Colt's Manufacturing Company, Inc. History
Hartford, Connecticut 06144-1868
Telephone: (203) 236-6311
Fax: (203) 244-1366
Incorporated: 1855 as Colt's Patent Fire Arms Manufacturing Company
Sales: $100 million
SICs: 3484 Small Arms
Colt's Manufacturing Company, Inc. is one of the world's most famous manufacturers of firearms. Weapons made by Colt have played a part in every war involving the United States since the middle of the 19th century, and the Colt revolver, invented by company founder Samuel Colt, is known widely as "the gun that won the West." In addition to its revolvers, the company makes a wide variety of other firearms, including pistols, shotguns, and machine guns. Its M16 line of combat weapons is used by military units all over the world. Founded in 1836, Colt's is one of the oldest companies in Connecticut. The company manufactured 145,000 guns in 1990, making it the seventh largest gun producer in the United States.
Samuel Colt's invention of the revolver represented a major improvement over the flintlock pistols that were the best available until the 1830s. Colt was only 18 years old when he applied for the patent for his revolver in 1832. When the patent was finally approved four years later, Colt immediately opened his first plant with the assistance and backing of his uncle, a successful local businessman. The company was called the Patent Arms Manufacturing Company and located in Paterson, New Jersey. Initially, three revolver models (pocket, belt, and holster) and two rifles (hammer-cocked and finger lever) were offered. Although the first generation of Colt guns performed well, the public apparently had doubts about such an unfamiliar concept in gun technology. Sales remained slow for several years, and Patent Arms Manufacturing Company was out of business by 1842.
When U.S. Dragoon forces and Texas Rangers began battling Indians in Texas in 1845, the Colt company was given its second chance at success. Using Colt firearms, the Rangers and Dragoon fighters defeated the Indians. The U.S. War Department took notice of the superior performance of the Colt guns. As a result, the Army sent Captain Samuel Walker to collaborate with Colt on an improved design when war broke out with Mexico the following year. The Government immediately ordered 1,000 of the new revolver, known as the "Walker Colt." Since Colt did not have a factory at the time, he contracted with Eli Whitney, Jr., the famous inventor's son, for the use of his New Haven, Connecticut factory.
With the successful completion of the government order, Colt was able to set up a new factory of his own in his home town of Hartford, Connecticut. Colt guns quickly became the weapon of choice for such diverse groups as California miners and foreign statesmen. Even at this early stage, Colt demonstrated a genius for marketing and public relations, hiring military officers to promote his guns in other regions, and actively lobbying government officials. By 1851, Colt had set up a factory in England (the first American manufacturer to do so), and work had begun on a larger facility in Hartford. The new plant was completed in 1855, the same year the company was incorporated as Colt's Patent Fire Arms Manufacturing Company. Within two years, Colt's was making 150 guns a day, and Samuel Colt was a millionaire.
Samuel Colt died suddenly in 1862, but the company he founded continued to surge. Colt's widow, Elizabeth Jarvis Colt, and her family maintained control of the company through the rest of the 19th century. From 1865 to 1901, Colt's brother-in-law, Richard Jarvis, served as company president. The Civil War brought huge government purchases to Colt's. In 1867 the company began manufacturing the famous hand-cranked Gatling machine gun. The Colt single action Army Model, a six-shot .45 caliber revolver, was first produced in 1873. That gun gained a huge following almost immediately, and was the model that went down in history as "the gun that won the West."
Many additional models were added to the Colt line during the 1880s, including double-action revolvers, hammerless shotguns, pump action rifles, and revolvers with cylinders that swung out to make loading easier. In 1891, Colt's relationship with inventor John Browning began. The Colt-Browning machine gun, which became known as the "Peacemaker", was first produced in 1895. It eventually replaced the Gatling gun as the top Colt machine gun. Around the same time, Browning began developing a line of automatic pistols for Colt's, and he continued working on new guns for the company for a few more decades.
