The United States by far has the highest gun ownership rate in the world. There are about four hundred million firearms in civilian hands, so US gun manufacturers are seeking
out new customers overseas. One of the companies working hardest at this is sig Sour Bloomberg Investigative reporters Michael Riley and David Kochineski right that the once struggling gun maker has now become the largest US exporter of guns, and it found a helpful hand from a place you might not expect, the US government, which has smoothed the way for international sales.
They create trade delegations where they take people down to markets. They also bring gun buyers from other countries to the Shot Show, for example in Las Vegas, which is the main show every year. They give them kind of a VIP treatment. They match sellers and buyers. They treated just as any other US product that they want to sell.
One of the company's largest deals was with tail.
Drawing a correlation and causation when dealing with crime is always a very complicated area, and the Thai police don't keep specific statistics on what happens with welfare guns.
However, there was a.
Big surgeon gun crime in Thailand at the time that all these weapons are starting to flow into the country.
We'll also hear from a reporter Papisha Tanaka Sempapod in Bangkok. She'll tell us about the aftermath of a mass killing in Thailand.
The scale of understanding that it took for society to come to terms with what happened was unlike anything we've seen.
I'm west Kasova today on the big take the USX sports guns and their consequences. Michael, at the center of the story you and David wrote with our colleague Eric Fan is this very ambitious CEO look into the future? Can you set the scene for us on some level?
This is a story of an amazing business success and transformation. Six hours a very old and storied European gun maker German and Swiss. It has roots in both countries. It was making rifles during the Seven Years War, that's how far back it goes. And yet its guns in the marketplace were really well made, but expensive, and so they didn't have a huge booming business even in the US gun market, which is a great market to be in.
Their presence in the US was pretty small. The US unit was basically a marketing arm for these really well made artisanal hunting rifles and pistols. At six Hour made it gets this new CEO in the United States, a man named Ron Cohen, who really is a kind of force of nature. He's in Israeli, served in the Israelian military, the IDF, and he comes in with a very different vision.
He wants a company to really grow. He wants the company to mana manufacturer in the United States, and he wants to focus on what are called black guns, which are guns that are used by either the military or police forces. And one of the reasons they're doing this is six Hour doesn't have the market share that Smith and Wesson does or that River does in the US, and so they're looking for places to grow.
So Cohen saw the opportunity when the assault weapons ban expired. It had been there for ten years, and in two thousand and four when it expired in the US, he recognized, like most people in the gun industry, that this was going to be a big moment and a lot of money to be made. He wanted Sigsaur to be part of it. So rather than focusing on the old German rifles, he wanted to get into ar type weapons and to
pistols that were like semi automatics. He saw that that's where the future was and he was going to take Sigsauer there.
So, Michael, what did he do to make that happen?
So he does a couple of really important things. He diversifies the supply chain, makes it more global, but he basically makes the guns cheaper. He subcontracts manufactured tories like India, they make parts through metal injection molding versus this very sort of hammer forged gun making that happened in Germany. He opens up a big manufacturing plant in New Hampshire.
He wants to move the center of gravity of the company and it's manufacturing from Germany to the United States, and he successfully does that, and he begins to sell guns both to police forces and the US military and then target countries selling guns to the developing world, especially abroad, and he begins to focus on international gun sales.
David moving the company's operations from Germany to the US obviously had one advantage because that's where a lot of the customers were. But there was another advantage too that you write about.
Yeah, there was a regulatory difference, you know. Cohen realized that in Europe there are far more regulations for exporting guns, and he learned it the hard way. In two thousand and nine to six Hour signed a deal with the Columbia National Police to sell fifty six thousand handguns. The only problem is they didn't have the capacity to make them in New Hampshire and it was illegal to export
them from Germany, so SIGSAUR developed a workaround. It shipped German made sig pistols to New Hampshire and filed export documents stating that the guns were going to be sold in the US civilian market, according to court records, but once the weapons arrived in the US, the employees allegedly relabeled the shipping boxes and sent them on to Columbia.
Cohen admitted wrongdoing as part of the settlement that led to sigpaing the largest export fine in German history twelve million euros, and Cohen ended up getting an eighteen month suspended prison sentence. But with that kind of trouble, with the costs of Germany, with the unions in Germany, they'd rather come to someplace more gun friendly, and that was the United States.
