Pamela Bump
Equinox Staff
While they are the biggest gun manufacturer in the United States, Smith and Wesson Holding Corporation has faced an environmental struggle, while experiencing political and financial successes, according to public documents including their Quarterly 10-Q reports and other documents noted by the Environmental Protection Agency.
Despite emails and phone calls to various representatives of the nearly 154 year old company, Elizabeth Sharp, Vice President of Investor Relations stated in an email, “I am afraid that your questions focus on areas that we are not able to address.”
Despite their decrease in stock by 4.3 percent, immediately after the Newtown shooting, according to the Boston Business Journal, Smith and Wesson reported in March of 2013 that their sales rose by roughly 39 percent compared to last year, according to their most recent quarterly reports.
Background
Smith and Wesson is one of two gun manufacturers in Massachusetts, along with Z-M Weapons. Smith and Wesson is one of the oldest firearms manufacturers in the United States, originally founded by Horace Smith and Daniel B. Wesson in 1852 in Norwich, Conn.. In BBC News report, Smith and Wesson was ranked as the largest gun manufacturer in the United States. Smith and Wesson has provided arms throughout events in U.S. History including the Civil War. The company also began signing international contracts with countries in Europe as well as areas in Asia, like Japan. Smith and Wesson has also been notable in the media, producing the revolver used by Clint Eastwood’s character in the film “Dirty Harry.” According to their mission statement The company’s brands include Smith and Wesson, M and P and Thompson/Center Arms.”
Politics and Financial Success
In 2006, Smith and Wesson unveiled a nearly equivalent model of the AR 15 called the M and P, which stands for Military and Police. Smith and Wesson/s headquarter facilities are located in Springfield, MA and currently houses roughly 1,400 employees.
Smith and Wesson is also notable for governmental contracts and political activity in the United States. In 2000 Smith and Wesson signed an agreement with the Clinton Administration, creating a joint effort towards gun safety and preventing firearm violence. The company agreed to change the manufacturing of various firearms to make them safer and to prevent firearm related accidents. The company agreed to add new features like locking mechanisms, safety testing on firearms, and other production of safety devices like magazine disconnectors. The agreement, which also enforced sales regulations, sparked controversy and an eventual boycott from the National Rifle Association.
In 2010 Smith and Wesson began receiving what will be a total of $6 million in tax credits through the year of 2017 from the Commonwealth of Massachusetts. According to a Press Release from the company, they will use this incentive to create over 225 new jobs in the Springfield, Mass. headquarters and manufacturing plant, which has been in business since 1920. The company was awarded the tax credits as they would expand job opportunities and manufacturing in Springfield. The company began creating and employing new positions in 2011.
In the same press release that explained the recent tax incentive, it was also noted by Smith and Wesson’s President James Debney that, “Although several states and cities have approached us to entice expansion into their locations, Mass. and the Patrick-Murray Administration, Secretary Bialecki and his office, and Springfield Mayor Sarno and his staff collaborated on the project to make our choice clear.”
Debney also added in the Press Release that, “These Administrations are highly collaborative and worked with us on incentive programs to structure an agreement that demonstrates the commitment of both the Commonwealth and the city to not only Smith and Wesson but to our employees the loyal community and to manufacturing in Massachusetts.” In 2006, Smith and Wesson secured a $15 million order to supply pistols to the “United States Army Security Assistance Command (USASC) Special Projects Office for shipment to the Afghanistan National Police (ANP).”
The press release from the company on this contract also said in, “2005 Smith and Wesson shipped a total of 22,500 pistols for use by the Afghanistan National Army and the Afghanistan Border Patrol. The new order represents the fourth contract awarded to Smith and Wesson by the U.S. Army for security forces in Afghanistan and is more than twice as large as the combined total of the previous orders, all of which were shipped in fiscal 2006.”
Elizabeth Sharp directed any further questions to the website and press releases of Smith and Wesson Holding Corporation, which also contained information about 10-K and 10-Q forms noting yearly and quarterly reports. As a publicly traded company, Smith and Wesson is required by law to file annual and quarterly reports with the U.S. Securities and Exchange Commission.
Environmental Issues
In the company’s annual report from 2012, it stated, ”We may be required to remove hazardous waste or remediate the alleged effects of hazardous substances on the environment associated with past disposal practices at sites not owned by us. We have received notice that we are a potentially responsible party from the Environmental Protection Agency and/or individual states under CERCLA or a state equivalent at one site.”
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), also known as the Superfund Act, is defined by the U.S. Environmental Protection Agency (EPA) as, “a tax on the chemical and petroleum industries and provided broad Federal authority to respond directly to releases or threatened releases of hazardous substances that may endanger public health or the environment.”
The 2012 annual report noted, “We are required to remediate [to fix or remedy] hazardous waste at our facilities. Currently, we own designated sites in Springfield, Massachusetts and are subject to two release areas, which are the focus of remediation projects as part of the Massachusetts Contingency Plan (“MCP”). The MCP provides a structured environment for the voluntary remediation of regulated releases.”
