A TRIBUTE TO THE FOUNDER OF

COMBAT EXCHANGE

Well you should.  You may even own one.  These are the two most popular synthetic SKS stocks ever made.  More of these stocks have been made and sold in the last ten years than all other aftermarket SKS stocks combined.    ATI owns the the rights to these designs and has been selling them for years.  This wasn't always so, as these designs were purchased from Combat Exchange.

Personally, I find Leo's story interesting on many different levels.  The business end of what it takes to build something like a synthetic stock was eye opening, to say the least.  Then there is the whole legal morass when the BATF steps in and starts to proactively damage legitimate businessmen.  All this aside, it's the human factor of the following account, specifically Leo's faith, that I find most intriguing.

CHAPTER 1:  The Inception

US patent #324,557 was issued in the US on March 10, 1992 to Leo Livingston, a pawn broker from Burgaw, NC.  One evening back in 1987, after he had closed the store, he looked at one of his SKS rifles.  He  thought it is one of the best shooting rifles he ever owned, but "boy that is the ugliest gun I ever saw".  But when he noticed one of his Ruger 10/22's with a folding stock, Leo had an epiphany.  He sat down with a drink of scotch whisky and worked out the design with pen and paper.  Leo gave the design to two different people over the course of a year, but nothing ever panned out.  At one point he even called Choate Machine and Tool in Arkansas and tried pass the idea on to Mr. Choate, but they wouldn't put him through.  A few years later the two eventually spoke, but that was in 1992 after the infamous 922(r) letter came out.  Choate said he was getting out of the SKS folding stock business, for he knew the BATF plan of assault.  Eventually, Leo decided to build the stock himself.

In early 1989 Leo had been watching "Shotgun news" every week expecting to see a folding stock for the SKS, but never saw anything.  Like most of us working folks, Mr. Livingston had little capital in which to launch his big ideas. To get an idea of how to put together the folder, he took a SKS and sawed the butt off and then bought a can of Bondo from the National Wholesale Auto Parts store next door .  The first SKS folding stock was born that night in Pender Pawn Shop.  When he put the prototype up to his shoulder and looked in the mirror, he knew he had a winning combination.  He took the best, most economical heavy bore rifle that you could afford to shoot and made it look like every gun enthusiast's dream.

CHAPTER 2:  About Injection Molding

Now it was time to learn a little about injection molding.  Leo drove to Maudlin, South Carolina and spoke with a plastic injection mold maker about manufacturing his concept.  The man was a pragmatist and couldn't understand why anyone would want to replace a perfectly good stock with one made from plastic.  A large bucket of cold water poured on Leo's idea when he heard the quote.  The injection mold will cost $275,000.00, will take 18 months to make, and they couldn't even start this process for 4 months.  Leo thanked the man and drove the 275 miles back to Burgaw.  

As anyone could imagine, this was quite discouraging news.  During the long drive home he wondered, "why don't you forget about this and just run your little shop and be content with what success you already have".  However, Leo's belief that people would indeed want a folder for the SKS, the he could build a business off it, drove him to dig a little deeper.  Further investigation revealed that most mold makers were up north, several in Chicago.  He found one that was easy to talk to and sent them the prototype for second opinion.  Two weeks later the quote came in.  It would be $385,000.00 and 18 months, but he was backlogged for 6 months.  He then said it was going to take at least a 1000 ton machine to inject the plastic into the mold and that he didn't know anyone in the South that could do the job.  That night Leo gave up on his dream.

CHAPTER 3:  New Neighbors

One slow afternoon at the pawnshop,  Leo was reading the local paper when he read a story relating to how the town had sold a piece of land to a plastics firm, Action Mold and Die.  A man named Ziggy had relocated from New York to Burgaw to continue his trade.  The irony of this incredible turn of events is staggering.  Burgaw was a town of  3500 and the biggest industry they had was blueberry picking season for a month in June.  That, and circuit court for one week a month.  Leo promptly drove over to Action Mold and found a new metal building of about 5000 square feet.  He walked in and introduced himself to Ziggy, a pleasant man with a warm smile and a European accent.  In New York, Ziggy made small plastic parts for the cosmetic industry.   He had moved to the South where he could slow down and enjoy life.  No more big city problems, with unions,  snow, crime, and traffic.  Now he, his three children, and two small plastic injector machines focused on making just one product: plastic tops and bottoms for the smokeless tobacco industry.  

