I knew ammo prices were high but

[Choid]

Wrong again but your just trying to troll so not suprising.

They have never made more ammo than in 2020. Its why componets are in such short supply, they are all excess manufacturing. They are now being diverted to production.

This would mean.....wait for it.... you are wrong again.

We all know who the dumbshit is so pleaee keep posting.

So you are saying that ammo supply is price elastic right now? Interesting. And by interesting, I mean obviously incorrect given the absolute fact that they cannot supply enough to clear the market. Of course, you know that as your statements reflect it, you just don't know what the terms mean. American education and all, I guess.

Let me see if I can help. If manufacturing is at maximum potential right now, as you say, that means the supply of ammo will be roughly the same no matter the demand. Thus, the supply line is vertical, or close to it, which is why prices are completely demand driven. As the demand curve shifts to the right, it rides a vertical supply curve directly up, showing price spikes. If the supply curve were to be elastic, the change in prices would be relatively minimal, and the market would easily clear. Eventually, at worst, the supply curve will shift right as well, which should bring prices down.

 

[CrabsandFootball]

Are you sure you should be the one calling others out for being uneducated and not being able to reason? SMDH.

Most peole reading this know what is right and who is full of shit. Keep living in fantasy land little boy. You either really are not that smart or your toll game sucks. Your posts are nothing but lol.

 

[Maggot]

Does anyone have the ability to reason
and think anymore?

Short answer, "Its rare."

 

[Choid]

Most peole reading this know what is right and who is full of shit. Keep living in fantasy land little boy. You either really are not that smart or your toll game sucks. Your posts are nothing but lol.

I have no idea what most people in this thread think, but anybody who knows anything about economics knows that not only is what I am saying right, but it is anecdotally what you are saying as well. You just don't understand big words.

 

[CrabsandFootball]

I have no idea what most people in this thread think, but anybody who knows anything about economics knows that not only is what I am saying right, but it is anecdotally what you are saying as well. You just don't understand big words.

Most think you are a fucking joke becuase you say dumb uneducated and ignorant shit. You are trying to argue with people who mentally outclass you in everyway.

Go back and look in the last thread you tried to get into a pissing match with me.

When 10 times the people like my post as yours its a hint. But since you are a little slow on the uptake, makes sense you dont get it.

 

[Choid]

Why would they lie? They are making record profits with demand never being this high.

The market is not designed for everyone buying ammo all the time. The vast majoirty buy just what they consume whey they consume it, its a JIT system.

There has always been way way way less ammo produced compared to people who own guns as most never really shoot or stockpile.

Now you have tens of millions of peolle all deciding theh need to stock up despite not shooting.

Shit is simple. There demand is far out pacing prodution, which has always been a ballance of batch runs.

You think federal has dedidicated machines for .243 or .270 or .30-30? No everything is run in batches and when you have over a thousand SKU you try to ballance demand for the year. Batches are being sold oit instantly as destributors have long backorders. Ammo is going out but some of you think it just miricles intonexistance and have zero understanding of manufacturing, supply chain and labor. Oh yea we are in middle of a pandemic where saftey procedures and protocols have impacted opperations and efficency in every industry.

Does anyone have the ability to reason
and think anymore?

So the bolded is exactly what I am saying, and why the curve you showed is wrong. The issue isn't price gouging or whatever people are complaining about. The issue is that the industry doesn't have the capacity to produce more ammo, even with demand sky high. The supply curve is close to vertical, price inelastic. That means that every shift right in the demand curve is going to lead to a greater corresponding rise in price than it would if there were excess capacity in the system. At current demand levels, the supply side needs more capacity, it needs to shift the supply curve to the right.

So now you can see I am saying exactly what you are saying, it is just a matter of vocabulary where you are deficient.

 

[Maggot]

I have no idea what most people in this thread think, but anybody who knows anything about economics knows that not only is what I am saying right, but it is anecdotally what you are saying as well. You just don't understand big words.

Econ is pretty simple supply and demand.

-The more shit available the cheaper the price.

-The less shit available the higher the price.

Think back to the early summer when the ranchers had to shoot all their cattle because the slaughter houses were shut for Covid. Prices skyrocketed.

