Why aren't companies rising to meet the ammo demand?

[SunnySlopes]

they're not going to make multi-million dollar capital investments in response to an artificially created spike in demand

They don't have to. All they have to do is exactly what they're doing, viz. continuing to manufacture ammo. Sooner or later supply will match demand.

And, make no mistake, this is not an artificially created spike. These are genuine shortages we're seeing.

 

[primalmu]

I think what many people fail to realize is that probably 75% of gun owners don't keep more than a few boxes of ammo on hand at all times. The remaining 25% shoot enough to justify* having a stockpile (*notwithstanding the arguments in favor of preparedness). Normally its this 25% that buys the bulk ammo. Suddenly, when there is a gun ban scare, the 75% come out of the woodwork. The guys who only shoot during hunting season start telling themselves, "Well, maybe I need to have a few more boxes on hand just in case." Simply put, the manufacturers aren't tooled up to support all the shooters in the US because most of them don't shoot high volume. Plus, these doesn't even take into account all the new gun owners that are just now getting into shooting due to the hysteria.

 

[9mmepiphany]

The OP seems to be under the impression that a factory can be expanded and new machines ordered, delivered, and set up overnight. Not to mention the hiring and training aspect for operators to use these new machines.

A more likely perception is that ammunition manufacturers are operation at less than full capacity.

Just by the rules of efficiency, the factory would be working at capacity. When demand increases, they'll incurred the additional cost of adding overtime shifts...that increases the manufacture cost of the product, which is naturally passed onto the buyer. When they reach that 150% of normal capacity, they really can't do much more unless they decide to increase capital investment. The question would then be how much could they increase their price to recoup that expenditure in a reasonable length of time.

 

[Killian]

Sooner or later supply will match demand.

And, make no mistake, this is not an artificially created spike. These are genuine shortages we're seeing.

What do you base the idea of supply eventually meeting demand on? I would argue that--unless there is a substantial increase in the amount of ammunition being produced--demand might not be met for many years. This is assuming that ammunition is not expended and subject to resupply issues. Expended by target shooting, training sessions, hunting, and, of course being that I'm from the South, Dueling. If everyone buys ammunition--and never uses it--then supply will of course eventually meet demand. If the demand curve has shifted because people perceive there is a shortage and they want what is now missing, then they will actively seek to acquire ammunition when it is available. This is no longer a casual "I'll pick some up when I get to the store." This is "I'm actively hunting it wherever and whenever I can with desperation." That's a demand shift.

I crunched some numbers for my state regarding .22 ammo supplies, as I posted previously, and I was shocked at how long it might take to supply even 3 boxes of 50 rounds each to 85,000 residents of my state. I had kept my demand ratio low (10% of gun owners in Mississippi owning .22 caliber firearms...which is a low side joke when I think of how many .22s are probably actually owned) which make my figures all the more shocking. At current production levels in the US it would take something like a 5 months or more I estimate to meet the current demand in my state (at my ridiculously low estimate of .22 owners). And that was in order to supply everyone with Walmarts "3 box limit". Do you really think people would be satisfied with that amount of ammo? People are going to buy their limit....then be back in line the next day when Walmart opens in hope of buying more until they feel they "have enough". I would argue that everyone's definition of "Enough" has radically changed in the last couple of months. 3 or 4 times more than you ever thought before was enough would be what I'd estimate most people would think now.

 

[B!ngo]

I too think this is just poor planning/spending on the part of Remington's management. Manufacturing has undergone a renaissance in the past dozen years and is still accelerating. The only reason that Remington doesn't have modern machinery is that they haven't invested in it. Perhaps they are so inefficient that they are not profitable enough, despite rising demand (not just the last four months, but the last three years) to be able to invest in new equipment, but again, that's their own fault.
I cannot accept that they haven't been able to partner with advanced machine and manufacturing proces companies to upgrade their gear. Look no further than the new plants that have been constructed in Detroit to manufacture cars from new materials, with new processes and lower costs. Or Boeing building airliners out of carbon fiber. It's remarkable.
B

 

[Big_John1961]

Simple market economics, folks. No conspiracies, no mysteries. Demand outstrips supply, which causes scarcity, which causes prices to climb. The exact reverse happens when supply exceeds demand. Nobody's out to get your bullets. I'd wager that the ammo companies are doing everything they can to get their ammo to the shelves.

