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Waldorf: To me it's a very difficult business. Anybody who thinks it's
an easy business today had better take another look at this particular segment
of the gun industry. Our costs are astronomical. It's nowhere near as
profitable as it was as recently as 4 or 5 years ago.
Q: What has led to that shift in the competitiveness of the business?
Waldorf: Well, the competitiveness of the business . . . you know prices
have become a point of contention. Smith & Wesson has introduced product
lines that are directly competing with our products, manufactured the same way,
same style, same everything, and they're getting right down into our pricing
category, so we have to become competitive to compete with companies like Smith
& Wesson. And basically litigation by trial lawyers has become quite a
significant factor in the entire gun industry.
Q: Are you saying that the lawsuits against Lorcin are equally
frivolous?
Waldorf: Most of them are frivolous. But I'll give you an example. We
had a situation where Lorcin was named in a product liability claim, and
Shaklee corporation, the vitamin corporation were named in a product liability
claim also. And the contention was that a mentally deranged person--this was
prior to the Brady Bill incidentally, and I believe in the Brady Bill; I think
there should be a background search for anyone wanting to own a handgun--but
prior to the Brady Bill this gentleman that had gotten out of a mental hospital
bought a gun and used it to assault someone.
Now this is prior to the background search we have today on a federal
level--which is a good law. And, we were named in the lawsuit because we
didn't practice enough diligence in publishing a profile in what the misuser of
a handgun might look like. And Shaklee Corporation was named in the same
lawsuit and Shaklee was named to the degree that they befriended this gentleman
and convinced him to get off of his Prozac and start taking vitamins, so they
were equally named in the lawsuit. Although the Shaklee vitamins were sold
through independent distributors and had nothing to do with the Shaklee
corporation directly. Wherever there is the opportunity for trial lawyers to
make fees, they're going to pursue it. And we're looked at like every other
opportunity for trial lawyers to make a fees.
Q: What contribution have you made to the gun market in America?
Waldorf: Well, Lorcin Engineering in 1993 had just about half of all the
.380 caliber handgun sales in the United States and that's a pretty significant
number. And 80 percent of Americans in the United States, that own handguns in
the United States own one of our products.
Q: What do you think you are giving to people?
Waldorf: We're giving them affordable self-protection. There's two
million people a year that defend themselves with a handgun. And you don't
hear that on the 6 o'clock news. And we're giving them affordable
self-protection, something a blue collar worker can afford to keep in his
dresser drawer at home to protect his family.
Q: So you really sell your gun[s] for self-protection, not for sporting, not
for any other uses.
Waldorf: Not necessarily. We have a legitimate target purpose for
certain of our models as well. And the .380's an excellent target pistol, the
9 millimeter's an excellent target pistol. Basically the gun enthusiast, the
one who does target shooting, uses our guns. But, primarily--the biggest use in
the United States for handguns is self-protection in the home.
Q: America is now in some sort of large public debate about how to make
ourselves safer from the violence that we see growing all around. What's your
prescription for that?
Waldorf: I think that our legislators should start taking a look at
providing tax benefits to working mothers, enabling the mothers to stay home
with their children, spend more time nurturing their children. Unfortunately,
the American society has become a two-income family for nearly every family in
the country. And there's a lot of latchkey kids out there that obviously
aren't getting the kind of parental attention that they should be receiving.
Now, as far as the crime problem, crime has been decreasing since about 1993 or
'94. I think we're going in the right direction, but certainly there's a
generation that could potentially be written off.
I think the impact in the reduction of crime has probably been the crime bill
that was proposed by President Clinton back in '93. I think that it has been a
tremendous deterrent, the three strikes law. People that used to assault
people are thinking twice before they carry out an assault, and I think that's
extremely important. Teenagers are thinking twice before they carry out that
assault now. Three strikes is a very serious law, and I think it's a law that
is going to do society a tremendous favor in the long run.
Q: You've been part of...developing a new market...
