Glock sales staff and gun distributors caught in scheme

[RustyShackelford]

Knoxville PD; SIG P220 .45acp....

A few months ago, I discussed the new duty pistols selected for the Knoxville TN police department.
They decided to drop the Glock 22/23 .40S&W & buy a contract run of SIG Sauer P220s in .45acp.
The chief pushed the deal & wanted his officers to carry SIGs.
The firearms unit told the local media they needed SIG P220s because they didn't want large magazines.
I find that strange since most people agree the Glock 22 .40S&W is the most widely used US police sidearm(65%).
There is 0 wrong with a new P220/P220R TDA(traditional double action) but why spend $$$ on new weapons when so many officers & detectives use the 22/23 just fine?
The Knoxville PD chief also requires all sworn personnel to pack 05/five 8rd .45acp pistol magazines on duty.

Rusty

 

[barnbwt]

Like H&K, like Glock. Must be a German thing (totally kidding; I'm sure they all do it. Germans must just suck more at hiding it )

TCB

 

[DT Guy]

Wow, relabeling 'blue' products as 'red' products could have increased profits a LOT.

And the numbers of pistols involved-some 14,000-seems like it would have raised some flags; although I guess with Glock people in on it, that might not have mattered.

Larry

 

[Willie Sutton]

All it means is that buyers of "Red" products have been ripped off from the beginning. The ones being taken advantage of are every civilian buyer.


Pick one:

Screwing #1: On one hand it's a screwing by Glock directly (selling "red" product for a high premium ab-initio over the identical product sold to the police),

or

Screwing #2: On the other hand it's by Glock AND this distributor, for setting up what is essentially the same mark-up scheme with someone else ripping off the consumer.


The only difference in #2 is that two sets of enterprising entrapraneurs are getting paid into their own pockets (Glock Execs and the Distributor) while on the first hand it's Glock as a corporation that is the one lining their pockets.


It's just a redistribution of the screwing that every civil Glock buyer receives.


Willie

.

 

[pendennis]

Wait, you can't bribe officials of a private company to give you preferential treatment? Don't people do that all the time with "gentlemen's agreements" and side benefits to businesses? I.e. If I worked as a wedding photog I can let everyone know of my friend who is in tent rental and get a referral fee for this or become their preferred photog?

I can understand Glock suing the people involved but seems odd that the FBI got involved. Someone explain this in dummy terms for me please?

FYI: to the NSA and FBI. I have never done this!

There are vast differences between so-called "finder's fees" and bribes.

I did a lot of wedding photography in the 70's and 80's. I got paid, and paid, finder's fees to/from catering, banquet hall, and other wedding services. Nothing wrong with that. I gave those folks some of my business cards, and I carried some of theirs. Referrals are a fact of life.

However, when you get into the world of contracts that involve Federal/state/local government agencies, it's a whole different ball game. Companies can get in a great deal of trouble by getting into extra-contractual payments.

If a company contracts with a distributor to sell x amount of guns, at y price; and if the distributor can sell more, then rebates are often paid. Rebates are a good incentive to boost distributor sales. The rub lies when a manufacturer and distributor start making side deals not available to other distributors, or visible to a government agency purchasing the product.

Imagine that a city purchasing agent buys the Glocks from a distributor, and he's unaware of the side payments. The agency has overpaid for their Glocks.

This case with Glock isn't the first, and it likely won't be the last. It's happened with vehicles, computers, services, etc.

 

[1911 guy]

Willie Sutton nailed it. Glock does this on a daily basis (as do a few other manufacturers, albeit not to the same extent) but this is labeled a crime because it's not done "official" like.

 

[pendennis]

They reportedly cost 70 bucks to produce.. No clue what distributers pay for Blue guns we know retail (commercial models) run from 500-600+. Seems to me they weren't skimming pennies with millions in bribes, kickbacks, etc.

I don't believe that Glocks, or any other popular gun, cost only $70 to produce.

I worked in the automotive industry for over 38 years (and a big chunk of that in cost accounting), and the public just has no idea how much it costs to produce things; whether cars, guns, refrigerators, etc.

Glock may only have $70 in materials in the gun, at their cost. And that assumes that they buy little from outside the company. But, that ignores direct labor, indirect labor and materials costs, freight, advertising, marketing, etc. Their labor costs, while less than in "union" states, aren't minimum wage. Machinists, tool and die makers, gunsmiths, etc., are fairly expensive as hourly rates go. Even floor sweepers do okay.

Manufacturing profit margins are very slim, and if anyone could produce a quality gun for $70, they would own the market.

