SCarruth
There had always been a fairly happy arrangement between small to medium size retailers and HK. Small retailers were allowed to purchase piecemeal without having to invest in large inventories, service their local government agencies and provide product to customers at a competitive price.
Two years ago hell broke loose. The higher ups at HK USA decided that now they were going to separate LE from consumer sales and made minimum qualifying ordering mandatory. Which for medium and large dealers was no big deal, but the smaller dealers were "out of the loop" for lack of a better term. If I remember correctly a dealer at the time had to buy something like $10K consumer goods (qualifier upfront), a mix of pistols rifles and shotguns and if they wanted to participate in the LE side of the business, another $8K in law enforcement products. Not to bad, if you were a big fish that is. Small dealers were forced to use distributor level programs or not sell the product at all. I recall prices went up significantly that year do to decreased competition and added cost of having to use a distributor.
Now we'll move forward to December of 2001 and those higher ups come up with another brilliant move. Why not hit the tax payer in the shorts, leave all those hundred or so dealers that spent lots of money on LE product the prior year hanging in the air and make the LE division into a cartel. And a cartel they made! All dealers were forced to buy LE products from one of only six distributors nationwide. Here's the good part. All these regional distributors have (the system is still in place!) exclusive territorial rights. So if say you are a FFL in Florida, you were forced to purchase HK LE from your one and only source that has the Florida region. They set the price, for you cannot purchase out of your region and if the distributor got the same LE bid, they can cut your throat at will. And in many cases they have.
The decision on who was going to be in the cartel was not based on who had the best regional numbers or the best distribution. It was based on cronyism. Pissed off a lot of people. Not as much the idea of the distribution, but the idea of killing competition, forced unions and rising prices for both consumers and government agencies.
Next few months are going to be very interesting with HK. Lets just hope that something better immerges.