Waldorf: I don't think it's a new market...The market's been around
forever. Years ago they used to do what's called 'sandcast' firearms, back in
the late 1800's, and there's always been affordable firearms and there's always
been certain sides of the issue who would like to prohibit affordable firearms.
But, America was built with firearms, and it's certainly a person's right to
own a firearm.
And I think that when you start looking at prohibiting ownership of a firearm
based on the price of a firearm you've just told a very large segment of
society that because they don't belong to an elitist class, and therefore they
have no right to defend their family.
Q: So you think that those laws would be discriminatory.
Waldorf: Absolutely discriminatory. I feel they'd be more
discriminatory than slavery....you're taking a basic civil right. Every person
in the country has a basic civil right to defend their family. And maybe not
more than slavery, but as discriminatory as slavery . . .
Q: Do you think that limiting gun sales on price is racist?
Waldorf: Absolutely.
Q: Tell me what you think the social impacts of taking away less expensive
guns would be.
Waldorf: I think that there's more racial minorities in the United
States that don't earn an income sufficient enough to buy a $600-700 firearm,
therefore their alternative is a $150 firearm. And you take that certain
class of people and say you don't have the right to defend your family if you
live in a bad neighborhood or you're a divorced mother of 4 and somebody's
threatening you or stalking you, you can't own a gun because you're priced out
of the market? I think that's terribly discriminatory.
Q: I guess I understand the economic argument more than the racial
argument.
Waldorf: Economics in the United States trickle down to races as well.
I think if you were to take a look at certain poverty segments, I think there's
a lot of Hispanics here in Southern California that are living below the
poverty line, which is unfortunate. But there's a lot of people who are.
Q: The legislation that I've seen doesn't specify a price. It tends to talk
about certain characteristics or lack thereof...Therefore, is it necessarily an
economic argument, or is it trying to impose a certain minimum safety
standard?
Waldorf: It's absolutely an economic argument. If you were to take a
look at the Gun Control Act of 1968 that prohibited importation of firearms
from exporting countries, that was basically a protectionist measure to protect
the US firearms industry from unfair competition. The guns that are in the
affordable range do not have safety problems. Every single gun that is
manufactured by one of the 8 or 9 companies that manufacturer affordable
firearms that account for 80 percent of the sales in the United States have
minimum, one safety on 'em, some of them have two safeties, some of them have
three safeties.
And of course, the mythical junk word that's used, that the guns 'blow up'...We
haven't seen a gun that blew up yet. Okay? So basically the way that certain
legislature is crafted, it doesn't say it specifically, but it is targeted at
manufacturing processes that would be eliminated from manufacturing affordable
firearms.
Q: How do you reach the lower budget buyer? How do you appeal to them
separate from Smith & Wesson, or more expensive ones...what do you do to
reach those people?
Waldorf: Well, you know, we don't do anything on the retail level. We
sell to 60 wholesalers in the United States, and those are the only 60 people
that we sell to. And the 60 wholesalers in turn sell to bona fide licensed gun
dealers throughout the United States. And basically it's a matter of opinion
of the purchaser that walks in, if you have our gun over here and someone
else's gun over there and they buy ours, it must mean that they like ours.
Q:...You talked about one of those distributors, maybe it was the Pawn Shop
Association...
Waldorf: Yeah, pawn shops deal in firearms, all types of firearms, not
just affordable firearms, the 9 dollar firearms as well. And the nature of the
pawn industry is they lend money also on items of value, so they naturally take
guns in on pawn, and resell them on occasion, but pawn shops sell our firearms,
they sell Smith & Wessons, they sell Glocks--basically we're doing
absolutely nothing more than, if you put our gun in a gun case next to anybody
else's gun, the consumer has the ability to choose which gun he wants. And
based on features of our gun, and a $600 or $700 gun, it stacks up fairly well
for $150.
Q: So, it's a good place--for you--to market your guns.
