Ridiculous Lead Time Quotes Following Panic Buying?

[Kynoch]

I'm having through understanding the 8-12+ month lead times some arms makers (particularly AR variant makers) are now advertising/quoting as the panic buying continues. 8-12+ months? Really? Why?

When the Newtown Massacre took place, it created an avalanche of buying. On many models (ARs, AKs, etc.) store inventories were quickly stripped. I'm sure that this was quickly followed by a stripping of the distributor network (where one even exists) and any finished goods inventory maintained by the different manufacturers.

OK, so the pipeline is stripped and the demand is still big but why the tremendously long quoted/advertised lead times within a week of the massacre? I can only think of two reasons. First, is there a bottleneck somewhere in the system that was mitigated in the past to some degree by excess inventory and now that inventory is gone?

The only other thing I can think of is that manufacturers continued to actually book orders while keeping output constant (which would also wonder about) that necessarily lengthened lead times. I wonder if these are actually booked orders or simply demand forecasts from the big customers? If they are actual bookings are they subject to de-booking when the panic buying ends?

Something is simply not adding up to me right now.

 

[Bubbles]

Even before the massacre there were already shortages and 2-3 month backorders on certain items thanks to 0bama's re-election. The subsequent demand surge would normally have petered out after a few weeks, except certain politicians keep running their mouths and spooking the herd.

 

[Kynoch]

Even before the massacre there were already shortages and 2-3 month backorders on certain items thanks to 0bama's re-election. The subsequent demand surge would normally have petered out after a few weeks, except certain politicians keep running their mouths and spooking the herd.

There were backorders with some manufacturers on some models. Even if there was already a 3 month blacklog (which means there weren't any such goods on the shelves anyway), it doesn't explain the 8-12 month lead times that are now being advertised.

 

[philobeddoe]

There were backorders with some manufacturers on some models. Even if there was already a 3 month blacklog (which means there weren't any such goods on the shelves anyway), it doesn't explain the 8-12 month lead times that are now being advertised.

Sure it does.
If everybody went to the same restaurant one evening to eat blintzes, there'd be chaos.
Every gun shop is out of inventory, same for online vendors, so everyone is ordering restock in quantity at the same time. Sure someone will get restock before eight to twelve months, but who's going to make a promise when everyone is hustling and there's so much uncertainty? The chaos at the retail level moves up the supply chain all the way to the manufacturers. Think they're not all dealing with the same craziness we see on our side of the counter?
The lead time makes sense.
Respectfully, my two cents.

 

[Double Naught Spy]

Sure it does.

+1

You don't think the manufacturers are intentionally slowing down the work during a period of peak sales, do you, trying to scare away customers such that they won't order if it takes too long? That would be silly.

They have simply figured out that given the current number of orders that they have and their current rates of production and being able to get supplies, their best estimates for completing orders is that far out.

If they tell customers they can have their products in 3 months and can't deliver for 8, it makes the customers really mad.

 

[larryh1108]

Agree. It's better to say 8-12 months and deliver in 4 months than saying 3 months and it takes 8 months. This just takes away the anger we saw in 08 when we went thru the same thing.

 

[HoosierQ]

Frankly I wouldn't be too surprised if some companies are holding down production here today simply because if this crap seriously goes south these manufacturers don't want a lot of stock they can't sell.

I seriously doubt, but of course could be wrong, that Magpul has 3-shifts and Sundays running making 30-round Pmags if they'll be illegal to sell at the end of the week...know what I mean?

 

[Skribs]

Makes sense, Hoosier. Although they may realize that if magazines are limited to 10 (and they are grandfathered in, not this NY crap), people with 30-rounders will not buy magazines for a very long time, meaning they should get 30-rounders out now.

Most of these laws would make stuff made before the law passed legal so as not to step on the toes of manufacturers.

 

[Killian]

Most places that make gun accessories are tiny. Very few of them are big, in terms of either production capability or employees. Looking up a company review on Magpul says they have an estimated 25 employees. 5 of those are either telephone secretaries, managers and janitors. So 20 employees to pump out how ever many mags are in demand right now? In a building the size of a McDonalds?

Edit: Excuse me. 10 to 19 employees. http://www.manta.com/c/mm2ssms/magpul-industries-corp

 

[Avenger29]

I seriously doubt, but of course could be wrong, that Magpul has 3-shifts and Sundays running making 30-round Pmags if they'll be illegal to sell at the end of the week...know what I mean?

I garuntee you they are doing the max production they can.

