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Defiance bought out
- Thread starter clark33
- Start date
I used 10% as a generic number /example as we don’t know their COGS, or their supplier contracts…for all we know their supplier could have bumped it 50% etc.
But it’s not just the raw material, it’s spares, tooling, equipment etc. as we know inflation kills everything and is all reaching.
Not giving anyone a pass on increasing prices drastically but no one invests in a business to purposely put it out of business.
I’m guessing the price increase was a immediate need for cash flow. And / Or the financials were not clean enough upon original inspection and they prob found a few “quicksand” areas that aren’t quick fixes.
Or I could be 200% wrong on all fronts?
But we’ll never know the truth, this whole thread is all speculation.
Wasn’t the previous Tenacity price increase a result of going to an integral recoil lug?
Facts ^^^A 10% increase in material cost in no way, shape or form translates into a justifiable 27% list price increase.
In fact, if a manufacturer raises their list price by 10% to "cover" for a 10% increase in material costs, he's coming out money ahead. Pulling numbers out of thin air, if material costs were $400.00 (which I doubt, but let's run with it), then 10% of that is $40.00, or $440.00 total material cost.
Conversely, raising the list price of a $1,299.00 Action by 10% is an additional $129.90. Raising it by 27% is an additional $350.73.
"Suffering" a $40.00 material cost increase, but charging an additional $350.73 is pretty good work if you can get it.
So no, I don't buy it. Not even remotely so.
That 10% rise in raw materials cost may work out to a 1% increase in their total cost per unit produced I'm sure their labor and overhead have increased as well and it's hard to argue against passing these costs on to customers to maintain profitability. Nevertheless, the sharp price increases we're seeing immediately preceding and following an acquisition like this are usually indicative of serious issues with their business model.
We can speculate for days about the details, but one way or another poor management is at the heart of whatever's going on here. I have no stake in the game here and I'm not trying to piss in anyone's cheerios. I'm just calling it how I see it.
On that note, I wish the best to the new and former owners in their present and future endeavors. Here's to hoping defiance pulls through this tumultuous period and comes out the other end with a sound, scalable model going forward.
I figured this was the case.
Selling 10 actions for $1k/piece at a $50 margin yields $500 in profit. Selling one unit of the same action at $1500 yields a $550 profit. Gross sales can drop by 90% and they'll still come out ahead.
This would be a major issue with their business model I just referenced. Loss leaders rarely work well anymore unless the manufacturer is able to recoup those costs in accessories or related items that can be upsold at huge margins. I'm not sure how that would apply here.
I do not want to muddle up the thread, but while Vampire action looks awesome, how does that relate to the Defiance price increases? I ask since I see that $1836 is the current price listed for the Vampire.
Once a Marine, Always a Marine.
I have never used a BAT. What does it offer over using an anTi-X? I see that it's made out of aluminum and steel and does not fit a r700 footprint. Does any major manufacturer make prefits for it? Basically, what makes the BAT worth the price but not the Defiance?
Thank you for your service. My first step-father was a second class boiler tech aboard the USS Ogden.
My second step-father who was his friend, actually, was in the Marines. He got medically discharged from a service related injury. He was a local hero. After exiting active duty, he was a truck driver and saved a woman and her two boys from carjackers at a rest stop. He punched one guy and knocked him out and the other bad guy sliced his arm and he turned around and hit him so hard that the guy flew across the hood of the car.
No problem but sounds like you had some good vets in your family as well. Good story about the carjacking. Glad they got what they deserved by that Marine.
A handful of people or so have said in this thread they will now go with BATs or another manufacturer. With mil discount, I did not pay that price
@abn31c I know there are options. Been putting in orders on Manners for the last two years and canceling lol. Gonna stick with this one.
It's my first one so we'll see. They are held in high regards for their actions though so I'm sure it won't disappoint. Yes, its made of aluminum and is steel reinforced up at the chamber to handle the pressure and what not.
Yes. And my sense of humor can be a bit dry. When I said "I liked my version better," I was thinking of Adam Savage from "Mythbusters." "I reject your reality and supplant it with one of my own."
Really, more of a self-depracating statement. But that does not always come across as "funny." And you are wise to correct the spelling.
I would have served but I was medically disqualified because of asthma that required medication and a doctor's care into my late teens.
A 10% increase in material cost in no way, shape or form translates into a justifiable 27% list price increase.
In fact, if a manufacturer raises their list price by 10% to "cover" for a 10% increase in material costs, he's coming out money ahead. Pulling numbers out of thin air, if material costs were $400.00 (which I doubt, but let's run with it), then 10% of that is $40.00, or $440.00 total material cost.
Conversely, raising the list price of a $1,299.00 Action by 10% is an additional $129.90. Raising it by 27% is an additional $350.73.
