Yosemite Sam":1lscbqrn said:
it just seems to me that if they were actually interested in this market they'd increase production.
Hi,
Let me toss out some random thoughts I've had over the years... not that I'm gonna be right on any of 'em, but they've kept me thinking.
Some 25 or more years ago, my brother and I were headed to a club skeet shoot, and we were talking about the fact there was a "shortage" of primers or powder and prices were going up way faster than they should. He was wondering out loud why they didn't step things up just as Sam did.
I made the off the cuff comment that I thought the American ammunition companies only stayed in business for the civilian market to give them something to do in between wars, when military contracts became Job One.
Today, we see a certain amount of that in play w/ respect to certain ammo. It might be a world wide problem, too: at the same time we couldn't get .223 or 5.56x45 ammo not so long ago, neither could we get 7.62x39 cuz our factories were feeding "coalition" demands, while somebody else's were providing for the various "bad guys" we've been involved w/ for a while.
So, if a plant can be kept occupied full time making military ammo, and has to let the civilian market lapse a little, I can see the bean counters telling the production managers "Let 'er rip" w/ the military ammo, and when that demand's satisfied they can get caught up w/ civilian demands. I'm sure the military contracts are more lucrative, too: even if the Army and Marines pay exactly what we might for the same round, there's an economy of scale involved in keeping the line set up for a single round and making kazillions of 'em versus making a couple million of one caliber, switching over for the next and so forth.
Right now, it looks like our factories have a big commitment to military ammo, w/ SOME overflow capacity for civilian ammo, but they're not looking to expand because they haven't a clue what the demand's gonna be once the "panic buying" settles down. And even if it's not "panic" buying, how much is being purchased right now just to "be prepared?" For example, I used to buy primers by the 100 at the LGS or maybe 1000 at the range, cuz I knew I could go back to the store the next week and get another 100 (or 1000), no problem. Today I'll try to buy several 1000 if possible, because I don't know what's gonna be on the shelf next week, next month or whenever. It's not that I'm loading more or shooting more, I'm just inventorying more, getting away from my former "just in time" mentality. The time will come that I have enough "stuff" I won't need to be buying for quite a while. I've never had an original thought in my life, so I know someone else out there's doing exactly the same. It doesn't take too many of us to overwhelm the system.
Then, if the words from Ruger management mean anything in the ammo biz, which I think they do (Ruger paid its first stock dividend in some time earlier this year, but mgmt's position in announcing it was "Don't expect this surge to last"), nobody wants to jump into a big expansion right now because of the fact that "panics" tend to blow over and the market rights itself. If I ran a plant, and looked at the guys who managed to get that 35k primers in another post, one important question would cross my mind: "When will they need more?" If the answer's not soon enough, I'm likely to be hesitant to expand when I might have to continue paying for that expansion in a down economy.
If the answer's next month, my plans will certainly be different than if the answer's sometime in a year and a half!
We also need to look at how big OUR demands are in the grand scheme of things. I mentioned in another post that Powder Valley's backordered some 50 million primers. That's a big enough number to keep most of us busy for a long time, but if the total production of primers in this country's measured in the BILLIONS, how big is our "need?"
I heard our Federal rep put something like this in perspective once as the trap shooters at our range were expressing their indignation at a proposal to drop one of their favorite Federal target rounds. The rep tried to explain that even though we shoot millions of them, it's not enough to attract the attention of the bean counters. As he put it, "We sell more shells for the first three hours of opening day of dove season than we sell trapshooters all year!" I got out my calculator later, and it appeared he could easily be spot on...
And finally, just how big are the ammo plants? Are they similar in size to the gun companies? I once read an article about S&W that said they had about 600 employees just a few years ago, and I believe Federal Cartridge has about 1000. It wasn't that long ago that Ruger was at around 1250. Even if they've all grown a bit since these numbers were valid for sure, these are NOT big companies! Look around you at other industries: after massive layoffs before the bankruptcy, GM was expected to lay off ANOTHER 20k in the b/k! I have a feeling our gun/ammo guys could fit their entire operations in the broom closets of many "big" industries...
I also have a feeling we're just gonna have to ride this one out and make do w/ what we have and can get for a while longer, because I think the mfrs are looking at forces we might not, and their decisions are more far reaching than our immediate wants and needs.
But don't get me wrong: I'd LOVE to see 'em ramp up the production of components, but if they're already running 24/7 at full capacity, I don't expect to see it happen except incrementally.
Let's hope I'm wrong on all my thoughts this time, eh?
Rick C
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