Waldorf: Well, you know something, there's far less pawn brokers than
there are gun dealers. In the United States a number that comes to mind is
about 14,000 pawn brokers versus about 182,000 licensed federal firearms
dealers. So, it's a very small segment, but certainly that's part of the gun
market as well. Pawn brokers, gun shops, sporting goods stores, are certainly
part of the gun market...you know, we attend pawn broker seminars and things of
that nature, obviously because they are an outlet for our product, but we also
attend the National Sporting Goods Association seminars and the SHOT show in
Las Vegas every year, those are all gun shows, so we try to keep all bases
covered.
Q: There certainly are some people within the gun industry, independent
within the gun industry who have been very critical of the quality of your
guns...I'm thinking Gun Test magazine...which, speaking of your .22 said, "We
wouldn't pay any amount of money for a gun that self-destructs in a couple
hundred rounds. Stay away from this one."
Waldorf: Well, number one, I think you have to realize that Gun Test
magazine is an extremely, extremely critical magazine, and I think that number
two, you want to take a look at what issue of Gun Test that was, and it's
probably a very old issue . . .
Q: May '96.
Walddorf: May '96. I haven't seen that issue. But there's certainly
other firearms that have been critiqued through gun tests that have received
bad reviews as well. On the same token, we have many publications that have
said that, they operate flawlessly. And you know also in firearms occasionally
if you get ammunition that is not the correct ammunition, this happens quite
often, especially with reload ammunition, a gun may not work properly. In
other words, not enough force to drive the slide back and eject the round, you
might have to see the particular gun that Gun Test [did] the article on, really
see why they didn't like it.
Q: But you stand behind the quality of your guns.
Waldorf: Sure we do, we give a lifetime repair/replace warranty with
every gun that goes out of the factory. Less than a half a percent of what we
ship ever comes back for repair or replacement. I think that's a testimony to
itself.
Q: Your .380 shows up at the top of the guns most frequently traced by ATF.
Isn't that a clear indication that there is a connection between your gun and
the crime problem?
Waldorf: No, not at all. Let me ask you this question, are there more
Chevrolets in accidents than there are Mercedes, I would just assume that there
probably are. And it doesn't mean that, that Chevrolet contributes to motor
vehicle accidents. It just means that there are more Chevys out there than
there are Mercedes. Whenever you have an item that's affordable to most
people, we may be number one on [the] ATF's trace list, but again, that's junk
hysteria. Okay? We also know that 99 percent of what we ship never shows up
at a crime scene, and that's an awfully big number. Ninety-nine percent of
what we ship is in dresser drawers at home or whatever the intended purpose is.
Q: ...[T]he Bureau of Alcohol, Tobacco and Firearms even says that your guns
are more likely in proportion to the number you sell, to show up in tracing
statistics than a Smith & Wesson gun.
Waldorf: Between 1 and 2 percent of what we ship is traced by ATF. If
you were to take--and that's as an industry whole--that's as all nine
manufacturers of affordable handguns. But if you were to take the top 9
manufacturers of expensive guns, $600 or $700 dollar guns, their numbers
represent very close to 4 and 5 percent. So, I beg to differ with anybody's
stats that say that we're disproportionate to the amount of guns that we
ship.
Q: In reading over the literature that's out there on Lorcin, there are
several articles about a spectacular case where thousands of guns were stolen
out of your factory by two of your employees.
Waldorf: That's correct, we had two employees back in 1994 I believe
that had stolen some firearms out of our secured area.
Q: How did that happen?
Waldorf: I have no idea. ATF is still investigating it. They had
picked the locks on the doors and went in and stole guns. I mean if anything,
we were extremely a victim there. We sustained a tremendous loss and of course
the firearms that ended up on the streets thatís something we don't like
to hear....
Q: What security did you have at the time of that theft.
Waldorf: Guns were stored in locked rooms, and the locks weren't
sufficient enough to keep the two employees out of the rooms.
Q: Did you have security guards?
Waldorf: No we didn't, not at the time.
Q: Did you have any kinds of fencing or locked...
