Good article in Forbes on the ammunition shortage

[Mike Irwin]

"I already know that factories/staff/logistics do not pop up in 24 hours but these major companies like ATK, Black Hills, Hornady etc have dealt with increased sales & production demands for 4/5 years."

yep. The problem is, what happens on the other end? When gun owners finally get their heads out of their panicky butts and stop buying?

Companies have to take into consideration what happens when the panic dies down. Can they afford to shutter lines? What do they do with them? Hold them in reserve just in case gun owners wig out again? That's expensive as hell because they not only have to maintain the equipment, they now have to service the debt that they took on expand those lines in the first place.

Unlike the panic hoarders, these companies have to take into account what MIGHT happen in the future.

And the American economic landscape is absolutely littered with the corpses of companies that guessed wrong.

I'd rather that these companies be a bit on the conservative side and puruse a reasoned course of operations as opposed to rushing around and overexpanding to their post-panic detriment just because they focus on Johnny the Panicky Jackass who's running around stoping his feet and screaming at the top of his lungs how it's horrible that he can't buy 50,000 rounds of ammo RIGHT NOW because he needs it to hold off the hoards of baby-blue-helmeted UN robot soldiers who are coming to take his guns.

Your REAL angst shouldn't be with the manufacturers.

It should be with a significant portion of your fellow gunowners. They've created this mess by being worse than herds of lemmings.

 

[Aguila Blanca]

So I hate to break it to them, but the ammunition shortage has been over for at least a few months now. It was really over for us regular guys back around mid-July (or even late-June), with everything you could want available dozens of places online... albeit with outrageous prices, but still plentiful.

The ammunition shortage is NOT over when every time I go into any of the three or four Wal-Marts within my normal circulation pattern there is NO .22LR ammo, NO rifle ammo, and NO handgun ammo.

The shortage will be over when ordinary people can once again walk into Wal-Mart at any time on any day and find ammo in the caliber they need, in stock on the shelves.

Your REAL angst shouldn't be with the manufacturers.

It should be with a significant portion of your fellow gunowners. They've created this mess by being worse than herds of lemmings.

This. Exactly.

Especially those who grab up everything the moment it hits the shelves at Wal-Mart (which, to its credit, has not jacked its prices), and within 24 hours that same ammo is on Craig's List at double the price.

 

[SPEMack618]

[quote="Mike Irwin']baby-blue-helmeted UN robot soldiers [/quote]

Ahem, I believe the term is robin's egg blue.

That being said, the ammo shortage won't be over for me until I can call the CMP in March and get my 5,000 rounds of .22 LR in May for summer camp.

 

[SamNavy]

The ammunition shortage is NOT over when every time I go into any of the three or four Wal-Marts within my normal circulation pattern there is NO .22LR ammo, NO, rifle ammo, and NO handgun ammo.

The shortage will be over when ordinary people can once again walk into Wal-Mart at any time on any day and find ammo in the caliber they need, in stock on the shelves.

Isn't that kinda like saying there's a F-150 shortage because the closest Ford dealer is 100 miles away and you don't like the Manager and refuse to shop there, and now you have to drive twice as far or settle for a Chevy?

I'm not an economics major and maybe I'm being a little dense (please tell me), but just because every store across the whole country isn't busting at the seams with stocked shelves doesn't mean ammo isn't available to the average person with a click of the mouse or a drive... so while you might have to take an afternoon and head a few counties over to get that special truck you want, you might have to do the same to get ammo... but it's there.

So I guess if we collectively want to say "there's still a ammo shortage" within the technical definition of whatever chapter in Economics 101 that covers supply&demand, I guess thats fine... but I think it would be as accurate to say there's just as much a shortage of motivated buyers who say "I can't find any", when they really mean, "I don't want to wait 3 days and pay 50% more than I did last year."

I also think that since many parts of the country are getting regular shipments to the point that there is inventory on the shelves, and yet some areas are still dry, that there are distribution decisions being made with the retailers that contribute to this.

I read an interesting set of numbers in an Ammoland article:

“Take for example .22LR ammunition. The industry as a whole (all manufacturers combined) is setup to produce 4,200,000,000 (4.2 Billions) .22 LR annually. That is running all the machines, full capacity all the time, all manufacturers together.

