It is important to understand that ammunition pricing is not set by what the ammunition costs to produce, rather it’s determined by what the next batch is going to cost to produce. The profit margin is a set percentage that’s typically going to remain constant as long as production costs remain constant. An important factor in production are labor costs, which are similarly constant unless demand increases or decreases and affects long-term projections. As you can imagine during this unprecedented event, costs are fluctuating dramatically.
Due to factors beyond the control of the ammunition companies, the cost of components and raw materials has more than doubled within the last two weeks. Fiocchi and Vista Outdoors, for example) are two major ammunition manufacturing brands I’ll discuss. Fiocchi is shut down for commercial business and operating with minimal staffing for their military customers. Vista Outdoors is up and running, but they are fervently working to catch up to an unstable market that went berserk. Even with a redirection of resources and a recent price hike to cover it, it’s going to take time before covering their adjusted costs with respect to their actual output stabilizes.
It’s also worthwhile to consider how Covid-19 is affecting the smaller small arms and ammunition providers. Turkey, home to the manufacture of much of the imported shotguns and handguns has been getting frisky with Syria. Even if Turkey’s munitions factories could bear some of the production output in support of their American clients, the shipping ports are generally closed. The same applies to our allies in the Czech Republic. The Czechs could be sitting on mountains of propellant powder, but there is no way to get it to us. Russian-sourced ammo and components are also affected.
h/t WRSA