So they moved their manufacturing largely to New Hampshire. And what happens next.
It becomes a much more of an American company. He expands the manufacturing in New Hampshire. Eventually the main German manufacturing plan to shut down. But he really embraces the American gun culture and what it is to be an American gun manufacturer.
What does that mean.
He plays the politics of it. He creates alliances within RA.
They started doing outreach for like shooting clubs and bringing people, making shooting a family event. And you know, in two thousand and eight they finally got their first semi automatic rifles on the market, and that kind of changed the company too, because all of a sudden, their market was the people who want to be tactical shooters, you know, civilians who want to fire weapons of war.
So, Michael, you said that they were zeroing in on this black gun market, selling to police departments and the military. How did that work?
To begin with?
It was a good market for Sick to try and get into because you can sell to the police and people want to buy your guns, not just the United States but elsewhere. We've traveled to other countries as part of our reporting for the story. One of the things we heard over and over again is from police apartments and others that the six hour guns are really good. They must be because US law enforcement uses them. There
is a little bit of a rub though. At the same time, by changing manufacturing methods and using cheaper manufacturing like metal injection molding, you create tolerances in the guns that are less precise. So they've been sued multiple times in what are essentially product liability suits, and the plaintiffs or people including police officers, who have been wounded or maimed because the guns misfired, or at least that's the claim.
One early and very loud example was in New Jersey. The New Jersey State Police bought three thousand sig guns in twenty fourteen.
They had so much problem with them malfunctioning.
They said they were almost unusable, and by twenty sixteen they had gotten rid of them and switched to a different weapon altogether and filed a lawsuit.
The main pistol that they're selling to law enforcement and that they sell a lot abroad, is called the P three twenty. It's a nine millimeter semi automatic pistol. There's a verse of it that they now sell to the Army. It's the Army's main side arm and one of the things that's novel about it is it's a modular pistol, which means you can take the grip and change it, and so it can be used by shooters who are women or smaller or bigger. That's something that the Army
really wanted to do. They helped develop the pistol for that specific purpose, but it became something that they can market to law enforcement and to countries around the world as well.
So did they manage to turn things around and start making more reliable fire arms.
The lawsuits have continued, and some of the incidents that are in the lawsuits are relatively recent ones. So SIG will say that they re engineered key aspects of the pistol so that they have fixed many of the problems, but people who are filing the lawsuits say that the either the incidents continue to occur, that the problem has not in fact been fixed. Some of these problems with their guns have prevented them from being incredibly successful as
gun manufacturers, sellers, and marketers. One example of that is they recently won in twenty the contract for the new US Army assault rifle, the US Army hasn't updated it's assault rifle in decades, and that contract is going to be worth four point five billion dollars over many years. It's an incredibly lucrative contract and it is really cemented sig as a major manufacture of guns in the United States, David.
At the same time that Sigsaur was looking to the US market, the CEO Cohen also saw the foreign export market as a big part of the company's future.
Yeah.
In twenty ten, Ron Cohen said that he thought the developing world was where SIGs Hour's future lie. So he tried to beef up his international sales staff and they started looking around the globe for different places in Latin America, in Asia.
So, even though they had moved manufacturing from Germany to the US in part because it was easier to export weapons from the US, they still had some obstacle you write, with the US government that they needed to solve.
Yeah.
Well, you know, gun sales in the US are overseen by the government. They're regulated, and the thought is, we want to help allow US manufacturers to sell places, but when to make sure they don't go the countries where they could fall in the hands of terrorists or in autocratic governments that will abuse the people or into the hands of cartels. So there's a screening process, a licensing process that was in the State Department.
So the gun industry for some time has been pushing an effort to switch the regulatory oversight of export licenses from the State Department, which typically focuses on things like human rights and the possibility of instability where some of these guns would go, and move it to the Commerce Department, which they saw is a much more business friendly, sales friendly kind of environment to do this kind of regulation.
