What The Great Ammunition Shortage Says About Inflation

[Stugotz]

https://www.zerohedge.com/political/wha ... -inflation

[jdege]

This isn’t purely a story of informal cartel engaged in profit-seeking, but also risk-management. Like a lot of commodity businesses, the ammunition industry is cyclical, with shortages and price hikes when demand increases, followed by collapses as capacity increases and demand stays level or declines. Industry executives know this, and are intent on that not happening again. Here’s Christopher T. Metz, the CEO of Vista, talking about their purchase of Remington, a competitor in the industry.

Because of some of the consolidation we've done with Remington, even if you look long term, we don't see the same type of price compression the industry may have experienced in previous times.

Vista has set up two pricing programs to ensure high prices and stability. The first is a subscription service for ammunition, which gives them a steady flow of ammunition demand and lets them plan production more easily. The second is, well, an informal form of price-fixing, or output reduction. They aren’t totally explicit about it, but they use code words to make the point. Here’s Metz explaining that they collude with their competition to keep capacity lower than it should be.

"Now with ammunition being the largest part of our business. I mean, clearly, buying a Remington, we've created what we feel like is an even more disciplined industry now as we go forward. We've got, I think, like competitors in the sense that they watch growth, they watch their margin profiles. And we feel like we've got a disciplined industry."

And I've mentioned previously that we studied, as best we can…industry capacity and making sure that we're not only managing our capacity, but very mindful of what's being brought into the industry, so we don't get over our skis, if you will."

In other words, Vista executives are planning to ensure that prices won’t come down. They have expanded some capacity on the margins, but because there are only two real firms now, they can easily pull that extra production offline if necessary.

[gun_fan111v2]

Didn’t Federal stop taking distributor orders for primers? I think I saw something recently on that.

[jdege]

Didn’t Federal stop taking distributor orders for primers? I think I saw something recently on that.

https://en.m.wikipedia.org/wiki/Federal_Premium_Ammunition

Federal Premium Ammunition is a wholly owned subsidiary of Vista Outdoor

[warrlac]

Olin and Vista Outdoors using their monopolies to limit supply and drive prices up is honestly the only explanation that stands up to scrutiny.

None of the explanations given over the past several years ever made sense.

Hoarding?

No. Hoarders bought when prices were low. High price hoarders would either be bragging about their purchases or trying to resell in the market.

7 or 9 or 12 million new gun owners?

No. Might explain temporary shortages of 9mm, 5.56mm & military calibers, but not .243, 12 gauge trap/skeet, .270 and steel shot hunting loads.

Government buying it all?

No. The government gets 9mm for something like 18 cents per round on DoD IDIQ contracts. 5.56 likewise. But the government isn't buying 30.06, 7mm-08, 44 Mag or trap & skeet loads.

Especially after Jason Vanderbrink, full of indignation, posted that video a year ago. Makes you really want to buy their products when you're being Gaslighted by their president at the same time your local distributor is confirming that Federal was controlling output and cutting shifts at its plant.

Change my mind.

Change My Mind about Ammo

[IvanTheTerribleShot]

I wonder where steel-cased 9x18 aka Makarov, 7.62x39, and especially 5.45x39, which (the cheap variety) are almost exclusively imported, are in this picture.
Surely there is more than a single factor involved.

[warrlac]

I wonder where steel-cased 9x18 aka Makarov, 7.62x39, and especially 5.45x39, which (the cheap variety) are almost exclusively imported, are in this picture.
Surely there is more than a single factor involved.

That is a good point. I used to be able to purchase WOLF Polyformance or Military Classic 7.62x39 at Fleet Farm for $4.50/box of 20. Today you can still get it (I typically buy from SGAmmo.com) but the price is $10 per box. Certainly Biden's ban on the importation of "Russian made" ammo isn't helping perceptions. To me it doesn't look like "the ban" has halted anything, at least not yet. Some say it is because the import licenses have remained valid through their expiration dates. Maybe there will be a shortage when they do expire?

