Featured What’s Quieting the Silencer Industry? Kel Whelan February 2, 2017 0 COMMENT A perfect storm of bad news, good news, and overcrowding has caused a glitch in the fastest growing segment of the shooting industry – and silencer manufacturers are dealing with their first real market adjustment. State of the industry, 2012 Silencerco has the #1 most-civilian-transferred suppressor on the market, with 3,672 ATF Form 4 transfers processed for their Sparrow .22LR model that year. The once-underground community of silencer enthusiasts formerly buying via special order through small, specialty gun shops that had the rare Class III license needed to order direct from the handful of silencer manufacturers, was starting to see major distributors pick up lines of silencers for them to push to mainstream megastores. Back in 2009, Remington purchased AAC and after some legal problems, was poised to take them to the next level. Enthusiastic silencer evangelists from Gemtech were getting results of years of networking with mainstream gun manufacturers, as Smith & Wesson, Savage, and Browning took a chance on offering “Silencer Ready” models with threaded barrels sporting suppressors in their SHOT Show booths and catalogs. The levee was about to break and this underground was about to go mainstream. The American Silencer Association In 2011, a group of silencer manufacturers figured it was time to push hard on the politics holding their industry back. The American Silencer Association formed in D.C. with a lobbying purpose to widen up the “skinny straw” of the ATF’s National Firearms Act Branch and stop it from being the logjam to silencer ownership that it’s been since its inception. You might ask, what was the National Rifle Association doing to help? It was quiet; according to a conversation with a senior leader of the NRA’s Institute for Legislative Action at the time, the organization was concerned it could “love silencers to death.” Too much attention paid to easing the path to silencer ownership by such a high-profile group might attract the attention of the gun control crowd before a properly educated support base was formed to combat them. Suggestions were made at the roundtable of manufacturers, lawyers, and lobbyists on how to improve the NFA Branch. The NRA mentioned avenues such as getting funds re-allocated towards ATF and earmarking money to stay in the Branch to streamline the NFA process. All wanted to help the ATF fix their broken e-filing system. But first, congress would have to learn that this wasn’t about assassin’s tools and Hollywood myths: So the ASA at first went ahead somewhat alone on an educational mission to spread the word that these silencer things weren’t all James Bond and movie silliness. Adam Kraut, an attorney who specializes in state and federal firearm legal issues, and who is running for election for the NRA Board, commended these efforts noting, “One great thing the industry and ASA did is they went to lawmakers and educated them on what a silencer actually is. That gave lawmakers a chance to understand that their preconceived notions weren’t correct on silencers.” Flash forward to 2017 Subsidiary of the $2 billion-dollar Vista Outdoor/ATK company, Blackhawk is promoting silencers front and center in their huge SHOT Show booth. Over 20 new silencer manufacturers have popped out of nowhere. Major firearm manufacturers with forward-looking CEOs, such as Mike Fifer of Ruger, joined the market with smart, low-risk approaches to silencers. Every salesman seems to know the once-underground lingo of first round pop and free bore boost (probably having been taught about silencers just hours before the show via PowerPoint briefs given to older gents that were pushing sporting clays equipment only weeks ago). Silencers have finally come to the mainstream, and one buzzword seemed to be on everyone’s lips: HPA. The Hearing Protection Act The Hearing Protection Act, a legislative bill to take away the $200 tax and the painfully-long waiting period of the NFA, turning silencers into Title 1 firearms, is the free-market dream of de-regulation. Silencers would be as simple for consumers to buy, and for dealers to stock, as a rifle. The same useful and timely criminal background checks as buying a pistol would be used. No NFA bottleneck. This author checked his notes from the ASA’s formative planning meeting and it turns out I had suggested that goal at that meeting. At the time, it was quickly filed as too soon – and it was. It may still be. What is most certainly too soon is the unfortunate assumption by tens of thousands of potential customers that HPA is as good as done. Kraut points out “the ASA and Silencerco may have broadcasted too loudly that ‘the chances of the bill passing have increased because the President is on our side’. But even if Congress was overwhelmingly Republican, there are far wider impacting issues to the majority of public gun owners than gun suppressors. I would think more people would be affected by National Carry Reciprocity than