The Latest Victim of the Recession: The AK-47

Unfortunately for the arms maker, the recession and cheap knock offs have nearly obliterated the need for the original AK-47. This shift towards cheaper alternatives have left Izhmash on the brink of bankruptcy. A Russian court will consider a bankruptcy application filed against Izhmash by a supplier that the gunmaker owes more than $13 million U.S. Reports coming out of Russia indicate that Izhmash has been losing money for years in its small-arms business. The company has also closed its largest gun factory for a majority of the past calendar year. Izhmash lays a majority of the blame for its failing business on fake AK-47s from China, Bulgaria, Poland, and other countries; along with a drop in orders from the Russian army, which is in the midst of a rather pronounced economic slump.

The article notes that some estimates show that copycat versions of the AK-47 outsell the original by 10 to one. Fortunately for American gun makers, domestic sales and profits jumped sharply during the past year. A majority of these sales are attributed to specialty products and political issues in the U.S., because international sales from both companies haven't been as strong. Does this mean that we will see American gun manufacturers go the way of Izhmash? I don't think so, mainly because American gun makers produce a far greater variety of weapons, and because it is much easier (in practice, not in theory) to buy arms in America. Don't expect the same fate to befall American weapons makers.