Ever since the fall of the Soviet Union and the end of the Cold War, market forces have found two of Russia's best arms design houses, Izhmash of the Kalashnikov fame, and Izhmeck of the Baikal and Makarov brands, in financial trouble. The Kalashnikovs which were produced in such massive quantities to support the Soviet Union, their allies, and the satellites, that after the Cold War the vast surpluses are still circulating all over the world that newly made rifles are not finding clients. Even the Russiand Defense Ministry has more than enough to equip the troops even if it plans to introduce the AK-12 for mass use in the Russian Armed Forces.

Even with their expansion into the civilian markets, and finding the U.S. to be a huge potential market for their products, their revenues are not enough to maintain what they had before, which was supported by a centrally planned economy. Faced now with a capitalist economy, they have to deal with competitors and at the same time, would have to support their efforts not only with government support, but also arms deals outside of Russia.

Mikhail Kalashnikov and 16 of his colleagues, raise their concerns that Izhmash needed to be saved as production is going low. According to Defense News,President Vladimir Putin is supportive of a proposed merger of both Izhvesk-based companies, Izhmash and Izhmeck, into one company under the "Kalashnikov" Brand.

It does makes sense to further exploit the Kalashnikov Brand, as it has a worldwide recognition that we think is even more valuable than the Colt brand, if marketed properly. The Kalashnikov brand's revenue streams have already expanded into garments, alcohol, and airsoft, but we do not know if Izhmash or Kalashnikov himself is earning from such. They will have to consolidate the use of the Kalashnikov brand and this might become a worldwide effort to put those who are using the Kalashnikov brand without paying royalties into notice.

But the question of such merger will make Kalashnikov a major player in the firearms market, it remains to be seen. The defense market, especially in terms of the institutional sales, will guarantee tens of millions or even billions of dollars of sales if tapped right, but it is also very political as the Russian government can only tap the markets of its allies, which are relatively few as compared to the U.S. and other NATO - member countries. In tapping the civilian market, the only lucrative market that they can really focus on is the U.S. market, and that market is highly competitive as some of the best firearms manufacturers in the world are also fiercely competing in that market. They may count on a good number of firearms enthusiasts who admire the AK-47 and its variants.

The merged company will have to rely on government subsidies to survive while they reorganize to meet the new challenges under the Kalashnikov name and grow their revenues to the point that government support will be a smaller part of their business. It will be a tough play, and even if we don't any light at the end of the tunnel, we don't want to see that brand go to waste.