Why are ammo manufacturers so bearish about investment?

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AlaskanInTexas
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Why are ammo manufacturers so bearish about investment?

#1

Post by AlaskanInTexas »

I could be wrong, but it seems that we have been in an almost perpetual state of ammunition shortages and high prices. We talk in terms of the 2020 shortage, but I can't think of a time in recent memory where ammo was fully stocked and reasonably priced for any meaningful length of time. It's been one shortage after another without really catching up in between.

According to my research, most manufacturers say that it is a demand side issue - lots of new gun owners, panic buying, etc. They are addressing it by running factories 24/7, working employees ragged, and maybe occasionally adding a new facility or machine. This obviously is not sufficient. When asked why they don't make major capital investments to bring supply up to the demand levels, they all say that they are not sure where demand is going to settle out. They don't want to overinvest and have to potentially mothball facilities or lay off workers.

I just don't get it. When was the last time that there was a glut of ammunition? Not in my memory. It seems pretty obvious that demand is going to stay above current production levels with no signs of slowing down. Plus, there is so much pent up demand. People who would readily buy bulk quantities to replenish their stock, but are holding off due to lack of availability and high prices.

I work professionally with a lot of manufacturing industries and all of them would have jumped by now and invested major capital.

Thoughts?

K.Mooneyham
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Re: Why are ammo manufacturers so bearish about investment?

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Post by K.Mooneyham »

AlaskanInTexas wrote: Thu Sep 09, 2021 11:41 am I could be wrong, but it seems that we have been in an almost perpetual state of ammunition shortages and high prices. We talk in terms of the 2020 shortage, but I can't think of a time in recent memory where ammo was fully stocked and reasonably priced for any meaningful length of time. It's been one shortage after another without really catching up in between.

According to my research, most manufacturers say that it is a demand side issue - lots of new gun owners, panic buying, etc. They are addressing it by running factories 24/7, working employees ragged, and maybe occasionally adding a new facility or machine. This obviously is not sufficient. When asked why they don't make major capital investments to bring supply up to the demand levels, they all say that they are not sure where demand is going to settle out. They don't want to overinvest and have to potentially mothball facilities or lay off workers.

I just don't get it. When was the last time that there was a glut of ammunition? Not in my memory. It seems pretty obvious that demand is going to stay above current production levels with no signs of slowing down. Plus, there is so much pent up demand. People who would readily buy bulk quantities to replenish their stock, but are holding off due to lack of availability and high prices.

I work professionally with a lot of manufacturing industries and all of them would have jumped by now and invested major capital.

Thoughts?
Businesses may be started by people who had an idea to create a product or service to sell to people. It may employ people who create that product or service. It may employ people who market that product or service. However, those aren't the people RUNNING any business. The people who really run the business are those who MANANGE it: paperpushers and beancounters...and THOSE folks know that THEIR paychecks hinge upon NOT spending money to the greatest extent possible, versus the amount of money they can bring in. NOT to make money for the company, but to make money for themselves. The larger the business, the more likely this is to be true. That dovetails with Jerry Pournelle's "Iron Law of Bureaucracy":

"In any bureaucracy, the people devoted to the benefit of the bureaucracy itself always get in control and those dedicated to the goals that the bureaucracy is supposed to accomplish have less and less influence, and sometimes are eliminated entirely."
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ScottDLS
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Re: Why are ammo manufacturers so bearish about investment?

#3

Post by ScottDLS »

AlaskanInTexas wrote: Thu Sep 09, 2021 11:41 am I could be wrong, but it seems that we have been in an almost perpetual state of ammunition shortages and high prices. We talk in terms of the 2020 shortage, but I can't think of a time in recent memory where ammo was fully stocked and reasonably priced for any meaningful length of time. It's been one shortage after another without really catching up in between.

According to my research, most manufacturers say that it is a demand side issue - lots of new gun owners, panic buying, etc. They are addressing it by running factories 24/7, working employees ragged, and maybe occasionally adding a new facility or machine. This obviously is not sufficient. When asked why they don't make major capital investments to bring supply up to the demand levels, they all say that they are not sure where demand is going to settle out. They don't want to overinvest and have to potentially mothball facilities or lay off workers.

I just don't get it. When was the last time that there was a glut of ammunition? Not in my memory. It seems pretty obvious that demand is going to stay above current production levels with no signs of slowing down. Plus, there is so much pent up demand. People who would readily buy bulk quantities to replenish their stock, but are holding off due to lack of availability and high prices.