This proposal first comes up during the Obama administration. They had this world change written, but it hadn't been published yet. They were preparing to publish and then the school masacre in new Town, Connectin happens. Rule change hasn't happened yet, but then Donald Trump is elected presidents in twenty sixteen. He has a much more friendly approach to the gun industry and he sees this as an opportunity to say, look,
I'm going to do something for the gun industry. He seeses that officials within the Commerce and the State Department quickly move to get this rule change to happen. It takes a couple of years, the necessarily public commented period, but it's clearly on the road to occurring soon after Donald Trump gets in and by twenty twenty the rule change happens.
And David you write that six Hour worked very hard to court Donald Trump.
When Trump even the month before he announced his campaign, he visited six Hour headquarters in the Hampshire. He got a private tour of the factory, and you know, Hampshire obviously the first primary state, so it's got a lot of political significance. His sons were seen at the SIGs Hour booth at the Shots Show, and they gave one hundred thousand dollars to a pack that was dedicated to
getting Trump elected. So they knew who was the gun friendly candidate and they were not shy about getting in his favor.
The new rule moved oversight over export licenses to the Commerce Department. The Commerce Department made an argument during public comments and elsewhere that their regime was as thorough as the state departments, but a lot of people predicted that international gun sales would go up once oversight was moved to the Commerce Department, and in fact that did happen. As a result, the gun industry basically got the rule
change that it wanted in. Companies like six hour have since benefited from it by increasing gun sales.
And David how is the switch from the state departments oversight of US gun exports to the Commerce Department changed the way the business works.
The gun industry is selling a lot more guns overseas. If you talk to gun brokers, not just at Sigmud, elsewhere, they'll say that things happen faster. They'll complain about some hold ups here and holdups there. But the National Shooting Sports Foundation, which is the industry trade group, had estimated beforehand that that change would increase by about twenty percent, and it turns out is delivering far more than that amount.
And what exactly does the Commerce Department do? Aside from just approving overseas gun sales.
Commerce also does a lot more than just oversee the licensing process. A different part of the Commerce Department is in charge of selling US products abroad, and so they create trade delegations where they take people down to markets. They also bring gun buyers from other countries to the Shot Show, for example in Las Vegas, which is the main show every year. They give them kind of a VIP treatment. They match sellers and buyers. They treated just as any other US product that they want to sell.
After the break, Sigsaur gets the US governments go ahead to sell guns to Thailand. We've heard how in twenty twenty, gun companies got what they'd hoped for. The federal government moved oversight of gun ex it's from the State Department to the business friendlier Commerce Department. But even before that happened, the Trump administration had already started making it easier for
gun makers to sell guns overseas. David, you write that one of the markets that sig Sour wanted to sell guns to was Thailand.
Yeah, you know, Thailand has had its own gun.
Culture for years that it's more pro gun than a lot of places in the developing world.
There's a huge black market.
You can buy guns on Facebook because of its location and relations with the US government and the US military. During the Vietnam War, there's a lot of weapons through there, and so sig realized that this was a potentially large market.
Now, Thailand actually has fairly strict gun laws for individuals, right.
That's right.
It's actually hard for ordinary tie to buy a gun, you have to fill out a lot of paperwork. The process can take over a year. One of the things you have to do is get a boss or some other authority. You're to testify that you in fact can get a gun. It's relatively onerous, and the guns are expensive because there's a forty percent tax on them. For all sorts of other reasons about the market, it's really expensive to buy a gun. So typically not many ordinary ties have access to guns.
But there is this other method that makes it a whole lot easier.
So six hour spots a kind of a loophole in all of that, and that is something that you need to TIELND called the Welfare Gun Program. Essentially, what program is set up to do is allow police officers and government officials to buy personal guns cheaply. The government negotiates the price with manufacturers. They could get them at as little as a third of the costs of buying one in a gun shop. And it solves a problem for the government because they don't have to provide the guns
to police themselves. So these officers sign up for the program, they buy a gun. It's their personal gun, but they use it on the job.
And SIGs hour won a big contract under this well fair gun program to sell firearms to the Thai police.
One of the stunning things about six Hours marketing or relationships in Thailand was they took a program that was relatively small historically few thousand and tens of thousands of guns, and then twenty fifteen they signed a really really big contract with the Royal type Police. It was for one hundred and fifty thousand pistols. It was one of the biggest contracts for six Hours. It was certainly the biggest contract for the gun and welfare program in Thailand, and
it was worth about one hundred million dollars. The guns have a hold up because the US government doesn't issue a export license, but once Trump comes in, they start moving relatively quickly, and by December twenty seventeen, all these guns are flowing into the country.