 

[larryh1108]

I believe that most of the ammo being sold is being stored, not shot. The ranges I've been to seem to have less shooters. I believe the regular shooters are holding back because we can't replace what we shoot. This doesn't take into account the competition shooters, of course. Everybody has their own comfort level with their reserves. This varies between each shooter but there should come a time when they feel they have enough in reserve to quit buying. I don't think the new shooters have more than a few boxes in reserve because they see 200 rounds and feel they have an arsenal. The shelves will fill up again when the serious buyers have enough. The thing is, the ammo will continue to roll in and so many people will be at their maximum reserve that the ammo will start to sit on the shelves. Recreational shooting will increase again and the "normal" flow of ammo will occur but there will be millions upon millions of rounds in reserve for years to come. Just like last time... and the time before... and the time before....

However, this time I feel it will take a bit longer because there are a lot more new shooters out there but we'll get back to normal unless they pass some kind of taxation or restrictions. If that happens, all bets are off.

 

[c4v3man]

Unfortunately, the fear of taxes/restrictions drives the purchase of more ammunition. I was able to grab some decent .308 a couple weeks ago online, and if I see some high-grade/low-end match 308 come up at a decent price I'm liable to stock up even more.

If we get taxed per round, or if manufactured ammunition shipping suddenly requires the same $27.50 HAZMAT charge that components do, then paying 10-30% more per round than summer 2012 prices may seem like the steal of the century. That fear is keeping me on the lookout for "Decent" priced ammo. It'd take an open war to drive me to spend gunbroker-level cash though...

 

[Killian]

Just like last time... and the time before... and the time before....

So you're saying that what is happening now is exactly what happened before? I've got to express some doubts on that. This time seems very very different to all the other times I've seen shortages. Not even the gun ban in '93 had ammo completely gone like this.

I think that right now even "non serious" people are looking for ammo--and not finding it. Until they do, I think all of them are "serious buyers".

For the last 3 years, when I've gone into Walmart to look for ammo, I have often not found any on the shelf, or found them out of one caliber or another. I think we (the US) were running at a thin edge of "just in time" shipping even then. Now that demand has doubled--Tripled? Quadrupled?--that thin line is gone.

Until ammunition production is increased, I'm thinking shortages are going to last. It's really simple. More people want ammo. A lot more. And, as was said, if ammo companies are pumping their production to 150% with overtime, they have peaked out on production. So until they build new factories to make more--or convince some people that they can really do without ammo and they need to stop wanting it (reduce demand)--this is it in terms of production level. And I firmly believe the earlier poster who said that no company is going to invest in buying new multi million dollar equipment just on what appears to be a short term spike in demand is absolutely correct. Until they become convinced it is long term demand, they don't need to muck around with increasing their supply. They are selling ALL of their ammo now. Why mess with that?

Or, even better from ammo makers point of view, just keep their current production levels and all of them simultaneously begin raising their prices to make 300% more in profits. If I was an ammo maker, that would be my choice. You'd be selling all your ammo at a higher price--and STILL have constant overwhelming demand as people tried to get ammo.

 

[mrvco]

At some point these people are going to get tired of eating ramen noodles and sitting on ammo boxes.

 

[SunnySlopes]

What do you base the idea of supply eventually meeting demand on?

You're entitled to your opinion. You're wrong, but that's your prerogative.

And I'm entitled to mine. And you think I'm wrong.

Time will tell.

 

[Killian]

You're entitled to your opinion. You're wrong, but that's your prerogative.

And I'm entitled to mine. And you think I'm wrong.

Time will tell.

I don't think you're wrong. I think you are being short sighted and projecting your hopes on what you wish will happen rather than looking at the situation as a whole, doing some math, and recognizing that there are 10's of millions--literally--of other people who are seeking the same product. And that as long as they are, this situation is only going to marginally--if that--improve. So my objection to your statements are that they seem rooted in what you WANT to happen rather than what is actually going on....in my opinion.

About supply, on a long enough time line, you're probably right. On a short range time line, I'm probably right. Now we have to decide what we mean by "long" and "short". Days, months...years? In all seriousness, the level of ammunition output is not meeting demand. The fact that you have crowds of people who can't get ammo and return every day shows that supply is not up to demand. What I object to from a logical standpoint is the argument that continuing at the CURRENT output is going to satisfy demand(???). Either you increase production and supply more than people want....or you reduce demand. Typically you reduce demand by providing a substitute product. If Coke is in short supply, you hook people up with Pepsi. This reduces demand for Coke. So all we need now is something other than ammunition we can shoot in our guns. This will compete with ammo makers, and demand will go down.

The other way to reduce demand is to raise prices. When a box of ammo is $100 a box...then demand will go down. I've already seen that. I've seen .22LR selling for a hundred a box. Maybe some of you have seen that too. It reduced demand. For sure. But some people still paid. I saw that too.

