stiletto raggio
Member
I found this to be very informative. I am posting on all the boards I am a member of. This is NOT my original work, but a pirated post from the USCCA newsletter.
Understanding the Ammo Shortage
by Mark Avery
USCCA Forum Moderator aka "Desert Lion"
People are stocking up, whether you want to call it panic, hoarding, fear, or simply preparation for the unknown. There are also many new gun owners. Ammunition manufacturers did not anticipate the popularity increase of "mouse guns" like the Ruger LCP and did not shift production to make more .380 Auto than usual.
No manufacturer is doing anything with ammunition serialization except fighting it by educating legislators on the manufacturing issues which make it completely impossible to implement.
There has been a shortage of the base metals. Look at these three price charts:
***See attachment.***
I can't control the period of each, and they don't match, but they're all in US dollars per pound. The time windows on these charts also float, so if you're reading this months after it was posted, you might not see the same charts described. Copper was up from Feb 06 thru Jul 08, but is now back down to less than half of what it was. Tin (used in both brass and bullet lead) had a spike for a shorter period of time and is also back down to less than half of its peak. Lead prices went up more than either of the other two but is now back down to less than a third of its peak. All three are at or below the prices in 2006. The prices are based on supply and demand, so either the demand has dropped or supply has increased - either way, they aren't affecting either the price or availability of ammunition now more than they were in 2006. Most of the manufacturers make their own propellant and primers. I'm not aware of any shortages in raw materials for those.
Yes, military has must-fill contracts with some manufacturers, but most of theirs comes from the Lake City plant run by Federal Premium. There are other sources as well, but that accounts for the bulk of their supply. Law Enforcement also gets priority, accounting for a major portion of the remaining production. However, law enforcement has also shifted to using more tactical carbines (M-16s) and is having to conduct initial qualification training for officers who have always used handguns and shotguns only. This accounts for a portion of the .223 Remington/5.56 NATO ammunition shortage and price hike.
There is also less surplus ammo being dumped on the market because a higher percentage of the new production is needed to replenish that being used. Normally, the military keeps purchasing as required by their contracts, even when they no longer need it, so the production capacity stays in operation. When the warehouses fill, the oldest ammo is sold as surplus and the new ammo takes its place. There is less of that old ammo available now. As more of the combat operations shift to Iraqi and Afghani forces, our stockpiles of surplus 5.56 NATO, 9x19, and .45 ACP will likely increase and the price will drop to something over the cost of the metals but much less than now. Many police departments are also switching to .40 S&W for handguns which will reduce their demand for 9x19. When the military stocks are replenished, there could be a huge flood of that caliber into the surplus market.
I would also like to get straight inside answers from the ammunition manufacturers. My guess is that the main reason for the shortage is increased demand. Increasing production capacity requires more than just additional raw materials. The plants are designed to run efficiently with only a small amount of unused capacity. If demand jumps dramatically, there's only so much they can do to increase output without major capital investment in new facilities. Those are both very expensive and take a long time to put in place. If the manufacturers believe this to be a temporary spike in demand which will drop off after people have what they think they need, there is no return on an investment in new capacity - by the time it's in place, it will be no longer needed. That would be a great way to drive up the price of ammo or put a manufacturer into bankruptcy. When the demand drops off, or if it never does, the manufacturers will add capacity to meet the new steady state demand with some surge production capacity. Some have reportedly already started the process.
But that's just my take on it - I don't have any special inside info besides having worked in the military logistics community for about a quarter of my career. Time will tell if any of it proves accurate.
And "normal" is just a setting on the dryer...
*************
Understanding the Ammo Shortage
by Mark Avery
USCCA Forum Moderator aka "Desert Lion"
People are stocking up, whether you want to call it panic, hoarding, fear, or simply preparation for the unknown. There are also many new gun owners. Ammunition manufacturers did not anticipate the popularity increase of "mouse guns" like the Ruger LCP and did not shift production to make more .380 Auto than usual.
No manufacturer is doing anything with ammunition serialization except fighting it by educating legislators on the manufacturing issues which make it completely impossible to implement.
There has been a shortage of the base metals. Look at these three price charts:
***See attachment.***
I can't control the period of each, and they don't match, but they're all in US dollars per pound. The time windows on these charts also float, so if you're reading this months after it was posted, you might not see the same charts described. Copper was up from Feb 06 thru Jul 08, but is now back down to less than half of what it was. Tin (used in both brass and bullet lead) had a spike for a shorter period of time and is also back down to less than half of its peak. Lead prices went up more than either of the other two but is now back down to less than a third of its peak. All three are at or below the prices in 2006. The prices are based on supply and demand, so either the demand has dropped or supply has increased - either way, they aren't affecting either the price or availability of ammunition now more than they were in 2006. Most of the manufacturers make their own propellant and primers. I'm not aware of any shortages in raw materials for those.
Yes, military has must-fill contracts with some manufacturers, but most of theirs comes from the Lake City plant run by Federal Premium. There are other sources as well, but that accounts for the bulk of their supply. Law Enforcement also gets priority, accounting for a major portion of the remaining production. However, law enforcement has also shifted to using more tactical carbines (M-16s) and is having to conduct initial qualification training for officers who have always used handguns and shotguns only. This accounts for a portion of the .223 Remington/5.56 NATO ammunition shortage and price hike.
There is also less surplus ammo being dumped on the market because a higher percentage of the new production is needed to replenish that being used. Normally, the military keeps purchasing as required by their contracts, even when they no longer need it, so the production capacity stays in operation. When the warehouses fill, the oldest ammo is sold as surplus and the new ammo takes its place. There is less of that old ammo available now. As more of the combat operations shift to Iraqi and Afghani forces, our stockpiles of surplus 5.56 NATO, 9x19, and .45 ACP will likely increase and the price will drop to something over the cost of the metals but much less than now. Many police departments are also switching to .40 S&W for handguns which will reduce their demand for 9x19. When the military stocks are replenished, there could be a huge flood of that caliber into the surplus market.
I would also like to get straight inside answers from the ammunition manufacturers. My guess is that the main reason for the shortage is increased demand. Increasing production capacity requires more than just additional raw materials. The plants are designed to run efficiently with only a small amount of unused capacity. If demand jumps dramatically, there's only so much they can do to increase output without major capital investment in new facilities. Those are both very expensive and take a long time to put in place. If the manufacturers believe this to be a temporary spike in demand which will drop off after people have what they think they need, there is no return on an investment in new capacity - by the time it's in place, it will be no longer needed. That would be a great way to drive up the price of ammo or put a manufacturer into bankruptcy. When the demand drops off, or if it never does, the manufacturers will add capacity to meet the new steady state demand with some surge production capacity. Some have reportedly already started the process.
But that's just my take on it - I don't have any special inside info besides having worked in the military logistics community for about a quarter of my career. Time will tell if any of it proves accurate.
And "normal" is just a setting on the dryer...
*************
