Firearm industry in chaos

Mayo said:

Sam1911----fine, let's play semantics. Let's say a generator then. Certainly not life or death--more of a luxury while power is out 1 week. Are you still 1 of those buying 10 at $200 and then selling for $1000 each? How about a store owner who sees a hurricane coming and raises gas prices $2 per gallon? Just because you CAN take advantage of people doesn't mean you should!

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If a customer bought 10 generators at $200 and sold them at $1000, then the store was either selling them too cheaply or the customer was buying before the need based on speculation. He or she took a risk, and as I've seen many times if the storm was a bust then they were stuck with them.

Zak Smith[/quote said:

I disagree that there will be a glut after the "panic". "New buyers" who realized they didn't have the firearms they wanted that they thought would be banned are not likely to get rid of them. Established buyers who wanted to lay in a little extra "supply" are not likely to get rid of them. Manufacturers are not likely to see lean times as a result unless we see bans that eliminate parts of the market.

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Thats not a unlikely scenario, I agree. I will say it really depends how the economy looks 6-12 months from now. Someone who sitting there with a $2000 AR and no cash to pay for necessities is going to reconsider their purchase. I recall post '08 panic someone on a local gun board was trying to sell a tricked out ar-15 with an 4x ACOG for literally $0.50 on the $1.00. Myself? I managed to pick up a nice Arsenal SGL 21 for only $100 more then what a WASR-10 was going for. YMMV, of course.

Plus, the other angle for a lot of the new buyers, is how many of them got it because the allure of something that is about to be banned? I suspect that crowd will have little attachment to their new acquisition.

Also, I do suspect lean times for manufacturers. Recall what was going on with prices in the summer and fall of '09? $650 MP-15s weren't hard to get, and everything seemed to be marked down a good $200+ from the going rates in '10 or '11. What does that translate to? Manufacturers and sellers accepting a slimmer profit margin in favor of moving goods.

Now, don't misunderstand me, I'm NOT saying they will have long lean times, but for the 3-8 months after this mess blows over, they are going to be seeing reduced sales volumes versus what the have been averaging prior to December of '12.

Mayo said:

2. I'm not talking about anticipating Sandy Hook per se. The fact is most people(at least here) had the sense 4 years ago or more recently to start getting the guns and ammo they wanted knowing this day was coming. This day meaning Obama's 2nd term and a shooting leading into another AWB. Again, plenty of people anticipated this happening yet none of these companies did---NONE. Or is it they now have a reason to jack prices. Heck, 24 hours ahead of the election the high ups on Wall Street were moving their investments anticipating(theres that word again) what was going to happen when Obama won. At the very least increase production slightly!

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I need to ask this again. What evidence is there that the "gouging" is the manufacturers and not the wholesalers/retailers?

At my Walmarts, Bass Pro, and Cabela's -- the largest retailers of guns and ammo in the US -- price tags are the same as they were a few years ago. At my local gun shops the tags are not new.

At gun shows and some LGSs prices are higher, yes. But overall, I'm not seeing the chaos.

The recent election did not cause any serious shortages or runs on ammo like we are seeing now. There was almost 6 weeks in between the election and the tragedy at Sandy Hook. There was a run on a lot of guns leading up to the election in anticipation of the election but after it my LGS and the big box gun stores all had a good supply of ammo and ARs, etc. I did not see anything like the last election and I was watching closely. A lot of guns were on backorder and they seemed to be the recent releases and popular guns but there was plenty of stock on the shelves and walls at every gun store i visited in the weeks after the election. When Sandy Hook occured, the very next day the run on ammo and ARs started because Obama came out and said he was fed up and would do someting about it. So, I attribute this shortage on the tragedy, not the election. Who could predict that?

Cosmoline said:

Remember back in the days when there were warehouses actually full of things people might buy? And the vendors didn't try to keep every bit of inventory in transit?

I think the solution is a lot simpler than building a bunch of new factories. Just quit trying to roll out firearms on a just-in-time basis like bread loafs. Get some back stock of them. In fact this is a problem that comes up ALL THE TIME, not just during these panic periods. Vendors from Midway to Track are constantly short of everything from components to firearms. With a return to the old style of actual warehousing, there could be a lot more flexibility in responding to market flux. Because trying to predict exactly what's going to be bought when appears to be impossible. I realize nobody likes to actually warehouse anything anymore, but it's not going to break anyone's bank to rent storage space and put up some racks.

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It in fact costs millions and millions of dollars to warehouse product. It used to be done prior to the advent of computerized inventory because there was just no way to know what was coming at you. Nobody liked dealing with all that inventory but they had to. Now, the whole supply chain is "just in time". So the guy making barrels for you is getting his steel just as he needs it...all the way back to the steel mill who's smelting the iron...etc.

It does not allow for the graceful handling of dramatic demand shift but otherwise saves an industry millions and millions of dollars. Until you sell it, you own it and if you own it, it's on your books and thus you have to pay taxes on it as well as secure it etc.

A few industries do maintain large inventories (vaccinations for example) because it there is unexpected demand, supply cannot wait. Guns do not fall into that category. Ammo...well the military does all the warehousing there, not the manufacturers.

One thing that I am a bit surprised has not been mentioned here is just how much out sourcing there is in the production of AR platform rifles these days, just look at all the Magpul branded parts you see on many brands of AR's, the limiting factor on the production of these guns may well be the availability of such parts, I therefore suspect we will see some new volume production models introduced soon that bypass many of the 3rd party parts bottle necks by using imported replacement parts, etc..

I suppose I could join the logic that if prices were raised, there would be more availability. A magazine that cost $40 before is $100 now. I'd be happy at $60 at this point.

Isaac-1 said:

One thing that I am a bit surprised has not been mentioned here is just how much out sourcing there is in the production of AR platform rifles these days, just look at all the Magpul branded parts you see on many brands of AR's, the limiting factor on the production of these guns may well be the availability of such parts, I therefore suspect we will see some new volume production models introduced soon that bypass many of the 3rd party parts bottle necks by using imported replacement parts, etc..

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The AR15 has become the IBM PC clone of the firearms industry. Back in the late 1980's and early 1990's small shops across the US were building dirt-cheap IBM PC clones until they were finally overtaken by a few that had grown into large companies themselves like Dell.

I would like to understand the (non-massacre) supply of parts to AR15 assemblers. If it's truly competitive and not artificially controlled, it should ultimate lead to very inexpensive AR-15s...

It did! Stripped lowers were going for under $100. But then panic hit and demand went crazy.

Mayo said:

Let's say a generator then. Certainly not life or death--more of a luxury while power is out 1 week. Are you still 1 of those buying 10 at $200 and then selling for $1000 each?

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How about that, my favorite video on price gouging actually uses generators as its example.

"Is Price Gouging Immoral? Should It Be Illegal?"
http://www.youtube.com/watch?v=h9QEkw6_O6w

Cosmoline said:

It did! Stripped lowers were going for under $100. But then panic hit and demand went crazy.

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Yeapper.

Areo Precision branded stripped lowers were going for $59.95 before the massacre.

I don't think they'll have any issue selling them. I know people that own a few AR's for different purposes. Competition, hunting, tricked out, fun, long range, etc...

I personally don't own an AR because I think there are better rifles available. I have owned a few different AR models and shot a number more, the gun is just not for me. Either way, whatever they manufacture will sell.

On a side, I haven't seen price increases at any of my area gun shops, just empty shelves and many customers. I'm sure after the panic is over the people who intended to purchase an AR will get one.