"Suffering" a $40.00 material cost increase, but charging an additional $350.73 is pretty good work if you can get it.
So no, I don't buy it. Not even remotely so.
Cost Accounting is not an area of expertise for you is it?
1) A 10% increase in the price of Metal is not the only price increase they likely faced,
2) If I was a skilled machinist, I would want a large raise each year. All other employees would expect raises as well,
3) Rent - it would certainly have gone up,
4) Shipping costs to/from the facility certainly went up,
5) Insurance costs have gone up,
6) If they had to pay for, maintain, and fuel vehicles those costs went up,
7) If the previous finance people at the company misallocated costs to one product vs another, that mistake would need to be corrected resulting in price changes for certain models (misallocation of costs is a major cause of significant financial distress),
8) How capital intensive is a product?
8) did their taxes go up?
9) did their property taxes up? and so on and so on.
At large corporations, there are entire teams of accountants dedicated to making sure the company knows the correct amount it costs to produce a product? If they get it wrong, it could cost the company millions of $'s.
The fact that only one of their products went up in price suggests the Tenacity wasn't a profitable product to make and sell at the old price.
Didn't all of them go up? I think the Tenacity sticks out because it was such a huge price increase. I'm not an expert though, I don't follow their prices as much as others on here.
GA Precision just announced on InstaGram they’re going to Impact actions.
I think a lot of people on this thread understand cost accounting. All companies are experiencing all of the factors you list. Except only one company has the additional cost of needing to cover a debt-funded buyout. Coincidentally that is also the only company raising prices to this extent.
I wish them well. I love their actions and hope the one I still have on order comes through at the price I already put a $1k deposit towards. In the big picture this isn’t a big deal but this is a massive change in our little community and worth debating, IMO.
For me, at current prices, I will choose something else for my next project. But that all hinges on availability. If other brands now have a deeper backlog and I can pay a bit more for a Defiance and have it now, I’ll probably pay a bit more for Defiance.
Yes, they all went up. I don’t track prices but the Deviant Tactical I ordered had a base of less than $1500 and is now $1745. I think it was ~$300 increase but may not be as bad for me if they got rid of the Lapua bolt up charge.
Well Crap! Now I understand when back at the end of November I decided the get another BadRock SouthFork rifle and they were basically shut down.
I have a bit of experience with merger and acquisitions. As a Business Analyst I was involved in a number of them. Including my own businesses. Those went 1- SOLD to a fortune 1000 which drove it into the ground with their lack of vision, and 2 - NOT SOLD to one of the two biggest public multinationals in that business and we have thrived beyond expectations ever since (we never had their stockholder overhead and were able to undercut their prices in our market).
I was also involved on a number of them on the consulting side where I told the little guy owner of a successful company for 30-years: "sell it and sell it now!"
A handful of the ones I told that too I met years later in some business function or other and they hugged me! Their usual response:
"Thank You! I was upset but sold it when you told me, made a killing and 4-years later the company went under and closed - best $100K I ever spent was on your consulting fee."
Those were some of the moments that made all the years of living in hotels all over everywhere, sleeping in jetplanes and missing some of my children's' "milestones" somewhat worthwhile.
As for Defiance, it can go either way. I don't know the particulars. That said, I know, I've seen it - It is extremely risky to buy companies at a premium price and at the height of their product demand during tumultuous times, within uncertain political climates, and be successful in the long run.
This is especially true but not limited to buyers not being extremely well versed in the particular business segment, and which in the case of Defiance has a product demand/growth potential which is limited by strong external factors. Name recognition will only get you so far.
I won't hold my breath on this one...
I have a bit of experience with merger and acquisitions. As a Business Analyst I was involved in a number of them. Including my own businesses. Those went 1- SOLD to a fortune 1000 which drove it into the ground with their lack of vision, and 2 - NOT SOLD to one of the two biggest public multinationals in that business and we have thrived beyond expectations ever since (we never had their stockholder overhead and were able to undercut their prices in our market).
I was also involved on a number of them on the consulting side where I told the little guy owner of a successful company for 30-years: "sell it and sell it now!"
A handful of the ones I told that too I met years later in some business function or other and they hugged me! Their usual response:
"Thank You! I was upset but sold it when you told me, made a killing and 4-years later the company went under and closed - best $100K I ever spent was on your consulting fee."
Those were some of the moments that made all the years of living in hotels all over everywhere, sleeping in jetplanes and missing some of my children's' "milestones" somewhat worthwhile.
As for Defiance, it can go either way. I don't know the particulars. That said, I know, I've seen it - It is extremely risky to buy companies at a premium price and at the height of their product demand during tumultuous times, within uncertain political climates, and be successful in the long run.
This is especially true but not limited to buyers not being extremely well versed in the particular business segment, and which in the case of Defiance has a product demand/growth potential which is limited by strong external factors. Name recognition will only get you so far.
