How well will gun mfgs. throttle back production to match slumping demand?

[Aragon]

I wonder how well gun makers will be at carefully and collectively throttling back production to match slumping demand in order to preserve profit margins? Or will ever increasing competition continue to drive down gun prices? A few things are different today than in the past which makes me ask this question:

* First, a great deal of "future demand" for several years into the future has already been satisfied. That leaves a real "pit" -- a dearth of at least one type of buyer.

* Second, there are a lot more able competitors today with highly competitive product lines.

* Third, I don't see politics causing mass hysteria in the gun-buying market like we have seen in the recent past, largely because the hysterical types have already purchased their guns and because gun control is more and more a loser from a politic viewpoint.

* Fourth in some cases -- say new handguns sales in CA, the manufacturers have already been precluded from some huge markets.

* Fifth, as always, guns are very durable goods that don't need to be updated on a regular basis.

* Sixth, on some firearms (say polymer semi-auto pistols), there is what appears to be huge margins/gun. It would give manufacturers a great deal of room to cut prices in an attempt to take/preserve market share from one another.

* Seventh, on probably the most popular rifle in the US -- the AR based rifle, the entry to producing them is very low (largely assembly and test at the lowest levels) causing brutal competition -- both for ARs and other rifles.

 

[Thermactor]

We seem to see manufacturers running around like ferrets, trying to find a niche. Example: Taurus has introduced its funky Curve concealable pistol.
We might also see a trend towards higher quality guns, now that production is no longer frenzied.

 

[bullzeye8]

I would think they will come out with a lot of different models to keep people buying. If they create new models even just the sAme gun set up a bit differently people will still buy it for something different. There are also a lot more gun owners than before so maybe that perso. Who just becAme a gun owner and has a polymer pistol and an ar will now get a revolver and a bolt rifle or many other things so I don't think the gun manufacturers will have too much trouble, unless of course your name is colt and u can't make money while having a high demand for your product.

 

[fastbolt]

* First, a great deal of "future demand" for several years into the future has already been satisfied. That leaves a real "pit" -- a dearth of at least one type of buyer.

New potential firearm buyers are turning the legal age to buy firearms literally each and every day. More potential buyers are discovering the existing 1 or 2 firearms they've bought don't serve all their anticipated needs, or simply their desires, and they're buying different ones.

And, to paraphrase something that I learned as a young man in the car business at the beginning of the 70's, when I was wondering how so many people could be buying cars every day ... "there's a butt for every seat made".

* Second, there are a lot more able competitors today with highly competitive product lines.

Yes, but each new product or model seems to stir the interest of both first-time buyers and existing owners. How many people constantly express enthusiasm to be the first on their block to buy the newest make/model just released, whether they "need" it or not?

* Third, I don't see politics causing mass hysteria in the gun-buying market like we have seen in the recent past, largely because the hysterical types have already purchased their guns and because gun control is more and more a loser from a politic viewpoint.

Well, let's consider that the "hysterical types" probably aren't prone to relax and consider the fact that new gun control is a political "loser". Their frame of mind and concern about possibly being denied ownership of firearms, new or existing, may not be so simply abated.

* Fourth in some cases -- say new handguns sales in CA, the manufacturers have already been precluded from some huge markets.

Just because a couple of the big names have decided to pull any "new", or recently revised/modified pistols from sale in CA, if anything, it seems to have stimulated even more interest in buying the models on the approved roster. (As of today, S&W still has more than 100 handguns available on the state roster, and Ruger about 48, if I didn't skip a line skimming down the list.) The CA market is still substantial.

* Fifth, as always, guns are very durable goods that don't need to be updated on a regular basis.

So are a lot of durable goods that people keep buying over and over again before they're "worn out".

* Sixth, on some firearms (say polymer semi-auto pistols), there is what appears to be huge margins/gun. It would give manufacturers a great deal of room to cut prices in an attempt to take/preserve market share from one another.

