Ammo Companies Stop Production

Hornady American Whitetail ammo

The shooting world is awash in rumors and speculation.  The rumors I hear range from the obvious to the ludicrous.

I got hit by this weird rumor, that ammo companies have stopped making ammunition, right before the SHOT Show, and have heard it many times since then.  The folks that espouse this one seem to believe that many or all of the ammunition manufacturers have ceased production in an effort to run up the prices of thier goods.  Then, at a later date, the companies will trickle the ammunition stockpiles back into the market at inflated prices.

I suppose this could make sense if you believed the firearms industry was run by a cabal, like OPEC controls the middle eastern oil production.  There are many problems with this theory, including the number of people and companies that would have to be involved, and that many ammo companies are happy to give customers and the media tours of their production facilities.

Ammo is made by a large number of companies all over the world.  All of them are experiencing shortages due to increased demand.  That includes manufacturers in the United States, South America and Europe.  While technically possible all of these companies could collude, reality dictates otherwise.

As I mentioned above, many ammunition manufacturers are happy to give tours of their facilities.  It is hard to imagine all of the efforts a company would have to go through to hide their production with regular tours taking place.  Heck, even if companies didn’t give tours, I imagine all you would have to do is sit outside the plant and count the UPS trucks coming and going.

Regardless, this rumor has gotten strong enough that manufacturers are having to respond to it.  Just last week Hornady Manufacturing published a response to questions and rumors on the company’s web site.  Included in the article was a denial of any kind of production stoppage.  In fact, the company detailed the extra shifts and hours Hornady employees are working to get ammo to consumers.

Demand far outstrips supply for both ammo and guns right now.  It will likely continue this way for months, if not years, to come.  It is a reality of capitalism.

And as for why companies don’t build more manufacturing facilities, who wants to invest millions of dollars into new buildings, equipment, people and infrastructure in such uncertain economic times?  Take Magpul, for example.  Here is a company that could expand production, but instead it looks like they are going to have to move their entire company to another state due to the Colorado legislature passing new gun control laws.  Why would anyone spend money on buildings and land they might have to abandon tomorrow due to the shifting political situation?

SureFire X300 WeaponLight

SureFire X300Trust the brand that has been combat tested by US Special Forces and elite law enforcement units the world over. The X300 WeaponLight is battle hardened and ready for duty on your pistol, rifle or shotgun.

500 lumens and instant on activation will give you the decisive advantage if you are faced with a lethal force encounter.  Accept only the best - your life is worth it.
About Richard Johnson

Richard Johnson is a gun writer, police trainer and really bad joke teller. Check out his other writing in Combat Handguns, Guns & Weapons for Law Enforcement, on The Firearm Blog and at BlueSheepdog.

Comments

  1. Steven Towsley says:

    Tell moving manufacturers to check out Northeast Indiana. The Fort Wayne area has lots of trained CNC, tool & die, plastics & extrusion resources and Indiana gun laws are among the most Constitutional in the nation.

  2. And as for why companies don’t build more manufacturing facilities, who wants to invest millions of dollars into new buildings, equipment, people and infrastructure in such uncertain economic times?

    Smart people who want to make money. Companies that invested early, right after gun control came back to the table and demand shot up, are making a killing right now, and grabbing market share. New buildings are easily rented. New employees are easily hired. New equipment pays for itself in a month.

    The real question is, who wants to sit on their hands while the other guy upgrades and takes all the market share and huge profits?

    • Yes, there are some companies expanding and are taking in the benefits for those decisions. Interestingly though, some of those companies were already in plans to expand before Sandy Hook and the election.

      As far as why manufacturers would have some reservations on expansion:

      At SHOT Show this year I checked out about a dozen “black rifle” companies, and got to see some of their wholesale price lists. The prices were just about the same as last year, and so was their MSRP. Sure those companies are making “more” profit now, but that is only because they are selling everything they make, instead of having . In fact, almost every rifle company I talked to stated that they had already sold out their entire 2013 building capacity.

      Fast forward 6 months, maybe a year. Many in the industry feel strongly that Congress is well aware of Americans love of freedom and firearms and will be unwilling to strap on the gun bans and many other ridiculous desires of the left. So the market begins to relax, demand slows down. Companies that overextend their finances now find themselves struggling to pay the bills for all the new buildings, machines, and people (people guaranteed expensive health care). Add to it a State passing laws that basically forces them to move or cancel production and you have the writings of a classic business failure.

      I think many companies are wisely riding this storm out, and simply adding shifts to maximize current production abilities. If this continues for duration then a company could make a more prudent decision to expand. If it wanes, they’ve made the wiser decision for long-term stability.

  3. Why would anyone spend money on buildings and land they might have to abandon tomorrow due to the shifting political situation?

    Why would anyone abandon buildings and land they own, when they can just sell them?

    Personally, after having had and read a few discussions on this topic with gun enthusiasts in the wake of Sandy Hook, I think the gun companies have the most economically illiterate customer base imaginable. It explains a lot of their behavior – they know they can get away with anything with their customers this side of supporting gun control.