I work professionally with a lot of manufacturing industries and all of them would have jumped by now and invested major capital.

Thoughts?
A full scope ammunition manufacturing plant is no small investment. Your talking about taking metal billet brass or steel, melting it, forming and extruding it to various case specifications. Large scale chemical (propellant and priming) handling which are hazmat materials. You've got bullet forming and coating, for multiple calibers, etc. It's not something the Lennox Air Conditioner plant in Stuttgart, AR can just shift their sheet metal bending operation to on a whim (used to work for Lennox :lol: ). It's not building an oil refinery, but I think an ammo plant could easily run to the hundreds of millions. Without lots of military pre-orders and government contracts, I'm not sure how easy it would be. I guess I have heard of some smaller manufacturers, but I don't know if they have to have suppliers for the major components like cases and bullets upstream of them.
4/13/1996 Completed CHL Class, 4/16/1996 Fingerprints, Affidavits, and Application Mailed, 10/4/1996 Received CHL, renewed 1998, 2002, 2006, 2011, 2016...). "ATF... Uhhh...heh...heh....Alcohol, tobacco, and GUNS!! Cool!!!!"
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Paladin
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Re: Why are ammo manufacturers so bearish about investment?

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Post by Paladin »

For a time the primers seemed to be the major limitation.
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Re: Why are ammo manufacturers so bearish about investment?

#6

Post by LTUME1978 »

I started shooting (and reloading) again after Obama was elected. I have seen times while Obama was in office where reloading supplies were plentiful and low in cost. One of the good deals was Remington small pistol primers at $23.00 per 1000 some time in his second term in office. Still shooting some of those out of a large batch that was purchased. I think we will see good days again, just don't know when.

Like the early Obama years (where government agencies are buying large quantities of ammo they don't need), the government is at it again. One agency made a conversion from 124 grain +P 9mm to 127 +P+ 9mm and bought hundreds of millions of rounds. Why would they do that other than to take ammo off the market?

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Re: Why are ammo manufacturers so bearish about investment?

#7

Post by flechero »

I had to go from Temple to Dallas today so I pit stopped in waco and Garland to see what the shelves looked like.... Cabela's and Bass Pro were stocked FULL of ammo... pistol, rifle, shotgun, even the lesser used calibers like 38, 357, 380, 25, 32, etc. I was shocked since I don't hit thos outlets much. I assumed some of the crying was still warranted.

No prices were not at 2018 levels but neither was the gas I put in the tank today or the lunch I ate. But they were much lower than last time i was there.
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Re: Why are ammo manufacturers so bearish about investment?

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Post by The Annoyed Man »

One thing seems certain……now that sellers have gotten buyers used to seeing $800-$900/1000 rounds of .223/5.56 (for instance), it seems improbable that it will ever go back down below $400-$500/1000. I sincerely hope I’m wrong. I’ve been used to paying $300 +/- per 1000.
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Re: Why are ammo manufacturers so bearish about investment?

#9

Post by Ruark »

A full scope ammunition manufacturing plant is no small investment.
Not only that, but the quality control has to be virtually 100%. You have to be able to manufacture millions and millions and millions of rounds, at very high speed, as perfect as possible, with virtually NO defects. It's not like making toasters. It's certainly not like just buying a few new machines and plugging them in.
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Re: Why are ammo manufacturers so bearish about investment?

#10

Post by ScottDLS »

The Annoyed Man wrote: Tue Sep 14, 2021 8:32 am One thing seems certain……now that sellers have gotten buyers used to seeing $800-$900/1000 rounds of .223/5.56 (for instance), it seems improbable that it will ever go back down below $400-$500/1000. I sincerely hope I’m wrong. I’ve been used to paying $300 +/- per 1000.
Go over to ammoseek and you can find case quantities of .223 for $390 and 5.56 for $500. Prices are slowly starting to come down. I don't know if we'll see <$300 any time.
4/13/1996 Completed CHL Class, 4/16/1996 Fingerprints, Affidavits, and Application Mailed, 10/4/1996 Received CHL, renewed 1998, 2002, 2006, 2011, 2016...). "ATF... Uhhh...heh...heh....Alcohol, tobacco, and GUNS!! Cool!!!!"

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Re: Why are ammo manufacturers so bearish about investment?