So this certainly offers the police away to kind of offload the costs.
It also has a lot of problems.
Because whale all are intended to go to police officers, they don't all stay there.
One of the problems is that Thailand is a country with a lot of corruption, and some of that corruption is a social did with the police forces and the military of the security forces. So some of these guns make their way from where they're supposed to go, which is the police forces and officials in the military, and they end up being resold on the black market. They end up arming the bad guys rather than good guys.
There are lots of ways in which this happened. In one case in particular, that was done last year by the Thai equivalent of the FBI, they busted a gun trafficking ring. The whole model was they were essentially buying guns from this welfare gun program which were cheap, and then they were reselling them on the black market or
smuggling over the border to nearby countries. They could do that because the Thai government and six Hours essentially created a new asset class by importing all of these tens of thousands of relative to the market, very cheap guns, and so there was a big incentive to move those guns to other places to make money.
Another reason why this was such a big deal, you right, is that gun shops in Thailand have very strict limits on the number of guns is they're able to sell in a year.
That's right.
One of the things that the normal commercial market keeps the number of guns small in Thailand is that each gun shop, and they are about five hundred of them, have limits on the number of guns they can import it and.
Sell each year.
It's thirty pistols and fifty rifles for a year, which is probably about what a busy Cabelas would sell in a week.
That works out to about fifteen thousand pistols a year.
This single warfare gun contract that six Hours struck in twenty fifteen was ten times that.
The guns were supposed to go to the police, but not all of them stayed with the police, and that started causing some pretty big problems.
Yeah, So one of the things that's gone on in Thailand over the last few years has been an increase in gun violence. So over this period where these guns were flowing into the country and they are supposed to go to the police, there's also an increase in gun violence just generally. And some of those guns, some of those same models, the P three twenty and the P three sixty five that come in through the gun welfare program, end up in the hands of bad guys or in
the hands of people were committeing crimes. Sometimes horrendous ones. So in twenty twenty one, one of the police officers that got one of these guns is a man named Panya conrab And. He was a police officer in a rural village of sugar cane and rice fields in northeast Thailand. He also had, at least according to his colleagues, a drug problem. He got fired from the police and a few months after that firing, he took that pistol and a very large sugarcane machete knife. He walked into a school.
He killed twenty three children. In all that day, Panya killed thirty six people, some of them with the knife, some of them with this P three sixty five six hour semi automatic pistol, and then he killed himself.
And this was the worst mass killing in Thai history.
That's right, and one of the worst in the world.
And that, of course drew a lot of attention. But it wasn't the only one.
No, And there was one in particular that drew a lot of national attention. In April, a well known influencer, a young woman was killed by her boyfriend using a P three twenty that had been bought legally by the boyfriend's father. There were examples of drive by shootings of
drug gangs using these guns. How they get from the legal program to the hands of criminals some way through the black market, It's not always clear, but it's clear that these guns are not all staying where they're supposed to stay.
Drawing a correlation and causation when dealing with crime is always a very complicated area, and the Thai police don't keep specific statistics on what happens with welfare guns. However, there was a big surgeon gun crime in Thailand at the time that all these weapons are starting to flow into the country. The number of crimes involving firearms surge
between twenty sixteen and twenty twenty one. So at the same time that SEGA started to increase the flow of guns, the crime with guns is going up.
David, When you asked EGSAUR about their business about the gun experts to Thailand, what do they say?
They did not respond.
You know, we emailed repeatedly, and I went to SIG headquarters in Newington, New Hampshire and asked for an interview. When they didn't respond, we gave a very detailed list of questions about what we didn't want to ask about and there's been no response whatsoever. We reached out to Ron Cohen, the CEO, we reached out to Michael Luca, who is the owner from L and O Holding, and no response from anyone. The company has just decided to not respond.
But we should be clear that not all these crimes were committed with Sigsaur guns.
That's right, and in fact, it's not easy to tell in Thailand which guns are used. You know, as this surge of gun violence happens, you can tell in some
specific instances that sig guns are used. But one thing that is clear is that during this period where this large number of guns are coming to the country from six hour at the same time their relatively strict legal imports for the gun shops, gun crime is rising and there's lots of evidence that not all the guns that were supposed to go to the police stayed with the police.
