This is another installment from our friend Gerry over at LITGM who is in the “front lines” of the gun rights issue working for a major retailer.
It is becoming all too weary for me to tell customers “no”. As a major outdoor equipment retailer it must be frustrating to know how a great sales period that is usually slow could have been even greater if they had the product to sell. That said, our store and the entire chain is doing very well. Turkey season is approaching and all the necessary items are being bought at a brisk rate. Now it’s fishing’s turn and yesterday the customers who are fishermen came in for a special sales event. They were all buying new tackle in anticipation of the season.
At work the phone doesn’t stop beeping so we started playing a new game. Between us we call out a caliber we each predict that will be requested by the caller whenever the phone beeps. I usually go with .22. Paul likes 9mm while Don prefers 5.56 or .223. “Hello, hunting department, how may I help you?” is soon followed by a “no sir, we are all out of 9mm.” Paul quickly lets out a “woo-hoo I won!” No bets, just fun. Breaks the monotony of constantly saying no.
Not much new to report from the firearm front. There is no retreat, more of a cease fire mode, awaiting replenishment from the supply line. AR’s come in small numbers and are quickly snapped up. Same holds true for ammo. Each morning the same dozen or individuals so show up looking for their favorite calibers. These are the battle hardened. They know they’re unlikely to find what they want but they still arrive to look. Maybe, and occasionally when they show up we actually have meager replenishment for them. Then it’s Katy bar the door – soon it’s gone. It goes into basements, garages and some to the great aftermarket to be resold. My bet is not much is being used at the range right now. When asked how soon ammunition will return to full supply I repeat the same answer trying my best to appear positive instead of weary. When the entire nation’s supply of consumer ammunition is sold within three weeks it takes a long time for manufacturers to recover. That is the simple truth.
What I witnessed last week was astonishing. 62 cases of PMC .233 55 gr. FMJ disappeared within 36 hours. That is 62,000 rounds (1000 per case) packaged in boxes of 20 and with a limit of 10 boxes per customer sold out in our one store alone. The first wave of regulars came in and while packing their baskets were simultaneously calling friends to alert them to their find. About an hour or two later that larger second wave arrived. Late in the day the after work crowd came in to clean up the leftovers.
They tell me of their own conspiracy theories or those they discover on the internets. The one most interesting is that the government is intentionally buying enough ammo with the intent of keeping the civilian supply low. So I went to a close acquaintance who is with the FBI. I asked him if what I hear about government bureaus such as NOAA and the DCFS buying excessive quantities of ammunition is true and why they would need so much, as many customers have claimed.
He explained that all government bureaus have their own agents, investigators and security forces. All need to be armed and all need regular firearm training. Including the Armed Forces the government is the #1 buyer of ammunition and each year they buy more than the previous. Federal and local government law enforcement come first in the supply chain and the civilian supply comes last, as always. The G has not ordered any more ammo than they planned to purchase prior to recent events no matter what Alex Jones and other attention-seekers will have us believe. All they are looking for is a reason for the current shortages and the G is easy to blame especially for conspiracy nuts. He went on to explain that his bureau’s practice range vault of ammunition is now at half capacity and that is rare.
I have no reason to doubt his explanation.
After searching for nefarious reasons for the shortages out of curiosity along with speaking with many I respect I am now convinced the current condition has simply been caused by consumer supply and demand – nothing more. The free market can be our friend and at times it can be our enemy.
While searching for info here’s something that caught my attention. The following is said to have come from the Facebook page of a small supplier called Valley Guns in West Virginia. Representatives of Valley Guns were said to have attended a manufacturers meeting and gave this report. I could not find and/or verify any of this information.
For what it’s worth:
I could find nothing to backup this information. Also noted is the lack of a report from Winchester, PMC, Magtech, CCI, Federal and many other ammunition manufacturers on their production other than primers. Also absent are reports from Hornady, RCBS, Lee, Dillon and makers of reloading dies all of which are in very short supply. All in all it appears this shortage will last more than a few months.
In other news, Magpul, a company with HQ in Boulder CO (of all places) and manufacturers of the finest hi-cap mags along with other high quality accoutrements and furniture for the AR platform, is threatening to move out of Colorado if that state enacts proposed firearm bans. One individual I work with has sent PMAGS to both his Marine sons currently serving in Berzerkistan and the boys were always asking him to send more before the shortage. PMAG’s surpass the performance of steel MIL-SPEC mags issued by the Corps and are much more appreciated by active duty Marines than sending a Chicago Pizza, according to my friend John.
I like Magpul’s style. Here is one of their recent ads with early 50’s cold war imagery. Well done.
LOCALLY
Don’t know about you but that sure sounds like a rowdy bunch of criminals to me.
My son told me about a deal on Garand M-1s at a nearby store. I’m not in the market but have been thinking about a 1911 .45 pistol. I brought my Walther PPK to Tucson this weekend to see if my daughter wants to shoot it and keep it. I won’t give it to her if she doesn’t learn how to use it. The ammo, .380, seems to be in reasonable supply here.
LOL. Well as long as there is enough 9x39mm I’m a happy camper.
There has been a run on ammunition since…Obama took office. You’d think by now production would have been stepped up to meet demand – production either at home or met by overseas production.