#11

Post by Soccerdad1995 »

ScottDLS wrote: Tue Sep 14, 2021 10:34 am
The Annoyed Man wrote: Tue Sep 14, 2021 8:32 am One thing seems certain……now that sellers have gotten buyers used to seeing $800-$900/1000 rounds of .223/5.56 (for instance), it seems improbable that it will ever go back down below $400-$500/1000. I sincerely hope I’m wrong. I’ve been used to paying $300 +/- per 1000.
Go over to ammoseek and you can find case quantities of .223 for $390 and 5.56 for $500. Prices are slowly starting to come down. I don't know if we'll see <$300 any time.
I just did a search. Limiting it to brass case only, I see alot of retailers selling 5.56 for .50 to .55 per round, and .223 for .445 to .49 per round. So yes, right in line with your numbers.

Personally, I could always find ammo somewhere. It's just that the price was close to $1.00 a round for a while there.
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Re: Why are ammo manufacturers so bearish about investment?

#12

Post by ScottDLS »

Soccerdad1995 wrote: Tue Sep 14, 2021 10:45 am
ScottDLS wrote: Tue Sep 14, 2021 10:34 am
The Annoyed Man wrote: Tue Sep 14, 2021 8:32 am One thing seems certain……now that sellers have gotten buyers used to seeing $800-$900/1000 rounds of .223/5.56 (for instance), it seems improbable that it will ever go back down below $400-$500/1000. I sincerely hope I’m wrong. I’ve been used to paying $300 +/- per 1000.
Go over to ammoseek and you can find case quantities of .223 for $390 and 5.56 for $500. Prices are slowly starting to come down. I don't know if we'll see <$300 any time.
I just did a search. Limiting it to brass case only, I see alot of retailers selling 5.56 for .50 to .55 per round, and .223 for .445 to .49 per round. So yes, right in line with your numbers.

Personally, I could always find ammo somewhere. It's just that the price was close to $1.00 a round for a while there.
9mm not bad either. I buy the steel case stuff if I want bulk to shoot my machine guns and to prepare for the zombie apocalypse which is surely coming (have you heard about the Omega variant? It's worse than the current India variant. ) :shock:

If I'm shooting for accuracy or honing my special operator skills, then I buy a couple boxes at the range. When you're a SpecOperator operating operationally in the tactical jungle that is Flower Mound, TX, you have to hone your skills to a razor edge. Wolf and Tula just won't cut it.
4/13/1996 Completed CHL Class, 4/16/1996 Fingerprints, Affidavits, and Application Mailed, 10/4/1996 Received CHL, renewed 1998, 2002, 2006, 2011, 2016...). "ATF... Uhhh...heh...heh....Alcohol, tobacco, and GUNS!! Cool!!!!"

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Re: Why are ammo manufacturers so bearish about investment?

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Post by Jose_in_Dallas »

How many of you guys buy your ammo in bulk online? I can't remember the last time I went to a brick and mortar store to buy ammo. Actually I take that back, I bought 3 boxes of some Aguilla .22 trying to figure out what feeds good in my Ruger LCP II.
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Re: Why are ammo manufacturers so bearish about investment?

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Post by ScottDLS »

Jose_in_Dallas wrote: Tue Sep 14, 2021 8:50 pm How many of you guys buy your ammo in bulk online? I can't remember the last time I went to a brick and mortar store to buy ammo. Actually I take that back, I bought 3 boxes of some Aguilla .22 trying to figure out what feeds good in my Ruger LCP II.
Before WalMart went all woke and stopped selling popular calibers, I used to buy the Winchester White Box 9mm and .45auto bulk packs. When prices were low, I used to by 500rd or 1000rd cases of 9mm and .223, mostly Wolf steel case from Ammoman.com . Now if I see any 5.56 or 9mm at Academy, I buy 4 boxes (usually the limit).
4/13/1996 Completed CHL Class, 4/16/1996 Fingerprints, Affidavits, and Application Mailed, 10/4/1996 Received CHL, renewed 1998, 2002, 2006, 2011, 2016...). "ATF... Uhhh...heh...heh....Alcohol, tobacco, and GUNS!! Cool!!!!"
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Re: Why are ammo manufacturers so bearish about investment?

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Post by The Annoyed Man »

Jose_in_Dallas wrote: Tue Sep 14, 2021 8:50 pm How many of you guys buy your ammo in bulk online? I can't remember the last time I went to a brick and mortar store to buy ammo. Actually I take that back, I bought 3 boxes of some Aguilla .22 trying to figure out what feeds good in my Ruger LCP II.
I can’t remember the last time I bought ammo from a brick & mortar store.
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