Here is a sales pitch and scaring people at the same time
Published: Jan 24, 2015 9:44 a.m. ET
The U.S. importer of the famed Russian-made AK-47 assault rifle announced this week that it plans to set up a U.S.-based factory later this year to build the guns here. Sanctions imposed last summer by the Obama administration against the gun’s Russian manufacturer had effectively kept new AK-47s from reaching American buyers.
RWC Group, the licensed importer for the Kalashnikov company, revealed at the popular Las Vegas gun exposition known as SHOT Show this week that it would form a new company known as Kalashnikov USA to manufacture the weapon. The company is currently negotiating with three U.S. states to locate a production plant, with the rifles possibly rolling off the lines as early as the second quarter of this year, Jim Kelly, the new production manager of Kalashnikov USA, told the website OutdoorHub.com.
RWC (which stands for Russian Weapon Company), located in Tullytown, Pa., didn’t return phone or email messages seeking comment; voice-mail announcements indicated that most of its staff were at SHOT Show.
Kalashnikov’s Russian manufacturer, State Corporation of Russian Technologies, or Rostec, signed a two-year agreement in January 2014 with RWC Group at that year’s Las Vegas SHOT Show saying they hoped to sell 200,000 Kalashnikov products a year in the U.S. The U.S. market constituted about 90% of its export sales in 2013, according to Pavel Kolegov, Kalashnikov’s deputy chief executive for sales and marketing, in a statement at the time. As of last summer, Russian-manufactured AK-47s were selling in U.S. gun shops for between $800 and $1,050 each.
But last July, the U.S. slapped sanctions on Rostec, along with other Russian defense companies, in response to suspected Russian involvement in the shoot-down of a Malaysian passenger jetliner over Ukraine. The Treasury Department’s Office of Foreign Assets Control (OFAC) said at the time that U.S. owners and dealers of the weapons could still own them and resell them at gun shows, so long as they or their dealers didn’t make any payments to the Russian parent company.
New transactions with the Kalashnikov company were prohibited after July 16, 2014. That was expected to hurt U.S. gun dealers, who wouldn’t be able to import any new Kalashnikov models (or models from the related Izhmash and Saiga brands). Only about 100,000 of the guns had been delivered to the U.S. at the time of the ban.
In a July 18 posting on its website, Rostec said that the U.S. market is one of “high demand” for the company and that “the sanctions of the United States government against Kalashnikov Concern go against the interest of American consumers.” On its own website, RWC said that it only had a “limited supply” of the weapons and that “there will be no more Saigas for the foreseeable future.”
Kalashnikov — named for Mikhail Kalashnikov, a World War II Red Army tank veteran who developed the “Avtomat Kalashnikova” rifle in 1947 — is the largest firearms producer in Russia. During Soviet times, the original plant in Izhevsk, two hours’ flight time east from Moscow, churned out 600,000 rifles a year for the military. Now, it’s down to a fraction of that, which made the U.S. deal a critical addition to the firm’s sales.
The AK-47, firing a powerful 7.62 mm round with a “distinctive sound,” was widely used by Soviet bloc countries during the Cold War and by aligned countries such as North Vietnam, Syria and Egypt. It has also been favored by insurgent and terrorist groups such as the Viet Cong, al Qaeda (Osama bin Laden’s own AK-47 now hangs in the CIA’s museum), Che Guevara’s ill-fated Bolivian revolutionaries and the Palestine Liberation Organization. More than 70 million have been produced, according to the Kalashnikov website. Mikhail Kalashnikov died in December 2013, at the age of 94.
Building a production line in the U.S. for the Soviet-era rifles could ease a shortage of the popular guns for American consumers. In July, after the sanctions were announced, Atlantic Firearms of Bishopville, Md., a dealer that exclusively trades in Kalashnikov-related weapons, noted on its website that “due to the recent Import Ban on Russian Based AK firearms we are experiencing heavy order volumes.” At the time a Russian-made AK-47 model listed for between $849 and $1,049 on the Atlantic Firearms site. At press time, none were available, though less-desired Polish, Romanian and other Eastern bloc–made copies of the Kalashnikov still are available for $649 to $839. On its Facebook page, Atlantic Firearms reported at the time that it sold over 400 weapons the day after the ban was announced.
A representative from Atlantic Firearms didn’t respond to email and phone messages; voice-mail prompts indicated their staff was also at the Las Vegas gun show.