I have been studying Taurus for many months now as part of my graduate program. It is an interesting company. Without getting into a dissertation length post or too many semantics, I will share some of my observations. Forjas Toras produces much more than firearms. Banco Santander Brasil SA is there largest shareholder followed by Caixa de Previdência dos Funcionários do Banco do Brasil which is actually a subsidiary of Banco Santander. The companies stock performance and growth has been very stable over the past ten years, although, they had a rough Q3, Q4 in 2011 due to a recent acquisition and inheriting some of that companies debt. This is not necessarily a bad thing though, basically just growing pains due to the acquisition. This did however cause the company to tighten it's belt both at Taurus International Miami and Forjas in Brazil. Miami reports to Brazil respectively.
Forjas Taurus SA is a Brazil-based company engaged in the manufacturing and marketing of revolvers, military and civilian pistols, shotguns, ammunition, machine guns, air guns and rifles. It is also involved in the production of glasses, bullet proof jackets, motorbike helmets, plastic products, as well as tools for civil construction and gardening, among others. The Company manufactures its products for shooters, sports, leisure, personal safety and public safety segments. It sells its products to domestic, as well as international markets and exports its products to more than 70 countries. The Company operates seven industrial plants, four of which are located in the state of Rio Grande do Sul, one in the state of Parana, one in the state of Bahia and one is located in the United States. As of December 31, 2010, the Company's subsidiaries included Taurus Holdings Inc., Taurus Maquinas-Ferramenta Ltda and Taurus Investimentos Imobiliarios Ltda, among others.
Taurus International Miami has some strengths and weaknesses. They are completely dependent on QC in Brazil for the weapons that are manufactured in Brazil and shipped to the U.S. including parts. Brazil has a different standard of manufacturing. Different laws, regulations, levels of transparency etc. Brazil is also an emerging market and a second world socialistic country which may effect manufacturing from a regulatory standpoint, how much is hard to determine since they do not provide much information regarding regulatory legislation, labor laws etc. Taurus International does not have a QC process for weapons coming from Brazil. The QC process is basically their warranty and the corresponding warranty work for malfunctioning firearms. So it is a reactive QC approach. The repair department is dependent on Forjas for parts. This may delay repairs since parts for the firearms produced in Brazil must be imported. When a customer sends in a firearm, CS notes the concern in the data system based on their understanding of the customer concern and or the letter that the customer is requested to send with the firearm to the repair department. There is usually never any dialog between CS rep's and repair tech's other than the notes in the system and the letter from the customer. Information can get lost in translation since it is coming form the interpretation of the customer(not a gunsmith) and or the CS rep(not a gunsmith), unless the firearm is sent to the attention of the review board. This usually only happens if the fire arm is unsuccessfully repaired the first time and my have to be replaced. So there is a disconnect between the customer/CS/and the repair department. This I feel (subjectively) is Taurus Internationals biggest operational obstacle currently.
Some of their strengths are that they produce highly innovative and well designed firearms using the latest manufacturing technology, for example their MIM process. Taurus actually owns many patents to their manufacturing approach and subcontracts for other firearm manufacturers. They are trend setters and aggressively market their products both internationality and state side. Mark Kresser's biggest obstacle may be pursuing his goals while staying aligned with the expectations of Forjas Taurus. One of his biggest strengths is the CS department. For what they are dealing with in regards to volume they are already performing above and beyond. If he could overcome the communication barrier between the customer /CS/ and repairs he would effectively increase the efficiency of the warranty process immensely and cut down on a massive amount of overhead in logistics(paying for firearms to be shipped back and forth) since firearms would not require multiple trips to get repaired properly. Another approach could be to create a pro-active QC system for firearms as they are received state side. Not only test firing them but checking them for tolerances. This would not completely eliminate out of tolerance firearms from being sent out, however it would drastically reduce the percentage and effectively lessen the amount of firearms being sent back for warranty repairs. This would also help strengthen brand reputation which is actually not as tarnished as one may be led to believe, it still could not hurt.
I actually sent a few proposals to the "Review Board" at Taurus International regarding these recommendations but I am assuming they were expeditiously filed in the circular inbox.
Overall I would give Taurus International a B+ based on their products and the percentage of customers they are reaching based on their target market (affordable quality, firearms). If Mr. Kresser could get them over the last hurdle of state side QC they could one day command market share in the near or distant future. They do build a damn nice snubby
