Tuesday, April 23, 2013

Ammo Shortage - An Example By The Numbers

Okay, I know some out there really hate the new math especially when it translates into a 50 round box of Winchester White Box 230 grain .45ACP going for 40 of my hard earned dollars, and I know many of us would like to blame the evil government like any good conspiracy theorist would. We can blame the government INDIRECTLY all we want. BUT, let's take a step back an look at some real numbers for a second.

According to the May 2013 issue of American Rifleman (that'd be the NRA's membership magazine for those of you who are not NRA members), somewhere between 1 billion and 1.5 billion rounds of .22 long rifle ammunition is produced by all manufactures ANNUALLY. That's up to 1,500,000,000 .22 pills of all sizes and flavors from my personal favorite CCI Stingers to your cheap, dud infested, big box store, bulk pack stuff made to supply the whim and demand of every man, woman and child over a 365 day span of time. And, last I checked, the goobermint wasn't sending out orders for .22 bullets by the ship load.

So, assuming for the moment that the smallest size box you can buy is a 50 round box of formerly cheap fun in a gun, that's 30,000,000 (30 million for those getting tired of seeing zeros like I am) boxes of .22 caliber satisfaction hitting the streets every year.

But, wait, that amount of ammo doesn't hit the street all at once. There's twelve (12) months in a year. 30 million divided by 12 is 2,500,000 boxes hitting the streets a month on average. If we assume that there are an average of 30 days in each month, we get that narrowed down to 83,333.33 50 round boxes of ammo arriving on store shelves somewhere every day (setting aside the fact that deliveries don't happen every day).

And where is all that ammo going? Well, the USA is a big place. There are literally millions of gun owners spread across 50 states clamouring for a piece of that action every day. I know that reality is different, but let's assume that the 83,333.33 boxes a day gets spread equally among the states. That leaves us with 1666.66 boxes per state per day.

What's the likelihood that you're going to be one of the lucky ones to snap up a box or two on any given day when every other Cletus in town is waiting at the gun stores doors on delivery day with cash in hand? Um, yeah. Not good. Do those per purchase limits make a little more sense now?

What does all this mean? That's an excellent question. I'm glad you asked. I don't know much, but I do understand basic economics.

Ammunition manufacturers and their suppliers are and have been working at or near capacity according to every report I've gotten a hand on including perusing some of their websites. That means that supply is pretty well maxed out; or, at the very least, it's as good as it's going to get for the near future. That leaves us with two options: increase supply or lower demand.

As long as the current resident at 1600 Pennsylvania is in office, lower demand is unlikely for the foreseeable future. Maybe ever. As long as there are gun banning politicians clamouring to relieve us of our Constitional rights, people are going to be stockpiling ammo. Truth be told, I don't blame them. If I had the extra cash in my budget, I'd be stockpiling too. Which makes me part of the problem.

On the other side of the coin, supply is harder to predict. For the near term, we can expect it to be relatively constant. In order for there to be an increase in supply at this point, one or more manufactures would have to invest in additional facilities, equipment and the manpower to staff the production line as well as getting their raw material suppliers to ramp up too. The likelihood of those stars aligning comes down to a cold, hard, cost/benefit/profit/loss calculation. If a company foresees that investing the necessary capital to increase production by adding another plant will yield a net profit over a period of time that makes sense to them, it will happen. If not, don't count on it. 

Don't ask me to figure out what that magic profit/loss number is...I don't have enough information to figure it out. For example, if you assume those 30 million boxes sell for an average of $8.00 a box (don't quibble with me about prices for match ammo...this is an example), that's $240,000,000 ($240 million) in gross retail sales. A guesstimated SWAG of the manufactures net profit out of that would be 10% or $24 million. Split that among however many ammo manufactures there are based on market share, and the picture gets even bleaker for the chances of a new ammo factory sprouting from the earth anytime soon.

Now, go ask your buddy who's bragging about his 1000 round score to sit back and let the rest of us have a shot.


GunDiva said...

One of our local gun shops received a case of "bricks" of .22 LR. The shop opened at 0900. I arrived at 0916. GONE! Even with each person being limited to one brick, it took less than 16 minutes for 20+ boxes to leave.

On another note, I did score some 9mm for Jay's gun (at $0.47/round I'm still crying). Also got some 5.56 and .45. But no .22. Damn it.

Daddy Hawk said...

GunDiva, I feel your pain. I stopped by one of my regular gun stores yesterday. They had plenty of .45...at $44 a box for 50 FMJ. There was not a .22 LR to be had and only one or two boxes of .22 WMR. It makes me cringe that I paid $17 a box for Tula and CCI Brass 230 gr. FMJ a year ago. For centerfire pistol, $0.50 per round +/- is the new norm unfortunately. If this keeps up, I'll have to switch to archery and pellet guns to have any fun.

GunDiva said...

My .45 was *almost* cheaper than the 9mm. I remember throwing a tantrum when I had to start paying $25/box of 100 for .45. I paid double that on Saturday.

I told Double Tap that I would assistant teach in trade for ammo or training time. He doesn't need to pay me in cash, just give me the valuable stuff :)

Momma Fargo said...

Yep. Crazy. And I get mad every time I see shelves empty. Ugh.

D.Hausmann said...

I live on the southern Oregon coast and have been checking with several stores in two towns approximately 30 miles apart. The stores in these two towns have not received any ammo shipments since the end of January. We definitely are not getting our share.

Daddy Hawk said...

GunDiva, at this point, I'd take payment in guns, ammo or silver if the company would pay me that way.

Momma Fargo, you and me both. I like to shoot, but it just isn't happening at these prices and supply levels.

D.Hausmann, that does not surprise me unfortunately. I live in the Dallas area, and it's bad but not that bad yet. I can still feed my .45 if I am willing to part with the cash. My problem is that I have a wife and baby girl to feed, and I can't justify turning that much cash into smoke and noise. Now, if you will excuse me, I hear an archery shop calling my name.

D.Hausmann said...

I hear you about the Archery, I have Bow hunted for years, but still love the smoke poles!!!