wacki
Member
Interesting reading found here:
http://www.perfectunion.com/vb/printthread.php?t=57479
I didn't know about the Clinton ban on Chinese ammo and the UN's attack on South African supplies. What a crock.
info cut and pasted below
===================================================================
Discussion with vendors on the ammunition shortages and price increases
In the past year or so, most people involved in the shooting sports have noticed a growing "ammunition crisis" which has been marked by dramatic increases in ammunition prices, and in many cases, a corresponding shortage of ammunition stocks. It is not unusual to contact vendors and find the entire surplus ammunition stock sold out, and where there is ammunition in stock, to find prices have gone up by two times or more. These shortages and price increases have been across the board, in all ammunition types, and they have been particularly noticeable for shooters who rely on surplus and military ammunition, such as factory loaded .223 for example. In the past year, the price of surplus .223 ammo has doubled or in some cases nearly tripled, to give just one example.
This forum is a discussion on these shortages and prices increases. I've invited a couple of ammunition vendors--Dave, from The-armory.com, and Kola, from StarsAndStripesAmmo.com--to comment on the following questions about the ammunition crisis. I thought their inside knowledge of the industry could be particularly informative and help us learn more about some possible causes for this crisis. They have not spoken with each other, so their answers may be very different. Also, we should not expect them to have all the answers. But, they have both thought about these issues a lot, and they deal with them on a daily basis, so I thought it would be interesting and useful for us to hear their insights. And by the way, if you know of any other ammunition vendors that would like to contribute to this discussion, please invite them to join in and make a comment here as well. And it will be great to hear your questions and discussion, too.
I asked Dave and Kola to send me their responses to the following basic two questions. I'm posting their complete responses below (these have not been modified in any way), which will serve as a good way to kick off our discussion. By the way, I want to thank both of these guys in advance--and I hope some of you will too--for sharing their time and insights with us. I've invited them to join in the discussion and make further comments or answer questions if they are able to.
* What are the main causes of the rapid price increases, and shortages in the available supply, of ammunition over the past year?
* Should we expect that these prices will eventually stabilize or return to a lower level, or should we assume that they will probably never be lower than they are, and therefore stock up on ammunition now?
===============================
Here are the responses from Dave, who is from The Armory ( http://www.the-armory.com ), a web-based firearms and ammunition store.
> * What are the main causes of the rapid price increases, and
> shortages in the available supply, of ammunition over the past year?
We've all heard the standard answer that "there is a war going on". This is
an incomplete answer. .223 (5.56x45mm), .308 (7.62x51mm), 9x19mm, SOME .45 ACP, 7.62x39mm, 5.45x39mm and 7.62x54R are impacted as they are military calibers and subject to demand from military contracts. Although not
mainstream, .50 BMG shooters are in the mix and have been feeling the shortage as well. There is a secondary effect to other calibers and bullet weights in the industry because of the limited number of production lines available. Commercial, automated pistol ammunition manufacturing machines start at about $20,000 each. Rifle caliber machines are about $40,000 each. The major manufacturers may have a dozen machines or so in each plant, but not enough to dedicate each line to one caliber and bullet weight. Retooling between runs may take a few manhours to do and production stops during re- tooling, so it becomes a painful management decision to change the line. This is most apparent in small manufacturers like Dakota (Corbon) and Black Hills Ammo where their operations are just a handful of machines and it may be several weeks to even a few months between runs on a particular caliber and bullet weight. With a high customer demand (beligerents in combat), a lot of orders and production gets sucked up in military contracts. This leaves the American consumer (as a whole, a high-demand consumer) with "the scraps" in a lot of cases. A good example of this was the 7.62x39mm shortage a while back--Syria literally sucked up supply for a few months while it was stocking up. But this is really just a part of the whole problem.
Second in the contract-filling arena are "big box" stores like Wal-Mart. In
case you didn't know it, Winchester has dedicated loading-dock space for Wal- Mart trucks. They have EIS (Enterprise Information Systems) architecture in place to know which stores are running low on stock and fill those trucks and
turn them around accordingly. The manufacturers are contracted to fill
orders for the box stores and due to penalty clauses in the contracts, have
to fill those contracts according to the specs, even down to what order ammo
is loading in the trucks, how it's shrink-wrapped onto a pallet and what ammo
goes where on a pallet.
After the 'marts, wholesale distributors get ammo (sometimes at horrible
prices) and in turn allocate to sales reps who then push the ammo out to
their customers (retail ammo vendors).
Direct supply and demand of ammunition has had a lot to do with ammo prices,
but it's just a part. For those who haven't followed metal prices in recent
years, it's been going up rapidly (copper maxed out at almost four times its
price in 2004 with other metals behaving similarly). Metals are commodities
and futures are traded in exchanges throughout the world. Those futures set
contract prices for metals. Commodities tend to follow eachother. When oil
is up, gold and silver eventually works its way up and the other metals work
their way up. Higher oil prices mean higher production and transportation
costs for everything else. As long as it's economical to produce a metal,
mines are profitable. On average, mining gold costs $280-300 per ounce to
produce. As long as the price is above that, mines will operate. The same
holds true for any other mine operation. Copper has been very profitable so
mines have produced now to surplus. More on the copper surplus later.
