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Layoffs and patent trouble at ailing Colt's.

In the wake of the Army's decision to award a 19,000-rifle M-16 contract to French-based Fabrique Nationale, Colt's Manufacturing Company announced a part-time plant shut down in its Hartford, Conn., facility. According to Ron Whitaker, Colt's president, the plant closed down for two weeks in September -- a move which resulted in a furlough for 250 workers. Whitaker said the company was considering closing the military side of the plant for two weeks every month, but that plan has been abandoned.

"We're moving ahead on several of our future contracts which won't be delivered until well into 1993 in order to keep our workers on the job," Whitaker said. "Our production people have progressed a substantial way along the learning curve of the new World Class Manufacturing, and we don't want them to have to re-learn the techniques every time they return from furlough."

Whitaker said that he hopes the government realizes that supporting the manufacturing base for the M-16 in the U.S. will cost a little more than buying French copies. He added that if Colt's does not receive another military contract by the end of the year "things are going to get awfully lean in '93."

This comes after the August 29 announcement that Colt's had given pink slips to 22 salaried executives in a move which will save the company an estimated $2 million. As this issue of Shooting Industry goes to press, the gun world is still awaiting the September 30 announcement of Colt's reorganization plan. Once this plan is revealed, Colt's will have 60 days under the law to work out any remaining details.

Colt's is still awaiting both the Navy's award of an 8,700 rifle contract and another contract from the Army for 40,000 rifles later this year. The Navy contract will reportedly be given to Colt's without competitive bidding, although Whitaker said, "I've learned not to expect anything from the government."

Along with the company's money troubles, Colt's is also facing a lawsuit regarding control of its trademark and patents. CF Intellectual Properties, a corporate entity established in March of 1990 when Colt Firearms Division of Colt Industries was purchased in a leveraged buyout, has filed suit alleging that the Colt trademarks and patents are property of CF Intellectual.

According to the lawsuit, CF Intellectual alleges that Colt's Manufacturing owes them more than $4 million in royalty payments. They have asked the bankruptcy court to stop the company from using its own name unless it pays its debts.

"I don't think there's any legal or financial precedent to take the name away from Colt's," Whitaker said.

While Colt's and CF Intellectual focus on a deal between the two, lawyers for the unsecured creditors say the entire arrangement should be scrapped due to financial improprieties by two of the deal makers.

In court papers, the creditors' committee alleges that Anthony Autorino, former chief executive officer of Colt's, and Herbert Oakes set up the name arrangement to bleed cash out of the struggling manufacturer so they could guarantee an annual return to certain investors -- including themselves.
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Title Annotation:Indsutry News; Colt's Manufacturing Company Inc
Publication:Shooting Industry
Article Type:Column
Date:Nov 1, 1992
Previous Article:Shot Show Review 1993: Dateline - Houston, Texas.
Next Article:Safety in hunting and the hunting store.

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