It aint rocket science.

 

[Choid]

Most think you are a fucking joke becuase you say dumb uneducated and ignorant shit. You are trying to argue with people who mentally outclass you in everyway.

Go back and look in the last thread you tried to get into a pissing match with me.

When 10 times the people like my post as yours its a hint. But since you are a little slow on the uptake, makes sense you dont get it.

Oh my God, a group of people who you describe as ignorant and uneducated like your posts. That is like so amazing bro.

 

[Choid]

Econ is pretty simple supply and demand.

-The more shit available the cheaper the price.

-The less shit available the higher the price.

Think back to the early summer when the ranchers had to shoot all their cattle because the slaughter houses were shut for Covid. Prices skyrocketed.

It aint rocket science

With all due respect, not only is it not that simple, but by all accounts production of ammo is not only up a bit, but prices are up a lot, so it is not like shooting cattle.

 

[Choid]

Most think you are a fucking joke becuase you say dumb uneducated and ignorant shit. You are trying to argue with people who mentally outclass you in everyway.

Go back and look in the last thread you tried to get into a pissing match with me.

When 10 times the people like my post as yours its a hint. But since you are a little slow on the uptake, makes sense you dont get it.

also, this, fwiw, is your current issue in the ammo market. Just the demand shift has been more severe.

 

[Douglas-001]

Have no fear members! The Gordon Geckos are here to help us make sense of all this....

 

[Maggot]

With all due respect, not only is it not that simple, but by all accounts production of ammo is not only up a bit, but prices are up a lot, so it is not like shooting cattle.

Has nothing really to do with shooting cattle, that was just one example. Could have been toilet paper. People are buying more ammo than is available.

So its back to my statement, availability is down so prices are up.

Dont over think it.

 

[Choid]

Has nothing really to do with shooting cattle, that was just one example. Could have been toilet paper. People are buying more ammo than is available.

So its back to my statement, availability is down so prices are up.

Dont over think it.

OK, but that is wrong. Avaliability (supply) is about the same, but demand is up, so prices are up. Prices will stay up until capacity increases.

To use your cow analogy, imagine that the same number of cows were available, but more people wanted to eat beef. Prices would go up, and it would take an increase in the cow supply (more births, more pastureland) to increase the capacity to meet the new demand so that prices would fall back to normal.

This is literally what I did for an entire career. It isn't a matter of overthinking.

 

[2aBaC̶a̶]

Yea great idea i am sure all the ammo manufactures would be eager to desteoy their business and go bankrupt. They must be all holding back production becuace.......

The ignorance being posted in this thread is mind numbing

fa·ce·tious
/fəˈsēSHəs/
adjective
treating serious issues with deliberately inappropriate humor; flippant.
"a facetious remark"

 

[CrabsandFootball]

Regardless of the 101 or lower level Econ debate, it's obvious the market is clearing in current conditions.

There does not appear to be much interest for new firms to come on line or for existing firms substantially expand their capacity.

A more interesting question to me at least, is why the market clearing conditions are volatile for ammo and reloading components. My guess would be increased buying at current prices levels based on fear of reduced supply and higher prices in the future due to potential new government restrictions/regulations/laws in the future. Then, the next logical question, is this a rational belief or is it based on hysteria or some other fallacy.

Its not as simple as repurposing a facility or line.

The lead time for new machines and plat is measured in years. Low rate custom built machinery that is only made a few places in tbe world needs to be ordered years before you plan to make your first round.

Then you also need the facility and infastructure to support it. So you are talking about an investment of 20-50+ million dollars and a 3 year lead time. No one knows what the market or demand will be in 3 years.

Then you have labor. These are skilled labor positions where a fuck up could shut down a production line for weeks. In order to trsin new peple they would have to take valuable line workers who are already in short supply away from a 24/7 productioj enviroment. Could take a year of training till the plan runs like it should

These companies have been around a long time. They have business and data anaysts and managment who have historical data and understand the market better than anyone here.

Its so unbelivable ignorant for people to say just build more factories or expand machinery. Most of these places are using 50 year old machinery and have on site machine shop to keep it running.