Waldorf: They were locked, closed rooms, and I think that if you take a
thief that's intent on stealing something, if they want something bad enough
they're going to steal it.
Q: When did you first learn that these guns were missing?
Waldorf: It was mid-'94 I believe.
Q: And what did you do at the time to stop it?
Waldorf: Well, number one the employees were fired, obviously, and
number two we scaled down our operation to keep inventory in such a confined
area, with infrared, steel doors, security guards, metal detectors. We're now
at the other end of the spectrum. I feel that Lorcin Engineering is probably
the least likely gun manufacurer in the United States to ever have a firearm
stolen from them again.
Q: We've learned that there were at least a hundred inquiries to Lorcin from
ATF going back as far as 1991 asking you to trace guns that you said were not
even manufactured.
Waldorf: We get inquiries from ATF on a daily basis, and every time we
get an inquiry from ATF as far as I know we've always complied with every
inquiry they've had.
Q: But there are internal ATF documents that show that there were unusual
tracing requests, that they had requested a trace that you said the gun had
never been manufactured, yet the gun had shown up in a crime.
Waldorf: Well, you know, I'm not familiar with that...I'm not familiar
with that, and I think I'd have to get a hold of our accounting department to
verify that. But I'm not familiar with the situations that you're talking
about.
Q: You've not heard at all that there was a problem with guns being traced
to Lorcin and Lorcin saying that the gun had not been manufactured?
Waldorf: No.
Q: Guns that had been used in crimes.
Waldorf: No.
Q: You've never heard this before.
Waldorf: I've heard an allegation, but I don't think that it's ever been
confirmed.
Q: We've learned that there are people in your company at least that did
know that these guns were going out, and that they did nothing to account for
the missing guns, and that this continued on for over a year.
Waldorf: I would like to know who the people are. We have done the best
at accounting for every single gun that we manufacturer as humanly possible.
Q: [B]ut these guns, these thefts were going back as far as 1991...
Waldorf: I wish I could answer your question, but I don't have an answer
for it...And really I'm at a clear disadvantage, because I don't have any kind
of documentation that you're referring to, I mean we're really getting into a
subject that I don't know anything about.
Q: You don't know anything about the problems in accounting for [the
guns]...
Waldorf: Every company in the world has got problems in accounting for
[a] product. And, I know that there's a problem in accounting for certain
number of serial numbers, but I don't know what the outcome is, and I don't
know for sure how many guns it was and obviously we had a theft. You know, so
I really don't know how to answer your question unless I have something in
front of me to defend myself with.
Q: But you're saying that ATF has had an ongoing investigation of the
company.
Waldorf: I don't know that they've had an ongoing investigation of the
company, I know they certainly investigated the thefts.
Q: They would say publicly that there is an ongoing investigation.
Waldorf: That's fine. I can't comment on that because I'm not ATF.
Q: Do you know of an ATF investigation currently into the company about
these missing guns and about how the missing guns have been accounted
for?
Waldorf: No I haven't heard anything from ATF for a long, long time.
Q: Why [has] your company put the former head of ATF, Steve Higgins, on
retainer?
Waldorf: We feel that Steve Higgins is an absolute expert in inventory
counting for firearms in every aspect of the firearms industry. And, if we had
any internal problems, we want the problems corrected.
Q: So you recognize that there was a problem that needed to be dealt
with.
Waldorf: No we didn't recognize that there was a problem. If there was a
problem we wanted it to be dealt with.
Q: So you're saying that his hiring was in no way related to this
problem...
Waldorf: Well, obviously it was related to people stealing guns from
us.
Q: Now, you say that as of--as early as mid-1994, you knew that the guns
were missing.
Waldorf: I'm not saying that. This is an issue that I really don't know
a lot about.
Q: This is a very serious issue, if there are thousands of guns, and we're
talking about six thousand...
Waldorf: Well, number one, the people that stole the guns from us are
incarcerated. And number two, there's never been anything that's [been]
brought to my attention that we're not cooperating with the ATF, we are
cooperating with the ATF.
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