It states in a Toxic Release Inventory Report from the EPA, shown on Envirofacts.com, that Smith and Wesson transports toxic waste materials to various locations and treatment plants. Since 2011 Smith and Wesson has transferred wastes to a Publicly Owned Treatment Works or a POTW in Agawam, Mass. The most common toxic waste element transported to other locations from their headquarters is known as sodium nitrite. Another recent waste of the company transported for treatment has been chromium.
Sodium Nitrite is most commonly seen in foods and is used to prevent the growth of bacteria. However, overuse of the salt can cause medical problems like cancer, according to Livestrong.com. According to the EPA’s “Hazardous Substance Fact Sheet,” sodium nitrite is considered a hazardous chemical as it also causes skin, nose, throat and eye irritation with contact, as well as headaches, nausea, vomiting, diarrhea and abdominal pain. High levels of the substance can “reduce the blood’s ability to transport oxygen, causing headache, fatigue, dizziness, and a blue color to the skin and lips (methemoglobinemia),” according to the fact sheet. It is also noted that in some cases, exposure to high levels may even cause death.
Chromium, according to the EPA’s website, is most commonly used in making steel and other alloys. The EPA’s website noted, “Chronic inhalation exposure to chromium in humans results in effects on the respiratory tract, with perforations and ulcerations of the septum, bronchitis, decreased pulmonary function, pneumonia, asthma, and nasal itching and soreness reported. Chronic human exposure to high levels of chromium by inhalation or oral exposure may produce effects on the liver, kidney, gastrointestinal and immune systems, and possibly the blood.”
The TRI report also indicated that these substances are moved to a various locations for treatment or disposal in other states including, most commonly, waste treatment plants or facilities in Michigan and Connecticut.
When it comes to chemical releases, in 2010 Smith and Wesson Holding Corporation’s main facility in Springfield, Mass., released and transferred a total of 31,516 pounds of nitrate compounds and 22,920 pounds of sodium nitrite in 2010, according to Compliance Reports shown by the EPA, which noted TRI history from 2003 to 2010 . According to a Toxic Release Inventory Report on Envirofacts.com, 100 pounds of toxic chemicals were released in 2011 while being transferred to “off-site disposal” These chemicals excluded “dioxin or dioxin-like compounds.”
Also in the report, it lists 100 pounds of chromium compounds were released during the process of disposal. The report also shows that there has been no on or off-site recycling or energy recovery at this specific facility. There is also no on-site treatment amount or projected amounts listed. However it was reported that there was an off-site treatment of over 57,000 pounds of waste in 2011.
It is also projected in the TRI report that there will be an off-site treatment of 69,000 pounds of waste in 2013. These compounds excluded dioxin and dioxin-like products. However, Dioxin and Dioxin like products similarly showed no report of on-site recycling, treatment or energy recoveries.
Dioxin is considered to be one of the most hazardous chemicals by many experts. In 1982, the town of Times Beach, Missouri faced contamination with the chemical after contaminated oils were spread on the streets to prevent dust. The EPA’s website stated, “Dioxins can be released into the environment through forest fires, backyard burning of trash, certain industrial activities, and residue from past commercial burning of waste. Dioxins break down very slowly and past releases of dioxins from both man-made and natural sources still exist in the environment.” The EPA has also noted that exposure to dioxin can be linked to cancer, miscarriage and sterility.
Smith and Wesson’s 10-Q report filed for July 2010 by the company explained, “We do not have insurance coverage for our environmental remediation costs. We have not recognized any gains from probable recoveries or other gain contingencies. The environmental reserve was calculated using undiscounted amounts based on independent environmental remediation reports obtained.”
Financially, Smith and Wesson reserved finances for remediation of waste purposes, according to the 10-Q form. Smith and Wesson set aside $638,000 in reserves to remediate waste. The company also stated, “Our estimate of these costs is based upon currently enacted laws and regulations, currently available facts, experience in remediation efforts, existing technology, and the ability of other potentially responsible parties or contractually liable parties to pay the allocated portions of any environmental obligations.”
Smith and Wesson also noted in the 10-Q report that, “Based on information known to us, we do not expect current environmental regulations or environmental proceedings and claims to have a material adverse effect on our consolidated financial position, results of operations, or cash flows.”
The Other Massachusetts Manufacturer
Despite Smith and Wesson’s prominence in Massachusetts, it is not their only firearms manufacturer. The other firearms manufacturer located in Massachusetts is Z-M weapons. Z-M has locations in both Mass. and Vt. The company, according to public documents is founded and directed by Allan Zitta.
Zitta is a known inventor of military weapons. Z-M weapons is owned under Para-USA, a manufacturing company also known as Para Ordinance, based in Canada. Para Ordinance is owned under The Freedom Group, which is the firearms manufacturer of the gun used in Newtown. After the December 14th, 2012 school shooting, Freedom Group was put up for sale by their firm Cerebus Capital Management.
Although Z-M is owned by Para Ordinance, there is little information about the company.. There is also little history or evidence of a target market present on its home website or any of the sites affiliated with the company. A representative from the company declined to provide information. Despite phone calls requesting more information about the company, representatives answering the phone at Z-M Weapons responded with “No,” to any request for information, followed by disconnection of the phone call by Z-M personnel.
Pamela Bump can be contacted at pbump@keene-equinox.com