Even in Europe, margins are fairly slim. Most countries east of the Atlantic, are social democracies. And those political structures cost money.

 

[gspn]

Anyone who believes that this isn't happening with the other gun manufacturers is delusional.

Yep. I wonder how many other dealers are reading this and getting very nervous.

 

[barnbwt]

I don't believe that Glocks, or any other popular gun, cost only $70 to produce.

That doesn't even cover one man hour any more, right? And we're talking an international superstructure with multitudes of design, manufacturing, management, quality, facilities, and even janitorial workers. And it adds up to one man hour per gun? Not counting materials?

TCB

 

[1911 guy]

Working in manufacturing myself, I, too, find the 70 bucks a little on the low side. The cost of labor isn't just a wage, it's burden rate. That's the cost per hour of wage, electricity, machine service, etc. My burden rate is ninety something an hour, I see about a quarter of that in my paycheck.

 

[ds76]

I don't know much about Glock's red label / blue label sales practice. Do other gun companies do this as well? I can easily see how companies would offer decreased pricing to large volume buyers, but how does it make sense to essentially have two parallel lines of guns, one for LE and another for civilian customers? I don't know; I'm just asking. I know of one local dealer who has two separate counters of Glock pistols, one is for law enforcement only and the other is for everyone else. Wouldn't it make more sense to just give a discount to law enforcement personnel or offer factory rebates to LEOs? It seems that the red/blue system is perfect for people who may be prone to abusing it.

 

[rs7]

Sour grapes. I'll buy Glocks. If you don't want it, don't buy it. I don't buy new guns. Never have.

 

[Agsalaska]

So basically they were acting exactly like the world acts other than USA, Canada, England, and maybe Japan.

 

[zorro45]

S&W got "stung" by the FBI a few years back with one of their high level execs being found guilty, the ruse was a 20% commission on a 15 million dollar contract, to be paid to a fake defense minister and the agent arranging the deal. All the other defendants got off. So this behavior is not confined to European manufacturers. It is also pervasive in healthcare with the two biggest manufacturers in high tech staplers getting trouble for bribing health ministers in Europe.

 

[RussellC]

Wait, you can't bribe officials of a private company to give you preferential treatment? Don't people do that all the time with "gentlemen's agreements" and side benefits to businesses? I.e. If I worked as a wedding photog I can let everyone know of my friend who is in tent rental and get a referral fee for this or become their preferred photog?

I can understand Glock suing the people involved but seems odd that the FBI got involved. Someone explain this in dummy terms for me please?

FYI: to the NSA and FBI. I have never done this!

Somehow and I don't know how, it included money laundering and wire fraud. Both Federal offenses. Sounds like there is more going on than a "Gentleman's agreement"

Russellc

 

[burk]

I don't know much about Glock's red label / blue label sales practice. Do other gun companies do this as well? I can easily see how companies would offer decreased pricing to large volume buyers, but how does it make sense to essentially have two parallel lines of guns, one for LE and another for civilian customers? I don't know; I'm just asking. I know of one local dealer who has two separate counters of Glock pistols, one is for law enforcement only and the other is for everyone else. Wouldn't it make more sense to just give a discount to law enforcement personnel or offer factory rebates to LEOs? It seems that the red/blue system is perfect for people who may be prone to abusing it.

Most companies that deal with LE or government contracts make runs of products for certain large agencies. For the most part the only differences are the serial #'s although I would assume that most LE Glocks for agency uses are coming with heavier triggers depending on the agency. Most of these companies look at it as "marketing" so they can lose money or break even on the firearm and chalk that lost profit up to advertising.

When a large agency like the NYPD, FBI, or prestigious unit like LAPD Swat, SOCOM choses your firearms it's a great promotion. For Glock, the choice of the NYPD, a city that once banned the "plastic terrorist gun" was instant credibility in the market. Remember in the 80's most LE carried S & W model 10 or 19. When the police adopted them, private owners began to consider them as reliable and a good value, something most semi's weren't considered at the time.

And Glock isn't alone. Look at the additional dollars Sig get for a MK 25 or M-11 because they have unit markings on them. And in some cases (Glock, S & W) they actually trade even up for 10-15 year old service guns to get into the agency.

Do the systems get abused? Yep, Glock police guns are bought for "civilians" with connections all of the time. I got my first 23 on a police discount. Most of the companies also offer shop employee deals, and Glock even offers a pretty substantial discount on GSSF purchases. The problem is when abuse becomes systematic and from dealing with some larger agencies, I can assure you it happens more often than you would like to know.