Monday, April 8, 2013

Ammunition Shortages: More Capital?

I can somewhat understand the inability of firearms manufacturers to ramp up production of guns.  There is a fair amount of skilled labor that goes into making guns, which means that you can't just put an ad in the paper and hire the first ten guys that show up.  My guess is that a lot of CNC machine tools probably have substantial lead times.  Believe me, I have briefly considered what would be required to buy a CNC milling center (one of the big expensive ones) and do my part to satisfy the demand.  I don't have the experience required for this, so I am sure that by the time I had everything working well, the business would have saturated.

But ammunition?  This is not quite the same situation.  Big ammunition making is highly automated.  I would think that reloaders (of which the U.S. is full) would be cranking away at both reloading and making new ammo in the garage to satisfy demand.  Is powder and primers really in such short supply?

It is hard to imagine that this isn't one of those areas where the application of capital would not produce pretty healthy returns right now.


Billll said...

The fabrication of primers involves the production of the two brass bits, which is (relatively) easy, and the preparation and application of the explosive part. This requires an explosion proof line and if not outdoor assembly, at least assembly stations in explosion proof cells with very thin roofs.

Powder I know less about, but I suspect the assembly kine would also need to be in an isolated area.

donumvitae said...

Actually, powder and primers, not to mention bullets ARE that hard to find. Right now, the only primers in stock at MidwayUSA or Brownells are muzzleloader primers. The available selection of powder is almost as small. Not just ammunition, but even the basic components are not available for purchase.

The American people appear to be arming themselves at heretofore unseen rates, leading to significant scarcity all the way up the supply chain.

Josh said...

In addition to raw material shortages, the regulatory systems involved are both complex and prone to systemic uncertainty. Manufacturing this stuff legally for sale is not dependent solely on capital and manpower availability.

I expect capital found in more progressive areas is also prone to thinking that the ammo demand bubble is close to bursting, too, for that matter -- either when purchases become more regulated, or when a Republican administration takes the Senate or White House.

philabor said...

If it were only so simple. Yes, application of capital is one of the requirements. There is also a series of events that must happen: Acquisition of suitable land for a factory which could explode and wipe out neighbors. Obtain approval from governments who are hearing from neighbors who don't want to be wiped out. Design of said factory with attention to details which could help it avoid exploding. Acquisition of specialized equipment with various lead times. Building the factory. Hiring people with the potential to be trained. Training people well enough that they don't cause said factory to explode. I haven't worked in the ammunition industry so I don't know their lead times, but it's not unreasonable to assume a year or two.

Before we do all the above, we need to look at the Dutch Tulip Bulb...I mean 2013 ammo shortage and decide what demand will be in a year or two. If it goes back to reasonable levels (or less, as many shooters will be consuming their basement stockpiles and a few people may be selling pallet lots of ammo on local gun boards), then the new shiny factory may not have been such a good idea. Instead the best strategy might have been to run existing factories 24/7 with (well trained) temps and overtime.

w said...

Let's not forget that many gun banners have made it clear they realize that making ammo unavailable is also the best strategy to "neutering" firearms than trying to just collect them outright alone....

Regardless of who has political power I think we all need to be mindful of that for years to come.

Rob Crawford said...

Ramping up would mean adding headcount -- and that would mean more Obamacare costs. Also, there's no guarantee the current demand will last long enough to recoup the cost of the new capacity.

I'm not thrilled with the shortage, but I understand it.

Sigivald said...

I would think that reloaders (of which the U.S. is full) would be cranking away at both reloading and making new ammo in the garage to satisfy demand. Is powder and primers really in such short supply?

My understanding from reports from them is that they're operating at 100% capacity.

The reason they're not *adding more capacity* (to the best of my knowledge) is that they know damned well that panic buying will end [some signs are that it's already starting, anecdotally] and then they'd have excess capacity.

If they can't pay for the capital expenditure before the bubble ends, they won't invest, because it'll cost them money overall.

(Plus it's not like you can just wave your hands and have a new loading production line appear; someone has to build the machines and set them up, and that process has lead-time, with the same "will it even be profitable?" constraints on it.)

hga said...

Extending Sigivald's comments, I've read that the lead time for getting new mass production line ammo equipment is on the order of a year; it's certainly got to be rather complicated to do what we do by hand, reliably and safely, both in running the equipment and in the final product.

Small arms smokeless powder is either single base from nitrocellulose, which is an explosive, or double base which adds nitroglycerin, a notoriously unstable explosive until it's mated with something that desensitizes it, dynamite being the early famous example.

I understand that there's a further restraint for reloading: in mass production a company can generally buy huge lots of powder that don't have to be quite identical lot to lot; they and/or the manufacturer characterize it and make the small load adjustments needed. Reloaders are sold a much more uniform product, based on the lots that come out just right or maybe ones that are blended (that actually sounds a bit improbable thinking about it, it's been a long time since I read this).

w said...

I tend to agree that the demand is likely to slow done enough and with the costs of such an operation being very high it's probably not economically viable to start a new operation. Certainly not without millions to invest...and more likely a low return done for personal reasons than to make lots of money.

All indications are that the factories are already running 24x7. The problem is as fast as the stuff hits the stores it's gone....Every store in the Treasure Valley sells it out as fast as it comes in for most pistol and MSR's. Of course hunting calibers are mostly available still.

I can tell you that in Ada and Canyon counties for which I hit all of the stores regularly it has slowed down a lot in the last couple of weeks compared to where it was from December till now. It used to be difficult to find parking and often impossible to even get to the counter space without waiting. It is not like that anymore for the most part. Many things are still unavailable but more AR's and other MSR's and pistols are coming back in to stock so inventory is slowly returning.

It seems with the likelihood of the gun grabber bans not getting through Congress the fear and investment speculator buying is easing up.

Assuming it blows over and the economy doesn't collapse soon the next such cycle could be in the next two years if enough gun grabbers get elected to pose a threat or if we get a Hillary or other such admin the next go around. Otherwise I think it will cool down. Or at least I hope it will.

Even though I can't afford to buy guns recently I have been doing so with credit cards and layaway just to say f*ck y*u to the *ssh*les in Congress (sorry for the language I hoped I cleaned it up enough). At least I've been buying the items that aren't in the high demand category so the price inflation hasn't been as bad though it's still there.

Let's just hope the prices do get better along with more inventory. It will be interesting to see if new stuff goes down and I expect those who bought to resell may find that they will lose money at least in some cases.

I would not want to be holding lots of guns bought to resell if a private party sale check requirement where to be enacted since I assume such sellers would get spanked for having so much to sell they are technically required to have an FFL dealer license!

w said...

BTW, it's technically illegal to make and sell ammo if not licensed for such purpose. I don't think you can get around that. Also home reloaders really aren't practical for mass production and then there is the liability issue...

One thing that might make sense is a reloading club where there is a collection or reloaders and the powder, primers, brass, etc so that people could have reloading parties or whatever and load lots of ammo for the members or themselves. Sound like an idea???

One of the clubs in Boise does have members that reload ammo for the club. Though it is just .45 ACP NRA 2700 Bullseye ammo. It is reasonably priced but has to be shot at the club range....