Yes, no & maybe. That might be something the sporting goods gun stores, wholesalers, distributors & stocking dealers might decide to utilize, to keep inventories manageable according to prevailing market flux. Maybe not so much the gun compaies. Adding incentives, like coupons for magazines or holsters, might be something we'll see continue occurring.

* Seventh, on probably the most popular rifle in the US -- the AR based rifle, the entry to producing them is very low (largely assembly and test at the lowest levels) causing brutal competition -- both for ARs and other rifles.

Competition may mostly be "brutal" for the companies who aren't large and established. Or who restrict themselves to specific market segments. Or who don't flex and adapt with the times. (cough, Colt, cough ) The big names in the AR field can look outside the US for a LOT of foreign sales, too, especially when they were competing against Colt's high-priced line.

The big names in the business who want to remain competitive can always carefully look at both previous and possible future market trends, and adjust their plans accordingly. Read through S&W's financial reports for investors for the last several years.

One of the potential major adverse influences that could affect the AR market is the source and availability of many of the "common" components. Shut off a few of the handful of major vendors who supply the bulk of such parts, and assembli8ng complete rifles can become difficult.

We were told in one of my M&P15 AR armorer classes that it was for this very reason that S&W started buying the manufacturing base and materials to enable them to make everything that's required to make their rifles, as a hedge against any future bans the results in a "run" on parts. We were told they aren't using that manufacturing capability to make all the parts at the moment, and probably won't until such time as it may be necessary. It's more beneficial to continue using some outside vendors, at least during "normal" times, as that allows them to allocate their existing manufacturing capabilities to other projects and product lines. It can also allow them to become a potential major source of high quality (or budget) parts for other companies building AR's, if the market makes it appear prudent and profitable at one time or another.

Just my thoughts. I've also little doubt but that as the 2016 election really ramps up, it's going to give us another bunch of roller coaster thrills.

 

[JSH1]

New potential firearm buyers are turning the legal age to buy firearms literally each and every day.

The flip side of that coin is the fact that elderly gun owners are dying every day and their guns are either being sold or passed down to others.


To the original question: Yes, I see gun manufactures reducing production to match demand. A lot of the extra production over the last few years was existing manufacturers adding extra shifts and overtime to meet demand. If demand drops those extra hours will be cut

 

[denton]

Slump?

This is NICS data from 2007 until now.

The red lines show statistically unusual behavior. The enormous peak around data point 70 coincides with Obama's second election. Compared with the gigantic all-time record breaking spike that happened then, I guess you could say it's a slump. But compared with the normal trend line, it's not. Since Obama's election, we've seen diminishing market echos of that event.

 

[Omaha-BeenGlockin]

I've been on a little buying spree for the last eight months or so, myself.

Mostly to replace the ones I had to give up from being broke all the time due to the recession of the last few or more years.

Pretty much a gun a month--not to mention an Aimpoint and Leupold scope plus decent quantities of ammo--mags and other accessories.

 

[wally]

We might also see a trend towards higher quality guns, now that production is no longer frenzied

I'd change this to "value priced" guns there never was a shortage of $2500+ modern sporting rifles. Its when the mundane were $1000+ that things were crazy.


Giving the most value to the buyer while still making a healthy profit will be the key.

 

[Lord Teapot]

Aragorn, this is your 2nd time making a thread based on the false premise that gun sales are falling, as i've already responded once i'll simply link to the response. i don't understand your fascination with pushing the idea that the firearms industry is declining, when all signs point to it booming, and continuing to boom.


http://www.thehighroad.org/showpost.php?p=9919641&postcount=3



http://www.jsonline.com/watchdog/wa...-to-boom-in-buyers-b99256050z1-256776061.html
http://missoulian.com/business/loca...cle_745dfe7e-fe37-51ca-b7cf-4a97a8ae6463.html


^gun sales booming

 

[jmr40]

This is a good time for manufacturers to make shorter runs of less popular guns. Or experiment with something new. There are always people who want less common calibers and configurations. Manufacturers have been making the common stuff for several years as fast as they could make them. The demand may be slowing for those guns, but there are a lot of folks chomping at the bit for some odd-ball stuff. And maybe willing to give something new and untested a shot.