I wanted to understand more about how that mass killing in Northeast Thailand last year impacted the country. So I called a reporter Pepisia a ton of Kasimpapat. She's in Bloomberg's Bangkok bureau. Papisia people in the US are very familiar with mass shootings, which happen all too often, but that's not the case in a lot of other countries. Can you describe how extraordinary the shooting in October twenty twenty two was for Thailand.
It was very shocking. I think what happened that day was that when in the news first emerge, I took everybody by surprise just by the severity and extremity of what was happening. And Thailand mass shooting is not that common to begin with. The last one before this one that we heard about was the one in Coat that involved a military officer mall that lasted for hours and hours.
But what was especially shocking about this case was that it was happening at a daycare and it involved dozens of children, and this was happening in a very very remote part of Thailand that's bordering Laos. So by the time that the news sort of reached the people in Bangkok, it was already almost over. The shooting already happened, and people were struggling to kind of understand why and what
exactly happened. I think it caused a nerve, especially in Thai culture, because we as a Buddhist country, killing is a very very big deal. To begin with, we have five precepts, which is a concept in Buddhism, and one of them is that killing is a very very bad sin. And this incident is not just killing, it's killing a bunch of children. The scale of understanding that it took firsts to come to terms with what happened was unlike
anything we've seen. My generation has a different relationship with guns than our parents' generation and their parents before them. I think growing up, I have heard about Thai households having a gun in their homes as you know, a safety thing for self defense. I've never actually heard of anyone having to use it, but it's somewhere in the house in a closet, you know, in a safe. It's something that gives people comfort, but normal people have never actually had to go and find it and grab it
and use it. At the same time, there's a culture of gun enthusiasm. There are shooting ranges where people go and you know, show their guns, and it's like a hobby,
share their enthusiasm for guns with other people. When it first happened, like within a day or two or a few days after words, the Prime Minister Janoshah he came out to say that the country needed stricter gun control as well as drug control, because the narrative around this mass shooting when it first emerged was that the shooter might have been on drugs because he was suspended from his job and was going to be on trial for
drug possession. Fresh in people's mind was still the Chorad shooting, the mass shooting in the mall, and then it came to the forefront of the discussion and the government said that it would review the licenses that have already been issued for gun ownership and might revoke some of those lenses where necessary, like the gun owners would be required
to go through psychiatric evaluation. They did actually put an outline of their plan after the mass shooting happened, but the concrete result of that has yet to be widely perceived.
Michael, and you spoke to some of the victims of some of these shootings in Thailand, So.
Yeah, we spent some time in the villages around where the mass rampage last October took place. We talked to neighbors of Panya, and we talked to some of the abbots and the temples who spent a lot of time with the families that were affected. I mean, it's really hard to imagine how much of an impact this had. Because the communities were small, they're tight knit, everyone knew
everyone else. One mom in particular, had as we were talking to the habbit at the temple, comes up with her five year old who had been in school with one of the young children who was killed, and she immediately freaked out because we were strangers. And the mother explained to us that since the killing, she gets very, very scared when somebody these es knows around.
When we come back, what's next for US gun sales around the world? So, David, what does six hours business look like? Now? We started this conversation saying they wanted to increase exports for the future. They've certainly done that. How are they looking?
Six hour is soaring.
You have to remember when this company was bought in two thousand, it was an adlong that they're trying to buy these rifle companies and they had to take SIG two America for less than a dollar. They're added into the business. Now six hour generates more than a billion dollars a year in revenue, according to German financial filings. They get the contract for the US Army assault weapon for four point five billion dollars, and they are a huge exporter. They are the largest US exporter by far.
They have almost fifty percent of the export market. And the thought is that once the US Army side arm that they're making and the US Army assault weapon they're making become integrated into the force, that sales overseas there are just going to go gangbusters.
So it's been a huge international success for six hours. But it's not the only one. They sell guns in many countries. They sell guns to Mexico, which has a big corruption problems, and some US manufacturers have avoided a sell guns to Ivory Coast, which until recently was under a UN embargo for guns because there's so much smuggling that comes from there. They sell guns into the Emirates, They sell guns all around the world.
