Any single one of those would have spiked demand, but all these factors happening in rapid succession was more than the market could bear. Partly because the NSSF estimates that 7 million new gun owners entered the market in 2020. As Vanderbrink pointed out, if those 7 million new gun owners each bought 100 rounds of ammo, that’s 700 million rounds that the market needs to produce.
To put that in context, the entire commercial market in 2018 made approximately 8 billion rounds. An 8.75 increase in demand wouldn’t shut everything down, but when it’s added on top of the demand created by all the other factors, it becomes too much.
How high is demand?
During a media presentation at Virtual SHOT Show 2021, Winchester said that if they stopped taking orders for .22 LR right now, it would take 2 years to fill all the back-orders. In December, the Vista family of companies, which comprises Federal, CCI, Speer, and Remington, announced they had a $1 billion backlog in orders. In the first 3 months of the COVID-19 lockdown, Winchester experienced a 17-percent surge in orders, which hasn’t tapered off.
Why can’t they build more factories?
The first question on people’s minds is “Why don’t these companies expand capacity?” That’s much easier said than done. Vista, for example, is already running three shifts a day, and operating 24/7. The same is true for Magtech in Brazil. For one of these companies to add capacity, they’d have to build a new space, and buy new machines, and train and staff the new machines.
All that while hoping that the bottom doesn’t fall out of the ammo market like it did in 2017. That investment in extra space costs millions of dollars and takes years to pay off, and if you look at past trends in the ammo market, not even this surge will last forever.
Why are prices so high at the consumer level?
Vista, Winchester, and Magtech/S&B announced a 15-percent price increase to distributors. Distributors have already raised prices, and of course at the retail level prices are coming up. Prices have to come up to create equilibrium. Eventually the cost to the consumer will be high enough that people won’t panic buy 9 mm FMJ. Retailers will start to have more stock than they can sell and prices will start to come down.
The manufacturer price increase helps as well. In a letter to distributors, Vista announced that all back orders would ship with the higher price. If this causes people to cancel their back order, that frees up theoretical capacity to go into the market. Using AmmoSeek to track historical 9 mm prices, the online price for 9 mm seems to have plateaued at between $0.80 and $0.90 per round for quality new manufactured 9 mm, which is actually a good sign.
Why can’t I get primers?
Only two domestic companies make primers, Vista and Winchester. All their primers are going into their production ammo for retail. Normally, the primer market is fed by companies being able to make more primers than they’d ever need to make loaded ammo. In 2020 and now 2021, that’s not been the case, so every primer that rolls off the line is going into a loaded piece of ammunition so the consumers can have something to immediately shoot. It’s a tough situation for reloaders, but the priority will always be the commercial shooting market.
What about the government?
Parker County Blog 