Manufacturers staying cautious

[hso]

https://www.forbes.com/sites/aarons...ers-aim-not-to-get-burned-again/#469fd0f4382a

Gun and ammo makers are staying cautious ahead of the election despite surging sales, because they remember all too well the crash that happened after the election of President Trump.

Gunmakers can barely keep up with demand. Sales have been booming since the start of the pandemic, fueled by fears of coronavirus and civil unrest. FBI background checks have been breaking records. Makers of guns and ammo are reporting double-digit increases in revenue. Handguns are flying off the shelves and ammo is selling out and getting scarce.

“It’s the 2013 shortage all over again,” said Brian Rafn, a gun industry analyst who recently retired from Morgan Dempsey, referring to the run on ammo during the Obama administration. Rafn, whose family owns shares in Sturm, Ruger, said that nowadays buyers of popular ammo like 9 mm have to hunt for it from store to store like “the guy who’s buying milk during the hurricane.”

But gun and ammo makers are hyper-cautious about ramping up manufacturing capacity. They don't want to get burned like in 2016, when sales surged to record levels only to implode on Election Day. Sales then were driven by fears of gun control fueled by mass shootings, but those fears evaporated with the election of President Trump, a Republican endorsed by the National Rifle Association. Gun sales plunged immediately after his election, resulting in layoffs and sliding stocks for Sturm, Ruger and Smith & Wesson.

 

[AlexanderA]

Sure. A smart businessman would not overextend and then be caught with excess capacity once things return to normal. 2020 has been a fluke of a year.

 

[Tommygunn]

AlexanderA hit it exactly right on the head. No more need be said.

 

[earlthegoat2]

As a similar example, the owner of my LGS has also seen a large increase in revenue.

He is not about to go and buy a new SUV though. Everyone SHOULD know about the highs and lows by now.

 

[George P]

If WE as the gun/ammo buying public would stop panicking and then buying everything in sight every time, the whole ammo shortage thing would calm down. None of the companies are going to invest the capital necessary to add production capacity (which could take a few years to realize). They will go to 2 and 3 shifts around the clock (assuming they can get folks and material) and we will have to be patient

 

[Hartkopf]

This is the classic work your guys to death situation in manufacturing. The company is afraid to hire so everybody has to work more hours and run more machines. The few talented machinist are worn out even in the age of CNC machines. I've been living it all year.

 

[unclenunzie]

This is the classic work your guys to death situation in manufacturing. The company is afraid to hire so everybody has to work more hours and run more machines. The few talented machinist are worn out even in the age of CNC machines. I've been living it all year.

Indeed, and with the economy in a bind there's no leverage to seek employment elsewhere.

 

[Alex Clayton]

Every time there is a panic a LOT of people refuse to believe the manufacturers are not "doing it on purpose". When you try to explain to them how manufacturing works a lot of them just don't want to hear it, sure that the Companies can just start making twice as much of what they make. Just not how it works of course. None of them are going to build a new plant to double output as they would fill the pipeline, people would stop buying, plant would sit idle. Then they have to lay off employee's they hired, and keep paying for all that equipment that is now sitting idle.

 

[Alex Clayton]

If WE as the gun/ammo buying public would stop panicking and then buying everything in sight every time, the whole ammo shortage thing would calm down. None of the companies are going to invest the capital necessary to add production capacity (which could take a few years to realize). They will go to 2 and 3 shifts around the clock (assuming they can get folks and material) and we will have to be patient

Way too late for that. Before Al invented the net these panic shortages never lasted nearly as long. Now they feed on themselves and just keep going. Look how many people take to the net daily to say the sky is falling? This went on last time after a couple years of shortage. With people daily suddenly discovering there was a shortage they needed to tell everyone about. Really kind of humorous after a while.

 

[Mars5l]

Make haste while the sun shines and save some for a rainy day

 

[swingmaster]

Every time there is a panic a LOT of people refuse to believe the manufacturers are not "doing it on purpose". When you try to explain to them how manufacturing works a lot of them just don't want to hear it, sure that the Companies can just start making twice as much of what they make. Just not how it works of course. None of them are going to build a new plant to double output as they would fill the pipeline, people would stop buying, plant would sit idle. Then they have to lay off employee's they hired, and keep paying for all that equipment that is now sitting idle.