In 1901, Mrs. Colt sold the company to a group of outside investors based in New York and New England. She died four years later. Under its new management, the company continued to produce guns for the government in huge numbers. Browning developed the Colt 45 automatic pistol in 1911. One of the most popular guns of all time, the Colt 45 was the standard issue sidearm for American troops in both World Wars. It also saw action in later military conflicts, and was a huge success commercially as well. The U.S. Government alone purchased 2.5 million Colt 45 pistols over the years. When the United States entered into World War I in 1917, business boomed to its highest levels yet for Colt's. The company's Browning Automatic Rifle became a big seller to the government. During the war, Colt's workforce swelled to 10,000 people. The company's revenue tripled in the last three years of World War I, and profits soared accordingly.
With the end of the war, Colt's sought to diversify in order to keep production at a high level in the face of shrinking demand for weapons. Printing presses, commercial dishwashers, and plastics were among the products the company began manufacturing after the war. Browning's last invention, an anti-aircraft cannon, came in 1921. Two years later, the company established an electrical division that made, among other things, fuses. Meanwhile, Colt's continued selling guns wherever they were needed.
Like many manufacturing companies, Colt's was devastated by the 1929 stock market crash and the Great Depression that followed. Revolver sales dropped below their pre-World War I levels, and many workers were laid off. A series of events in the second half of the 1930s battered the company even further. In 1935 a bitter and sometimes violent strike took place at the Colt's armory, lasting 13 weeks. A flood in 1936 and a hurricane in 1938 filled the Colt's factory with mud and water and inflicted huge monetary losses on the company.
World War II brought with it huge new government orders for weapons, creating another boom period for Colt's. By 1942, the company's workforce had tripled to 15,000. Those employees worked three shifts, seven days a week at three plants. In spite of the large numbers of pistols and machine guns being turned out for the war effort, Colt's struggled to remain profitable during that last few years of the war. The 1941 unionization of Colt's employees had dramatically increased the company payroll. In addition, production techniques were becoming outmoded. The inexperience of the quickly growing workforce also contributed to efficiency problems. Amazingly, the company was losing money by the later stages of the war. Production was sagging due to ancient machinery, layoffs, and labor squabbles.
When World War II ended, Colt's government orders dried up, leaving the company's finances in shambles. Operating now under the name of Colt's Manufacturing Company, the company spent the postwar years frantically searching for ways to cut costs and improve manufacturing efficiency. The Korean War in the early 1950s provided a rush of business for Colt's, but the surge was only temporary. By the middle of the decade, the company was once again losing money. With losses mounting by the month, Colt's began actively looking for a prospective buyer for the company. In 1955 Colt's was purchased by Penn-Texas Corporation, a holding company controlled by Leopold Silberstein, and one of the first conglomerates.
For the rest of the 1950s, Colt's operated as a wholly owned subsidiary of Penn-Texas. Silberstein lost control of Penn-Texas in 1958, and a year later Penn-Texas changed its name to Fairbanks Whitney, following its acquisitions of two larger companies, Pratt & Whitney, a Connecticut manufacturer; and Fairbanks Morse Company, a diesel engine firm based in Chicago. A major overhaul of the parent company's management in 1964 resulted in yet another name change. Although Colt's represented only a small fraction of the conglomerate's business, the name chosen was Colt Industries, and Colt's became the Firearms Division.
The escalation of the Vietnam conflict in the 1960s brought a new rush of business for the Firearms Division of Colt Industries. The M-16 rifle, developed by Colt in 1959, soon became the standard issue for U.S. armed forces. The first big government order for M-16s came in 1963, when the Air Force agreed to purchase 25,000 of the rifles. By 1966 the Division had 1,600 employees, nearly half of them engaged in putting together M-16s. The company delivered its one millionth M-16 rifle in 1969. That year, the Division was divided into two separate units, one for military production and one for small arms.
When Vietnam began winding down in the early 1970s, Colt was again faced with the pressures of adjusting for peacetime production. The company began to focus more attention on sporting guns, and in 1970, rifles and revolvers for sport generated $17 million in revenue. Around the same time, interest in classic Colt guns as collector's items began to climb. In order to capitalize on this emerging market, the company established its Custom Gun Shop in 1976. The Custom Gun Shop specialized in producing replicas of famous historic Colt guns, such as the ones presented by Samuel Colt to Czar Nicholas I of Russia and to the Sultan of Turkey in the 1850s. By the end of the 1970s, the Custom Gun Shop was generating annual sales of $3 million. For 1977, Colt's Firearms Division recorded $11 million in profit on sales of $77 million, trailing only Winchester, Remington, and Smith & Wesson in volume. Orders from the U.S. Government, however, dried up almost completely that year, and the Division's sales and profits lagged for the rest of the decade.
