Why Ammo is in Short Supply.

[wildman]

A few weeks ago I ran into a news story about ammo from out west the link is posted below. One of the posts in the comment section caught my attention. I have posted it here for your consideration.

from www.grantcunningham.com:

Gun stores continue to be a never-ending source of hilarity. Walk into your local shooting emporium and ask why there is an ammo shortage, and you'll hear inane speculation coupled with a conspiracy theory or two. The reality is that the supply chain for ammunition is relatively inelastic, and is easily overwhelmed by a sudden jump in sales.

As one industry consultant has told me, ammunition demand over the years has been remarkably predictable. Ammunition wholesalers know (within a certain margin of error) how many units of each caliber they'll sell in the coming year, and approve purchase orders for the delivery of that amount of product during that year.

Ammo makers, too, know with fair certainty how much they're going to sell to the wholesalers during that period, and sign contracts for the purchase of sufficient components to produce those products. They don't typically keep large stores of components on hand, as standing inventory is expensive, so components are delivered on a "just in time" basis.

The suppliers of those components do the same thing with raw materials; again, ammunition is a stable business, which allows them to forecast with pretty good accuracy the stuff they need to make the components they sell. This pattern repeats itself on up the chain, all the way to the people who mine the stuff necessary to make a single cartridge.

Along comes a huge, sudden spike in demand. Retailers all over the country are suddenly swamped with ammunition purchases, and quickly call their suppliers to get more. The first few calls are rewarded with replacement stock, but soon the wholesaler's shelves are bare too - their entire year allotment of ammunition is gone in just a few days.

The wholesaler calls the maker, and the same thing happens: all of the suppliers are doubling (or more) orders to get their dealers restocked, and the manufacturer is quickly stripped of on-hand components as he tries to fill those orders.

The dealers are out, the wholesalers are out, and now the manufacturers are out. But it gets worse.

The makers of the priming compound, primer cups, brass, powder, jacket material, and lead are suddenly swamped with desperate pleas for more product, and they in turn contact the suppliers of the raw materials for more. The entire chain of supply is empty, and everyone has to wait while all of the raw materials are gathered. (I shouldn't have to tell you that those folks have other contracts to fill before they can get to the rush orders - they're not just waiting around for next year's order from the ammo companies!)

That all sounds simple, but it just isn't. As an example, smokeless powder may contain a huge variety of raw materials: Nitrocellulose, Nitroglycerin, Nitroguanidine, Dibutyl phthalate, Polyester adipate, Ethyl acetate, Diphenylamine, 2-Nitrodiphenylamine, 4-nitrodiphenylamine, N-nitrosodiphenylamine, N-methyl-p-nitroaniline, tin dioxide, bismuth trioxide, bismuth subcarbonate, bismuth nitrate, bismuth antimonide, Potassium nitrate, Potassium sulfate, Talc, Titanium dioxide, Graphite, and Calcium carbonate. Each of these has to be sourced from a supplier, ordered, received, then finally compounded into smokeless powder. Think that all happens overnight??

Once the raw materials are finally in hand, the work can start. Lead has to be formed into projectiles, copper into jackets, brass into casings; priming compound is made from lead azide and/or potassium perchlorate, then the mixture combined with metal cups to make primers (they have to be made, too); the aforementioned powder has to be made (a huge job in itself.)

Once those components are ready, they can be sent to the manufacturer, who puts together into a finished round, then packages them appropriately. (Oops - we forgot that boxes and trays that have to be made and printed. That takes time and materials!) They're then shipped to the wholesaler, who (finally!) can ship to the retailer.

This whole process takes time - lots of it. If demand is high enough (which it has been), even the emergency orders placed all the way to the producers of the raw products may not be sufficient, and shortages will continue. That's what we're seeing right now.

The supply chain is simply empty, all the way up to the people who mine the raw materials. It's going to take time to replace all the links in that chain, and it's not because of the war in Iraq/Afghanistan, The Joos, FEMA, the CIA, a secret agreement to implement gun control through ammo availability, or any other silly theory you may have heard. This is a textbook example of what happens when an inelastic supply chain, composed with scarce "just in time" inventories, meets insatiable demand. It's not sexy or intriguing, but that's the way it is.

You know what's scarier? Your food comes to you the same way. Imagine what would happen if..

http://www.oregonlive.com/news/index.ssf/2009/06/ammunition_hard_to_find_as_gun.html#post

[jimbtv]

O.K., that's all well and good...  but why can't I find any ammo? ...