They’re already running multiple shifts at their existing plants?

 

[Poper]

If WE as the gun/ammo buying public would stop panicking and then buying everything in sight every time, the whole ammo shortage thing would calm down. None of the companies are going to invest the capital necessary to add production capacity (which could take a few years to realize). They will go to 2 and 3 shifts around the clock (assuming they can get folks and material) and we will have to be patient

Yes, however there are always new youngsters that just became old enough to buy a gun that are also a part of the problem. Not everyone is as old as we are and they have to live through a couple of the panics and banics before they learn their lesson.

On the bright side, there should be some great deals on lightly used rifles, shotguns and handguns in about 12-16 months following the election. Unless Biden is elected with gains in the house and senate. Then all bets are off and my loading bench will be abuzz with activity.....

 

[Ernie Bass]

. I have never panicked. I saw what is going on now over 20 years ago. And I do not for one minute think that it is going to get better. Some people might now be panicking, but others just became prepared over the years. And I am not naive to think it is going to get better. It will not. It is getting worse all the time. And the Ammo manufacturing companies have been asleep way too long.

 

[bassjam]

If WE as the gun/ammo buying public would stop panicking and then buying everything in sight every time, the whole ammo shortage thing would calm down. None of the companies are going to invest the capital necessary to add production capacity (which could take a few years to realize). They will go to 2 and 3 shifts around the clock (assuming they can get folks and material) and we will have to be patient

I don't consider myself a "panic buyer". I have't bought ammo since February because I'm well stocked and I don't need any more right now.

But.

Darned if I haven't bought 4 guns since April, which is more than I normally buy in a 2+ year span. One I would have gotten anyway, since I sold my conceal carry gun with the intention on replacing it, but the other 3 were just good prices I couldn't pass up. I feel like I contributed to the panic buying by getting them, but I'm a sucker for a cheap gun that I know I can sell for at least what I have in it if I ever get bored of it.

 

[Speedo66]

Sure. 2020 has been a fluke of a year.

I think you misspelled the fifth word in that sentence. lol

Between the pandemic, hurricanes, tornadoes, unemployment, civil unrest, and the upcoming election, I can think of a few choice words to describe 2020.

This certainly hasn't been the "Happy New Year" I imagined last Dec.31.

 

[HB]

Just short of sold out is a great place to be!

I’m out of the industry now and honestly glad I am.

The sales cycle from distributor/manufacture to retailer is in theory week to week as you ship the hot new pistol on the cover of Guns!. In reality its 4-8 year investment. The big boys know this.

 

[Insignificant bill]

I. Have always bought ammo every month. This has put a crimp in it.

 

[George P]

They’re already running multiple shifts at their existing plants?

That would all depend on their ability to staff the facility and acquire raw materials. Something else has come up I found out today - there is a shortage of flat bed truck available nationwide due to Covid (wife works for a utility and their suppliers are informing her); so if flatbeds for hauling transformers are in short supply, dry boxes will also be that way. now you have to factor in delays in shipping products to the equation, making stores receiving goods even longer. There was a report that one of the ammo makers (CCI IIRC) can make 50 pallets per day of ammo - that's one pallet per STATE; so PATIENCE is the key.

 

[rdnktrkr]

I sold a Kenworth k700 with 650hp Cat because of the shipping rates going down and all the fees and fuel going up, from what I've heard the rates are still below what they were and the "red" (rush) rates are still low also. It takes a lot of money to keep a big truck rolling and I know some who didn't get out in time and lost a lot.

 

[Dunross]

I don't blame the manufacturers for being cautious.

2020 has been a fluke of a year. Presidential election cycles come around every four years and everyone who has been around for a while understands their effects on the supply situation. This time however we have first a pandemic happening at the same time AND a wide-scale lawlessness problem amplifying the situation.

Using the past as a prediction tool for the future has not worked here. We are at a nexus point where many things are coming together very close to each other in time. Come November things MIGHT settle down as they have done in the past, but there's a very real chance they might get much worse.

It has been interesting to me that several people I know who have never been particularly interested in certain types of firearms and stocking up in general have suddenly decided they now are only to discover they are a day late and a dollar short. This is happening all over the country.

