CNN, October 11, 1999

HARTFORD, Connecticut (CNN) -- Colt's Manufacturing Co., Inc. said it is cutting some handgun production, but is not exiting the industry. "We're staying in the handgun business," a company spokesman said Monday afternoon. In a statement faxed to news organizations Monday afternoon, Colt management said "a consolidation is underway involving the elimination of some of its unprofitable handgun lines, which is part of the normal, ongoing management of the business." The company said it is discontinuing seven handgun model lines, including its top-of-the-line "Python" .357 Magnum, according to a letter from the manufacturer that was sent to a gun dealer. A company spokesman acknowledged that the Python was slated to be discontinued, but would not release a list of the others, saying final decisions have not been made. In fact, he said, the company may stop making as many as 15 of the nearly 60 models its current catalogue offers, he said.

Company considers hundreds of layoffs

"We're still working with distributors and dealers," he said. "The letter may have been a little bit premature, and we're looking at reformatting it." He said it may be two weeks before final decisions are made about which models to discontinue. The company is considering laying off some of the 700 to 800 people who work in the plant, most of them UAW workers, the company spokesman said. But no decision has been made yet about how many, he added. The company plans to continue to market its classic handgun products, which represent the majority of the company's business, the spokesman said. "We intend to continue the growth of our military and law enforcement market segments while focusing our commercial efforts on our most important and profitable product lines," said retired Marine Corps Lt. Gen. William Keys, CEO of the New Colt Holding Co.

Colt says lawsuits not a factor

Colt is one of several gun manufacturers being sued by nearly 30 American cities seeking compensation for their costs in treating victims of gunshot wounds. The company spokesman denied a Newsweek report that the cuts are to be made in response to lawsuits against the company. "I don't know how that would limit our liability," he said. "It's not the litigation so much as the fact that it's not profitable. It's not a safety concern; it's a profit concern."

'Smart gun' in works

The company emerged from Chapter 11 bankruptcy proceedings in 1994 and has received several major government contracts since then. Colt has agreements to produce or refit more than 90,000 of the U.S. armed forces' standard combat rifle, the M-16. The company is still hoping to develop and market a "smart gun," which can only be fired by the gun's owner. The gunmaker has been in business for 165 years and makes handguns, rifles and carbines for the consumer market, law enforcement, international arms sales, and the U.S. military. Company founder Samuel Colt patented the revolver in 1836 and began mass-marketing the first firearm capable of being fired multiple times without reloading. The company has produced more than 30 million guns since then. The New Colt Holding Co. has looked into the possibility of setting up a separate entity to producing so-called smart guns that fire only when their owners are holding them.