silencers.” “Instead of presenting it as ‘we have an opportunity to make this law, and we need your help in the process,’ Silencerco came across as ‘it’s a done deal,’ Kraut said. “It’s still going to take work to get it to the floor for a vote,” continues Kraut. “The way the Senate is made up there’s 52 Republicans and 2 independents, so there’s not a 60 vote or supermajority, and political goodwill might not be expended to push something niche like silencers across. The bill still needs to get out of committee, and that’s where people’s help is needed – calling specific members asking to get it out of committee and on the floor for a vote. Because if it’s stuck in committee it’ll die again – the most common death of a bill.” The conventional wisdom coming from those that know how laws are made, especially gun laws, is that counting on HPA to pass before buying what they want is a recipe for a very long wait. “Anybody who is waiting for the HPA to pass to buy a suppressor is going to be waiting a very long time,” says Todd Rathner, Chairman of the NFA Freedom Alliance and NRA Board Member. “The reality is that we still need 60 votes in the US Senate to pass a bill, and it’s a big question as to whether those votes are there or not. People should take a deep breath, and if you want a silencer BUY ONE! Waiting on the HPA makes no sense.” “This 41F Bullsh*it…” Before we can adjust to what would be good news of HPA if it does pass, and how awareness of this bill’s good news is affecting the market, it’s important to understand the industry is still just now adjusting from the bad news of last year: 41F. Sales of silencers had taken a beating last year when ATF proceeded with the nearly-unanimously protested ruling number 41F, which was perceived as closing the door on the purchase of silencers through legal instruments called trusts. This hurt sales nationwide. One dealer offered, “This 41F bullsh*t slowed cans WAY down at our shop. Went from dozens a week to maybe a can or two a month.” As backstory, buying a silencer via a Trust, instead of as an individual, was somewhat necessary, because –again– the onerous NFA Branch requirement of having to get a local anti-gun police chief to sign off on your application could be impossible in many areas. Using a Trust skipped past the local law enforcement requirement and went directly to national background checks. Trusts also offered the benefit of being a problem-free method to acquire and pass down NFA items to heirs. But, there was an infinitesimal chance of a felon getting a restricted item by breaking the law and lying on a Trust. A collectors association, the National Firearms Act Trade and Collector Association brought that to the ATF’s attention, hoping for good changes, but got bad ones. (Be careful what you wish for!) Instead of modifying the process as NFATCA desired, the ATF took it upon themselves to put a clumsier end to the fun, killing some of the benefits of everyone’s favorite way to buy silencers. Which, in turn, caused a huge run on NFA items as the community made that one last purchase of everything they wanted to ever add onto their trust. Years of normal buying activity got crammed into one election-year-sized panic buy. So the skinny straw of how many NFA registrations could be processed a year got clogged: Just when pretty much everyone decided it was time to buy a short-barreled CZ Scorpion and a Silencerco suppressor. “Next person to ask me about the HPA is getting strangled.” – Corey Shaffer, Thompson Machine suppressors, overheard during SHOT Show, 2017. Everywhere at SHOT Show 2017, the rumor of good news that HPA was all but signed by Trump – that friend of the Second Amendment! – and would be passed. Subcontract machine shops, previously totally unaware of the silencer segment, were trolling around the show, offering their services for when HPA passes. Everyone knew that soon, very soon, will be the time to buy a suppressor. Just not now, of course. Waiting for HPA seemed to be the customers’ mantra, frustrating silencer manufacturers offering some of the industry’s most evolved designs and lowest prices. Gary Hughes of Dead Air Suppressors said, “Everything is in a holding pattern. customers and wholesalers both are taking a wait and see attitude – business is down a significant degree. Upon Trump’s election, everyone figured it was a foregone conclusion, when it is anything but.” Thompson’s Shaffer echoed this saying, “Customers are definitely in a holding pattern. Which, as you can imagine, hurts direct sales and distributor/dealer reorders. The act of letting people know what the Bill is seems accomplished; the education of the process that the Bill has to overcome before it means something seems a little slower. Unfortunately, some think it’s a 100% done deal or that it’s already passed. Luckily for us we are big enough that we can endure the slow times. I fear it is going to put lots of smaller can companies out of business during the wait.” Dave Saylors of Liberty Suppressors commented that, “We are debt free, so