Wall Street Journal Article of 1/17/2000 follows:
Smith & Wesson's CEO
Is Gun Industry's Maverick
By PAUL M. BARRETT
Staff Reporter of THE WALL STREET JOURNAL
SPRINGFIELD, Mass. -- Sitting in his no-frills office here, Ed Shultz, chief executive of Smith & Wesson Corp., stretches his arms wide to explain the current litigation against the gun industry.
"Over here," he says, tapping the conference table with his right hand, "I've got people who say any compromise leads to the end of all gun rights. Over here" -- tapping his left hand -- "I've got people who want guns to disappear."
Tapping in the middle, he adds: "We're here."
Mr. Shultz wants to settle the wave of municipal lawsuits that is distracting and draining the gun industry. In the current issue of Shooting Industry magazine, he exhorts others in the firearms business to consider a truce with their foes:
"We can circle our wagons tighter and try to convince ourselves that we are absolutely correct in our positions, or we can go out, talk to, and meet our opponents, while earnestly trying to understand what motivates them and how we can impact the issues."
Coming from the head of the nation's largest handgun manufacturer, these pronouncements are getting attention in gun circles. The comments are also timely, circulating just as the gun industry meets this week in Las Vegas for its main annual trade show. Industry officials have agreed to hold another round of preliminary settlement negotiations there on Friday with representatives of some of the cities that have sued, as well as with officials from New York state and the Clinton administration, both of which have threatened to file antigun suits of their own.
In urging a conciliatory approach, Mr. Shultz has some support among gun makers. Paul Jannuzzo, vice president and general counsel of the U.S. unit of Glock GmbH, the Austrian handgun maker, says: "None of us in the industry think these lawsuits make sense legally, but I generally agree with Ed that we can't just draw a line in the sand and refuse to budge."
However, some other major gun makers such as Sturm, Ruger & Co., Southport, Conn., have taken a much harder line. "The entire topic of compromise clouds the fact that these suits are wrong, an abuse of judicial process," says Stephen Sanetti, vice president and general counsel of Ruger, the largest overall gun manufacturer. "We have not embarked on any settlement discussions of any kind."
Smith & Wesson CEO Ed Shultz
Position: CEO, Smith & Wesson Corp., unit of Tomkins PLC.
Age: 58
Education: Engineering degree, Iowa State University.
Experience: Construction, agriculture, power and recreational equipment industries.
Other Duties: Also heads another Tomkins unit, Murray Inc., maker of outdoor home-maintenance equipment and recreational products.
Sidelines: Pilot; occasional target shooter; invites (and sometimes answers) personal e-mail from customers.
The National Rifle Association has warned against any agreement that infringes on the rights of the gun owners it represents -- a warning the industry takes seriously because of the NRA's ability to influence customers. Even Mr. Shultz acknowledges there are some demands he isn't prepared to meet.
Still, he says forward-thinking gun executives should shake off their resentment of the lawsuits and figure out what changes in the manufacturing and distribution of guns will cause their antagonists to go away.
Don't misunderstand, Mr. Shultz is quick to say: He has a dim view of what he calls "greedy" plaintiffs' lawyers and "extremist" antigun activists who generated the suits filed by 28 cities and counties. "But I'm a pragmatist," explains the 58-year-old executive, who came to the gun business only eight years ago. Contrary to what the famously combative NRA might argue, he adds, "you don't have to sacrifice the Second Amendment to get this resolved." An NRA spokesman declined to comment.
This isn't the first time Mr. Shultz has exerted this sort of leadership. In 1997, as gun-control proponents in Congress tried to pass legislation requiring safety locks on all firearms, Mr. Shultz unilaterally announced that Smith & Wesson would provide locks with its guns. Most of the rest of the industry later made the same pledge at a White House ceremony, drawing harsh criticism from the NRA for dealing with the Clinton administration.
A longtime gun owner with a blunt manner, Mr. Shultz lacks the emotionalism about firearms common in the industry. He took over a stumbling Smith & Wesson in 1992, when its British parent, Tomkins PLC, hired him. His earlier career included stops in the construction, power and recreational-equipment industries.