I won't hold my breath on this one...
Respectfully, Not the way it works. These days, and it has been like this for decades, the real danger is automation.
Automation is very expensive to initially acquire, hire trained personnel, and requires a lot of up front capital. Dammed if you do or don't because competitors that can afford it and do, will drown you over time with better (more precise) products, plant and equipment write offs, lower production costs, higher volumes and 5-years or so later, higher profits.
Yes. I was generalizing for the sake of efficient illustration. My main point was the disparity between the stated (or assumed) raw material cost increases and their list price percentage increase. I wasn't interested in picking peanuts out of turds.
If they have to raise their list price(s) that far, the company was probably already underwater financially. If so, the buyers bought a pig in a poke. Again, if true, the new owners are trying to make their bad investment back, on the backs of consumers.
I have no dog in this hunt. But, as with all manufacturers in the firearms industry, I want to see them be successful.
I don’t think anyone wants to see Defiance fail. I would certainly hope so anyway. Unlike some other vendors…
My main point was that the cost of materials was only a small part of the true cost of producing an action.
They likely bought the company knowing that it was in trouble. The statement of cash flows and account statements would show that to them.
When a company is faltering, the new owners (if they are smart) will act quickly to stop the bleeding. For whatever reason, they decided that their budget action was a money loser and decided to raise it's price. They clearly think it was a money loser at the old price.
So how does ARC offering an integral lug integral rail action for $900 play into this?
I can’t imagine the name “coup de grace” being a coincidence either.
I can’t imagine the name “coup de grace” being a coincidence either.
Most people don't realize, and I didn't until I got out of college and started my profession, that for a company to make a profit it needs to markup their prices over materials costs by 100 to 200 percent! Closer to 200.
This might sound huge, but it's not really. There are a lot of other costs involved, which bring real profits down to around 10-15%, and only if they manage their overhead wisely and have a niche market. In a very competitive environment, which most are, it can be much less than that.
I love that they announced this.
Defiance tenacity simps in fucking tears right now.
So getting rid of the stuff you have already bought and paid for is your answer when it is one of the finest actions on the market??? If you choose not to buy from them is one thing but why sell what you have that’s lunacy. They make actions 24 hours a day there are a lot of employees that are depending on their jobs to support their families your not hurting the owners your hurting them.
Being an owner of a TTF can, I don’t want any part of another cluster like that.
Jacking up orders placed months ago, Industry leaders dumping them, ARC with the new $900 action, etc.
As for their employees, been there and done that too. I took a pay cut but seeing where they were heading, I jumped ship. Got to take care of you first.
Jacking up orders placed months ago, Industry leaders dumping them, ARC with the new $900 action, etc.
As for their employees, been there and done that too. I took a pay cut but seeing where they were heading, I jumped ship. Got to take care of you first.
I have an action on order with a deposit I am being told the price will be honored.
Coup De Grâce, New Action from American Rifle Company, $899 WOW!
People of Earth, American Rifle Company proudly introduces the Coup De Grâce at the hard to believe introductory price of only $899. We'll be taking orders soon, probably in about eight weeks once actions are on the shelf. From the Oxford English Dictionary: e. coup de grâce n. /ku də ɡras/...
www.snipershide.com
Coup De Grâce, New Action from American Rifle Company, $899 WOW!
People of Earth, American Rifle Company proudly introduces the Coup De Grâce at the hard to believe introductory price of only $899. We'll be taking orders soon, probably in about eight weeks once actions are on the shelf. From the Oxford English Dictionary: e. coup de grâce n. /ku də ɡras/...
The thing about offering a low priced model, it tends to take sales from the company's higher priced models (with larger margins) as well as sales from their competitors.
I hope ARC does well with it and as a company in general. If they can manufacture it and sell it a good profit, good for them. It definitely is good for buyers looking to save money.
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except this is an intro price...and replaces an existing model (Archimedes)
and ARC will sell a boatload of these really fast
And its not tied to a turd in the punchbowl.
Really think that Eric dude and Bob should ring up Philipe and get a serious bowl of floaters goin on.
why why did you have to put that image in my head? though in all seriousness I do think Eric and Bob will have a hard time on their hands.
Im not a fan of Bob and could care less what kinda stuff he does.
The other dude chooses to work for him.
my give a dang ran out.
The dumpster fire keeps my hands warm for a bit.
Not sorry for the visions in your head.
Its really just a 3 way circle jerk in an ice bath, post “weight loss workout”
Just close to a punchbowl.
The other dude chooses to work for him.
my give a dang ran out.
The dumpster fire keeps my hands warm for a bit.
Not sorry for the visions in your head.
Its really just a 3 way circle jerk in an ice bath, post “weight loss workout”
Just close to a punchbowl.
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