The Glock brand enjoys the largest segment of the civilian handgun market as well is the firearm selection of 65% of all law enforcement officers in the US.
Glock’s unprecedented success has been achieved by supplanting established pistol makers, mainly Smith & Wesson and Beretta, in the most robust handgun market in the world. This has been strategically accomplished with consistently superior products coupled with insightful marketing, advertising and promotional campaigns to key markets segments.
Glock GmbH is located in Deutsch-Wagram in Austria and did not enter the arms market until 1980. The impelling force behind this sensation is founder Gaston Glock, a civil engineer with advanced synthetic resin manufacturing experience, in his then modest plastics plant located outside Vienna.
In early 1980 Gaston Glock happened to be visiting the Headquarters for the Austrian Ministry of Defence (AMD) to promote the sale of his polymer munitions belts, pack shovels, practice grenades and combined trench tools.
While waiting for his meeting Glock overheard and obviously eavesdropped on two high ranking officers discussing an official Request for Proposal (RFP) to five established arms manufacturers for production of a handgun to replace the obsolete Walther P38s currently in use.
Both colonels were bemoaning the progress of their request and had been quoted four to five years development time. There were 17 mandatory features required to satisfy the RFP. The Austrian Ministry requested an accurate, lightweight, durable pistol with large capacity magazine and by the way make it conform to NATO rounds.
The officers’ conversation further revealed that to obtain a gun in a timely fashion the AMD was going to have to rationalize their expectations to 70% of these requisite features.
These stringent specifications gave engineers nightmares. The gunmakers continued working in the time honoured method of their craft, initially with existing frames and tooling, modifying to fit the specs just as they had done for decades. These pistols were traditionally built with 45-60 working parts.
Glock introduced himself to the officers and suggested that he would like to be considered to build the gun and, soon after explaining his business and theories on resins, was relegated with crisp Austrian disdain. Apparently that is not something you do to Herr Glock.
Glock then cleverly secured himself on the Ministry bidders list based on his status as a current supplier, received the specifications and the bid process compliance parameters and schedule and then went to work, night and day for the next two years.
Glock purchased every pistol on the market and took them apart and put them back together. To him being a virgin to the gunmaking process was understood to be a virtue ; since he had no experience he “was not handicapped with preconceived notions about firearms” he would later explain. To supplement his inexperience, he hired two notable armaments consultants and had a series of ‘focus groups’ to create the weapon.
Gaston had highly developed polymer experience and extensive manufacturing expertise and melded those skills into a gun design that had 34 moving parts, held 17 rounds and weighed less than any other weapon submitted. The Glock was better engineered, more precisely manufactured and cheaper by a long shot—a sophisticated gun that cost around $70 to make. Every Glock has a polymer frame, precision moulded steel slides and a patented heat treatment to augment resistance to wear and rust. There was nothing like it and it proved reliable, durable and accurate. The Glock 17 incorporated all 17 RFP requisites and was entered in the Austrian Army Trials for the weapon in 1982. Needless to say, it won the competition.
Glock sidestepped five other key manufacturers when the Austrian Ministry of Defence awarded the contract for 25,000 Glock polymer, carbon-steel hybrid pistols and unleashed a commercial juggernaut into the staid ranks of the world’s gun makers. The Glock 17 pistol was subsequently adopted by the Austrian Military and the Police and designated the P80. The closest competitor, Smith & Wesson who had been in business since the 1850s, was curtly displaced.
Glock GmbH is a privately held company so the financials are only open to Gaston Glock and subject to speculation. According to documents filed by Glock in a 1992 patent lawsuit the average gross profit at the factory was 68%.
Very few modern organizations have been able to sustain margins at this level and grow market share so dramatically without sacrificing one for the other. Gaston Glock has walked this razors edge successfully and in modern marketing that is a singular achievement. The sales of the whole Glock product line have escalated year over year since the launch of the Glock 17. The Glock brand is currently sold in 50 countries.
The holding companies for Glock GmbH are located in Lichtenstein, another example of shrewd management as there are token corporate taxes levied on holding companies in the Principality. The Lichtenstein holding company is Unipatent a corporate entity co-owned by Glock and Charles Ewert, his then financial genius.
The meteoric rise to the top has not been a bed of roses for the founder. In the relatively short time in the gun business he has been embezzled out of $ 30 million by the self same Charles Ewert a long time colleague. Even more bizarre, Ewert contracted to murder Glock in 1999 and it would yet again represent a point in the gallant then 70 year old’s life where someone underestimated him. Glock beat the hired killer, an ex-legionnaire named Jacques Pêcheur who was also a professional wrestler under the name Spartacus, into unconsciousness, knocking out several teeth in the process. Glock brought all parties to court and then prison … 20 and 17 years respectively.
These series of events were not without dire repercussions for Gaston. The court proceedings regarding the attempted murder and the embezzled millions revealed a network of shell companies as the corporate finances became part of the court record. Glock claims no knowledge of these companies and that he didn’t know the financial aspects. It must be the Austrian water that causes these memory lapses.
According to Paul F. Jannuzzo the former CEO of Glock USA, “Gaston Glock has been taking a skim of $20.00 per weapon since he opened the doors.” This money and half of the gross from the US subsidiary were clandestinely funnelled to Lichtenstein according to Jannuzzo. The former US chief executive had previously represented the company on CBSs 60 Minutes. It is estimated that there have been 5 million units sold since the late 1980s so the allegations amount to substantial sums.
Jannuzzo, a former state prosecutor, is in whistleblower litigation attempting to gain a percentage of funds recouped as a result of stepping forward on his previous employer. To demonstrate the adage that turnabout is fair play, Gaston Glock is suing Jannuzzo for embezzlement.
You can’t make this stuff up.
In day to day happenings with the US Subsidiary in Cobb County, Georgia, Gaston Glock has ground up 7 national sales managers in 11 years. In a job like that it takes a 6 months to a year to get your feet under you. Coupled with an ever expanding market there are not enough hours in the day, so it is clear that Gaston’s expectations are very high with an average 19 month life span on sales executives.
Glock went through all of the extensive official process—and they are arduous—to become a manufacturer of pistols in the USA as there is strong protection for US gun makers and Glock sales have consistently soared since, by units and dollars. It is estimated that annual sales are in the $ 100 million range.
Glock flies the corporate jet himself. No surprise there.