Also remember that they have to have the raw materials on hand to make the stuff. If they only had enough in stock to meet normal demands plus a bit extra, then when they run out of their material stock then they are going to need some more and that may take some time to get it from their suppliers.

A lot of people take the simplistic notion of a manufactorer can just flip a switch and increase production, and it's simply not so. A HUGE amount of factors involved that we don't normally even think about.

 

[Kynoch]

Sure it does.
If everybody went to the same restaurant one evening to eat blintzes, there'd be chaos.

Yes there would. But it wouldn't take a week or month for them to recover.

Every gun shop is out of inventory, same for online vendors, so everyone is ordering restock in quantity at the same time. Sure someone will get restock before eight to twelve months, but who's going to make a promise when everyone is hustling and there's so much uncertainty?

I already covered the supply chain being stripped-out. That doesn't explain 8-12+ month lead times that some are advertising/quoting.

The chaos at the retail level moves up the supply chain all the way to the manufacturers. Think they're not all dealing with the same craziness we see on our side of the counter?
The lead time makes sense.
Respectfully, my two cents.

No no way does it explain the 8-12 month lead times.

This all makes little sense...

 

[Kynoch]

Agree. It's better to say 8-12 months and deliver in 4 months than saying 3 months and it takes 8 months. This just takes away the anger we saw in 08 when we went thru the same thing.

OK, so they are not telling the truth? Yes, that is possible. They might be lying. Are they do that to fan the flames of buying?

 

[Kynoch]

I garuntee you they are doing the max production they can.

Also remember that they have to have the raw materials on hand to make the stuff. If they only had enough in stock to meet normal demands plus a bit extra, then when they run out of their material stock then they are going to need some more and that may take some time to get it from their suppliers.

A lot of people take the simplistic notion of a manufactorer can just flip a switch and increase production, and it's simply not so. A HUGE amount of factors involved that we don't normally even think about.

I suspect most are running flat-out too. It's folly to think they wouldn't have time to strip-out their work-in-progress and finished goods inventory (if they had any) before any bans actually took effect.

Manufacturers (I am one) can most certainly "flip a switch" to increase production to an extent depending on the product and process.

I don't see a huge issue with Magpull getting more resin from Polymerland or metal hardware from their existing suppliers. I also don't see a huge problem with increasing final assembly.

Then again Magpul isn't quoting ridiculous lead times either.

 

[Kynoch]

Most places that make gun accessories are tiny. Very few of them are big, in terms of either production capability or employees. Looking up a company review on Magpul says they have an estimated 25 employees. 5 of those are either telephone secretaries, managers and janitors. So 20 employees to pump out how ever many mags are in demand right now? In a building the size of a McDonalds?

Edit: Excuse me. 10 to 19 employees. http://www.manta.com/c/mm2ssms/magpul-industries-corp

That's a very good point. There might not really be that great of capacity to begin with in small arms manufacturing in the USA.

Ford or Toyota wouldn't introduce a hot new model without having substantial production capabilities dedicated. If sales went hyper-nuts they would move very very quickly to add even more capacity.

I seriously doubt Toyota would ever say "demand for our products is so strong that we aren't taking any additional orders" as Ruger has done for the last several months.

Thanks for your comments. It does lend some insight.

 

[Kynoch]

Frankly I wouldn't be too surprised if some companies are holding down production here today simply because if this crap seriously goes south these manufacturers don't want a lot of stock they can't sell.

I seriously doubt, but of course could be wrong, that Magpul has 3-shifts and Sundays running making 30-round Pmags if they'll be illegal to sell at the end of the week...know what I mean?

C'mon...

Just how much work-in-progress do you think Magpul would have on 30 round PMags even if they were running balls-out? I would hope it doesn't take them more than a few days to mold, assemble and package and ship. If such mags became illegal there would be plenty of time to sell what's in progress.

 

[Teachu2]

There were backorders with some manufacturers on some models. Even if there was already a 3 month blacklog (which means there weren't any such goods on the shelves anyway), it doesn't explain the 8-12 month lead times that are now being advertised.

If we can produce 1000 units a month, and have orders on hand for 10,000 units, the lead time on today's orders is 11 months....

 

[wow6599]

Stag said they are at 2 years now......

 

[Kynoch]

If we can produce 1000 units a month, and have orders on hand for 10,000 units, the lead time on today's orders is 11 months....

First, production capacity shouldn't be fixed in most cases.

But do you really think that those firms advertising 8-12+ month lead times following the Newtown Massacred actually booked 6-12 months worth of orders in a week? I don't. Not unless their production capacity is minuscule to begin with.

