[RB]

I work for a company that makes consumer type products just as Browning does. We actually make our 'core' products and buy the low volume fringe products from other manufacturers and have them branded in our name so our dealers can have a whole range of products to sell.

Help me here... it doesn't appear that Browning actually makes any of their shotguns (I don't know about rifles and pistols). Why not?

They have a dealer network, a good brand, service stations, a big chunk of the market share... they carry the bunden of warranty costs and liability. Buying product is expensive as you pay the overheads and profits of your supplier as well as your own. This must make it harder finacially to compete with more vertical integrated manufacturers.

In Europe, they sell against the very manufacture (Miroku) that supplys them.

Why don't they build or buy a plant, hire the talent and make their own??? ...and then lower their prices!

Insights please.

 

[RB]

The answer is simply that costs would go up, not down. It's fundamental economics. In general American labor and benefits are more expensive than most anywhere else.

I'm not saying they should necessarily build in the US. Actually though, it wouldn't be that bad if they did given the weak US dollar. Importing in from Japan and Europe is really expensive right now.

I'm saying: why don't they build vs. buy? Build anywhere it makes sense... they are market leaders.

Fundamental economics: it can't be cheaper to buy the shotgun from one manufacturer (you just paid for all of his overheads, direct costs, and profits), then add your own overheads, direct costs, and profits... then sell to the dealer. Especially when your competiting against companies who actually make their product, without the added margins.

It's like GM going to Toyota to get the WHOLE FLEET BUILT... not just a Vibe.

Is Miroku a subsiderary of some kind??? Something's missing.

 

[RB]

Wow... cool down.

Actually, I do know something about manufacturing and retail. I work for a large manufacturer with a worldwide dealer network. I also ran my own company on the side for years selling a patented woodworking tool in various markets around the world. I recently sold the business.

Getting a gun made is the easy part... the building, the talent, getting a design,... is a commodity. You buy it just like you'd buy anything else.

Building the BRAND and developing the dealer network is by far the hardest. That's probably why my local dealer doesn't sell me a Miroku instead of a Browning. They haven't built the Brand in this country and don't have a network.

The economies of scale you mention flatten out as volumes get large. Browning would have PLENTY of volume to create their own high volume manufacturing. Miroku's added volumes (primarily Europe) wouldn't lower manufacturing costs much, if any. I would bet you a beer that Miroku's volume pails to Browning's US branded numbers.

Every market is different but in woodworking tool accessories: you make it for $10, you sell it for $20, and list price is $40. The dealer marks down from there as necessary. In the tractor business, a $10 cost add hits the dealer as a $50 hike.

My point is that Miroku's profits are in there when Browning buys the shotgun. Those costs get multiplied several times as the gun heads toward retail. A gun company, making their own product, would have a big cost advantage without this burden.

Browning has the important part: the Brand and the network...