The chickens of "may you live in interesting times" have come home to roost.

 

[huntsman]

Americans are spoiled consumers, we’re used to getting what we want when we want it.

I believe that fuels panic buying as much or more than fear.

yeah guns and ammo are hot now but I ordered a new freezer in May and it’s being delivered next week, ordered a new handgun last week and it’s being delivered today.

Gun manufacturers aren’t exclusive to the panic buying and if they choose to throttle back availability they may find themselves selves dammed if they do and dammed if they don’t

 

[jmorris]

You don’t want to take out a loan or finance a bunch of equipment that won’t even be paying interest on the principal by Spring.

Lots of boutique AR builders likely still under water on CNC equipment. Might be better if you are large enough to ride the wave but then you know you can just keep chugging along no stop, never have to lay anyone off and even bump your prices when demand is high.

 

[Ernie Bass]

You don’t want to take out a loan or finance a bunch of equipment that won’t even be paying interest on the principal by Spring.

Lots of boutique AR builders likely still under water on CNC equipment. Might be better if you are large enough to ride the wave but then you know you can just keep chugging along no stop, never have to lay anyone off and even bump your prices when demand is high.

Lol, it would most definately be paying for itself come Spring. Do your really think all the chaos is going to just come to a complete halt in that short of time. And then by and if the time comes around, the Window is so short that yet another election will be on the way.
Yes the biggest gamble right now for the Manufacturers is the election. That is the Gamble. Just listen to them. They are now preaching to stop buying ammo on line. And that is just for starters.

 

[BigBore44]

I primarily reload so this doesn’t really affect me. But it seems to reason that ammunition companies only profit off the sale of their ammo once. So when they run low from a panic, they are only making money on what they sell. If they can’t keep up with demand, then that’s when scalpers (capitalists) make all their money.

Seeing as how this has become a cycle every 4 years and even more often because of civil unrest, it stands to reason that they would increase profits if they ramped up production at least the start of every 4th year for sure. And the civil unrest isn’t going to get better in the foreseeable future. The left and MSM are really pushing this narrative. Seems like no one has an answer and likely never will.

The problem is being late to the party. Scalpers are prepared. Why can’t ammo companies do the same?

 

[kmw1954]

Many things here all in-line to form this cause and effect. How about let's start with 8 months of record gun sales with a vast majority of them going to first time buyers who then also need ammunition's. Then let's look at the virus and what it has done to the complete supply chain and the number of jobs related to the manufacture of ammunition components completely shut down for many reasons. Some because of outbreaks and others because of government mandate. Each one of those instances effects the flow of finished goods. From the many different chemicals needed to make powders and primers to the companies and workers supplying the raw brass to make cases. All those things need to come together. One hiccup and the whole chain is stopped. Also many of these components/products come from over seas!

Next again look at all the new shooters and the demand they have placed on the whole supply chain. Having started working at an outdoor range this year I see daily all these new and first time shooters showing up and having no thought of spending hours just blasting away with their new AR's, AK's and semi-auto pistols. One guy sat and put 6 boxes of 223/5.56 down range in just a couple hours. then asked where he could get more! Another showed up at the 200 yard range with his new AR with a red dot sight. I watched as he put 40 rounds down range and hit paper exactly 5 times and then asked what he was doing wrong. I told him he should go back to the 50! Then there was another new owner AR shooter with another red dot sight. Myself and another shooter watched as this guy fired at a 200 yard target and but 15 rounds into the 4th overhead baffle. Again never hit paper.

Then there is the story from my boss who went to help this aged couple with their new semi-auto pistol. her hands were so weak she needed both hands to squeeze the trigger. Even then the shots were passing over the top of the target.

As a public range that sells range time and ammunition as of yesterday we could not find any 9mm anywhere. The pro shop was already selling 9mm ammo for $27.00 a box with a limit of 1! The manager was considering increasing to $30.00.. Not to price gouge but to try and slow sales. He figures if we cannot get and supply 9mm ammo to our customers that we will then loose 35/40% of our daily business.

The manager at out daily briefing yesterday related he was able to find one supplier for 9mm and they were charging 80 cents per round! And that would be before shipping costs or any mark-up for our resale.