Powder Company Consolidation


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Eagle103
December 23, 2006, 11:01 AM
I'm pretty new to the hobby but I've noticed, as I'm sure most other reloaders have, that there's been some major consolidation among the powder companies lately. It looks like Hodgdon wants to be the big player here in taking over IMR and Winchester.
Western owns Ramshot and Accurate. Vihta Vouri and Alliant/Hercules are the other two main players.
So basically we're looking at four powder companies now where a while ago there were eight. (Please correct me if I'm wrong.)
I can see where there would be some economies of scale in distribution and some other reasons for this but I don't normally see consolidation as a good thing for the consumer. It can hinder new product development and prices often go up. Competition is the key. I don't look to the government to take much interest in consolidation among the gunpowder companies.:rolleyes: Where's Teddy Roosevelt when you could really use him.:D
I know I'll be trying to do more business with the "little" guys (non-Hodgdon) when possible. What are your thoughts.

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armoredman
December 23, 2006, 11:43 AM
Not to mention, I have been told almost all our powder comes from overseas. Imagine a Executive Order banning importation of reloading powder...who makes local stuff?

snuffy
December 23, 2006, 01:53 PM
I can see where there would be some economies of scale in distribution and some other reasons for this but I don't normally see consolidation as a good thing for the consumer. It can hinder new product development and prices often go up. Competition is the key. I don't look to the government to take much interest in consolidation among the gunpowder companies. Where's Teddy Roosevelt when you could really use him.
I know I'll be trying to do more business with the "little" guys (non-Hodgdon) when possible. What are your thoughts.

My thoughts are that your last comment makes no sense. Why limit yourself to the "little guys"? Hodgdon has filled most of my powder needs for quite a while. They will continue to do that for me!

If they want to buy out other companies to streamline the choices, more power to them. Some of the duplicate powders will be eliminated. That will cause some wailing from some who have pet loads in the discontinued powders.

Most of the "aquisitions" of Hodgdon only concern the distribution and packaging of the powders.

As for research & developement, how about varget, and the clays powders? New stuff even if they are made off-shore. Alliant has come up with STEEL, benchmark and several others. IMR's new trail boss is filling the need for bulky SASS loads in old large capacity handgun calibers.

ReloaderFred
December 23, 2006, 02:00 PM
A good portion of the Winchester, and former Winchester powders, are made in Florida, at St. Marks Powder Company. Some powders come from Canada, some from Australia, some from the Finland, some from Eastern Europe, etc.

Part of the reason Hodgdon took over IMR and Winchester distribution was that there was too much duplication of effort, and the powder business wasn't a big profit item for those two companies, so they sold the distribution rights to Hodgdon. I've talked to the Hodgdon representatives at the SHOT Show and I don't think they're out to kill the market or to drastically raise prices. Just about everyone in that company is a handloader, so they're sympathetic to our needs.

If you'll notice, the price of powder has remained fairly stable the last few years. About the only reason it's gone up at all is the higher cost of transportation and shipping. I can still buy an eight pound keg of powder for about the same price I was paying 7 or 8 years ago. The same can't be said for other components, such as brass, bullets and primers. Those prices are being driven by rapidly rising commodity prices on the world market for raw materials. China and India are both gobbling up copper and lead at an alarming rate. This is because they're both putting a large effort into electrifying their entire countries, which is sucking the rest of the world dry of copper and copper containing metals. Lead is being used to make batteries, and if you'll notice, a large portion of the batteries you're buying these days are made in China. They used to produce lead for the world market, but now they're consuming more than they produce.

No, I don't think Hodgdon is out to hurt the powder business. Western Powders is also holding the line on prices. Neither one wants to kill the golden goose, and their business depends to a pretty large extent on reloaders, though a major portion also depends on the ammunition manufacturers.

Winchester, Federal, Speer and Remington have already announced price increases in the range of 15% after the first of the year for ammunition. Their costs have gone up around 25% over the last two years and it's eating into their bottom line in a very big way.

A good example is a group of us just bought 1,000 pounds of lead shot. Two weeks ago, it was $16.00 a bag at the manufacturer. Last week, when we bought it, the price was $17.00 a bag, but the owner of the company said his next purchase of lead was going to cost him $18.25 a bag for the raw materials, before he turns it into shot. He's going to have to charge about $24.00 to $25.00 a bag on the wholesale end, just to keep his doors open. That means that retail prices on his shot are going to be over $30.00 a bag, which I'm already seeing in some stores.

I got a little off the subject of powder, but the items are related. Bullet companies have already had to raise their prices because of the increased prices they're having to pay for lead and copper, and it's not over, since the raw material prices just keep going up. Manufacturers can't produce a product at a loss and stay in business. With the costs of labor and insurance, plus shipping, we're going to be paying more for what we need in the future.

It's not a pretty picture, but it's what I'm reading in the trade magazines and hearing from the manufacturers.

Hope this helps.

Fred

P0832177
December 23, 2006, 04:57 PM
Remignton sold out their IMR distribution rights a long time ago. Hodgdon has consolidated three brands under one distribution company.

So you have
ATK with Alliant Powder/Federal Cartridge/CCI under one roof with ATK running Lake City Ammo Plant in MO
Hodgodn with IMR/Winchester Powder/Hodgdon powder under one roof
Western Powder with Ramshot and Accurate Powders under one roof
Vihta Vouri with several US distributors ie Kaltron Pettibone and Graf and Sons
Norma Powders hit and miss......

Eagle103
December 23, 2006, 07:18 PM
I can see where phasing out overlapping powders may be a good thing for newcomers such as myself. But it seems noteworthy to me when the number of players in a given industry gets cut in half in a relatively short time though. Hopefully it leads to more and better choices. As long as the politicians stay out it would seem that reloading, due primarily to cost savings for rifle ammunition, should have a good future. How long before the price of loaded shotgun ammo skyrockets too? I haven't bought any in the last few months so maybe it has already.

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