Its also clear how most dont understand basic business.

You have the guys running the plants telling you exactly what the issues are.

They cant just go on amazon and order an industrial ammo plant and even if they could, demand could drop in a year and they would lose their ass.

 

[Choid]

Regardless of the 101 or lower level Econ debate, it's obvious the market is clearing in current conditions.

There does not appear to be much interest for new firms to come on line or for existing firms substantially expand their capacity.

A more interesting question to me at least, is why the market clearing conditions are volatile for ammo and reloading components. My guess would be increased buying at current prices levels based on fear of reduced supply and higher prices in the future due to potential new government restrictions/regulations/laws in the future. Then, the next logical question, is this a rational belief or is it based on hysteria or some other fallacy.

Well, it is actually pretty obvious it isn't effectively clearing in current conditions, as there is excess demand for just about everything, which is obvious from threads like this existing. I guess the debate is too high level for you at 101?

Snark aside, it is true that there has been precious little interest in increasing capacity either in the current environment or in other recent shortages. I don't know why no new capacity has come on line. It could be what Crabs says below, or it could be the assumption that this current buying doesn't represent the long term demand in the market, or whatever. I would generally side with the idea that those in the business understand the economics of their own business better than I do, so their decision to not increase production is likely totally rational.

Its not as simple as repurposing a facility or line.

The lead time for new machines and plat is measured in years. Low rate custom built machinery that is only made a few places in tbe world needs to be ordered years before you plan to make your first round.

Then you also need the facility and infastructure to support it. So you are talking about an investment of 20-50+ million dollars and a 3 year lead time. No one knows what the market or demand will be in 3 years.

Then you have labor. These are skilled labor positions where a fuck up could shut down a production line for weeks. In order to trsin new peple they would have to take valuable line workers who are already in short supply away from a 24/7 productioj enviroment. Could take a year of training till the plan runs like it should

These companies have been around a long time. They have business and data anaysts and managment who have historical data and understand the market better than anyone here.

Its so unbelivable ignorant for people to say just build more factories or expand machinery. Most of these places are using 50 year old machinery and have on site machine shop to keep it running.

Its also clear how most dont understand basic business.

You have the guys running the plants telling you exactly what the issues are.

They cant just go on amazon and order an industrial ammo plant and even if they could, demand could drop in a year and they would lose their ass.

So basically exactly what I said?

 

[OldSalty2]

OK, but that is wrong. Avaliability (supply) is about the same, but demand is up, so prices are up. Prices will stay up until capacity increases.

To use your cow analogy, imagine that the same number of cows were available, but more people wanted to eat beef. Prices would go up, and it would take an increase in the cow supply (more births, more pastureland) to increase the capacity to meet the new demand so that prices would fall back to normal.

This is literally what I did for an entire career. It isn't a matter of overthinking.

Yes its very simple.

What is the source of the increased demand? New gun owners? Hoarders? Opportunists?

In the simple cow analogy what would happen if a single person or entity were to buy a significant position? Or, could the demand even be manipulated, who would be responsible for counting the heads in the field?

Even in the simple analogy there are multiple variables. None of which we have much insight to assign values...

And while I agree that there isnt always "more to it" than the simplistic answer, I also tend to seek additional supporting information if only for self edification.

Sucks being a cynic...

 

[Choid]

So, what's the rational take-away when it does not appear that there are any plans for substantially increased capacity and there is excess demand in the current market conditions?

I'm not sure you are using rational in the correct way here. The assumption should be that those in the business are making rational decisions based on what they know about long term demand. That they have no incentive to act in a way that would be less than the most profitable over time. Why doesn't really matter.

 

[CrabsandFootball]

So, what's the rational take-away when it does not appear that there are any plans for substantially increased capacity and there is excess demand in the current market conditions?

The rational take away is there is not much you or anyone else can do. Buy shit when you see it but ultimately anyone who didnt stock up durring good times has no one to blame but theirself.

Market will eventuality reach equilibrium

 

[Choid]

Sure, but that's a truism that firms are in business to be profitable. Just like the sky is blue and grass is green. It does nothing to analyze the specific situation at hand.