I don’t even go to the range anymore when ammunition procurement is so iffy.
all of this talk of revolution suddenly doesn’t seem so crazy, it seems almost mandatory – Reynolds.
Come the revolution, I want to be well-armed.
I think one of the issues, that’ simportant, is that agencoes like NOAA have armed security forces at all. Some of these agencies not only have armed security they have tactical SWAT teams. I read that the Univ. of Calif. at Berkley even has it’s own SWAT team.
Is it really necessary to have that many heavily armed and funded federal bueracrats to enforce technical regulations. Seems like a bunch of accountants and lawyers might be more productive and less expensive. They could still wear BDU’s if they feel the need.
Just a little nit, Magpul doesn’t make hi-capacity magazines. The standard size magazine for AR15 style rifles is 30 rounds.
Big Cat Says:
March 5th, 2013 at 7:38 am
Among my favorites of the current regime imitating the German tendency to have armed paramilitary units all over the government is the National Weather Service SWAT team. I assume that they plan on storming tornado shelters. And our small mountain town Social Security office now has armed guards, bulletproof glass barriers, and you have to be buzzed in. Can’t be too cautious when dealing with the elderly and disabled. Vicious lot that we are.
Then there is the recent purchase contract signed by Homeland Security for 2700 Mine Resistant Ambush Protected [MRAP] Infantry Fighting Vehicles. Which is more of them than we deployed to Iraq at the height of the insurgency there. As in enough to equip several divisions of the Army and Marines in a full scale war.
I have some friends who run a restaurant in town. They have a son-in-law who works for DHS. Apparently he is a gun-worshipping, attack trained, Barney Fife. At family gatherings, before he was banned; he was quite explicit that orders from above outweigh the Constitution. Apparently that is what he was taught at their Academy. Long ago when I first pinned on a Peace Officer badge, we were taught a different set of priorities when we swore the Oath.
Subotai Bahadur
Let them take the field then.
Dismounting from an MRAP is problematic.
It’s for mines. Not war.
}}} The free market can be our friend and at times it can be our enemy.
Why would this be “our enemy” in any way? It’s how the system works — shortages are caused by underestimates of demand, and, duh, the threat of government imposed limits has substantially increased demand. Hell, from his own commentary, it’s not a matter of a true free market, as his company is (not inappropriately, but not within the “free market” in its purest form) limiting purchases somewhat.
The free market is what follows — that demand shortage has caused the suppliers to ramp up production, because the shortages are a sign that there needs to be more of it.
What you are seeing here is what it means to be a marginal customer in a market where demand has increased faster than supply. This happens in any market in this environment – large customers with formal contracts get supplied to the letter of the contract, long term customers without contracts get something close to what they have bought in the past and anyone else gets whatever is left over as long as they are willing to pay thru the nose for it.
For ammunition, the feds abd local LE are going to have the contracts, since their demand is relatively large and predictable. Established retailers are going to be the long term customers. The suppliers need them long term, so they will do what they can to meet orders, but they HAVE to supply their contracts and the contracts specify price so there is nothing they can do to try and discourage LE from buying to the contracts. Only existing customers can get anything.
Even adding shifts to existing facilities takes time (hiring/training), and while I don’t know the firearms industry I would expect it to take at least a year to bring on line new equipment/production lines (generally you have some debottlenecking opportunities where you buy one piece of equipment to loosen up a constraint, these you can do faster than a new plant or line). But until this happens, you squeeze out all the inventory you can and everyone ends up hand to mouth until either demand drops off or enough capacity comes on line.
The maddening thing for everyone is that demand only has to outstrip supply by a couple of % for this to happen. This is because so much of the volume is contracted, and thus outside the feedback loop of market pricing. Clearing the market by raising prices would require massive increases on the fraction of volume not under contract, which most suppliers won’t do because that really poisons relationships that you’ll need once the market comes back into balance. It’s not a simple decision to invest in capacity – you don’t really know how much extra supply is really needed or even if the demand will sustain itself, so by the time you bring the new capacity on-line the market may be oversupplied and then you’ll end up running the new equipment only 1 shift and not making enough to cover cost of capital. And that assumes that your suppliers can handle the extra demand – if they can’t then you have to wait for them to invest in their capacity. (I saw this in chemicals in the years before the housing bubble collapsed – it was even worse for us, because economies of scale mean any cost-effective production train will add several % to the overall supply on a project with 2-3 year lead times, so if one company builds it will probably pay off, but if two do it almost certainly will not. Anybody’s contract that expired during this period saw big increases on the next one, but our largest customers were still buying for pennies over cost (one account, which had a contract that permitted it, was actually reselling a chunk of what we supplied them). But within about 18 months the market started to soften (one competitor brought a plant out of moth-balls) and a year after that the housing market collapsed, demand dropped 10% and the whole thing was moot).
In short – I’m sure the ammunition companies are squeezing out everything they can from their plants right now, looking for quick ways to get a little more and trying to decide if the current shortages reflect a real demand increase that can support investment. The simple stuff has been done, the opportunity lists are being worked on now and the executives are thinking about investing. At some point in the process, supply will finally catch up.
Phwest’s got it. Another industry to which his explanation applies is energy, except there the producers’ decision is more whether to invest billions in new technologies than millions in new production facilities.