounds to 30 pounds. Clint Eastwood's .44 Magnum in the "Dirty Harry" movies weighed in at a whopping 55 ounces, says Allen, noting that Smith & Wesson still makes that type of gun.

"So the poly-frame guns weigh less and they cost less to produce," he says. "And you get a lot more detail out of the injection mold."

Allen says the company has a low turnover rate of employees, but finding and keeping skilled CNC workers can be a challenge. Smith & Wesson has hired more than a dozen graduates of Northern Maine Community College in Presque Isle over the last 10 years. The school has a two-year precision metals programming course.

It also has partnered with a community college in Peoria, Ill., near Caterpillar and other large manufacturers. That school has a CNC training program that teaches students how to repair the machines.

"We're an oddity in northern Maine with this type of manufacturing," says Allen. "This area is known mostly for wood, farming and potato processing. But in the last 40 years we've shown you can do high-precision machining and manufacturing not unlike what is being done in southern New England. And we do it cost-competitively."

Smith & Wesson is a Pine Tree Development Zone company, which according to a Maine Revenue Service 2010 report created 34 jobs.

Most of the employees have never had experience in metal-working, says Allen, so Smith & Wesson trains them. "Within 30 to 40 days they can do the job. We don't have a lot of turnover. Some employees have been here 40 years."

Allen adds that the company gives local residents an option for work. "Some guys here are used to working in the woods," he says. "It's cold, and there are black flies and mud. Here, they don't have to wear three layers of clothing."

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