Mr. Shultz has thoroughly revamped the gun company, modernizing its factory, cutting the work force by about 50%, to 750 people, and diversifying into such products as specialty auto parts and police computer software. Annual revenue exceeds $110 million, Mr. Shultz says, but he won't discuss exact financial figures.
One dollars-and-cents reason to resolve Smith & Wesson's legal troubles is that Tomkins, as part of a larger restructuring, has explored selling the company, according to people familiar with the situation. Uncertainty related to the litigation would depress the price, however, and Mr. Shultz says Tomkins isn't actively shopping for a buyer.
In the meantime, meeting some gun-control demands is actually good business, Mr. Shultz says. Many homeowners want locks to make sure their children can't play with firearms, for example.
A more ambitious demand made by those suing the industry is development of a high-tech "smart gun" that can be fired only by authorized users. Smith & Wesson has been quietly working on such a product for years, although the company isn't prepared to go public yet with its version.
Separately, Smith & Wesson has been tightening supervision of its wholesalers and authorized dealers. The company, like its rival Sturm, Ruger, forbids sales of its new firearms at gun shows, which law-enforcement officials call a common source of criminal arms. When five dealers in Chicago were indicted last summer for allowing allegedly shady purchases, Smith & Wesson cut them off, Mr. Shultz points out.
Such steps are precisely what gun foes hope to get out of a settlement, although they say even Smith & Wesson hasn't gone far enough.
Mr. Shultz counters that some demands being made of the industry require government action. Gun opponents want manufacturers to weed out retailers to whom the federal Bureau of Alcohol, Tobacco and Firearms repeatedly traces guns used in crime. But Mr. Shultz maintains that the ATF or other police agencies should take the lead in identifying patterns of questionable sales.
"Right now, they don't give us the information," he says. If the government did so, he adds, "we are prepared to act."
Demands such as those for limiting consumers to one gun purchase a month or otherwise restricting bulk sales should be addressed by Congress, he says.
A flash point in any future talks will be a demand by New York Attorney General Eliot Spitzer -- who has threatened to make his state the first to file its own suit -- for an independent monitoring authority to oversee all gun companies. The industry maintains that this function already belongs to the ATF. But neither side will get all it wants, Mr. Shultz says: "That's just how these things go."
Smith & Wesson's CEO
Is Gun Industry's Maverick
By PAUL M. BARRETT
Staff Reporter of THE WALL STREET JOURNAL
SPRINGFIELD, Mass. -- Sitting in his no-frills office here, Ed Shultz, chief executive of Smith & Wesson Corp., stretches his arms wide to explain the current litigation against the gun industry.
"Over here," he says, tapping the conference table with his right hand, "I've got people who say any compromise leads to the end of all gun rights. Over here" -- tapping his left hand -- "I've got people who want guns to disappear."
Tapping in the middle, he adds: "We're here."
Mr. Shultz wants to settle the wave of municipal lawsuits that is distracting and draining the gun industry. In the current issue of Shooting Industry magazine, he exhorts others in the firearms business to consider a truce with their foes:
"We can circle our wagons tighter and try to convince ourselves that we are absolutely correct in our positions, or we can go out, talk to, and meet our opponents, while earnestly trying to understand what motivates them and how we can impact the issues."
Coming from the head of the nation's largest handgun manufacturer, these pronouncements are getting attention in gun circles. The comments are also timely, circulating just as the gun industry meets this week in Las Vegas for its main annual trade show. Industry officials have agreed to hold another round of preliminary settlement negotiations there on Friday with representatives of some of the cities that have sued, as well as with officials from New York state and the Clinton administration, both of which have threatened to file antigun suits of their own.
In urging a conciliatory approach, Mr. Shultz has some support among gun makers. Paul Jannuzzo, vice president and general counsel of the U.S. unit of Glock GmbH, the Austrian handgun maker, says: "None of us in the industry think these lawsuits make sense legally, but I generally agree with Ed that we can't just draw a line in the sand and refuse to budge."
However, some other major gun makers such as Sturm, Ruger & Co., Southport, Conn., have taken a much harder line. "The entire topic of compromise clouds the fact that these suits are wrong, an abuse of judicial process," says Stephen Sanetti, vice president and general counsel of Ruger, the largest overall gun manufacturer. "We have not embarked on any settlement discussions of any kind."
