For about the last 12 months, hunters, shooters, and everyone involved with or familiar with the firearms industry has noted a dramatic spike in firearm sales, along with a corresponding rise in ammunition sales. Coinciding with these spikes has been an acute shortage of certain firearms and almost all ammunition. We interviewed Cheaper Than Dirt! CEO Michael Tenny about the shortages and to see what insights into the ammunition industry we could glean. One thing is immediately clear: the ammunition shortage did indeed begin around the time of the presidential campaign and subsequent election of President Obama. During this time, the industry has seen unprecedented volumes of sales in both firearms and ammunition.
Tenny commented on the situation saying “With the change in the political landscape, many citizens decided to buy firearms and ammunition before any additional restrictions on ownership or purchasing were enacted. Rumors about increased restriction and taxes on these items drove many to stock up on firearms and ammunition.” The increased purchasing has centered on high capacity firearms and magazines that had been previously affected by the Assault Weapon Ban, many of these used the same calibers of ammunition as the military and police. Tenny had this to say about the shortages of popular calibers of ammunition: “Not only do you have the civilian sales, but law enforcement and the military use many of the same calibers of ammunition. For example, the popular AR-15 rifle uses the same round as the military M16. Many popular handguns use the same 9mm ammunition as the military’s M9 pistol.” The fact that less popular calibers of ammunition would be affected has perplexed some consumers. In some cases, such as with .30 Carbine, the ammunition was being bought up by owners of firearms chambered in that caliber who were going along with the rush and purchasing as much ammunition as they could afford. Some of this was prompted by fears that if firearms could not be regulated, that the new administration would seek to regulate ammunition instead in an attempt to make an end-run around the 2nd amendment.
Many retailers only order ammunition once a year. The recent rush to stock up on ammunition caught nearly everyone off guard. Retailers know from past experience how much ammunition they will sell in what calibers. When the rush to buy ammunition wiped out their shelves, many attempted to order more, placing an enormous demand on ammunition manufacturers. In response to demand from retailers, manufacturers started working 24 hours a day 7 days a week to keep up with demand.
The way in which ammunition manufacturing production lines are set up added to the shortage of less common calibers. A single ammunition production line may be able to produce 3 or 4 different cartridges. For example, one machine may be able to pour out 9mm, .380, and 9×18 Makarov. Like retailers, ammunition manufacturers know what the average demand for a given caliber will be over the course of a year, and they allocate their production lines different lengths of time to produce each caliber. For example, that 9mm line may spend January through July producing 9mm, August through November making .380, and December making 9×18 Makarov. Seeing panicked retailers begging for the more common 9mm (which, being the most common, sold out faster than the .380 and 9×18 when the rush began) manufacturers may have just kept on producing the 9mm through August and September and so on until the orders were met. This meant .380 would not have been manufactured at all that year, and all of the retailers who ordered that caliber were left with their orders unfilled.
Faced with the fact that certain calibers simply were not going to be shipped any time soon, retailers were faced with a dilemma: increase prices to slow down sales, or sell out of the ammunition that they had and have empty shelves and nothing to sell. Not wanting to be faced with ongoing business expenses and no inventory to sell, retailers began scrambling to find ammunition from any source. Tenny explains it like this: “The increase in demand has many companies similar to Cheaper Than Dirt searching for ammunition to supply their customers, and each is willing to pay more to have stock to sell. This drives the wholesale price up, and the retail customer sees the price increase too. The cost of the components that the manufacturers use to make the ammunition- brass, lead, copper, have also increased.” But why are component prices rising? It is a case of simple supply and demand, compounded by a weaker dollar and rising metal prices.
Compounding the problems that manufacturers were having, the reloading industry experienced an incredible surge in demand from reloaders. It was bad enough for manufacturers of primers, bullets, and other cartridge components when ammunition manufacturers went into overdrive trying to keep up with demand, but when one million reloaders all decided that they needed to stock up on an additional 2,000 primers all at the same time, it simply broke the system. In addition to the normal amount of reloading components they would normally buy, reloaders started ordering tens of thousands more primers and bullets. When combined with the increase in demand for primers, brass, powder, and bullets from ammunition manufacturers this created a perfect storm for a shortage of components. What’s more, component manufacturers funneled almost all of the components they DID produce to the manufacturers, thereby exaggerating the acuteness of the shortage to consumers who reloaded their ammunition.
So, how long will the shortage last? Michael Tenny said “I don’t think demand will slow down to pre-election levels … ammunition sales have tapered down some from the peak around the election-inauguration period. Manufacturers are working at full capacity around the clock to meet the demand, but no one knows if supply will catch up to the demand any time soon.” Overall demand for ammunition has risen. Individuals who, prior to the election, did not feel the need to own a gun and practice with it are now new gun owners and add to the base level of ammunition consumption. While stockpiling has slowed, it will take a while for manufacturers to catch up to current levels of consumption.
Tenny explains it thusly: “We’ve seen many first-time firearm owners discover they enjoy shooting, while the avid shooter is purchasing large quantities of ammunition to save money in case of the increased restrictions and taxes. Both are now competing for the same supply along with the military and law enforcement.”