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The
Truth Behind The Great Ammo Crisis
by Caleb Giddings
Everyone
is aware of the ammunition
crisis. Major media outlets have covered it, it's
all over what little of your social media feed hasn't been censored, and I've
been covering in detail since July. The ammo crisis has been constantly
evolving, starting as a mere shortage in the early days of the COVID-19
lockdowns, and progressing to a full-blown crisis as I write this 321 days
after March 13th.
What caused it?
The
simple explanation is that demand exceeded the supply, then continued to exceed
the supply. But to understand how that happened you have to go a little deeper.
According to Jason Vanderbrink, President of Federal, CCI, Speer and Remington,
before the COVID-19 pandemic, there was considerable excess capacity in the
ammunition market.
Manufacturers could make more than they could sell, so supply was abundant and
prices were low. You could order a case of 9 mm off the Internet for $200.
Manufacturers were prepared for an uptick in sales that normally accompanies a
presidential election, but the excess capacity would have been enough to cover
that.
2020 had other ideas. The first was the COVID-19 pandemic. Then a summer of
civil unrest that sometimes turned violent. A hotly contested presidential
election, and then the party of gun control having control of both houses of
Congress and the Presidency.
Any
single one of those would have spiked demand, but all these factors happening
in rapid succession was more than the market could bear. Partly because
the NSSF estimates that 7 million new gun
owners entered the market in 2020. As Vanderbrink pointed out, if those 7
million new gun owners each bought 100 rounds of ammo, that's 700 million
rounds that the market needs to produce.
To put that in context, the entire commercial market in 2018 made approximately
8 billion rounds. An 8.75 increase in demand wouldn't shut everything down, but
when it's added on top of the demand created by all the other factors, it
becomes too much.
How high is demand?
During
a media presentation at Virtual SHOT Show 2021, Winchester said that if they
stopped taking orders for .22 LR right now, it would take 2 years to fill all
the back-orders. In December, the Vista family of companies, which comprises
Federal, CCI, Speer, and Remington, announced they had a $1 billion backlog in
orders. In the first 3 months of the COVID-19 lockdown, Winchester
experienced a 17-percent surge in orders, which hasn't tapered off.
Why can't they build more factories?
The
first question on people's minds is "Why don't these companies expand
capacity?" That's much easier said than done. Vista, for example, is
already running three shifts a day, and operating 24/7. The same is true for
Magtech in Brazil. For one of these companies to add capacity, they'd have to
build a new space, and buy new machines, and train and staff the new machines.
All that while hoping that the bottom doesn't fall out of the ammo market like
it did in 2017. That investment in extra space costs millions of dollars and
takes years to pay off, and if you look at past trends in the ammo market, not
even this surge will last forever.
Why are prices so high at the consumer level?
Vista,
Winchester, and Magtech/S&B announced a 15-percent price increase to
distributors. Distributors have already raised prices, and of course at the
retail level prices are coming up. Prices have to come up to create
equilibrium. Eventually the cost to the consumer will be high enough that
people won't panic buy 9 mm FMJ. Retailers will start to have more stock than
they can sell and prices will start to come down.
The manufacturer price increase helps as well. In a letter to distributors,
Vista announced that all back orders would ship with the higher price. If this
causes people to cancel their back order, that frees up theoretical capacity to
go into the market. Using AmmoSeek to track historical 9 mm prices, the online
price for 9 mm seems to have plateaued at between $0.80 and $0.90 per round for
quality new manufactured 9 mm, which is actually a good sign.
Why can't I get primers?
Only
two domestic companies make primers, Vista and Winchester. All their primers
are going into their production ammo for retail. Normally, the primer market is
fed by companies being able to make more primers than they'd ever need to make
loaded ammo. In 2020 and now 2021, that's not been the case, so every primer
that rolls off the line is going into a loaded piece of ammunition so the
consumers can have something to immediately shoot. It's a tough situation for
reloaders, but the priority will always be the commercial shooting market.
What about the government?
To
answer the question right off the bat, no, the government is not buying ammo
and stockpiling it in a warehouse somewhere to keep it off the market. The
largest government consumer of ammunition is the Department of Defense, and the
majority of their ammo comes from the Lake City plant, which is currently
administered by Winchester. Lake City is owned entirely by the government—all
the machines, all the land, etc. The government then contracts its operation to
private companies, with Winchester taking over for Northrop Grumman in 2020.