Smith & Wesson CEO Ed Shultz
Position: CEO, Smith & Wesson Corp., unit of Tomkins PLC.
Age: 58
Education: Engineering degree, Iowa State University.
Experience: Construction, agriculture, power and recreational equipment industries.
Other Duties: Also heads another Tomkins unit, Murray Inc., maker of outdoor home-maintenance equipment and recreational products.
Sidelines: Pilot; occasional target shooter; invites (and sometimes answers) personal e-mail from customers.
The National Rifle Association has warned against any agreement that infringes on the rights of the gun owners it represents -- a warning the industry takes seriously because of the NRA's ability to influence customers. Even Mr. Shultz acknowledges there are some demands he isn't prepared to meet.
Still, he says forward-thinking gun executives should shake off their resentment of the lawsuits and figure out what changes in the manufacturing and distribution of guns will cause their antagonists to go away.
Don't misunderstand, Mr. Shultz is quick to say: He has a dim view of what he calls "greedy" plaintiffs' lawyers and "extremist" antigun activists who generated the suits filed by 28 cities and counties. "But I'm a pragmatist," explains the 58-year-old executive, who came to the gun business only eight years ago. Contrary to what the famously combative NRA might argue, he adds, "you don't have to sacrifice the Second Amendment to get this resolved." An NRA spokesman declined to comment.
This isn't the first time Mr. Shultz has exerted this sort of leadership. In 1997, as gun-control proponents in Congress tried to pass legislation requiring safety locks on all firearms, Mr. Shultz unilaterally announced that Smith & Wesson would provide locks with its guns. Most of the rest of the industry later made the same pledge at a White House ceremony, drawing harsh criticism from the NRA for dealing with the Clinton administration.
A longtime gun owner with a blunt manner, Mr. Shultz lacks the emotionalism about firearms common in the industry. He took over a stumbling Smith & Wesson in 1992, when its British parent, Tomkins PLC, hired him. His earlier career included stops in the construction, power and recreational-equipment industries.
Mr. Shultz has thoroughly revamped the gun company, modernizing its factory, cutting the work force by about 50%, to 750 people, and diversifying into such products as specialty auto parts and police computer software. Annual revenue exceeds $110 million, Mr. Shultz says, but he won't discuss exact financial figures.
One dollars-and-cents reason to resolve Smith & Wesson's legal troubles is that Tomkins, as part of a larger restructuring, has explored selling the company, according to people familiar with the situation. Uncertainty related to the litigation would depress the price, however, and Mr. Shultz says Tomkins isn't actively shopping for a buyer.
In the meantime, meeting some gun-control demands is actually good business, Mr. Shultz says. Many homeowners want locks to make sure their children can't play with firearms, for example.
A more ambitious demand made by those suing the industry is development of a high-tech "smart gun" that can be fired only by authorized users. Smith & Wesson has been quietly working on such a product for years, although the company isn't prepared to go public yet with its version.
Separately, Smith & Wesson has been tightening supervision of its wholesalers and authorized dealers. The company, like its rival Sturm, Ruger, forbids sales of its new firearms at gun shows, which law-enforcement officials call a common source of criminal arms. When five dealers in Chicago were indicted last summer for allowing allegedly shady purchases, Smith & Wesson cut them off, Mr. Shultz points out.
Such steps are precisely what gun foes hope to get out of a settlement, although they say even Smith & Wesson hasn't gone far enough.
Mr. Shultz counters that some demands being made of the industry require government action. Gun opponents want manufacturers to weed out retailers to whom the federal Bureau of Alcohol, Tobacco and Firearms repeatedly traces guns used in crime. But Mr. Shultz maintains that the ATF or other police agencies should take the lead in identifying patterns of questionable sales.
"Right now, they don't give us the information," he says. If the government did so, he adds, "we are prepared to act."
Demands such as those for limiting consumers to one gun purchase a month or otherwise restricting bulk sales should be addressed by Congress, he says.
A flash point in any future talks will be a demand by New York Attorney General Eliot Spitzer -- who has threatened to make his state the first to file its own suit -- for an independent monitoring authority to oversee all gun companies. The industry maintains that this function already belongs to the ATF. But neither side will get all it wants, Mr. Shultz says: "That's just how these things go."