The point is that there is significant excess demand. There is also no appearance that there are plans for a significant increase in capacity.

Regurgitating that it costs money to expand capacity is also meaningless. Everyone knows that.

What I think most people are interested in is what the market conditions would need to be to see an increase in capacity or if there are artificial/regulatory/extra-market factors at play affecting these decisions.

It doesn't do anything specific because none of us really understands the long term economics of the ammo business. We can certainly analyze the short term economics of it just by looking at current market behavior, but that only tells us about right now. The truism that the people in the business are certainly trying to maximize their own profit gives us a window into their beliefs about the future, as it did during the last ammo shortage. They believe that the current situation is not indicative of long term demand, because if it were, they would increase capacity to take advantage, but clearly they believe the cost of doing so is not worth it.

I suppose that the market condition that would cause an increase in capacity would be if there was a sense that the demand curve had changed in the long term rather than the short term, but again, why would I substitute my guesses for simply looking at the fact that Federal, Hornady etc are not making those changes?

 

[Blue Sky Country]

"Yo papa desperately wanted a case of 5.56 but couldn't afford it, so yo' mama sold his AR-15 to help him out"...

Seriously... $200 for 50 fucking rounds of .357 Mag???

 

[CrabsandFootball]

Sure, but that's a truism that firms are in business to be profitable. Just like the sky is blue and grass is green. It does nothing to analyze the specific situation at hand.

The point is that there is significant excess demand. There is also no appearance that there are plans for a significant increase in capacity.

Regurgitating that it costs money to expand capacity is also meaningless. Everyone knows that.

What I think most people are interested in is what the market conditions would need to be to see an increase in capacity or if there are artificial/regulatory/extra-market factors at play affecting these decisions.

By the time a new plant would be up and running demand will drop and they will have negative ROI.

Why would they take on thst risk? These cycles are predictable.

This shit is easy to understand , no not sure what is difficult to grasp

 

[myronman3]

"Yo papa desperately wanted a case of 5.56 but couldn't afford it, so yo' mama sold his AR-15 to help him out"...

Seriously... $200 for 50 fucking rounds of .357 Mag??? View attachment 7535441

it’s something to observe, aint it? $4 a shot.....damn.

 

[OldSalty2]

Wonder how much one of these costs?

And if you could turn profit within a year using this or a like machine given todays market conditions...?

Oh crap, thats right...no/expensive primers....who makes the dang primers?

 

[Choid]

As much as you want to make it seem like you have extra information that the rest of us are not privy to, history does not bear it out that it never makes sense to expand capacity.

Otherwise, we would still be stuck in the 1700's for manufacturing capacity of ammo and reloading components. Sometimes, it does make sense to expand capacity. Sometimes it doesn't. Yes, that's a truism, but it's also something you're ignoring. What you are really making a guess about is consumer behavior. I don't think you would say that you have additional insight into consumer behavior beyond that of the average person or average business owner. I could be wrong about that haha.

There is no real way to know how much consumers will buy except reality. We can make our best guesses about predicting the future but they are still guesses, some better guesses, some worse. If you could apply a simple economic formula, any mouth breather could be a successful business owner but reality doesn't bear this out.

Ammo and reloading is a multi-billion dollar industry in the US and 20 billion dollar industry globally with projected positive growth for the next decade. It's simply not a reality based position to state that it is projected for demand for ammo and reloading components to have negative annual growth in the next few years. That does not necessarily mean that it makes sense for firms to increase capacity but it does mean that there is projected positive growth and no appearance of substantially increased capacity.

What does it tell you that they have declined to increase capacity during the last two ammo shortages?

 

[Blue Sky Country]

Wonder how much one of these costs?

Oh crap, thats right...no/expensive primers....

Now THAT video is going to cause absolute mental trauma to all new gun buyers this year and 2020...

 

[CrabsandFootball]

What does it tell you that they have declined to increase capacity during the last two ammo shortages?

We actually agree

You know its ironic how he tells me he thinks i know more than everyone yet he thinks he know more than the people running the companies, ya know the ones with skin in the game.