Just kidding     

That's a pretty comprehensive tretise on the subject and I'd only add one more part to the supply chain.

Only a very foolish manufacturer would retool their facility for a one-time, flash-in-the-pan, run on product. This then leads back to reading the market and determining if the change in the marketplace that's driving the shortage is short or long-term.  Your guess is as good as mine.

In the current economic clime, most companies are holding off on cash outlays for new tooling so my guess is that the only thing that will induce a price and supply correction is a reduction in demand.

[Nickle]

O.K., that's all well and good...  but why can't I find any ammo? ...

Actually, YOU can, and locally at that. The prices won't be as cheap, and only centerfire is available. But it's there, or can be made for you.

[wildman]

On the supply side I think people are still buying everything they see whether they need it or not which keeps the shelves empty which then leads to more panic buying. Sales will slow down at some point. It is my understanding everyone in the supply chain is working as hard as they can.

jimbtv you make a good point about not tooling for this spike.

I just received 5k rounds of .22 from CMP their top of the line stuff delivered for 249.00. I have shot some and find it shoots very well through my CZ452. That is the way to go for .22 IMO takes a while but worth the wait.

[gunville]

Devil's advocate here...

I've been able to easily find 209's, shot, and 12Gauge powder - loaded shells of various types - as I've needed them - yet I have to believe SG sales have gone up like everything else - pretty much the best "home defense" weapon. I can't see this more elastic than other ammo.

I can find powder, and rifle bullets in many calibers, but primers have been next to impossible (though they seem to have eased some.)  In fact I stopped buying powder and bullets because without primers I don't need them - if this was a well planned supply chain as the article claims the other components would have diminished as well for the same reason.

[Mark D]

If you pick up the new issue of Backwoods Home Magazine, not only will you be treated to a terrific article about Appleseed, but Mas Ayoob has a six-pager on the Ammo shortage.

Brother

[asminuteman]

.

[Mark D]

I'm scared to hear the backlash...BUT..I know someone who works for Remington (UMC)...(I get some some for the employee discount) They tell me Factory warehouse is full....I believe in the panic purchaces, and the supply chain theory as well....but why would a warehouse be full if theres a shortage? High prices doesn't hurt the bottom line.
my 2 cents ken

If you know someone that works for those folks and they're telling you that the warehouse is full, please do me a favor...ask them to let loose with the 6.8 SPC because Brother needs some. 

[slim]

I can't wait til all these rich guys who went out and bought 10,000 rounds for $5,000 start to realize they didn't need all that ammo and now decide to sell it all in hopes of "recovering some of their loss." They're going to flood the market with all this "extra" ammo and before you know it, it'll be like pre-October '08 all over again!

I believe we're seeing ammo do the same thing gas did. It got super-inflated, then it went way down, then back up, then started to even out again. I bet we'll see cheap surplus again by this time next year.

The food thing is what scares me. People can scrape together gas money and the ammo thing is more of a hobby for most folks. But when you see food triple in price, you're going to wish you'd bought more of that expensive ammo!


..... and since this is a working forum - IMC will save you money on ammo!

[KingsMountain]

I can't wait til all these rich guys who went out and bought 10,000 rounds for $5,000 start to realize they didn't need all that ammo and now decide to sell it all in hopes of "recovering some of their loss." They're going to flood the market with all this "extra" ammo and before you know it, it'll be like pre-October '08 all over again!

I believe we're seeing ammo do the same thing gas did. It got super-inflated, then it went way down, then back up, then started to even out again. I bet we'll see cheap surplus again by this time next year.

The food thing is what scares me. People can scrape together gas money and the ammo thing is more of a hobby for most folks. But when you see food triple in price, you're going to wish you'd bought more of that expensive ammo!


..... and since this is a working forum - IMC will save you money on ammo!

I mostly agree, but my question about the surplus is where will it come from? From what I've been told by friends in South Africa, you won't see any South African surplus coming into this country, it's gone, literally. At the request of the UN, the ANC (ruling party in South Africa) blew up all of the surplus stockpiles of ammunition.

[slim]

It'll come from the rich guys' basements. It's there, right now, just gathering dust. I've heard market analysts advising folks to "invest" in ammo and rifles because they're the most profitable tangible assets at the moment. Gold, diamonds, even pork bellies are something to dump money into, but most of these "foul-weather investors" are going to realize in a few months their dollars are better spent on oil futures or uncut diamonds or something like that. Those tins of South African sitting in their basement aren't gathering any interest (except ours!) and don't look very good on paper.