 

[cfullgraf]

This is a good time for manufacturers to make shorter runs of less popular guns. Or experiment with something new. There are always people who want less common calibers and configurations. Manufacturers have been making the common stuff for several years as fast as they could make them. The demand may be slowing for those guns, but there are a lot of folks chomping at the bit for some odd-ball stuff. And maybe willing to give something new and untested a shot.

I could go for this.

Scaling back production is easy although idle capital equipment not yet paid for is not desirable.

 

[Aragon]

I would think they will come out with a lot of different models to keep people buying. If they create new models even just the sAme gun set up a bit differently people will still buy it for something different. There are also a lot more gun owners than before so maybe that perso. Who just becAme a gun owner and has a polymer pistol and an ar will now get a revolver and a bolt rifle or many other things so I don't think the gun manufacturers will have too much trouble, unless of course your name is colt and u can't make money while having a high demand for your product.

Is that really true?

 

[Ed Ames]

I wonder how well gun makers will be at carefully and collectively throttling back production to match slumping demand in order to preserve profit margins? Or will ever increasing competition continue to drive down gun prices? A few things are different today than in the past which makes me ask this question:

What?

They shouldn't, if they want to maximize profits.

The major gun makers diverted some of their production to panic product lines. E.g. Ruger said at one point they were scaling back on established lines in order to make their ARoids. That left existing consumers unable to buy products with established markets. It would be crazy for Ruger to then scale back on production in general..they are already under serving their markets. They need to rebalance production to current demand. That doesn't mean lowering production, which would be crazy in this market.

* First, a great deal of "future demand" for several years into the future has already been satisfied. That leaves a real "pit" -- a dearth of at least one type of buyer.

Do you have evidence of this? You treat it as a foregone conclusion but without corroborative evidence that's just speculation. Unlikely seeming speculation.

If you model the gun market as a fixed pool of potential buyers, and assume that over a long period the average conversion rate is constant, then you could claim that by converting more potential buyers to actual this year, you reduce the number for future years, but there are some huge assumptions in that model.

First, the pool of potential buyers isn't fixed. Depending on prevailing political and social ideas, popular fiction, and many other factors, the pool can shift from maybe 35% to 75% of the US adult population. Polling, ammo availability, and other factors show that a large part of the upswing in sales resulted from the pool growing, not the conversion rate within the pool. Example of what I mean: women are the fastest growing segment of gun owners. That is a result of changing views of appropriate behavior for women.

Second, gun owners tend to own multiple guns. That means not all sales are equal. Selling me a gun doesn't do anything to the odds I'll buy another next week. Selling Bob Neverownedagun his first pistol *increases* the chances he'll come back for another next week. The curve accelerates. Many of the recent sales have been to first time owners.

I could go on but won't, until you offer more reason to believe your theory is correct.

* Second, there are a lot more able competitors today with highly competitive product lines.

In some specialty niches, yes, but due to supply chain issues that isn't reflected in retail.

What I mean: The average gun store I visit now has 5 revolvers. A Heritage Rough Rider, two Judges, a snubby .38 with pink grips, and one .357 or the like of some sort. I happen to have money earmarked for several revolvers right now. Can you guess how many of those guns are on my list? Zero. Zero many. In order to earn my money the stores must start stocking more, different, guns. They can't because manufacturers aren't making enough.

Right now, due to sustained underproduction, it is very difficult to find any interesting guns in normal retail. They are all diverted to gunbroker auctions and the like. I, and many others, don't want to play that game so we sit on our cash until a local store has what we want...which if they follow your advice would be never.

* Third, I don't see politics causing mass hysteria in the gun-buying market like we have seen in the recent past, largely because the hysterical types have already purchased their guns and because gun control is more and more a loser from a politic viewpoint.