 

[Choid]

We actually agree

You know its ironic how he tells me he thinks i know more than everyone yet he thinks he know more than the people running the companies, ya know the ones with skin in the game.

We've been agreeing the whole fucking time. This is a problem where short term demand cannot be met because there is no way to further increase supply in the short term, and, as it seems, nobody in the business thinks that increasing supply in the long term makes sense. It is not a gouging issue, it is a supply elasticity issue.

 

[CrabsandFootball]

Yea its pretty evident in here who has run a business before and who thinks steak comes from the grocery store.

 

[OldSalty2]

Now THAT video is going to cause absolute mental trauma to all new gun buyers this year and 2020...

LoL

Chunks out about 65 rounds/min.

At 30% capacity thats 28,080/day.

Given a mere 20% monthly run rate, thats 168,480/month.

Going 9mm rates at 0.60 to 1.00 per round (just for FMJ) thats quite a bit of cash per month. Would it cover both capital and operational/support costs? IDK, way beyond my me simple county maths. Things people dont think of, like licensing, insurance, legals fees, material costs, labor costs, ongoing operational and maintenance costs...adds up quick...

*And I used artifical runtime numbers, not sure what actual production efficiency would be again beyond me... 30% day and 20% of that monthly SEEM conservative...

 

[OldSalty2]

As much as you want to make it seem like you have extra information that the rest of us are not privy to, history does not bear it out that it never makes sense to expand capacity.

Otherwise, we would still be stuck in the 1700's for manufacturing capacity of ammo and reloading components. Sometimes, it does make sense to expand capacity. Sometimes it doesn't. Yes, that's a truism, but it's also something you're ignoring. What you are really making a guess about is consumer behavior. I don't think you would say that you have additional insight into consumer behavior beyond that of the average person or average business owner. I could be wrong about that haha.

There is no real way to know how much consumers will buy except reality. We can make our best guesses about predicting the future but they are still guesses, some better guesses, some worse. If you could apply a simple economic formula, any mouth breather could be a successful business owner but reality doesn't bear this out.

Ammo and reloading is a multi-billion dollar industry in the US and 20 billion dollar industry globally with projected positive growth for the next decade. It's simply not a reality based position to state that it is projected for demand for ammo and reloading components to have negative annual growth in the next few years. That does not necessarily mean that it makes sense for firms to increase capacity but it does mean that there is projected positive growth and no appearance of substantially increased capacity.

Seems this size market would also encourage smaller, more localized competition as well.

My hope is that it still will have that effect...

 

[CrabsandFootball]

for all your bloviating, your position is simply an appeal to authority in that whatever the reasoning is for the manufacturing executives' decision is ... must be correct because of their position .... a little ironic considering that in today's environment to have a successful business if you're competing with the giants is ... that you need to do things differently and better of them so that would be the best way to put yourself out of business is to try to copy them

Appeal to authority?

You simply do not understand industry or the market. Those that do are telling you what I am.

Its already been broken down so an idiot can understand, and its actually more complicated than that when you factor in licensing and regulatory issues.

They love it when you throw up a new explosives factory next door.

 

[BullGear]

You have to look at this from the manufacturers side of the issue. I'm pretty sure their consumable prices have increased. They are putting out as much ammo due to working their folks overtime. That increases the price. Once the ammo is boxed, they need to ship it to distributors. Those costs have increased in the last year. That increase is doubled from the distributors to the stores.

All that alone has probably increased the price of ammo by 10-15%.

Now I know that doesn't explain the prices we're seeing today, but I hope it doesn't hurt as much when you understand this.

 

[CrabsandFootball]

LoL

Chunks out about 65 rounds/min.

At 30% capacity thats 28,080/day.

Given a mere 20% monthly run rate, thats 168,480/month.

Going 9mm rates at 0.60 to 1.00 per round (just for FMJ) thats quite a bit of cash per month. Would it cover both capital and operational/support costs? IDK, way beyond my me simple county maths. Things people dont think of, like licensing, insurance, legals fees, material costs, labor costs, ongoing operational and maintenance costs...adds up quick...

*And I used artifical runtime numbers, not sure what actual production efficiency would be again beyond me... 30% day and 20% of that monthly SEEM conservative...