Other
federal agencies and local LE agencies do source from private manufacturers,
but they're getting squeezed too. Federal contracts are public record, and
there has been no unusual ammo related purchasing activity since the shortage
began in March. Local LE agencies don't have the purchasing power to cause a
shortage like this, unless there was some secret meeting of all the police
chiefs in the country to secretly buy all the ammo (there wasn't). While it
might feel good to believe there's some sinister force behind the ammo crisis,
the answer is a slightly more complicated version of "supply and
demand."
What are the companies doing about it?
As
noted above, everything they can. Mike Fisher, the VP of Sales and Marketing at
Magtech, said in a phone call, "We're doing everything we can to get
product to our loyal customers. We've worked hard to build these relationships
and getting them ammo, so they can get it to the consumer, is our first
priority."
In a video statement, Jason Hornady said that they have made a third more
ammo this year than they did in the previous year, and also pointed out that
there is no government conspiracy to make ammo scarce. As noted above, the
price increases across the board will eventually have a stabilizing effect on
the supply of ammo, as it will eventually reach a point where most people won't
feel the need to buy.
You
can help as well. The most important thing you can do as a consumer is don't
panic. Ammo is available. AmmoSeek shows
a daily inventory of what its bots find in stock. There's ammo for sale on
GunBroker and ArmsList. It's more expensive than any of us would want, but it's
better to have it available than to have empty shelves. The second most
important thing you can do is "don't
be that guy."
You know that guy—the one who finds 55-grain .223 at a great price and cleans
the whole place out. That guy sucks. Buy what you need and maybe a little more,
but don't buy 10,000 rounds of ammo you're going to end up trying to flip to
make a car payment in 6 months.
Last, stop repeating conspiracy theories. Contrary to what your favorite
YouTube entertainer told you, there's no government or industry conspiracy to
drive up the price of ammo.
When will it get better?
In
my first article about this, I optimistically thought that if Republicans
retained control of the Senate, we'd be back to normal supply levels with
slightly increased pricing by July. Given the state of the back orders, I don't
think we'll see a return to regular levels of supply now until early 2022.
As far as pricing? Sometime after supply gets back to normal level, and that's
assuming that nothing weird happens in 2021 (everyone knock on wood right now).
Right now the best thing to do is stay calm, don't panic buy, and let the ammo
industry do everything they can to get caught up.
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POSTSCRIPT
Sheriffs’ Arresting Feds? 2nd Amendment ‘Sanctuary Movement’ to Protect
Lawful Gun Ownership Grows in US
https://americandefensenews.com/2021/02/23/sheriffs-arresting-feds-2nd-amendment-sanc
New Bill Would
Protect Veterans from Gun Confiscation
Gun-Control Groups Lash Out at Biden
Washington Appeals
Court Unanimously Strikes Down Local Gun-Control Law
Wayne LaPierre: This Fight is
Bigger Than the NRA
|
|
"This
is a constitutional fight. It's bigger than the NRA. It's for all
Americans," said NRA Executive Vice President Wayne LaPierre in an interview
with Newsmax. Read
More |
Biden Gun Control Plan Would ‘Criminalize’ up to 105 Million People:
Gun-rights Group
WARNING: Get With Your Family - Prepare Now...
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7 Unusual Home Security Tips You Probably Didn’t Know
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17 Common Home Security Mistakes
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2 comments:
Seems to be a shortage of many, many gun related items-ammo prices at flea markets & auctions are through the roof! [better than gold]
Fair and Equal Access for Gun Sales
FreeBeacon.com reported that before he left office, “The Trump administration adopted a new rule to prevent big banks from denying services to gun manufacturers and other industries in a rebuke of an Obama-era financial program. “The Office of the Comptroller of the Currency (OCC) rule ...will instruct large financial institutions to only deny services to specific clients on a case-by-case basis instead of making industry-wide black lists” like it did with Operation Choke Point, which, “sought to pressure big banks to cut ties with businesses disfavored by the Obama admin
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