The hysterical types *who were able* purchased their guns. You must remember that in 2008 a significant economic downturn became visible. Some of those who were unable then are able now.

* Fourth in some cases -- say new handguns sales in CA, the manufacturers have already been precluded from some huge markets.

This is true and will be an interesting test case. When will Californians start calling their state reps because they can't buy handguns they want? A dam will break.

* Fifth, as always, guns are very durable goods that don't need to be updated on a regular basis.

Yet very few individuals carry or actively use guns from even the 1960s. Plus you need to factor in non-gun-owner ignorance.

I stopped a (non-gun) friend from throwing away several guns because they had been made in the 1930s to 1980s and he didn't think they'd still be safe to shoot. He gave them to me because I promised I would safety inspect them and destroy any that were unsafe. By safety inspect I meant clean and take shooting.

* Sixth, on some firearms (say polymer semi-auto pistols), there is what appears to be huge margins/gun. It would give manufacturers a great deal of room to cut prices in an attempt to take/preserve market share from one another.

That is an interesting question. I agree there appear to be hefty margins, but pricing seems stable.

* Seventh, on probably the most popular rifle in the US -- the AR based rifle, the entry to producing them is very low (largely assembly and test at the lowest levels) causing brutal competition -- both for ARs and other rifles.

The problem with ARs is that yeah, everyone can make a basic .223 gun, but most of the interesting variants disappeared as manufacturers tried to keep up with the rush. I have a nice .223 rifle, and honestly it is pretty useless. Selling me another is going to be tough. Selling me another AR in general is going to be tough due to the modularity. Why would I buy a whole gun when I already have a nice lower with a sweet trigger and furniture I like?

It still comes down to this: if you want to sell guns, you must make guns people want. In the case of ARs, that means something more than yet another generic AR. That can be hard because if you drift far enough it ceases to be an AR.

But...offer me a truly light (like one pound) take down 22lr rifle? Or a bolt action in .308 that comes with peep sites, a threaded barrel, and uses FAL, m14, or AR10 magazines? A take-down lever gun in .454 casul or .327 federal? A...well, I could keep going but the point is that I can't even find "in production" guns I want most of the time because they aren't making enough of them to meet demand, and there are plenty of guns I want but nobody is even making them.

The last thing they should do is cut production or try to get into a generic gun (AR) bidding war right now.

 

[Aragon]

The flip side of that coin is the fact that elderly gun owners are dying every day and their guns are either being sold or passed down to others.

To the original question: Yes, I see gun manufactures reducing production to match demand. A lot of the extra production over the last few years was existing manufacturers adding extra shifts and overtime to meet demand. If demand drops those extra hours will be cut

I definitely agree with you there -- OT and temp employees will be the first to be cut.

 

[Aragon]

I could go for this.

Scaling back production is easy although idle capital equipment not yet paid for is not desirable.

Scaling back production might be "easy", but it hits revenue and can ultimately impact profitability.

 

[Aragon]

I'd change this to "value priced" guns there never was a shortage of $2500+ modern sporting rifles. Its when the mundane were $1000+ that things were crazy.

Giving the most value to the buyer while still making a healthy profit will be the key.

It will be the key and the goal.

 

[guyfromohio]

Demand goes down, supply goes up, prices decrease until supply goes down. I just bought a sub-$600 hammer-fired HK. This is how they deal with it.

 

[TimSr]

Demand goes down, supply goes up, prices decrease until supply goes down. I just bought a sub-$600 hammer-fired HK. This is how they deal with it.

Free market capitalism 101. Supply and demand.


Political climate can certainly change demand quickly. I remember when AKs wnet from $300 to $900 overnight. In more recent times AR variants did the same thing, but now there is a huge glut in that market, and prices have fallen. The biggest and longest trend of recent times is smaller semi-auto pistols as more and more states are seeing concealed carry as mainstream. Growing interest in handgun hunting has prompted a growing market for big bore revolvers. We've all seen ammo prices spike, and those that spiked most (.223) have seen the prices plummet.