The manufacture is not charging those super high rates, it is retailers and distributors trying to ensure they have stock on hand instead of empty shelves or can make enough profit to offset the loss of revenue from having no stock.

Even then the actual profit on a round after expenses is probably in the pennies or fractions of a penny for the big boys.

A 50 round box of 9mm range ammo wholesales to a distributor for probably $6/box, Distributor probably makes another $1-2/box and sells it to retailers. Retails add a few dollars of profit as well. The cost of shipping is added in each step. Depending on state you always have inventory taxes to deal with.

Component cost, manufacturing costs, supply costs, financing in costs, licensing, legal, plus uncle same gets his FET tax.

Federal is selling direct now to try and wipe out the middle men. It should not only lower price and time to market, but help the actual company making the shit profit a bit more so they can re-invest in new machinery and expand.

 

[acudaowner]

lions , and tigers , and bears oh my .

 

[Choid]

Seems this size market would also encourage smaller, more localized competition as well.

My hope is that it still will have that effect...

Most of the big manufacturers are also primer manufacturers, or in Hornady's case, component manufactuerers, from what I can tell. I don't know if some level of vertical integration is necessary to be a significant player, and if this is perhaps a barrier to entry for what you are talking about.

 

[Doc68]

While I agree with everyone's sentiments about Whiney Lapierre, without the NRA you are going to kill ranges all over the country.

The NRA provides training and insurance for member and ranges. Without the NRA my local fish and game club would close. There is no way we could afford commercial insurance rates without the NRA acting as a pro 2A broker. Do you want those ranges to shut down?

The NRA also provides training courses for trainers that allow people in more restricted states to get the required pieces of paper so they can exercise their 2A. Do you imagine for a moment they the legislatures will be in a hurry to fill that void if you get your wish and the NRA dies?

I swear we are our own worst enemy. There is a big difference between the political efforts from the NRA-ILA and from the NRA main body. Most of the froth and graft comes form the political side of the body, like that would be a surprise.

So to anyone who wants to kill the NRA, because the NRA-ILA are backstabbers, please tell me where my range is going to get insurance and who is going to take up the training slack, and of course get the credentials recognized by all the legislatures required? Do you really think a gun culture will survive with nowhere to shoot and no credentialed trainers? We don't all have access to BLM land. It is divide and conquer, and you fall for it. Who is backstabbing whom now?

The number of idiots here who would throw their allies under the bus because they don't get the big picture is stunning. No wonder we lose all the time.

Bottom line, throw me under the bus and I'll return the favor.

That's great they build ranges, offer insurance, but what good will they be when we dont have any guns left.....

Doc

 

[CrabsandFootball]

Exactly. Primers, Power and Cases are all biproducts and excess manufacturing. They have all increased production to try and meet demand so less of each is getting to the market further driving up component prices.

Been trading 1k packs of primers for 1K cases of 7.62 and 5.56. Been a good time.

 

[OldSalty2]

Most of the big manufacturers are also primer manufacturers, or in Hornady's case, component manufactuerers, from what I can tell. I don't know if some level of vertical integration is necessary to be a significant player, and if this is perhaps a barrier to entry for what you are talking about.

Agree. I think it would require some integration from a supply standpoint. I doubt those who control components will just willingly contribute to competition.

In the cow example, it would be a analogous to the same entity who owns the cattle also controls 95% of the necessary means to efficiently raise cattle (stupid analogy i know...)

 

[myronman3]

all the bickering aside.....400 for a box of 50.....i should quite my job and run my dillon for and hour a day and live like a mother fucking fatcat.

 

[OldSalty2]

That's what I think the interesting question is. I don't work in that industry. My first guess would be that whatever their cost of acquiring capital is for the new project is .... is too high compared to what their projected valuation of the project would be. But the flip side of that is that reality bears out that capacity has increased historically over time in the US and the there is projected annual growth in the ammo market. So, what is different about the current conditions compared to historically.

I don't think is strictly lack of capital in this market given its size and growth.

Its that the market has many (at least partially) closed doors...that make access rather difficult.