There is NOTHING they can do to produce more.

That corresponds to 230,137 cartridge per State per day, which is 460 bricks of 500 .22lr per day per State. That means that if less than 50 people per day in each State are buying 10 bricks of .22, it is enough to dry up the entire supply as it is being manufactured.”

 

[Brian Pfleuger]

Isn't that kinda like saying there's a F-150 shortage because the closest Ford dealer is 100 miles away and you don't like the Manager and refuse to shop there, and now you have to drive twice as far or settle for a Chevy?

I'm not an economics major and maybe I'm being a little dense (please tell me), but just because every store across the whole country isn't busting at the seams with stocked shelves doesn't mean ammo isn't available to the average person with a click of the mouse or a drive... so while you might have to take an afternoon and head a few counties over to get that special truck you want, you might have to do the same to get ammo... but it's there.

So I guess if we collectively want to say "there's still a ammo shortage" within the technical definition of whatever chapter in Economics 101 that covers supply&demand, I guess thats fine... but I think it would be as accurate to say there's just as much a shortage of motivated buyers who say "I can't find any", when they really mean, "I don't want to wait 3 days and pay 50% more than I did last year."

Well, yeah, you're being a little dense. A shortage is when something isn't readily available on average, when supply can't keep up with demand. If the average person has to go out of their way to get something that used to be available at every store that sold such things, it a shortage. That's pretty much the definition.

Ammo isn't extinct. Of course it can still be had but it's no where close to as available as it was 1 year or most especially 2 or 3 years ago.

Your own example illustrates exactly what a shortage is and why there is one.

That's a shortage. There is far more demand than supply.

 

[Mike Irwin]

"Isn't that kinda like saying there's a F-150 shortage because the closest Ford dealer is 100 miles away and you don't like the Manager and refuse to shop there, and now you have to drive twice as far or settle for a Chevy?"

No, I think he's saying that, as the largest retailer in the United States for many products (and probably the top retailer for ammunition, or at least close to the top), when he walks into WalMart and sees fully stocked shelves, it means that people have finally stopped panic buying.

 

[ClydeFrog]

Who's to blame? The gun/ammunition makers or the gun shooters?....

I think the dispute here is who to blame & why.
Is it the huge shooting sports industry members? "Big Green"(Remington), ATK, Hornady, CorBon, Winchester, etc?
Or is it the consumers? The US gun owners or shooters who "panic buy" hoard or "prep" .
I haven't done any "roll bys" to check my local gun/sporting goods stores, which seems to be the new hobby/past-time for many US gun owners.
I did see a local gun range selling 50rd boxes of .45acp FMJ for $29.95.
That ammunition is going to sit there.
I, for one blame the shooting industry firms for the supply/demand/market conditions more than the US consumers.
John & Mary gun owner are not in charge of staffs or run large plants. If these ammunition companies produced more rounds then the market would be like it was in the mid 2000s. Hunting or milspec FMJ rounds wouldn't be at used car prices like it is now & top quality duty-defense rounds wouldn't be extinct or nearly impossible to obtain.
I don't think the preppers or hoarders are as big an issue now as in early 2013.
The gun industry(S&W, Ruger, S-A, Glock, etc) has leveled off. Now the major ammunition firms need to tow the line.
They can still get big profits & keep long term customers satisfied.
Clyde

 

[Tom Servo]

I don't think the preppers or hoarders are as big an issue now as in early 2013.

They may not be an active problem at this point, but their actions earlier in the year helped create the shortage that manufacturers are still struggling to ameliorate.

I find it amusing that we're willing and eager to point fingers at everyone but ourselves on this.

 

[ClydeFrog]

Gun owners/shooters...

That's because gun owners & shooters don't own companies or run factories that produce ammunition; "24/07" as some top firms claim.
They don't decide what gets made, who makes it, how much is made & where it is sent(logistics).
It's true that panic buying, preppers or hoarders created a problem but if the 2A/gun laws don't change or there is not another Sandy Hook/Super Storm Sandy/Katrina type event the panic buying should trickle out.
The lack of .22LR & problems finding it for low(what should be considered normal) prices is still strange.
If I had a ammunition firm or ran a company Id increase factory runs of .22LR and keep the prices down. That would keep the customer base happy & maintain loyalty.
Some of these US shooting sports businesses seem to have a "hey so what" attitude. They want the $$$ now rather than have a long term customer.

