Groupe Herstal S.A.

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Groupe Herstal S.A.

Voie de Liège 33
B-4040 Herstal
Belgium
Telephone: (32) 4 240 81 11
Fax: (32) 4 240 88 99
Web site: http://www.herstalgroup.com

Private Company
Incorporated: 1889
Employees: 3,000
Sales: $584.8 million (2001)
NAIC: 332992 Small Arms Ammunition Manufacturing; 332993 Ammunition (Except Small Arms) Manufacturing; 332994 Small Arms Manufacturing; 332995 Other Ordnance and Accessories Manufacturing; 339920 Sporting and Athletic Good Manufacturing

Groupe Herstal S.A. is one of the world’s leading makers of small-caliber firearms, ammunition, and accessories for the military, law enforcement, marksmanship, hunting, and sports markets. Based in the village of Herstal, Belgium, near Liège, the company operates through two primary subsidiaries: Fabrique Nationale Herstal—which produces side arms, rifles, mounted weapon systems, training systems, and military engineering for the defense and law-enforcement sectors—and Browning/US Repeating Arms Co., which produces sporting rifles and hand guns under the famous Browning and Winchester names. The company operates manufacturing facilities in Belgium and elsewhere in Europe, as well as in the United States and Japan. Herstal has been owned by the regional Walloon government since the mid-1990s; however, the government has been seeking to sell off the company, most likely to a group of private investors. In 2001, the latest year for which figures are available, Herstal posted revenues of nearly $585 million.

Forging Firearms History in the 1880s

Weapons manufacturing in the Belgian city of Liège began as early as the 16th century. By the second half of the nineteenth century, the city featured a number of prominent arms manufacturers. In 1886, a group of manufacturers, including Ancion, Dumoulin Frères, Dresse-Laloux & Cie., J. Hanssen, and Pirlot-Frésart joined together to form an association, Les Fabricants d’Armes Réunis (United Arms Manufacturers).

An order from the Belgian Army in 1887 for 150,000 repeating rifles encouraged Les Fabricants d’Armes Réunis to begin planning a new, large scale factory, and in 1888 the group created a new company, Fabrique Nationale d’Armes de Guerre. The new factory was built in Herstal, and in 1889 the company launched production of the Belgian army order, producing Mauser-designed rifles under license. Mauser, based in Germany, then bought up the company from its founders.

At the completion of that contract, the Belgian army returned to the company, later to become known as FN Herstal, with an order for 30 million rounds for the Mauser rifles. FN Herstal promptly set up a dedicated munitions factory next to its rifle production site in 1891.

FN Herstal soon expanded its production to include civilian arms, especially hunting rifles. By the mid-1890s, the company began seeking other production areas, and in 1896 the company launched production of its own line of bicycles, including its own “acatene,” or chainless, shaft-driven bicycle designs. The company would remain a popular producer of bicycles for some 30 years.

From bicycles, FN Herstal entered the young automotive market, producing its first car in 1900 and its first motorcycle two years later. While the company stopped producing cars in 1937, it continued to build motorcycles into the 1960s. In addition, FN Herstal became a prominent truck manufacturer, with production running from 1930 to 1966, and also built trolleys between 1932 and 1955. Closer to its core weapons production was the manufacturing of military vehicles, and activity in this area continued until the early 1980s. Its diversified product line notwithstanding, FN Herstal achieved its greatest renown as a maker of small arms.

It was during the late 1890s that the company came into contact with one of the most important personalities in gun manufacturing history: John Moses Browning. Browning, the son of a gunsmith, built his first rifle when just a boy. By the age of 23, he had already received his first patent, for a single-shot rifle. Browning and brother Matt decided to set up their own workshop to produce the rifle in 1880. Browning’s invention quickly caught the attention of Winchester, another famous name in U.S. rifles, which bought out the patent.

Browning proved to be a prolific inventor, introducing in 1884 a lever-action repeating rifle, which became famous as the Winchester Model 86. The New York-based company remained a steady customer for Browning, buying up some 20 of his patents before the end of that decade. In the meantime, Browning had begun work on a new, groundbreaking design—the automatic machine gun, patented in 1890.

By then, the relationship with Winchester had begun to sour, and Browning had begun to seek other manufacturers for future patents. In 1894, Browning turned his attention to adapting his automatic firing system to handguns. By 1896, Browning had perfected the mechanism for the world’s first automatic pistol.