 

[OldSalty2]

It very much could be a cash flow or liquidity issue as well. Undoubtedly, in these conditions, increased capacity leads to increased market share which increases a firms leverage and bargaining power relative to the competition. But at what cost.

I doubt any of these firms have enough cash reserves to completely self finance a new plant. It seems like cost of capital would have to be unusually high and also potential cash flow or liquidity issues if there was an unexpected short term down turn. It would be interesting to see the net present value calculations for adding a new plant and the assumptions used in the calculations.

I agree with this and many other comments you have made.

But that wasnt my only point. At some juncture in a large and established market with predictable and sustained growth, one would expect more competition to natually evolve, unless more factors aside from access to capital are at play. You can get money if you can turn that money into more money. There will be those that will take that gamble.

 

[Choid]

It very much could be a cash flow or liquidity issue as well. Undoubtedly, in these conditions, increased capacity leads to increased market share which increases a firms leverage and bargaining power relative to the competition. But at what cost.

I doubt any of these firms have enough cash reserves to completely self finance a new plant. It seems like cost of capital would have to be unusually high and also potential cash flow or liquidity issues if there was an unexpected short term down turn. It would be interesting to see the net present value calculations for adding a new plant and the assumptions used in the calculations.

There is nothing about a company like Olin that would suggest that their cost of capital would be higher than average. They produce a good amount of free cash, their debt to equity is normal, they have diversified operations and they are close to standard in volatility. Presumably raising money for an ammunition side business could add political beta, but I don't know about that. My guess is that their calculations tell them the value in doing so is negative...

 

[slowworm]

That's great they build ranges, offer insurance, but what good will they be when we dont have any guns left.....

Doc

If you are worried about the political angle you have SAF and GOA, various state organizations. You have options other than the NRA-ILA.

The NRA is the ONLY game in town providing material support to keep the infrastructure of shooting alive. With no ranges the Gun Culture dies. No trainers for the "Mother May I" paperwork in many states for basic ownership let alone CCW. Good luck keeping your guns when there is no place to use them and the gun culture is dead as a result.

Like I say, politics is downstream from culture. The NRA is the only organization doing any useful work upstream from politics. Why do you think they are attacked so hard of they are so ineffective, and the GOA and SAF so wonderful? Because the anti-gunners understand politics is downstream from culture, so they attack the organization doing the most to support the culture.

You think NY doesn't know what will happen to ranges across the country if they succeed in killing the NRA? You think that all the states that accept training certificates from NRA approved instructors will rush to fill the gap? The NY suit is all about killing the foundations of the culture. How the hell do I pass on skills and learning to my son with nowhere to shoot?

You just want some kind of purity test before you will ally with anyone. Good luck with that as a winning strategy. Who the hell needs enemies when we can't even share the road with potential allies walking in the same direction.

Lets put it this way. I lose my range, I'm going to support any group and cause that wants to shut down shooting and hunting access to BLM lands in the west. Turn about is fair play.

 

[CrabsandFootball]

The only thing you’ve done in this thread is argue that the only correct position is the position of the executive’s of the ammo manufacturers simply because they are an executive and others are not. That’s an appeal to authority.

Sure, I’m not an executive at an ammo company. You’re not either. You don’t have any specialized knowledge about the ammo business much less the ability to analyze the market in a novel way. The only thing you are doing is regurgitating surface level outdated talking points and saying it lines up with the position of the ammo industry so it must be right.

If it were up to you we’d still be living in 1820 in the ammo world. No one would ever expand for any reason. Thank God for men who build things. They will always need people like you to follow orders and not spend time thinking on their own.

The reality is that over the course of history in the US, ammo manufacturing capacity has expanded. If you had any specialized knowledge, you could conduct an in-depth analysis of the market conditions present at the times of historical expansions and compare and contrast that to current conditions then offer opinion or prediction based on proven methods of analysis to support your prediction. But you don’t have any specialized knowledge beyond the ability to regurgitate surface level outdated talking points and truisms.

You are arguing against logic and known issues.

Stop trying to use mental gymnastics and create some moon bat conspiracy when we know exactly what the issues are.