If you are arguing that demand is going to go down and you have good reasons to show why it will and must go down, then I'll accept that you are right. If you are saying that continuing CURRENT outputs are going to eventually "catch up" and meet the demand (with prices staying the same or similar to pre-panic prices), then I'm saying that--as a numbers measure, assuming demand remains at the current percentage of the gun owning population--you may still be talking about 1 to 2 years before some people get a chance to get a couple of hundred rounds through the traditional "go to the store and buy it" method. On that time scale, with the same production outputs, I think ammo could "be short" for a very very long time. For sure it will be months. Could be 2 or 3 years.

Seriously. Crunch some numbers people. It's not that hard. Get some estimates on the major ammunition companies and how many rounds all of them collectively produce. Do it by caliber. Rounds produced, per day, divided by 50 states. This tells you how much ammo is coming to your state per day. Then an estimate of how many guns of that caliber are in your state, and an estimate of how many people you think who will want to purchase it. (My suggestion on calculating how many people you think will want ammo....figure "a lot" or "all".) Then calculate how many days it would take for those people to get ammo. When I did it, I was shocked how long it would take even in a relatively underpopulated state like mine, using very low figures of demand (10% of the gun owning population was what I used) for them to get 3 boxes of ammo.

Show me some numbers that show I'm wrong. Show me how ammo makers in this country, or through imports, or by a sudden growth of cottage reloaders is going to meet the demand. Believe me, on this issue, I won't mind being wrong. But wishful thinking in the face of logic is not helpful. Recognize what the situation is and accept it, that's what I'm saying.

 

[Ignition Override]

Is there any 'intell' on whether the Russian or Serbian companies have increased production for US distributors?

If my ammo ever were to run low, I would check a mid-town shop on prices for a basic longbow and arrows.
Might do that anyway as a distraction or new hobby.

 

[Killian]

If you extend logic and marketing theory a bit in our current situation with ammunition, what are some things for the future if demand remains high but supplies don't increase?

In my opinion...
1. Increased prices. That's in the "short" term. Like 4 to 6 months. Ammo makers will keep their current styles of packaging, like the 50 round box, brightly colored with their logo, with cute little individual plastic separators inside of those boxes. Same shipping methods. Same procurement. I'd figure .45ACP at $60-70 a box of 50. 9mm at $45 or 50 a box. Both of these for the cheap FMJ, or what use to be cheap I should say. What am I basing that on? 1973 gas price increase rates during that shortage.

2. Longer term. Get ready to see 25 round boxes of FMJ as opposed to 50 round. Probably not in brightly colored boxes with design logos, but plain brown cardboard without plastic insert. Cost saving measures they can pass on to you so that you'll swallow a bitter pill more easily. Maybe 25rd boxes for .45ACP and revolvers and 30 round boxes for 9mm and other "hi cap" type guns. This idea of smaller packaging is based on what's happened the last few years with meals at restaurants. They haven't increased prices and kept meals the same size. Instead they've reduced the size of the meals and saved costs (or both reduced size of meals and raised prices). Upside is you will be paying $15 or $20 a box. Downside is you use to get twice as much for the same price.

3. Procurement cost increases. Plastic and cardboard suppliers aren't fools. They'll see ammo guys raking in money hand over fist and eventually their suppliers will bump up costs on cardboard, lead, brass..whatever else is needed.

And a host of other things that I'm too tired to get into now.

 

[SunnySlopes]

if demand remains high but supplies don't increase

Dude, get a grip. This is a market driven temporary shortage. It's not an End Time Event. It will pass.

 

[JohnBT]

"Show me some numbers that show I'm wrong."

Do I have to use real numbers or can I just make up some numbers using assumptions, estimates and guesses like you did?

I look at the record setting number of gun purchases - especially first-gun buyers - last year and figure very few of them will become weekly or maybe even monthly shooters. Maybe they will, but I think not. The ones I know want a couple of boxes so they can shoot their new guns a few times. Very few folks in my experience are ever interested in buying case lots of ammo. They get a few boxes and go back to their other hobbies and paying their bills.

One day soon maybe I'll calculate what I could get by selling my retirement stash of ammo. Not that I'm going to, but for a start 4 cases of .22 LR is 40 bricks @ $80 = $3200. It's tempting to take the profit because I paid $15 a brick for the Wolf Match Target and $18 for the Extra. Ammo has done better than gold recently.

Everything is expensive (I'm starting to sound like my grandparents "It costs how much?"). I bought 2 dozen jumbo minnows a month ago and paid $27.30. They were sickly as it turned out and I caught a 9.25# largemouth on a $5 spinnerbait.