You know, they are the biggest, so we focus them on this story. But other gun makers are doing the same and America is the biggest arms exporter in the world, and so other companies are following a similar pattern, and we're seeing the impact.
And what about Thailand in the wake of all of these shootings, have they done anything.
Well, especially after the killing in October, there was a big examination of the welfare gun program. They suspended for a time. We asked one of the police generals who was in charge of the commission that examined the welfare gun program what was going to happen. They said, do you think it'll continue? With some minifications. They'll try and crack down a little bit on who's available to get it. They may put some provisions in for mental health, but
it's likely to go on. They haven't done a major welfare gun program contract since then, but it's likely that once they sort out what the new regulations are, that they'll start doing them again.
Michael, we talked earlier about how the Commerce Department is trying to facilitate sales and help the gun manufacturers the way the Department does for any other US product, and yet the Biden administration has taken a pretty strong stand against the gun industry in the wake of US mass shootings.
That's right. Although the Democrats generally the Biden administration in particular, are focused on domestic gun sales, what happens to all of those guns that are sold and under what conditions are sold. The interesting thing about having looked at gun exports for some months during our reporting. One of the thing we found is it's just not a huge policy priority for just about anybody, in part because there's so
much to pay it to domestically. But when you do shift the lens a little bit and begin to look at US gun exports, where they're going and what's happening in those countries where they're going, a lot of things open up that look as if the US is exporting its gun culture to many of these countries, and so along with these weapons, they're basically creating markets by exporting a culture.
And you know, candidate Biden on his website said that if these regulations were loosened at allowing oversight to switch from state to commerce, if those are enacted, he would rescind them and he could do it with the stroke of a pen. And they have not done anything he's been in office. And if you ask people around the administration, they will say, well, he did do some things about three D printed guns and whatever.
But the reality is, you know.
On the campaign they link to very specific things about the concerns that this would lead to increase of gun sales and places where they're going to hurt civilians and they have not acted.
What does the White House say about this program? And where does the Commerce Department say?
A spokesperson for the Biden Administration's National Security Council responded to US and said that the US quote thoroughly reviews firearm export applications for national security, human rights, and other policy concerns to limit illegal trafficking or diversion of firearms.
They also went on to say that the transfer of responsibility from state to Commerce quote has strengthened enforcement and investigative scrutiny over these exports because they use the Commerce Department's resources and personnel.
Michael David, as you continue to cover this story, where are you watching for? What is the next thing?
I mean, one of the things that we're going to continue to do is follow these guns into different parts of the world. We focused on Thailand in this story, but there are other countries where, under very different conditions, US guns are pouring into those countries and having a similar devastating effect.
And not just six Hour but other manufacturers.
Not just six Hour, but all sorts of manufacturers. And in fact, one of the trends we're watching is that a lot of European manufacturers and manufacturers from other countries are opening up plants manufacturing facilities in the US. They want to do that because they want to sell the US market, but they also want to take advantage of the looser export regimes in the US to sell internationally.
I'm looking to see how this scrutiny to this will be taken internationally by other countries. There have been a lot of complaints about US illegal guns going in and you know the lawsuit that Mexico has filed against the US, and there's been a complaint, the big complaints in the Caribbean basin nations about US guns being smuggled in and
leading to an inordinate amount of crimes. According to trace data from the Bureau of Alcohol, Tobacco, Firearms and Explosives, about twenty percent of crimes committed with guns in Central America these weapons that were brought in legally from the United States and Canada, that number is thirty percent. And so I think, well, there's been all this focus on
illegally smuggled guns, and rightly so. The fact that a lot of the crimes are being committed with legally exported guns that are being helped and enabled by the United States government.
I think that's a discussion that needs to be had.
David Michael, thanks so much for speaking.
With me today, Thanks for having us, thanks.
For listening to us here at The Big Take. It's a daily podcast from Bloomberg and iHeartRadio. For more shows from iHeartRadio, visit the iHeartRadio app, Apple Podcasts, or wherever you listen. And we'd love to hear from you. Email us questions or comments to Big Take at Bloomberg dot net. The supervising producer of The Big Take is Vicky Bergalina. Our senior producer is Catherine Fink. Our producers are Michael Fallero and Mow Barrow. Hil de Garcia is our engineer.
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