Every fucking ammo plant in the world is having the same issues. You must be smarter than all of them them combined.

And what your retarded fucking small brain ass hasn't realized is while capacity has expanded, so has consumption. We have more guns and more shooters shooting more ammo with the proliferation of cheap AR15's and semi auto guns. Industry has already stated based on research and surveying, 8 million new gun owners in the last year alone and that's months old data. Number is probably north of 10 or 12 by now, and they all are trying to buy ammo to go with their new guns.

Go take a look at the machinery being used, it is decades old. Hell barrel makers are still using machines from the 40's. Gun industrial machinery is very expensive and very limited production and its not like getting a new CNC every 5 years when they wear out. Same goes for Ammo plant. Its not something that is easily scalable and the cost takes a long time to recover.

Ammunition is not cheap, people buy what they need and then go buy more. Very few people have large stockpiles as its cost prohibitive for the vast majority of people.

You just want to argue for the sake of arguing and have brought nothing to this thread other than bullshit. If you had an IQ over 80, you would be able to put all these pieces together and see its a systemic issue.

Please tell us what you do for a living so we have some relevance. Tell us about the insight you have that refutes what everyone in the industry already knows.

 

[CrabsandFootball]

all the bickering aside.....400 for a box of 50.....i should quite my job and run my dillon for and hour a day and live like a mother fucking fatcat.

Sure since apparently the market can't adapt and people are just dumb for not meeting under-supply, start a ammo plant.

Thats why there are so many small boutque ammo makers and they don't go out of business every other year like we have seen. Its such a gold mine go for it.

 

[UKDslayer]

If anyone can advise on mailing ammo. please let me know. Fedex informed me as of December 31 that they no longer need the ORM-D labels, but instead a "limited quantity sticker". And about that quantity? 48 rounds.

 

[FCS]

If anyone can advise on mailing ammo. please let me know. Fedex informed me as of December 31 that they no longer need the ORM-D labels, but instead a "limited quantity sticker". And about that quantity? 48 rounds.

63 lbs max weight
Black outline diamond....I’ll go take a picture, be easier

 

[Choid]

That’s what I was trying to get at earlier and is the interesting part to me. If a manufacturer could acquire capital through debt at a 4% annually total costs for debt service and the new project requires an initial outlay of 15 million dollars.

So, in 2015 for the US the gun and ammo manufacturing industry was a $13.5 Billion industry with a $1.5 billion profit.

So, given historical data, what would be the expected increase in cash flow per year from the 15 million initial outlay and then if you divide by the discounted rate for the expected return for each year then you can decide if there is a positive or negative net present value.

So, something about the numbers isn’t adding up. Is it that there is a small increase in capacity for a 15 million dollar initial outlay or is it that the cost of capital is high or is it that the margins are way lower than they typically are in general for manufacturing or is it that the executives disagree with the experts who are projecting future growth in the industry?

My guess is that 15 million does not buy much capacity in this space.

All you have done is restate a generic valuation formula. It isn't hard to estimate costs of capital in the industry. Olin seems to be around 8% or so as an entity, though I obviously don't have insight into the costs specific to the ammunition division.

Most problematic in your post, though, is that you have created a false dichotomy between the "experts" in the ammunition business, and the "executives" in the ammunition business. Market analysts are generally not very expert, and not at all when they are not spoon fed projections by dumb executives. You could see this by how much worse financial estimates got after communications were tightened up. Indeed, the executives generally are the experts in their businesses, and while you keep stating that it is nothing but a truism that they are likel to persue profitable endeavors, the truth is that they are most likely to understand which endeavors are profitable.

 

[gunsnjeeps]

It's only gouging because people are dumb enough to pay it. Welcome to capitalism where supply and demand set prices. Someone made a water analogy which is somewhat off the mark. If a grocery store marked up water 10x the price during a "crisis", the government would get involved. Guns and ammo aren't considered an essential by government.

If you didn't plan ahead you are paying the prices that everyone else is. I'll wait until you sell it for real world prices in a garage or yard sale with the AR's that never got taken out of the box because the real answer is most people treat them like the first aid kit they don't learn how to use until they have to read the directions over a bleeding victim.