Leo learned a great deal about the plastic molding industry that day.  Ziggy was a wellspring of information and had an open willingness to teach.  It's Ziggy's professional opinion that America does not  train or encourage young people to get into the machining trade.  It is hard to find tool and die men much less a mold maker.  In the industrialized north, they recruit skilled mold makers from Europe.  Ziggy  also spoke of the glass industry in Portugal that once employed  many skilled craftsmen, but plastics has all but killed  the glass industry.  However,  the mold makers in glass were taught from childhood the skills involved and  they were making the conversion to plastic with no problem.  Ziggy suggested they  send the plans to Mira Grande, Portugal for a mold quote.   The very next day, Ziggy invited  Leo over to the shop as he had just received a fax from Portugal.  

Ziggy read off, "There will have to be two molds..."

At this point Leo thought, "Two molds?!?!   I can't afford $375,000.00 for one mold, and here they want to make two molds!?!?!"

 "Leo, the price of the molds will be $69,000.00  It will take 26 weeks to complete and deliver to North Carolina.",  Ziggy continued.  "If I make it, I will have to buy a 750 ton machine and they aren't cheap."

"How much for the machine?"

Ziggy said with a smile, "That will be out of my pocket not yours.  I can make the stock and place it in a plastic bag with a paper top and pack them in a box of 25 for $9.00 per unit.  The question is, can you sell them for a profit?  Is there a market out there?"

CHAPTER 4:  Formulating a Business Plan

The first thing Leo needed to establish was how many SKS's exist in this country.   Who does one turn to if they want to know how many of a particular type of weapon were imported into the U.S. to date?  Leo contacted the BATF and asked them for information on how many SKS rifles that had been imported since 1969.  He figured that, since the war in Vietnam and President Nixon's journey to establish trade with The Peoples Republic of China, there had to be millions of SKS rifles in the US.  The BATF told him that there records showed 1,600,000 but it could be more since many had come into the country from returning HERO servicemen.  He then asked several of his firearms distributors that he bought weapons from how many had they bought.  With all his research, he figured it to be around 6,000,000 from 1969-1989.  Six million in a country the size of America would be swallowed whole, but these rifles were everywhere at the gun shows, so he believed the actual figure were more along the lines of 11,000,000.   He then figured he could sell to, at the least, 10% of the people that owned or would ever own a SKS.  Now, armed with the per unit cost ($9.00) and the projected sales (10% of 11 million = 1,100,000), he could project profit margins.  Selling the stock wholesale for $43.75 X 1,100,000 would gross $48,125,000.  That's a profit of $38,225,000.00!  Now Leo has what's called a business plan.

These are some incredibly humbling numbers.  And through some incredible twists of fate, things were rapidly falling into place.  That night Leo had a long conservation with God.  He asked, "Lord you know I will forget this whole thing if you want me to, but you know this man Ziggy has moved here and knows how to do it.  He is even willing to buy a mighty expensive machine to make it. Lord, he has even talked to Portugal and found the best price in a short time to make it.  The one thing is, Lord, I haven't got the $69,000.00.  And don't know if I can raise it.  It's in Your hands.  If you want me to do it... Your will, will be.  Oh yes, Lord this is for a gun, I wish it was for something more peaceful, but it's the only thing I have an idea for... And yes, if it is Your will, it will be."  

That night he was struck with inspiration. Why not buy an ad in the "Shotgun News"?  He could place an advertisement showing the Folding Stock with an attractive woman holding it.  If there is one thing men enjoy looking at more than fast cars and guns, it's a beautiful woman.  He placed the ad, with the pawn shop phone number and address, which requested that people not send money, but reserve theirs today.  The stock in the photo was the Bondo made, prototype stock.  In fact, if you see the ad, it didn't have a folding part or the butt end.  Just a woman holding this spray painted Bondo stock.  The ad came out in late 1989.  

That day the phone rang off the hook.  He stressed that people not send money, but he would take their name and address and send a post card when he was ready to ship.  About two days later, he went to get the mail for the pawn shop and there was a yellow card in the box requesting he see the front desk.   As soon as he walked up the counter, the worker said, "Boy have we got some mail for you!"  He returned to the shop with a shopping bag full of mail and started opening it.  He kept finding money orders, cashiers checks, and cash with letters saying, "I want to be sure to be first, I don't care how long it takes."  

Leo's lawyer cousin, who is now a judge, told him not to cash one single check or make one deposit of that money for it could be considered mail fraud.  He suggested putting them in a safe and send everyone a receipt and letter offering to send the checks back if they wanted.  The letter also stated it would be quite a while before the mold was ready.  The checks totaled over $83,000.00.  Before he had spoken to his cousin, he had thought maybe he could use the money to make the mold, hence no need for a loan!  The lawyer told him even though he thought it was a gift from God and a sign, it was just that.  A sign that there was a market for the folding stock and that maybe the bank would see that as well.

