What The Great Ammunition Shortage Says About Inflation
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. We’ve seen the management of pricing across economic cycles in other concentrated industries. Chris Leonard wrote about Tyson Food’s control of the poultry business, and how during the financial crisis this meant the entire industry could raise prices by all cutting production at once.
If America goes down the world goes down. They are nipping at our legs fast and furious.
One possible solution is to learn to reload. It may not be much cheaper, but at the least, your ammo supply will be steadier and not nearly as subject to scarcity.
Yes strider I have been reloading since the early 90s, supplys are low or no existent now.
Not good. They’re closing all the doors.
Yes they are.
Standard current U.S. business model- used to be “the customer is always right”. Now, screw the customer, “corrupt, greedy management is always right”. Or, build bigger bonuses back better. Every company that follows the CCP business model has failed. Sears, K-mart, chrysler, general motors, and anything unionized.
Let’em
I’m to damn tired too care anymore.
The Writing, is Chisled into the Rock.
Parties OVER.
Not a one politician currently OR running there yap to be one…
Has a clus as to there Job Description.
They all see the Pay Day and like that.
As to “The Industry”….
In 20yrs, they’ll ALL be gone anyhow.
Except to Arm the King & Queens, there guard and any Gov’t approved Whore sale(s) deemed “Legal”.
The Industry is damn near all done now.
And it’s there own fault.
A New Color, doesn’t mean shit!!!
I’m beginning to see the hippies point, thinking…in some ways.
No good comes from Corporations.
John Browning and his kind, YES.
But Business….NO.
It is always destroyed by The Suits and Pimps.
They wrecked the music industry too.
Oh…and
Hang all lawyers.
That is all.