Other industries compete for our same metals. China and India are both
industrializing very rapidly. The demand for cheap consumer electronics has
been fueling this and will continue to fuel this. Brass, lead and copper are
used in these industries and are in direct competition with the ammunition
industry.
For those that haven't followed the industry closesly, South Africa
effectively went off the market about a year ago. IANSA and the UN blew the
whistle on South Africa for selling off surplus to ARMSCORP (a German-based
company, not the Filipino company the rest of us know) who was supposed to
scrap the ammo and sell of the components. Instead it was sold on the US
surplus market as well as the Central and South American markets. Fearing
the wrath of the UN and the image of being the world's source of
proliferation of arms and munitions, the South African Congress closed the
doors on its surplus. Without a huge source of billions of rounds of ammo,
there is less competition to other international vendors to keep their prices
down.
For those that watch ammo, the major manufacturers have averaged 5-6
increases per year for the last two years. I have personally seen good
sellers (Winchester .45 Colt Cowboy comes to mind right away in one
particular incident) that haven't been produced for a couple months,
magically appear after a price hike at the higher price, which meant the
production happened before the price hike and presumably were produced with
components at the previous price. I am sure they are profit-taking where
they think they can get away with it. Remington Ammo reported it's first
profit in years this past quarter.
Manufactuers also watch what is happening with other manufacturers and try to
set production on what may be hitting the streets soon. Even since El Dorado
(PMC) went out of business a couple years ago, PMC ammo has only trickled
into the US. The Koreans have surplus and they are hungry for business. The
first shipments are arriving in time for the summer slowdown. Not knowing
exactly what is on that shipment, a lot of manufacturers are leary of
investing too much into production that the PMC shipment may force down
prices on.
Another often forgotten facet is the value of the dollar. A lot of ammo is
imported. Anything Winchester that has an "A" in the product code means that
it is imported. Q3131A was the .223 55-gr FMJBT load made in Israel. I
haven't seen it in over a year. For quite a while, S&B was making .45 ACP
230-gr for the Winchester Q4170A loading. A lot of Winchester shotshells are
now made in Australia (XU168A is one I'm looking at right now). A weak
dollar drives the prices of imported ammo up. Hotshot (Igman) is from
Bosnia. S&B is from Czech Republic. Prvi Partizan (Wolf Gold Line, FNM,
Hornady metric calibers) is from Serbia. Pricing from these manufacturers
are dictated by the Euro, which the Dollar has been doing horribly against.
http://www.perfectunion.com/vb/printthread.php?t=57479
I didn't know about the Clinton ban on Chinese ammo and the UN's attack on South African supplies. What a crock.
info cut and pasted below
===================================================================
Discussion with vendors on the ammunition shortages and price increases
In the past year or so, most people involved in the shooting sports have noticed a growing "ammunition crisis" which has been marked by dramatic increases in ammunition prices, and in many cases, a corresponding shortage of ammunition stocks. It is not unusual to contact vendors and find the entire surplus ammunition stock sold out, and where there is ammunition in stock, to find prices have gone up by two times or more. These shortages and price increases have been across the board, in all ammunition types, and they have been particularly noticeable for shooters who rely on surplus and military ammunition, such as factory loaded .223 for example. In the past year, the price of surplus .223 ammo has doubled or in some cases nearly tripled, to give just one example.
This forum is a discussion on these shortages and prices increases. I've invited a couple of ammunition vendors--Dave, from The-armory.com, and Kola, from StarsAndStripesAmmo.com--to comment on the following questions about the ammunition crisis. I thought their inside knowledge of the industry could be particularly informative and help us learn more about some possible causes for this crisis. They have not spoken with each other, so their answers may be very different. Also, we should not expect them to have all the answers. But, they have both thought about these issues a lot, and they deal with them on a daily basis, so I thought it would be interesting and useful for us to hear their insights. And by the way, if you know of any other ammunition vendors that would like to contribute to this discussion, please invite them to join in and make a comment here as well. And it will be great to hear your questions and discussion, too.
I asked Dave and Kola to send me their responses to the following basic two questions. I'm posting their complete responses below (these have not been modified in any way), which will serve as a good way to kick off our discussion. By the way, I want to thank both of these guys in advance--and I hope some of you will too--for sharing their time and insights with us. I've invited them to join in the discussion and make further comments or answer questions if they are able to.
* What are the main causes of the rapid price increases, and shortages in the available supply, of ammunition over the past year?
* Should we expect that these prices will eventually stabilize or return to a lower level, or should we assume that they will probably never be lower than they are, and therefore stock up on ammunition now?
===============================
Here are the responses from Dave, who is from The Armory ( http://www.the-armory.com ), a web-based firearms and ammunition store.
> * What are the main causes of the rapid price increases, and
> shortages in the available supply, of ammunition over the past year?