  4. But, it’s impossible to really know what the manufacturers are thinking without knowing the numbers they’re looking at: profit from each black rifle sale, cost to produce each rifle, monthly sales figures, labor costs, equipment costs, etc. It all depends on the numbers. If the profit from each gun is high enough (gotta be at this point), yes, it makes sense to expand immediately because you get your money back in a month, and more importantly, you’re in a position to cut your competition’s throat over the long haul, especially if there’s no black rifle ban (something that anyone can read a headline has known since January probably wasn’t in the cards).

    • Svi, you make some good points, however the manufacturer’s “profit” on each sale is not going up as much as you think. There have been some increases over the last few years, but that correlates to the increase in raw materials – mostly the increase in metal prices.

      If anyone is making double or triple profits I’d look more at the dealers than the manufacturers. They have gone on an ordering frenzy, and because they’re selling stuff as soon as they get it they’re seeing dollar signs and raising prices. Cheaper-Than-Dirt has received a lot of well earned chastisement on the gun blogs for just that reason.

      However, Wal-Mart sells a 100-pack of Federal FMJ .223 ammo for $39.99. The prices have not changed in over four years, hence the reason that as soon as they get them in, they’re gone! Same thing for the few Wal-Mart’s that sell AR-15′s. A friend of mine was lucky enough to be in one as the clerk was walking them out from the back. He bought a DPMS basic AR-15 for $599 just a couple of weeks ago. Now I know that Wal-Mart is huge, and their bargaining power allows them to get such great deals, but if the manufacturer’s were sticking it to everyone you would see a higher price at Wally World – they’re not going to lose money.

      Those 2 items sold at a dealer right now … probably close to $100 for the ammo box, and $1200 for the basic DPMS (A2 front sight, no rear sight, generic collapsible stock, and plastic hand guard).

  5. Sorry for the serial comments, but I keep thinking of new points and I don’t see an edit button.

    I should point out that CNC machining is open-ended in terms of the product made. I don’t know if that’s how guns are primarily mass-produced (but I do know it’s a perfectly viable way to do so). But for those companies that do use CNC, I’ll let you in on a little secret: financially speaking, they don’t give a fig if Congress passes a magazine capacity limit, bans black rifles, or restricts what they can produce. In fact, I bet a lot of them wish Congress would pass a law every year banning particular mechanisms, setting manufacturing guidelines, and confiscating guns that retroactively violate the new regulations. Because they would make tons of money selling the new, acceptable kinds of guns to gun addicts each year who have had their guns taken away. Not a realistic scenario, but a gun maker can dream, can’t he?

    Know why? Because if you have open-ended (as opposed to dedicated) manufacturing equipment, you make money either way. What do you care if there’s a mag capacity limit? You could sell twice as many mags, if they have half the capacity. What do you care if Congress adds some mandatory safety device to all rifles? You’re still going to sell guns, either way. What do you care if they ban rifles altogether? You can just make pistols instead, and the market demand for rifles will shift to pistols.

  6. “Why would anyone spend money on buildings and land they might have to abandon tomorrow”

    Because they are free men and would like to remain so?

    If they plan to run away and hide because mean commies scare them, why not just hand over all their property to the state now? Because that is exactly where they are headed…

  7. Final comment for now (I think). This reminds me of what they call “churn” in real estate development. Developer buys land, builds a neighborhood, sells the houses. Developer takes his proceeds and after a nice profit-taking, buys some land for his next development, and starts building the next neighborhood. Meanwhile, government brings in the Section 8 or subsidized illegal alien hordes to infest the neighborhood. Homeowners in the neighborhood see their property values plummet. Meanwhile, our developer has just finished building his next nice, new neighborhood, and sells to the same people who lost their shirts in his first neighborhood.

    Rinse, repeat.

    Similarly, businessmen love divorce. Now a family needs two houses, two washing machines, two refrigerators, maybe another car, etc.

  8. Steven Towsley says:

    I
    A load of generics and no insight whatsoever adds nothing relevant to a topic. Clearly no familiarity at all with the market forces at work. He misses the boat on every single point. People really should stick to what they know, and save face.

  9. All gun and ammo mfg. should just move to Texas. Here, you will NOT be hassled; in fact, you will be PROTECTED against the Feds. Our legislature is passing laws that prohibit local authorities from enforcing Federal gun control laws. This is, mostly, to protect the law enforcement from any prosecution from the Feds for not enforcing their unconstitutional bans. However, each of these Texas laws will be specifically tailored to offset the Federal law in such a way that it fits into the parameters of Constitutional law that, if forced to the Supreme Court, they, as the defenders of the Constitution, would have to uphold. Texas has always been the maveric that refuses to be dictated to. We have State Legislators who are more than happy to take on the Feds when they try to strip Texans of their liberty. We are celebrating our fight for Independence and recognition as an independent Republic now. It is only fitting that our Legislators continue the legacy of fighting for the rights and liberties of Texans dispite those who would try to strip them from us. Santa Ana found out the hard way at San Jacinto, we may be tattered and torn, but we will not lay down our arms and give up to a tyrant.

Speak Your Mind

*