[Holland&Holland]

I wonder where steel-cased 9x18 aka Makarov, 7.62x39, and especially 5.45x39, which (the cheap variety) are almost exclusively imported, are in this picture.
Surely there is more than a single factor involved.

That is a good point. I used to be able to purchase WOLF Polyformance or Military Classic 7.62x39 at Fleet Farm for $4.50/box of 20. Today you can still get it (I typically buy from SGAmmo.com) but the price is $10 per box. Certainly Biden's ban on the importation of "Russian made" ammo isn't helping perceptions. To me it doesn't look like "the ban" has halted anything, at least not yet. Some say it is because the import licenses have remained valid through their expiration dates. Maybe there will be a shortage when they do expire?

Wolf is not Russian any longer.

[warrlac]

Coming from a 10,000 Plus poster and esteemed member, your statement may very well be true and we'd like to believe you on face value. Your credentials are impeccable.



But... here on MNGT we require proof! Kindly state your evidence sir.

I wonder where steel-cased 9x18 aka Makarov, 7.62x39, and especially 5.45x39, which (the cheap variety) are almost exclusively imported, are in this picture.
Surely there is more than a single factor involved.

That is a good point. I used to be able to purchase WOLF Polyformance or Military Classic 7.62x39 at Fleet Farm for $4.50/box of 20. Today you can still get it (I typically buy from SGAmmo.com) but the price is $10 per box. Certainly Biden's ban on the importation of "Russian made" ammo isn't helping perceptions. To me it doesn't look like "the ban" has halted anything, at least not yet. Some say it is because the import licenses have remained valid through their expiration dates. Maybe there will be a shortage when they do expire?

Wolf is not Russian any longer.

[Holland&Holland]

If you do a search on where Wolf is made you will see multiple sources that reference there contract dispute that ended there buying ammo from Tula in 2009. I think the consensus is that most of it is eastern bloc manufacturers.

[IvanTheTerribleShot]

If you do a search on where Wolf is made you will see multiple sources that reference there contract dispute that ended there buying ammo from Tula in 2009. I think the consensus is that most of it is eastern bloc manufacturers.

My understanding is the dispute was about who owns Wolf tradeark, not where it's manufactured. Wolf I bought last August from OpticsPlanet has "Made in Russia" written on the box and "Tulammo" stamped on the shell base.

I am more curious about what the "Ukranian" ammo actually is. As far as I know, there was a single factory that makes 7.62x39, Luhansk cartridge works; and that region has since seceded; I wonder what are the logistical difficulties to relabel Tula or Barnaul production as if it was made in Luhansk.

[Holland&Holland]

If you do a search on where Wolf is made you will see multiple sources that reference there contract dispute that ended there buying ammo from Tula in 2009. I think the consensus is that most of it is eastern bloc manufacturers.

My understanding is the dispute was about who owns Wolf tradeark, not where it's manufactured. Wolf I bought last August from OpticsPlanet has "Made in Russia" written on the box and "Tulammo" stamped on the shell base.

I am more curious about what the "Ukranian" ammo actually is. As far as I know, there was a single factory that makes 7.62x39, Luhansk cartridge works; and that region has since seceded; I wonder what are the logistical difficulties to relabel Tula or Barnaul production as if it was made in Luhansk.

I checked my boxes as well and you are correct. Maybe the interwebs is wrong?

[ex-LT]

If you do a search on where Wolf is made you will see multiple sources that reference there contract dispute that ended there buying ammo from Tula in 2009. I think the consensus is that most of it is eastern bloc manufacturers.

My understanding is the dispute was about who owns Wolf tradeark, not where it's manufactured. Wolf I bought last August from OpticsPlanet has "Made in Russia" written on the box and "Tulammo" stamped on the shell base.

I am more curious about what the "Ukranian" ammo actually is. As far as I know, there was a single factory that makes 7.62x39, Luhansk cartridge works; and that region has since seceded; I wonder what are the logistical difficulties to relabel Tula or Barnaul production as if it was made in Luhansk.

I checked my boxes as well and you are correct. Maybe the interwebs is wrong?