Once they reassess their portfolios, we'll be seeing centerfires aplenty on our lines again. Til then, LTRs to the rescue! 

[jimbtv]

I broke down and bought 5k of CCI Standard Velocity for $269.00. It's more money than I'd like to pay but I look at it this way. I can't tell you the number of trips I've made to WalMart's, gun stores, and just about anywhere else I think I might find ammo. I am probably making a purchase in one out of ten stops and this is all taking up a lot of time and resources. I'm tired of driving all over creation trying to find 500 rounds of 22LR and coming up short every single time.

Like a gentleman at the Holderness, NH shoot a couple of months ago, I'll have a couple of extra boxes with me for someone else who finds themselves coming up short. He bailed me out of a fix and I hope to be able to do the same for someone else.

[Old Dog]

ammo in warehouses?  Why not?  A situation doesn't have to have a real cause to be real situation.

I lived in Texas during the first big oil shortage in the early 70's.  The newspapers there were reporting that there were tankers lying off the coast waiting to unload their crude oil because the refineries had full storage tanks of....gasoline.  Since they were not shipping gas, they couldn't run the refineries to empty the crude oil tanks so the tankers could not unload.  Were the newspapers reporting the truth?  Who knows.

The point here is that if it's important to you to have ammo, make sure you have enough, all the time.  Decide on what you need to have stored away, then you know what you have available for practice.

I've stopped shooting my M1A.  CMP 30.06 ammo is so much cheaper and the M1's are so much fun to shoot why burn up the .308 ammo. 

For the 10/22 and the AR15 conversion kits I've got plenty of ammo.  Only once have I checked at WalMart and found they had no bulk .22 ammo.  I'm not desperate for it so I won't pay what they're asking for the CCI ammo (evidently I'm not alone there as that was all they had left).

You'd be amazed how beneficial dry firing is, once you've got the mechanics of firing your rifle.  You don't have to put holes in paper to have a good practice session.

Learn to reload for your centerfires.  I'm about to start trying cast rifle bullets.  With the right rifle and the right load the results can be amazing.  Go to the castboolits forum and check it out.  Recently a guy at M14 Firing Line Public Forum reported winning rifle match with cast bullets.  He said his groups at 400 yds. were about 9" wide by 12" high.  That's 3 MOA at a fairly long range with cast bullets.  It may not be as simple as going to the store to buy your rifle ammo but it sure is cheaper.

[student]

I'm scared to hear the backlash...BUT..I know someone who works for Remington (UMC)...(I get some some for the employee discount) They tell me Factory warehouse is full....I believe in the panic purchaces, and the supply chain theory as well....but why would a warehouse be full if theres a shortage? High prices doesn't hurt the bottom line.
my 2 cents ken

I actually may have an answer to this.  I have been working with Remington all last semester.  The Marksmanship class I teach at ETSU used to use Remington .22 ammo.  I was having a terrible failure rate with their ammo.  Misfires and split cases were off the chart.  Using various rifles and handguns to include 14 Anschutz rifles.

They may have a butt load of the ammo that we identified as "bad".

Now back to Appleseed

[capnmac]

One other factor in this, and any other shipped good is in the fuel price to get it shipped.

If you go from one rate of shipping an item, to needing twice as many deliveries, the cost to have that product available for sale goes up since additional shipping will apply.  Which makes each sale point in the chain see an increase in price.  All the retail customer sees is the price on the shelf go up, and then accuses the retail seller of gouging or worse.  Yet the retailer may only be recovering what the additional fuel cost is costing the retailer for more delieveries; the wholesaler for more deliveries; the manufacturer for more deliveries.

Priced diesel lately?  Not cheap.  Ammunition has a greater weight than volume factor, so you need more trucks for more deliveries.  Quantity of trucks and drivers remainws finite.

When GD & ATK get up and running here soon, this will even out.  Will we see WWB 5.56 back down to $3-4 a box?  Dunno.  $11-12 cannot last that much longer.  I'm guessing that "popular" rounds will go through a huge glut, too, then we will start seeing calibers like .30carbine come back, too.

[gunville]

Old Dog - If you think ammo is expensive and hard to find - try primer!

Interesting that 7.62x54R is still so cheap compared to .308, and 5.45x39 compared to 7.62x39 or .223.

