Thoughts on Ammunition and Firearms costs volatility

I have a couple of new firearms that I have been wanting for a long time.  One of the ones I wanted to get came into stock and sold out of stock so quickly, you would think it was shortly after Newtown and the pol's were talking about banning firearms again.

That lead me to think on just how volatile the markets actually are when it comes to firearms and ammunition.

Every time, a politician even mentions the possibility of a ban on either a firearm or ammunition, ALL firearms and ammunition, suddenly becomes hard to get if not almost impossible to get.

You have to think about that.

If someone wanted to try to game the markets, all they would have to do is to buy up a bunch of a particular firearm or ammunition, then start a rumor that there is a ban being proposed.

If you think that is far fetched,look at the availability of .22LR ammunition to this day.

Ammo speculators but up as much as they can and hoard it, letting it dribble out on Gun Broker and other similar sites, Artificially inflating the prices and limiting the availability of .22 LR ammo, because others who see those high prices, buy up all they can for themselves depressing the availability for everyone else.

Making the rarity of supply of .22 LR ammo a self fulfilling prophecy.

I was at my local Walmart the other day, and I saw the "Speculators" who I have seen before.  These are the guys who would go from store to store to store buying all the .22 LR ammo before anyone else could, and then posting it for sale on an auction site.

Right now doing a quick check on AmmoSeek, the cheapest per round price of .22 LR ammo is .052 cents per round with a One Box limit.  the next cheapest is .085 cents per round and that is for a specialty CB Cap round, not standard ammo.  the next cheapest standard velocity ammo is .09 cents a round and again a One Box limit.

On Gunbroker.com, the LOWEST price per round on auctions that are close to completion is all over 11 cents per round.  On buy it now only auctions, the lowest price per round I've found is over 12.3 cents per round.  Add in Shipping and Handling, and the costs per round can easily exceed .18 cents per round.

This on an ammunition that most of us used to pay less than 1.3 cents per round on.  And many years ago, I actually paid less than .05 cents per round.  Yes, a half a cent per round.  When I was a kid, I could buy a 100 round box of Remington or Winchester .22 LR ammo for right at a dollar a box.  If I wanted to buy .22 Shorts, I could get a 50 round box of short's for as little as .25 cents a box.  And I remember my uncle calling THAT highway robbery as he used to be able to buy .22 Shorts for .05 cents a box of 50.

There are some who say that it is the ammunition companies that are marking up their prices.  I don't believe that is the problem.  For the most part ammunition companies can only run so many lines of production before they HAVE to shut down for maintenance or changeover to another product/caliber.  Many of the machines being used are decades old and they require proper maintenance, they require parts, and they require some time off to for their operators to get some rest themselves.

I don't know how many of my readers have ever worked on a production factory floor, but I have.  For Contico Plastics and at an Onion Ring Plant.  And even with a good maintenance department, the machinery NEEDS downtime beyond basic maintenance to destress the parts.  Otherwise you start having larger numbers of and increased severity of breakdowns.  It's just like your car or truck.  You CANNOT have it run 24/7/365, it needs some downtime to cool down, have maintenance performed and have preventive maintenance done to head off problems.

Remember when I said above that a lot of the machinery used to manufacture ammunition is decades old?  I know for a FACT that the Olin Plant in Alton, Illinois had and probably still does have machinery from the early 1900's on their production floor.  Some of that stuff is pushing 100 years old, if not older.  Would you like to try to find parts for those machines yourself?  You probably can't.  However Olin's Maintenance Department also has a good machine shop, and they make a lot those parts themselves.  Or have them sent out to a custom machine shop if they can't do it themselves.

Many other ammunition producers WANT to increase their output.  However they do NOT want to have to purchase new, very expensive equipment to do so, and then find themselves stuck with the interest payments on that new equipment after the market catches up.

Firearms manufacturers are in the same quandary.  Do they spend millions of dollars on new mills, lathes and CNC equipments which costs upwards of a hundred thousand dollars, or do they do their best to try to keep up, without their quality dropping off and killing their market share?

And the speculators, remember them?  The speculators are also in the firearms markets as well.  There is a guy down in Corpus Christi, sitting on over 200 80% AR-15 receivers, and when I last saw, he had dozens of unopened boxes containing nothing but AR-15 Magazines.  And he keeps buying more and more.  He had more ammo in his garage, mostly 5.56 and 5.45, than I saw in the back room at Gander Mountain in College Station.  He WANTS Congress to try to ban stuff again, so he can try to make back his money.

Once again, remember those old machines?  And how a lot of them need parts custom made for them?  How do you think those parts are paid for?  How do you think the people working on those machines are paid for?  What about the operators of those machines?

Through SALES of their product.

The manufacturer's don't WANT congress to try to ban their products, they don't want state or local governments to do it either.  They want their product to be available to whoever can legally own it at a price they can afford to pay for them.

That way, the manufacturers can sell you more of their product down the road, for your kids and grandkids to enjoy.

There was a video by a YouTuber who said that everyone needed to stop buying ammo and AR-15's, because they were driving up the prices so HE couldn't buy them himself.  Kind of shot sighted and narcissistic of him, isn't it?

So remember this, the current volatility isn't the manufacturers trying to get more money, even though many of them have had their costs of materials rise, which needs to be added in to the cost we pay, the volatility is the DEMAND, which so far has been outstripping the supply.

Granted also that when the M855 ban was being floated there WAS quite a bit of price gouging by certain distributors.  However it wasn't really as bad as some people make it out to have been.  Yes the cost for all 5.56 ammo has risen and supplies have gotten scarce, but the market is starting to come back down.  It was NOT the manufacturer's who did that though.  They know where their bread is buttered, and they would much rather have loyal customers for life than annoyed customers for right this minute.  Loyal customers will always come back to buy their product, annoyed customers will take their money elsewhere.

And it only take one bad customer review to cost a company untold amounts of money.  So the good manufacturer's will do whatever they can that is reasonable to keep their customer base, and to keep them happy.

I have written e-mail to Remington, Winchester, and a few other manufacturers asking them if they would be willing to comment on this.  I'll update as it comes through.

The response from Vista Outdoor (ATK - Speer) -

" Thank you for your inquiry.

The current market and environment is causing stronger than usual demand for products in our industry. The current increase in demand is attributed to the civilian market. Our facilities operate 24-hours a day. We are continually making process improvements to increase our efficiency and investing in capital and personnel where we have sustained demand. We are bringing additional capacity online again this year.

If you'd like further comment on the topic, Mike Bazinet at the National Shooting Sports Foundation (NSSF) is providing insight from an industry perspective. He can be reached at -------@------------ or ***-***-****

We wish you the best with your blog.

Appreciatively,

Vista Outdoor Communications Team"

I have sent Mr. Bazinet an e-mail, and have received notices of my messages to other companies being forwarded to their PR departments.  As more replies come in I will up date this post.