 

[Baldman]

Saw this, this morning answers some of the questions but not all.

http://video.foxbusiness.com/v/2221...ion-lead-to-bullet-shortage/?intcmp=obnetwork

 

[rodregier]

In a different thread I saw lead times of up to 5 years mentioned for the specialized high-volume ammunition production equipment used by the "big boys". Probably no regular production line for that industrial machinery, so it's all custom built on demand in low volume.

kind of like commissioning a sculpture...

 

[Queen_of_Thunder]

Understand that there is no ammo sitting in wharehouses just waiting to be shipped out. What ammo you do see is what is coming right out of the factory and we all know that as soon as it shows up its gone. Ammo production cannot match the demand for it. At some point in the future things will right themselves but until then the shortages will be a fact of life.

Personally I need 20 cases 9mm and 20 cases of 45acp ammo to take care of my shooting needs for the year. Getting that ammo will be next to impossible.

 

[LemmyCaution]

Americans have short attention spans. Demand will slacken as soon as the next shiny thing crosses our screens.

I predict this will occur at roughly the point the next asset bubble bursts and we're in a recession, again. Possibly later this year.

 

[Pilot]

The ammo shortage is already starting to lessen. Yes, .22LR is still widely unavailable, but more centerfire is available, and reloading components are still available. Through this shortage, I have still been able to get primers of all types and sizes. That was not the case in prior shortages, and panics. With primers, I am able to reload all the centerfire cartridges I shoot.

I would think .22LR will also start to become available as soon as people realize they've hoarded enough to shoot for years. I have limited my .22LR shooting, and refuse to over pay for ammo, and I refuse to hoard beyond keeping the amount if ammo I've always had on hand.

 

[evan price]

Killian, have you ever worked in a high-volume, high speed manufacturing environment??

The ammo manufacturers are running balls-out to make product. The demand is outstripping the ability to produce.

Companies normally do their production planning far in advance of actual production. That way they have the materials and manpower in place to start manufacturing. The big dealers and distributors turn their projected orders in a year in advance. What gets made up is excess capacity. Plants try to minimize that excess capacity, but they have to allow for downtime on machine lines for maintenance or emergency repairs.

If they can keep the machines running they may skip preventative maintenance (A losing proposition, eventually the spectre of mechanical failure rears its ugly head) or try to not change over to make lesser-demand product (witness the problems getting 380 four years ago- they just kept running 9mm because there was so much demand they saw no need to change over to 380).

Factories do not want to keep unproductive excess assets around for the emergencies like the current shortage.

A good comparison is airline ticket sales. The airlines have invested heavily in predictive algorithms which help them determine on a particular flight, how many of reservations won't show up. They oversell the seats by a different amount based on flight time and destination, weather, traffic patterns, moon phases, calendar, season, etc. to maximize occupancy of seats and minimize empty seats. The airlines don't keep a fleet of extra jets parked somewhere to make up for extra ticket sales. That would eat up maintenance and depreciated assets and all the other expenses.

If 500 extra people per day suddenly want to take flights, there is just no more seats.

It's not a conspiracy. It's a combination of poor planning by certain people (Production AND customers!) and a perfect storm of anti-gun sentiment due to Sandy Hook and the re-election of Omamma to the White House. It happened in 2008-2009 just like this.

 

[JohnBT]

"kind of like commissioning a sculpture..."

Or a roller coaster. A few years ago I heard some of the details of the design and planning process from a guy who was in town to build a new roller coaster at Busch Gardens. Or maybe it was King's Dominion.

But why can't the ammo companies hire the unemployed and buy a train load of Lee Loaders or something? Think of the boost to the economy.

 

[joeschmoe]

Have you ever walked into a restaurant to find a crowd of people waiting for a table. You're told it will be at least a 45 min wait.
Did a bunch of workers suddenly show up, at that moment, and build an addition to the restaurant and unload tables to fill the need so you didn't have to wait? Or did another restaurant pop up next door and open while you waited to "fill the void".
It takes months/years for these changes to occur. Not days/weeks.
If things haven't improved in the next year or two, then this thread would be valid. 60 days is a temporary spike/shortage.

This is a lesson why you need more than just a couple of boxes of ammo on hand. I don't know why people buy ammo 25 rounds at a time. To me a "box" is 100-500 rounds.

 

[breakingcontact]

Joe, that is great. Funny image of them building on immediately and waiters descending onto the tables. Suppose it may go on for a long time and perhaps eventually some small makers will come up or the big guys will expand if they see profits long term.