 

[Brian Pfleuger]

If I had a ammunition firm or ran a company Id increase factory runs of .22LR and keep the prices down.

Do you have any idea what that costs? It's not as if they just push the "Easy Button" and crank out more ammo. These companies WANT to sell you every round that you'll buy. If there isn't enough it's because they CAN'T make enough, it's certainly not a matter of will.

EVERY company has said that they are operating at 100% capacity. Some used to only run one or two shifts a day, now they're going 24/7.

Sometimes they're restricted by their own supply and demand problem. The base ingredients don't just drop out of spaceships. They have to be mined/refined/machined/whatever.

It's very complicated. There's so much more to it than "I'd make more!", it could literally fill a book.

 

[SVO]

I recently was able to buy a box of Federal 22 ammo at Academy, first in about 2 years or so. Felt pretty good about it till I got home and noticed that what I thought was a box of 50 was really 40 rounds. So does this mean that Federal has now re-defined the brick as 10 boxes of 40 rounds?

 

[Mike Irwin]

"If I had a ammunition firm or ran a company Id increase factory runs of .22LR and keep the prices down."

How? By having the staff unicorns magically procure everything you need?

By having the unicorns tweek the machinery so it can produce three times the ammo in half the time?

Yeah.

 

[thallub]

So does this mean that Federal has now re-defined the brick as 10 boxes of 40 rounds?

Federal sells both 40 round and 50 round boxes of .22 ammo: They've been doing that for many years. All the 40 round boxes of Federal American Eagle ammo i've seen were priced for individual sale.

 

[ClydeFrog]

Raw materials....

The one point I can see as being a factory issue is the lack or supply of the raw materials needed in production; copper, zinc, brass, lead, etc. Those are items that must be allocated first before increased production can be had but to my knowledge many of the resources are plentiful & sustainable. These items have been around for 100s of years. Product demand or a huge increase in new shooters shouldn't drive these industries out.

As discussed, the overall demand for many common calibers; .22LR, .38spl, 9x19mm, .40S&W, .45acp, .223, .308(7.62mm), 7.62x39mm, etc might wind down but I doubt the sale prices will lower too.
The major ammunition firms will space it out so local gun shops & retailers can keep the prices higher.

 

[Brian Pfleuger]

The one point I can see as being a factory issue is the lack or supply of the raw materials needed in production; copper, zinc, brass, lead, etc. Those are items that must be allocated first before increased production can be had but to my knowledge many of the resources are plentiful & sustainable. These items have been around for 100s of years. Product demand or a huge increase in new shooters shouldn't drive these industries out.

As discussed, the overall demand for many common calibers; .22LR, .38spl, 9x19mm, .40S&W, .45acp, .223, .308(7.62mm), 7.62x39mm, etc might wind down but I doubt the sale prices will lower too.
The major ammunition firms will space it out so local gun shops & retailers can keep the prices higher.

Sale prices are controlled by the average of all buyers. If the average buyer won't pay the price, prices will fall. Who is at fault for current prices? The buyers. If they wouldn't pay it, the sellers couldn't charge it.

The supply chain of raw materials suffers the same expense and lag time as the supply chain of finished product.

It's not as if the copper producers have 500 million ton blocks of copper sitting in the back yard hoping someone buys them. By and large, they are equipped to produce roughly the historical average demand and bring more production online over the course of YEARS as the supply changes. No industry is typically able to double or triple output at the drop of a hat.

It's kind of funny, we want to vastly over-simplify a very complex system, the manufacture of the end product, because we want to vastly complicate a very simple cause of hoarding and short-sighted consumers.

The blame for the current situation lays squarely on the shoulders of the firearms owners. It's not with retailers, wholesalers, distributors, manufacturers or their suppliers or their suppliers.