The slump at the Colt Firearms Division continued into the 1980s. Military demand was still depressed, and Colt was also continuing to lose ground to competitors in the law enforcement market, long one of its most important outlets. In 1982 and 1983 the company laid off 700 employees, half of its total workforce. Rumors of the Division's imminent demise began to circulate. Labor problems made matters even worse. In 1986 workers represented by the United Auto Workers (UAW) began a strike that eventually became the longest in Connecticut history. The company continued operating with replacement workers. Colt suffered a huge blow in 1988 when it lost out to FN Manufacturing Co., a subsidiary of a Belgian company, in the bidding for the U.S. Army contract to make M-16s, its bread-and-butter product. That year, parent Colt Industries went private, with ownership consolidated into the hands of Colt Holdings Inc., a newly created holding company. The Firearms Division was put up for sale soon after.
CF Holding Corporation, a group of private investors led by Shared Technologies Inc. chairman Anthony Autorino, purchased the Firearms Division in 1989 for about $100 million. The newly independent company was christened Colt's Manufacturing Company, Inc., the same name it had carried for a period after World War II. The company quickly resolved the lingering strike, reinstating striking workers and giving the UAW three seats on the board of directors. As part of the transaction, a Connecticut state pension fund paid $25 million for 47 percent ownership of Colt's. With new management intact and labor disputes under control for the time being, Colt's set out to win back some of its lost police business and stake out more ground in the sporting gun market.
Sales remained hard to come by in the early 1990s, however. Colt handguns had a difficult time finding a niche in a market flooded with cheap handguns and more sophisticated semi-automatic weapons. Colt products were considered either too expensive or too old-fashioned by many police departments and other potential buyers. Under the burden of a growing debt load, Colt's filed for Chapter 11 bankruptcy protection in 1992. While in bankruptcy, the company took measures to streamline its operations while updating its manufacturing equipment. Colt's suffered a setback in 1993 when the semi-automatic, military-styled Sporter--the company's best selling rifle--was banned in Connecticut, its home state.
In spite of that ban and potential bans in other states, Colt's was able to emerge from bankruptcy in 1994 when it was purchased by a partnership headed by the New York investment firm Zilkha & Company. The partnership acquired an 85 percent stake in Colt's. Whether Colt's new ownership can return the company to the exalted position it once held among gunmakers remains to be seen. Even during one of the most humble periods of its business history, the Colt name continues to evoke a sense of historical import and a great deal of respect among gun enthusiasts, regardless of the difficulties the company has encountered in recent times.
- Bryant, Adam, "Colt's in Bankruptcy Court Filing," New York Times, March 20, 1992, p. 1D.
- ------, "Colt's New Chief Likes to Fix Businesses," New York Times, May 15, 1992, p. 5D.
- "Colt's Manufacturing is Officially Out of Chapter 11," New York Times, October 1, 1994, p. 19.
- "Firm to Sell Firearms Unit to Some Private Investors," Wall Street Journal, November 29, 1989, p. 5B.
- Grant, Ellsworth S., The Colt Legacy, Providence, R.I.: Mowbray Company, 1982.
- Johnson, Kirk, "Crying Betrayal in Hartford, Colt Faces Uncertain Future," New York Times, June 12, 1993, p. 1.
- Manges, Michelle, "Connecticut State Pension Fund Buys 47% Holding in a Firearms Company," Wall Street Journal, March 23, 1990, p. 14.
- Verespej, Michael A., "Colt's New Rider," Industry Week, October 1, 1990, p. 14.
- Wilson, R. L., The Colt Heritage, New York: Simon and Schuster, 1979.
Source: International Directory of Company Histories, Vol. 12. St. James Press, 1996.