The following year brought Browning into contact with FN Herstal, when a representative of the Belgian company, traveling in the United States in search of new bicycle designs, came across the Browning automatic. FN Herstal agreed to begin producing the design and by 1899 had launched the world’s first commercially available automatic handgun. The new side arm became a huge success for the Belgian company.

Browning now turned his attention to developing an automatic repeating function for shotguns. By 1900, Browning had perfected the new design, a five-shot fully automatic shotgun. However, U.S. manufacturers were unwilling to produce the new weapon, believing it to be too far ahead of its time. In 1902, Browning traveled to Belgium, where he found ready acceptance for the shotgun from FN Herstal.

Browning and FN Herstal now began to work closely together, with FN Herstal producing an initial order of 10,000 shotguns. These were sold by Browning within a year, leading Remington to pick up on the design as well. Nevertheless, Browning’s closest ties where with FN Herstal, and by 1907 Browning had agreed to allow the Belgian company to manufacture arms using his name. Among the arms produced by the FN Herstal-Browning team in this period were a 9mm military semi-automatic pistol in 1903; a pocket-sized .25 caliber semiautomatic in 1905, and a semi-automatic .22 caliber rifle in 1914. In that year, Browning received the Order of the Knighthood from the Belgian throne in recognition of his contribution to the Belgian company’s growing worldwide reputation. The company received more dubious distinction as the maker of the automatic handgun used in the assassination of Archduke Ferdinand, setting off World War I.

FN Herstal shut down its operations during the German wartime occupation of Belgium; some of the company’s staff fled to France, setting up a new company, Manufacture d’Armes de Paris. Following the war, FN Herstal resumed operations. The company was now stripped from Mauser and taken over by Sociéteé Genérale de Belgique.

Browning had continued developing weapons during the war years, including .30 caliber and .50 machine guns and the famed Browning Automatic Rifle, or BAR, the world’s first light machine gun. Browning brought these new designs to FN Herstal following the war, and by 1920 Herstal had begun production of the BAR. While Browning himself returned to the United States, his son Val Browning remained at FN Herstal, further strengthening the family’s close association with the manufacturer. Browning continued to make frequent visits to FN Herstal, where he had his own office, and ultimately died in Liège in 1926.

The following year, the Browning family founded its own manufacturing works, the Browning Arms Company, in Odgen, Utah. That company, which focused on producing hunting and sports rifles and shotguns, later parlayed the famed Browning name into a variety of sporting goods items.

Diversification Disaster in the 1980s

Following the war, FN Herstal’s business had been boosted by the adoption of its 9mm pistol design as standard issue by police forces across Europe—and later around the world. FN Herstal had also continued to diversify its manufacturing basis, as already noted. In 1928, the company began construction of a new factory for its automobile production. Two years later, FN Herstal added a new production site, in Bruges, transferring its munitions production there.

By 1936, FN Herstal had begun to produce 40mm antiaircraft cannons. Two years later, the company was once again taken over by German occupying forces, which used the arms manufacturer’s production to support its own war effort. FN Herstal escaped bombing by the Allies; however, after the liberation of Belgium in 1944, the company’s factories became the target of Nazi bombing raids.

Following the war, FN Herstal began a new expansion of its defense manufacturing operations. In 1948, the company launched production of jet airplane engines, using the Gloster Meteor design. Over the next decades, FN Herstal was involved in the production of a number of important aircraft designs, such as the Hunter, the F104-G, the MirageV, and the Boeing Airbus. At the same time, as it wound down its automotive and motorcycle operations, FN Herstal turned instead to producing agricultural machinery.

Company Perspectives

Herstal is committed to be a reliable source for small arms for the military and Law Enforcement markets. We are committed to maintaining operational excellence through continuous improvement and the pursuit of world class manufacturing.

The 1970s marked a new period of growth for the company, as the intensification of the Cold War and tensions in the Middle East brought about a sharp increase in worldwide defense spending. Yet even as defense manufacture took on a major role in FN Herstal’s revenues, the company sought to extend its civilian-based businesses.

In 1977, the company acquired long-time partner Browning. Browning’s presence in the sporting goods market encouraged Herstal to step up its own operations in that sector. In 1979, Herstal acquired France’s Lerc, a maker of fishing equipment, as well as that company’s distributor. It also began producing such diverse sporting goods equipment as tennis rackets and surfboards. Meanwhile, the company had formed a manufacturing agreement with Japan’s Miroku, which in turn took a 25 percent stake in Herstal. By 1980, the company employed more than 10,000 workers.

