Magpul is relocating because it landed long-sought financial deal

 
[dropcap]E[/dropcap]rie, Colorado-based Magpul firearm-accessory company was exploring moving out of state as part of a plan to expand operations long before Colorado legislators passed gun laws last year, according to interviews with people involved in the company’s negotiations.

Magpul announced last month that it would be moving its manufacturing to Wyoming and headquarters to Texas, and it is now clear that financial considerations unsurprisingly dominated negotiations around the move.

Yet the expansion plan itself and the company’s financial bargaining never made news in all of the reporting around Magpul last spring during the gun-law debates at the capitol. The main narrative spinning around Magpul at the time was that the company would move as a political statement. As the conservative Colorado Observer put it, Magpul executives “announced they would leave in reaction to the Democratic state legislature’s passage of gun-control bills.”

Deal-making

But Wyoming and Texas offered financial incentives to Magpul in 2012, when the company began exploring how best to realize its expansion plans and long before the gun measures had even been introduced.

Colorado officials confirm Magpul reached out to them for financial assistance in 2012.

“A Magpul partner reached out to the Business Development Director at the time to let them know Magpul may be interested in some of the state’s programs,” said Kathy Green of the Office of Economic Development and International Trade in an email to the Colorado Independent.

“The director asked [Business Development Manager Sam Bailey] to follow up, and he went out and met with the leadership team to discuss the various financing, incentive and training programs we offer as a state,” she said. “This is standard practice for our business development team in our efforts to retain and help companies expand in Colorado. He has not heard back from Magpul on their discussion to date.”

As first reported by television news station KDVR last March, Magpul in the summer of 2012 told the Colorado governor’s office and the Office of Economic Development that Wyoming and Texas offered the company incentives to relocate. In 2014, citing the gun laws passed in 2013, Magpul announced the manufacturing move to Wyoming. It had locked in a $13 million grant and loan package from the state.

Magpul said it was never trying to play state governments off of each other in an effort to land a sweet deal, the way sports teams have done for decades now.

“We never made any threat to leave,” Chief Operating Officer Doug Smith told KDVR. “We were just mentioning, Hey, these other states have approached us. This is something they offer.”

Magpul hasn’t returned repeat requests for comment, but a pattern emerges in the record of negotiations. It seems clear that, in last year’s proposed gun-control laws, Magpul saw an opportunity to increase its leverage in its ongoing relocation negotiations.

The company first threatened to leave Colorado last February if lawmakers passed the gun bills — primarily those aimed at closing gun-purchase background-check loopholes and banning in-state sales of ammunition magazines that hold more than 15 rounds. The Colorado magazine bill notably made no restriction on manufacturing the so-called high-capacity magazines, which Magpul specializes in designing and making.

Nevertheless, as debate heated up around the bills at the capitol, Magpul launched a high-profile advertising campaign that criticized the proposals and that featured anti-gun law rallies and special product giveaways and promotions.

States across the nation took notice. A dozen Facebook pages popped up, begging Magpul to bring its jobs, profits and aggressive firearm politics to more gun-friendly states.

Smith reportedly met with economic development teams in Nebraska, Texas and Wyoming. Indiana lawmakers Bill Friend and Randy Head wrote letters to Smith, asking Magpul to consider their state as a future home. Magpul also reportedly considered relocating to states that included Utah, Montana, Idaho and Arizona.

“I mean everybody in the economic development business tried to get them to come to their district,” said Randy Burns, CEO of the Cheyenne-Laramie County Corporation for Economic Development, whose organization eventually beat out the competition. Burns’s team reached out to Magpul around February last year. “When I say everybody, that is an exaggeration, but not by much. Frankly, we’re pleased to be able to keep them as a part of the Front Range. They were being courted, and pretty heavily, by some states pretty far afield.”

Magpul, however, was not ready to jump. It was still deeply engaged with Colorado and its new gun laws. The company ramped up 30-round magazine sales with a get-‘em-while-you can summer campaign held in the weeks before the magazine-sale ban took effect.

Showing Magpul the money

Magpul representatives met with Wyoming Governor Matt Mead on a few occasions, said Renny MacKay, a staffer in Mead’s office. Unlike Colorado, Wyoming has no corporate state income tax, no personal income tax, no inventory taxes and various other tax exemptions for which Magpul may qualify.

Indeed, Wyoming shares many characteristics with tax-free havens around the world, keeping rates well below almost every other state in the country. The fact that Wyoming’s tax policies have spurred a host of shell companies to set up shop there brought international attention recently when a New York Times tech and business writer falsely reported that a tidal wave of Chinese web traffic had flowed to a small house in Cheyenne.

The attraction of those low-tax policies was augmented when Wyoming offered Magpul the $13 million grant and loan package, secured by the Cheyenne-Laramie County development office, working with the governor’s office and Laramie County.

During the 2013 general assembly, just after the gun bills were introduced, Magpul told the press that it put off signing a lease on a new 125,000-square-foot building in Colorado for its headquarters and held off plans to expand and build a 200,000-square-foot facility near I-25.

Now, according to Burns, Cheyenne-Laramie will be using Magpul’s $13 million package from Wyoming to buy and rehab a 58,000-square-foot temporary manufacturing and distribution facility and Magpul will have the option later to buy a permanent 100,000-square-foot being built by Burns’s Cheyenne-Laramie office with the $13 million in its business park. Magpul will pay the lease on its new building, said Burns and, eventually, the grant and loan money will have to be repaid.

The Laramie County Commissioners voted in favor of the Magpul financial package on January 7 and other state boards have signed off in the last month. Commissioners only officially knew about the agreement with Magpul in December. Before then, according to Laramie County Commissioner Amber Ash, talks with Magpul were strictly confidential and the commissioners knew about the deal only as “Project Roger.”

“Wyoming is very much a right to bear arms state,” Ash said. “We’re proud to have them.”

Magpul’s January press release announcing its plan to move to Wyoming and Texas seemed to suggest that 92 percent of its Colorado workforce would join the company outside the state. But Magpul’s Duane Liptak told the Denver Post that wasn’t the case, that most of the company’s employees would be left behind in Erie. Liptak did not respond to the Independent’s requests for clarification, though a story about Magpul in the Caspar Star-Tribune states that “some” unknown number of employees will move with the company and that 184 positions will be available in Wyoming. A more recent AP story says Magpul will bring “90 new jobs” to Cheyenne.

Plastics

For Burns, Magpul’s move is less about guns and more about plastics. The kind of injection modeling Magpul performs is a type of plastic manufacturing Wyoming’s economy has been missing for a long time, said Burns.

“It’s really critical having the skill sets and manufacturing capability around that process, or more accurate, those processes,” he explained.

When Magpul moves to its permanent facility, the temporary building owned by the Cheyenne-Laramie office will be able to house other plastics businesses.

“Did you see that movie with Mrs. Robinson, The Graduate? Do you remember the advice in the movie? Mr. McGuire said, ‘Young man, let me give you one word of advice: plastics.’ And that proved to be really true.”

Though there are formalities to conclude in Wyoming related to the deal, Magpul claims it will set up shop in the Equality State sometime in the next year or year and a half.

Although Wyoming doesn’t have any professional sports teams, now it has Magpul.

[ Image by james bigdog. ]