CHAPTER 5:  More Financial Setbacks

The very next day, Leo drove out to the local bank with his partially Bondo-made prototype folding stock, the Shotgun News ad, the quote from Ziggy, and $83,000.00 in pre-paid orders.  He had been doing business with this bank for over five years through his Pawn Shop, so they knew him well.  Leo also had an ace in his pocket when it comes to collateral, as his pawn shop's assets alone easily totaled twice the amount of the loan.  After a brief discourse, the loan officer politely declined the loan.  Although they agreed that the folding stock would most likely make for a profitable business, they don't lend for new businesses and they absolutely weren't interested in the gun industry.  Although Leo had his answer, as a formality they "considered" the loan for a week before sending him on official declination.

Disappointed by the swift rejection, Leo returned to the pawn shop to reconsider whether he really wanted to go through all this, after all.  He knew the loan officer was shortsighted, but maybe this just wasn't meant to be.  Leo has a golf loving brother named Harry who lives in Tulsa, OK.  That same day, Harry was playing a round of holes with a lawyer friend of his.  During the course of the game, Harry's buddy asked him if he knew of anyone who was in need of venture capital.  He said he had a client who sold one of his previous investments and was about to take a substantial tax hit if he didn't find a place to reinvest approximately five million dollars.  Of course, at this point Harry brought up Leo's gun stock idea.  Although this would probably interest the investor, who owns a ranch in Texas and enjoys hunting, he was looking for a substantially larger investment. 

That night Harry decided to give Leo a call and ask about how the trip to the bank went.  Leo expressed the loan officer's disinterest in lending to a gun related business, so Harry told him about the golf conversation.  Harry had given his number to the lawyer, but he didn't think too much would come from it.  Sensing Leo's discouragement, he urged him to keep looking and not to give up.  There are plenty of folks out there, like the Texan, who would love to invest in an idea like Leo's.

CHAPTER 6:  Good things come...

Sometimes people don't exactly surrender, but plans get put on hold indefinitely.  Building yourself up just to be let down wears on a man after a while.  If it was meant to be, it was meant to be, so Leo went back to his pawn shop and tried putting it out of his mind.  It was just another Tuesday at Pender Pawn when at around 2pm the phone rang.  

Upon answering, a soft voice with a Western drawl said, "Leo you don't know me but I am John Smith [this name has been changed for obvious reasons] from Tulsa Oklahoma and I hear that you have a gun stock project that needs some funding."  

Leo acknowledged the assertion and further mentioned that he had been to a bank but was still waiting for the formal response from them.  John then asked if he had any paperwork to back his ideas and was pleased to hear Leo still had the business model he prepared for the loan officer.  John then needed to know a ballpark figure Leo was going to need to get this bird off the ground.  After a moment of careful consideration, Leo aimed a little high and ventured that it would perhaps take $150,000 in startup capitol.  He shrewdly asked for more than he needed because he knew it would go smoother on the front end than potentially having to go back later and ask for more.

"Why don't you FedEx the paperwork to me and I will give it a look.  One way or another, I'll get back to you soon."

Leo agreed and that was about all that was said.  John was to the point, and had no wasted words.  Leo was comfortable with his style and it seemed that he was a genuine entrepreneur, with no BS.  The local FedEx branch had a 3pm deadline for next day delivery, so Leo immediately jumped in his truck and raced to the drop-off point.  

True to his word, two days later John again phoned.  John liked what he saw and wanted to meet with Leo.  Early the next week he was leaving for an international business trip out of New York City, but was willing to leave a little early and schedule an extended lay-over in Wilmington on his way out.  He knew it was short notice, but was wondering if they could meet that coming Monday.  They agreed on a meeting time and place and, true to form, the call didn't last much longer than necessary.

After the call, Leo just sat there for a minute collecting his thoughts.  He marveled at the immediacy and reality of the situation.  "This really is happening!", he thought to himself.  On Monday of that week, Leo didn't even have hope in the project, but come next Monday he was going to officially be in the firearms industry.  To say he was excited would be an understatement.   Leo was brought up to be, and has always been, a hard working man.  However, in this case it seemed that every time Leo labored to bring his dream to life everything fell apart, but every time he let go, things just fell into place.  Needless to say, he raised his eyes to the heavens and gave thanks for all his blessings.

CHAPTER 7:  Breathing life into Combat Exchange

More to come.  Please check back in about two weeks for upcoming chapters...

[ Up ]

Simonov.net is written and operated by David Sutherland. All contents are © Copyright 2000, 2001, 2002, 2003, 2004, 2005.
Because of the ever-changing nature of this site, please excuse any errors in content and function.
No part of this site may be used or sold without the express written permission of the site's owner, David Sutherland.