 

[Kynoch]

Stag said they are at 2 years now......

That makes no sense at all. There has to be a reason(s.) Either a bottleneck from a critical supplier, minuscule production capacity to begin with or something else.

If Stag has actually booked orders out for two years I would suggest that's not the best thing they could do. Advertising a 2 year lead time and turning potential buyers off WHILE there are major changes about to take place makes little business sense. Turning-off potential customers would be especially problematic if the panic ended and orders began getting de-booked.

There is another huge variable. If demand started to build like this for other durable consumer goods (say there was a huge run on portable drill motors), other companies would get into the business and quick. I don't see too many capable and well-funded manufacturers wanting to get into the gun business, particularly in today's climate.

 

[Teachu2]

Most manufacturers recognize the temporary nature of the panic, as well as the uncertain future political climate. They would be foolish to invest capital in expanding production and training staff, just to have demand fall in a short time. Banks are probably not lining up to loan money to expand firearms/ammo businesses, as well.

Of course, the real question is "Why didn't I see this coming and buy a lot of stuff LAST year?"

 

[larryh1108]

Of course, the real question is "Why didn't I see this coming and buy a lot of stuff LAST year?"

There were those who did prepare with the election coming. Of course, no one could see the tragedy in CT, which spurred this to the frenzy we see now.

Obama, Bloomberg, Feinstein, et al, used this trajedy to further their personal agendas. I'm sure they were all mortified at the tragedy but within minutes they saw the window that opened for them to force their dream down our throats. I doubt it will materialize nationally but states like NY and other copy cats are really pushing the limit of our rights. No, they have far exceeded their rights granted by their positions. They need to be held accountable with personal law suits and restitution to those affected by their illegal actions.

 

[Ky Larry]

Ford has factory space, trained people, and $$$ that small companies don't have. If they need 20 new CNC machines and the trained people to run them, they can afford it.Stag Arms pockets aren't nearly that deep. If GM orders a million tons of steel and Lewis Engineering orders 10 tons of steel from the same manufactrurer, guess whose order gets filled first.

Also, don't forget, this is the cost of sending our manufacturing base to Mexico and China.If you listen, you can still hear that giant sucking sound that Ross Perot talked about.

 

[Kynoch]

Most manufacturers recognize the temporary nature of the panic, as well as the uncertain future political climate. They would be foolish to invest capital in expanding production and training staff, just to have demand fall in a short time. Banks are probably not lining up to loan money to expand firearms/ammo businesses, as well.

Of course, the real question is "Why didn't I see this coming and buy a lot of stuff LAST year?"

You honestly don't know how much capital would be required. Many AR builders are little more than assembly houses. There is very little capital tooling required if they can get parts.

There is also idle machine time in contract jobbing machine shops waiting for work.

I still don't see the reason for the ridiculous lead times being quoted.

 

[Kynoch]

Ford has factory space, trained people, and $$$ that small companies don't have. If they need 20 new CNC machines and the trained people to run them, they can afford it.Stag Arms pockets aren't nearly that deep. If GM orders a million tons of steel and Lewis Engineering orders 10 tons of steel from the same manufactrurer, guess whose order gets filled first.

Also, don't forget, this is the cost of sending our manufacturing base to Mexico and China.If you listen, you can still hear that giant sucking sound that Ross Perot talked about.

So the gun makers simply don't have the resources to respond? I'm not sure that's the case at all. I don't think many AR builders are buying "20 new CNC machines." At most they would be buying more machine time at existing general CNC machine shops who are already seeking work.

I also don't think Lewis is having any trouble buying raw stock -- not that they buy 10 tons at a time.

There are still plenty of contract machine shops, molders and forges looking for work in this good old USofA. Unless there is a specific bottleneck (ie. receiver forgings?) I don't understand the ridiculous lead times.

 

[akodo]

Frankly I wouldn't be too surprised if some companies are holding down production here today simply because if this crap seriously goes south these manufacturers don't want a lot of stock they can't sell.

I seriously doubt, but of course could be wrong, that Magpul has 3-shifts and Sundays running making 30-round Pmags if they'll be illegal to sell at the end of the week...know what I mean?

under that logic, magpul should be making basically zero magazines if they fear what they make will be made illegal

It doesn't make sense. Making as many as they can until it becomes illegal to sell them makes sense. Let's say worst comes to worst and old mags aren't grandfathered in causing magpul to have giant inventory, they could still sell to any military in NATO at least at the financial break even point. With very little risk and potentially strong profits, I don't see them purposely dragging their feet.