I think people are shooting less... buying more guns, but shooting less... myself, I shoot 95% 22LR these days, and try to conserve my 7.62x39 and .223.

Still, I've seen steel case Russian ammo comming down in price - both x39 and .223 - so maybe the bubble is begining to busting.

[fepowered]

Will we see WWB 5.56 back down to $3-4 a box?  Dunno.  $11-12 cannot last that much longer. 

WWB has been $6 long before Obama even got nominated.  It is currently $8 if you are getting the bulk packs at WalMart or $9 if you are watching many other stores.   I would not expect it to ever drop below $8 a box if the trends over the past 20 years of my buying 7.76x39 and .223 continue.  There are short term increases and long term price increases which we are feeling the effects of right now.

[Old Dog]

This place says they have S&B small rifle primers in stock (the other brands show out of stock, but not S&B).  Huh, same with the S&B large rifle primers.  Try it and see.  S&B makes good ammo.

http://www.sinclairintl.com/product/12737/Small-Rifle-Primers

http://www.sinclairintl.com/product/12738/Large-Rifle-Primers

They may not have them but it won't hurt to check if you need some.  Searching takes some time and effort (sort of like learning to shoot, or learning to instruct) and sometimes may not be successful. 

If you need'em I hope they still have some in stock for you to order.  Have a good one.

[gunville]

I can confirm sinclair does have them and they are shipping -

I ordered Small Rifless on Monday and they showed up today!

But I've been looking for 3 months, and at $33.90 it's the most I ever paid for primers.

My H4895 is almost out, so I'll probably switch to BLC(2) only because I can get it.  That will leave bullets in the critical path. (ideally only brass is in the critical path.)

Casting for .223 might be tricky though.

[P51]

The demand for ammo has skyrocketed since the Obama election. To dismiss the Iraq war and Afganistan front not being a factor would be a mistake. Before Obama was even a threat I watched ammo drastically increase in price. Prior to Iraq/Afganistan I bought cases of wolf .223 and 7.62.39 for about $129 for a case of 1000. Shortly after the onset of the before mentioned conflicts, ammo prices started their sharp upward climb in price. Like wildman stated there is only a finite amount of materials at any one time, which causes competition for those materials. The Obama anointing has just exacerbated the situation.
Just my $.02

[CetmeManNH]

Don't know about you folk, but I am buying case lots of 22lr for $170/5000.  Sure, $17 a brick is more than the $13.40 Wally World was charging for their bulk pack Federal Ammo, but how much are you really saving if you can't get any?  The week after the Pelham AS I picked up another case, since I sold four of the five cases I purchased prior to the shoot. 
Not wanting to incur your collective wrath(es), we NH instructors are saving up our rounds for the upcoming Life Free or Die festival, wherein we are running a novel AS experience; three or four targets, LTR use, and ammo, for whatever fee has been decided on.  We're figuring 64 shots per shooter, with a 15 person firing line, Friday and Saturday.  I think our current guess is 26K rounds, provided by us.  So I am not trying to be selfish purchasing 25K rounds in about five days, just prepared.
But anyone in the Central NH region needful of ammo, let me know, and I'll fill you in on a local goldmine.  Don't know if driving in from VT, NY, ME, or MA would be a worthwhile investment, but if you are going that'a way, there is a place, and no, I don't own or work there. 
My $.02

[Old Dog]

After your shoot/weekend is over, let us know how it went (AAR).

Thanks.

[MrBill]

My H4895 is almost out, so I'll probably switch to BLC(2) only because I can get it. 

Wideners.com has 8 lb jugs of surplus 4895    http://wideners.com/itemdetail.cfm?item_id=8969  This is in stock as I type.  May not be tomorrow

_______________________________________________________________________________________________________________________________________
RG4895 Surplus Military Powder $109.00/8lbs  RG4895 8lb Keg

This is Surplus Military Powder from Radway Green of Great Britain. It is as used in 7.62 x 51 (308) Radway Green ammunition. It is extremely clean burning and produces consistant pressure loads.

Burn Rate is similar to IMR4895.
_______________________________________________________________________________________________________________________________________

I picked up a jug to try.  I haven't loaded any rounds yet so nothing to say, but $109 for 8lbs is pretty reasonable.  I really like RL15 for accurate loads with the 168 Sierra MK for 308, but for lesser quality boolits I think this will do nicely. 

Since I'm a heretic, and shoot an AR10T I wont see pressure problems until the brass flows into the ejector button hole  .  No bent op rods for me!

YMMV

Cheers