My personal observations and predictions:

High volume sales in the biggest continuing increase will be in the concealed carry market. As 380s continue to gain popularity, ammo prices will to 9mm levels. With all the tiny 380s now available, .25, .32 acp will continue to decline. 38/357 snubbies have made a slight comeback, and will continue to sell at a steady but relatively low volume.

AR variants and similar have so saturated the market that in a couple years they'll be like buying a used computer. AKs will continue to decline as yesterdays fad.

Big bore revolvers have already peaked and will taper slightly but remain constant. Some of the calibers will meet the fate of the .41 mag.

Bolt rifles and sporting shotguns will always have a steady moderate demand.

As more "shotgun only for deer" states change their deer hunting regulations, shotguns designed for long range slug shooting will decline, while pistol and straight wall cartridge caliber rifles continue to spike, especially in lever action rifles. The 45-70 is being resurrected.

 

[JSH1]

Good predictions TimSr. The only one I question is concealed carry guns. Most states have had concealed carry for a while now so I see demand for carry guns leveling off.

 

[wally]

Most states have had concealed carry for a while now so I see demand for carry guns leveling off.

I see this as more reason demand for CCW will continue to grow as people in those states are starting to realize that the police have no specific duty to protect them specifically, and that "when seconds count, the police only about twenty minutes away!"

 

[JSH1]

I see this as more reason demand for CCW will continue to grow as people in those states are starting to realize that the police have no specific duty to protect them specifically, and that "when seconds count, the police only about twenty minutes away!"

I don't see that in the current trend of continuing decreases in violent crime. We are now more than two decades into a trend of decreasing crime rates and there is only so much the media can do to drum up fear of crime. I believe most of the people that are concerned with the issues you mentioned already have their permit.

I also believe we are reaching the limit to concealed carry gun trends. We went from revolvers to autos to compact "big bores", and tiny 380's, etc. What is the next trend to get people to go out and replace their concealed carry weapon?

 

[Aragon]

Demand goes down, supply goes up, prices decrease until supply goes down. I just bought a sub-$600 hammer-fired HK. This is how they deal with it.

You didn't address my question. Demand is definitely going down from recent all-time highs. However manufacturers (individually) can choose a number of paths in a down market:

* They can come out with new models/variations in the hopes of spurring sales.

* They can cut prices and go after bits of their competitors' pies.

* They can maintain their prices and cut production if necessary in the hopes of preserving their current profit margins.

* etc.

 

[guyfromohio]

I did answer....they're cutting prices. P-30 HKs were $800 three months ago. Today...$585 for the new model.

Glock 43...new model.... Street price $450 while older models are $500+
HK P-30 SK.... New model.... Street price $585 while older models are $800+
Sig 320.... New model... Street price mid $400s while older standard models $700+

 

[Blade First]

"I don't see that in the current trend of continuing decreases in violent crime. We are now more than two decades into a trend of decreasing crime rates and there is only so much the media can do to drum up fear of crime. I believe most of the people that are concerned with the issues you mentioned already have their permit." --JSH1

Certainly not true here. I'm an NRA-certified Range Safety Officer and also instruct regularly. Classes are so busy on weekends that many LGSs and ranges are scheduling extra days/times during the week to handle demand.

Don't assume that the majority of the population is as educated and informed as you are regarding crime trends.

Don't forget how powerful a motivator that fear can be...and how empowering it is for people to choose the best means available for their personal self-defense. There's a reason that some of our local classes are majority-female.

Crime rates are falling as gun ownership goes up, but the MSM prostitutes will never admit that their propaganda is, for them, a perverse and ironic failure. They lose ground every single day...and every day, more of us gain ground because more firearms are sold, traded and bought.

The OP is, again, wrong...and demonstrably, factually so.

 

[splattergun]

after the latest mass shooting and all the accompanying calls for more gun control, a slump in panic sales does not seem so apparent to me.