It's us. The firearms community (like all human conglomerates) is an ignorant, panicky animal causing harm to itself and blaming everyone else.

To quote Men In Black, A "person" is smart, "people" are stupid panicky animals and you know it.

 

[zukiphile]

If I had a ammunition firm or ran a company Id increase factory runs of .22LR and keep the prices down.

Let me pile on, but from a different direction.

If you owned the manufacturing facility, you would want to increase your return. You might dial back on QC or buy cheaper components (though I don't know enough about brass, lead, powder and wax to know how one would save money there).

In the face of increased scarcity, you would not increase runs and suppress prices. Your entire run would be purchased, your costs increased, your returns static or decreased, and your ability to continue impaired.

In the face of a glut, you might stockpile and release to make prices crash if you have the market power to do it and you think it might put a competitor out of the business so you could raise prices later, but that would be a monopolistic move.

FWIW, there was a copper shortage and price increase a few years ago, but I haven't heard much about it since the 2008 downturn.

 

[Mike Irwin]

"The one point I can see as being a factory issue is the lack or supply of the raw materials needed in production; copper, zinc, brass, lead, etc. Those are items that must be allocated first before increased production can be had but to my knowledge many of the resources are plentiful & sustainable. These items have been around for 100s of years. Product demand or a huge increase in new shooters shouldn't drive these industries out."

The businesses that process those materials are also limited by their produce dramatically increased quantities of finished "raw" materials.

The "brass" used in the production of cartridge brass isn't simply any old combination of copper and tin. It's a specialized material made under exacting requirements.

And, even if these companies can dramatically increase their production of the specialized brass, guilding metal, and lead required by the shooting industry, you have multiple companies competing for it.

What you're not understanding is that there are potential bottlenecks at ALL phases of the production line.

You CANNOT, I'll repeat that, CANNOT simply snap your fingers and somehow magically increase your production 2, 5, or even 10 fold.

You seem to be either incapable or unwilling to grasp that concept.

 

[Mike Irwin]

Eh, crap. Beaten to the punch again.

 

[zukiphile]

Beaten to the punch again.

Your punch is different, explaining what someone midpoint in the chain of supply can do, while mine pertained to what they would want to do.

Figuring out markets is difficult, not least because the most valuable insight at this level of analysis is figuring out what we don't know.


What I know: When .22 golden remingtons are $20 for 500, if I am lucky enough to find them, I am worse off than when Jerry's and Sportsman's Guide and lots of other retailers were tripping all over themselves to send it to me for less than two cents per round.

This leaves the possibility that my reference point is a low point in pricing, and I will never feel the satisfaction of a great deal again.

 

[Mike Irwin]

"In the face of increased scarcity, you would not increase runs and suppress prices."

Actually yes, you would.

You want, as best you can, match production to extant market conditions. Going too far in either direction (no product vs absolutely flooding the market) only does one thing -- it leads to either a partial or total market collapse and dramatically reduced sales.

The BEST scenario for all involved is NOT what we're going through right now.. alternating cycles of panic buying followed by lulls.

These panic cycles actually worry the hell out of the manufacturers because they know that all of the ammo that they're loading is not being shot.

They are seeing, and are worried as hell, about what's going to happen to their sales when this panic finally bottoms out.

Sales aren't going to return to 2005 levels -- robust and steady.

We have the distinct possibility of seeing a depression in the ammunition and components market because so many people who used buy at a steady state turned into complete and total drooling, brainless zombie-like moronic tools who couldn't hit the panic button fast enough.

These people are now sitting on 50,000 rounds of ammunition, 50,000 primers, 20,000 bullets, and 30 pounds of powder, knowing full well that their shooting habits will NEVER get them through that much product.

But... BLIP! GLOP! GLORG!

GOTTABUYGOTTABUYNEVERSEEANYOFITEVERAGAIN!!!!!

OBAMMASISBUYINGUPALLTHEAMMO!!!!

I know more than a few people who spent ridiculous sums on ammo that they're never going to shoot.

I'm going to let that reality burn on them for awhile, then swoop in and offer to buy a bunch of it for pennies on the dollar.

Maybe then Timmy the Toolbag and Lester the Leming will have learned their lessons...

Nah!