slow sales isn’t hurting us too bad, but it is really annoying when you hear people say they will buy once the HPA passes. It is almost like the industry has been led to believe that the legislature is going to do some special miracle this session or something. According to Josh Waldron, SilencerCo’s CEO, nothing happens fast in Congress and this is no different. As he said on NRA TV, ‘the public awareness campaign had ‘unintended consequences…’ People are sitting on their hands and waiting for the miracle.” Silencerco, the largest promoter of the HPA, felt these unintended consequences hardest with reportedly sizable layoffs reported this week. Planning ahead big for deregulation, but getting caught in the same bottleneck of the NFA Branch, has apparently caused a need for the company’s “right sizing for current industry conditions” as Willie Vernon, Silencerco’s Senior Director of Products and Marketing at SilencerCo, told RECOIL. “It’s been really slow.”- a recently-downsized SilencerCo employee via social media. With an estimated 180 employees 15 months ago, and with a high concentration of capital equipment in a field where most silencer manufacturers subcontract and probably have less than twenty employees, any “really slow” hiccup in sales can bring headcount quickly into revenue-management crosshairs. Add to this that during the pre-election scare, many gun stores overspent on AR15s and accessories (which are having their own market adjustment, post-panic), and might not have the cashflow available to buy Silencerco’s silencers even if they wanted to. The recent breakup between Silencerco and megadealer Silencer Shop (which has a unique way of stocking and distributing suppressors so local dealers don’t have put out funds to stock items) also removed an income stream from cash-strapped SilencerCo dealers. 2016-17 is turning out to be a strange speedball of all-time awareness, excitement, and new product availability in the silencer world, but is hampered by the reality of customers still being stuck with almost year-long waits to receive product through the ATF’s NFA Branch and 41F’s consumer-unfriendly processes. It’s Not So Simple The ASA’s Knox Williams tempers the easy excuse of blaming slowdown in sales on the HPA as “a gross simplification of what’s happening. HPA is a factor – a big factor – but it’s an oversimplification of the gun market as a whole right now, and the suppressor industry in particular.” Williams says, “If you look at the market, gun sales in general are down because everyone hedged their bets on Hillary getting elected. Dealers and distributors stocked up on things they thought were going to be banned – They hedged their bets for good reason, but lost. They didn’t want the same shortages they saw in 2008, 2012… but now there’s no sense of urgency that there had been over the past eight years. Another major factor is 41F, which we fought tooth and nail. We got some form of victory there with no CLEOs, but it’s still an imperfect system that causes people to hold back on purchases.” Williams continues, “It’s important to understand [the ASA is] working to make suppressors more accessible to everybody, and focusing on the current conditions of the industry alone is forgetting the most important part: better consumer access to suppressors. Which in turn will be better for preserving hearing, and then creating new American jobs as further expansion of the industry happens.” The Bottom Line If you want a suppressor, buy the ticket, take the ride. The HPA Bill may or may not pass in the two year Congressional class it is now in. While things actually do look positive, the firearms legal community has more widely-impacting laws it may burn its clout on to pass (notably nationwide reciprocity for concealed carry). Support the HPA and the ASA – they need your help since this *isn’t* a done deal. The best thing for supporters to do is to call and email legislators in support of the HPA, and ask to bring the bill out of committee and onto the floor for a vote. There are some impressive cans coming out on the market this year, and buying them today supports the very manufacturers that brought us to this point in technology, advocacy, and availability. Yeah, you’re going to have to wait a bit to get them. Just like all the old-school suppressor owners that you see at the range did. You know, those guys who are enjoying their cans now, with a bit of a smirk at the new kids waiting for HPA Christmas to come before they can enjoy theirs. But shooting suppressed is worth the wait. Hopefully, one day everyone will have easier access to the health and shooting benefits of suppressors – until then, man up for the wait and enjoy being one of those insiders that had them before it was cool. Kel Whelan is a consultant to industry and government on silencer business and technology with more than 20 years of experience in manufacturing, design, sales, distribution, branding, and politics throughout the NFA industry. Before it was cool. David Merrill contributed to this report.