FN Herstal stumbled in the 1980s amid a slumping defense market. In addition, the company had invested heavily in building up its aircraft motors and sporting goods wings, which failed to take off and left Herstal overburdened by debt. By the middle of the 1980s, the company’s interest payments accounted for some 10 percent of its sales.

Despite the fact that the company had succeeded in reducing its reliance on defense contracts, FN Herstal was forced to abandon its diversification strategy. The company began shedding most of its non-core operations, shutting down most of its sporting goods businesses, except for its hunting rifles and fishing equipment lines. In 1988, FN Herstal sold off its aircraft motors subsidiary—renamed as Techspace Aero. Nonetheless, FN Herstal had not completely given up on external growth. In 1987, it acquired US Repeating Arms Co. which had been formed in 1981 to take over the manufacture of Winchester guns.

Meanwhile, Société Genérale’s attempts to restructure the company proved fruitless, and, after pumping a further $400 million into the company in mid-1990, finally sold FN Herstal to French defense giant GIAT for about $100 million. The government-controlled company acquired 92 percent of FN Herstal, soon to be renamed Herstal SA, while the Belgian government retained 8 percent and an important veto right.

New Owners in a New Century?

Under GIAT, Herstal restructured again, reducing its focus back to a core production, on the one hand, of light arms and munitions for the military and sporting guns and sporting goods under the Browning name, and, on the other, of anti-aircraft cannons and armament systems for helicopters and other aircraft. The restructuring of the company cut deeply into its workforce, which shrunk back to just 1,300 employees by 1992.

GIAT itself began bleeding badly in the 1990s as the worldwide defense market collapsed with the end of the Cold War. As its own fortunes dwindled, GIAT finally was unable to continue to invest in keeping Herstal afloat, and by 1996 had announced its willingness to sell the Belgian company.

GIAT appeared to have found a buyer in Colt Manufacturing, the U.S.-based company and Herstal’s chief rival in the worldwide small arms market. Colt and GIAT began negotiations in 1997 and were close to reaching an agreement when the Walloon regional government vetoed a potential deal. Fearful that Colt sought to buy Herstal only to shut it down, and thereby increase its own share of the market, the Walloon government itself decided to buy Herstal.

The company now became Groupe Herstal S.A., with FN Herstal and Browning/US Repeating placed as its primary subsidiaries. Groupe Herstal’s restructuring continued, including the loss of more than 500 new jobs. This time, however, the company’s efforts paid off, and by 1999 Groupe Herstal was once again posting profits.

The Walloon government announced its intention to sell off Groupe Herstal again in 2000. In the meantime, Herstal fortunes began to rise again in the new century as it released a number of new products, including a polymer frame handgun in the United States, and, under a contract with the U.S. government, a prototype “smart gun” designed to be fired only by its owner. Herstal’s military sales received another boost in 2003 when the British government choose to supply its armed forces with the company’s newest Minimi series of light machine guns. As the Walloon government continued to search for new owners for the company, the Groupe Herstal was poised to continue making small arms history into the next century.

Principal Subsidiaries

Browning International; Browning North America; Fabrique Nationale Herstal S.A; FNH USA, Inc.; FN Manufacturing USA; US Repeating Arms Co.; Herstal Group.

Key Dates

1886:: An association of Liege-based arms manufacturers, Les Fabricants d’Armes Reunés (FAR), is founded.
1888:: FAR sets up Fabrique Nationale d’Armes de Guerre in order to produce 150,000 Mauser rifles for the Belgian military; following completion of that order, Mauser takes over the company.
1918:: FAR is taken over by Société Genérale de Belgique after World War I.
1899:: Production of John Moses Browning-designed automatic pistol begins.
1936:: Production of anti-aircraft cannons begins.
1977:: Browning company is acquired.
1987:: US Repeating Arms Co. and the Winchester brand are acquired.
1990:: Société Genérale sells company to GIAT for $100 million.
1997:: The Walloon government buys the company from GIAT and renames it Groupe Herstal.
2002:: Herstal develops a “smart gun” prototype.

Principal Competitors

Pentair Inc.; MKEK-Makine ve Kimya Endustrisi Kurumu Genel Mudurlugu; Rheinmetall DeTec AG; Tula Ammunition Plant Joint Stock Company; Olin Corporation; SNPE; Poong-san Corporation; CIC International Ltd.; RUAG Holding; Denel Proprietory Ltd.; Blount International Inc.; Israel Military Industries Ltd.