We've all heard the standard answer that "there is a war going on". This is
an incomplete answer. .223 (5.56x45mm), .308 (7.62x51mm), 9x19mm, SOME .45 ACP, 7.62x39mm, 5.45x39mm and 7.62x54R are impacted as they are military calibers and subject to demand from military contracts. Although not
mainstream, .50 BMG shooters are in the mix and have been feeling the shortage as well. There is a secondary effect to other calibers and bullet weights in the industry because of the limited number of production lines available. Commercial, automated pistol ammunition manufacturing machines start at about $20,000 each. Rifle caliber machines are about $40,000 each. The major manufacturers may have a dozen machines or so in each plant, but not enough to dedicate each line to one caliber and bullet weight. Retooling between runs may take a few manhours to do and production stops during re- tooling, so it becomes a painful management decision to change the line. This is most apparent in small manufacturers like Dakota (Corbon) and Black Hills Ammo where their operations are just a handful of machines and it may be several weeks to even a few months between runs on a particular caliber and bullet weight. With a high customer demand (beligerents in combat), a lot of orders and production gets sucked up in military contracts. This leaves the American consumer (as a whole, a high-demand consumer) with "the scraps" in a lot of cases. A good example of this was the 7.62x39mm shortage a while back--Syria literally sucked up supply for a few months while it was stocking up. But this is really just a part of the whole problem.
Second in the contract-filling arena are "big box" stores like Wal-Mart. In
case you didn't know it, Winchester has dedicated loading-dock space for Wal- Mart trucks. They have EIS (Enterprise Information Systems) architecture in place to know which stores are running low on stock and fill those trucks and
turn them around accordingly. The manufacturers are contracted to fill
orders for the box stores and due to penalty clauses in the contracts, have
to fill those contracts according to the specs, even down to what order ammo
is loading in the trucks, how it's shrink-wrapped onto a pallet and what ammo
goes where on a pallet.
After the 'marts, wholesale distributors get ammo (sometimes at horrible
prices) and in turn allocate to sales reps who then push the ammo out to
their customers (retail ammo vendors).
Direct supply and demand of ammunition has had a lot to do with ammo prices,
but it's just a part. For those who haven't followed metal prices in recent
years, it's been going up rapidly (copper maxed out at almost four times its
price in 2004 with other metals behaving similarly). Metals are commodities
and futures are traded in exchanges throughout the world. Those futures set
contract prices for metals. Commodities tend to follow eachother. When oil
is up, gold and silver eventually works its way up and the other metals work
their way up. Higher oil prices mean higher production and transportation
costs for everything else. As long as it's economical to produce a metal,
mines are profitable. On average, mining gold costs $280-300 per ounce to
produce. As long as the price is above that, mines will operate. The same
holds true for any other mine operation. Copper has been very profitable so
mines have produced now to surplus. More on the copper surplus later.
Other industries compete for our same metals. China and India are both
industrializing very rapidly. The demand for cheap consumer electronics has
been fueling this and will continue to fuel this. Brass, lead and copper are
used in these industries and are in direct competition with the ammunition
industry.
For those that haven't followed the industry closesly, South Africa
effectively went off the market about a year ago. IANSA and the UN blew the
whistle on South Africa for selling off surplus to ARMSCORP (a German-based
company, not the Filipino company the rest of us know) who was supposed to
scrap the ammo and sell of the components. Instead it was sold on the US
surplus market as well as the Central and South American markets. Fearing
the wrath of the UN and the image of being the world's source of
proliferation of arms and munitions, the South African Congress closed the
doors on its surplus. Without a huge source of billions of rounds of ammo,
there is less competition to other international vendors to keep their prices
down.
For those that watch ammo, the major manufacturers have averaged 5-6
increases per year for the last two years. I have personally seen good
sellers (Winchester .45 Colt Cowboy comes to mind right away in one
particular incident) that haven't been produced for a couple months,
magically appear after a price hike at the higher price, which meant the
production happened before the price hike and presumably were produced with
components at the previous price. I am sure they are profit-taking where
they think they can get away with it. Remington Ammo reported it's first
profit in years this past quarter.
Manufactuers also watch what is happening with other manufacturers and try to
set production on what may be hitting the streets soon. Even since El Dorado
(PMC) went out of business a couple years ago, PMC ammo has only trickled
into the US. The Koreans have surplus and they are hungry for business. The
first shipments are arriving in time for the summer slowdown. Not knowing
exactly what is on that shipment, a lot of manufacturers are leary of
investing too much into production that the PMC shipment may force down
prices on.
Another often forgotten facet is the value of the dollar. A lot of ammo is
imported. Anything Winchester that has an "A" in the product code means that
it is imported. Q3131A was the .223 55-gr FMJBT load made in Israel. I
haven't seen it in over a year. For quite a while, S&B was making .45 ACP
230-gr for the Winchester Q4170A loading. A lot of Winchester shotshells are
now made in Australia (XU168A is one I'm looking at right now). A weak
dollar drives the prices of imported ammo up. Hotshot (Igman) is from
Bosnia. S&B is from Czech Republic. Prvi Partizan (Wolf Gold Line, FNM,
Hornady metric calibers) is from Serbia. Pricing from these manufacturers
are dictated by the Euro, which the Dollar has been doing horribly against.