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Thread: 2021 firearms and ammo market speculation from a friend at a distributor

  1. #1
    Frequent DG Adventurer fatdog's Avatar
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    2021 firearms and ammo market speculation from a friend at a distributor

    From a friend who is in management at one of the major firearm and ammo distributors. I excerpted these two paragraphs from his happy new year message to the LGS community they serve. I am always interested in the speculation and forecast nature of his observations having been in the industry 25+ years.

    "2020 steamrolled on while consumer demand showed no signs of cooling down. NICS numbers continue to surpass previous high water marks even as inventory supplies appear to be nonexistent. Inventory is turning at such a rapid rate, it simply does not survive on the shelf at distribution nor at retail for more than a few hours. Empty shelves, scarcity, drives changes in consumer behavior. This scarcity drives the average consumer to purchase in greater quantities than they would otherwise, particularly in the ammunition category. Scarcity is also playing a role in influencing consumers to purchase additional and/or multiple firearms. Scarcity also forces all of us in the supply chain to look further ahead in 2021 and plan for the next season's sales sooner than traditional timelines once dictated.

    There are no simple solutions to answering the hyper demand and the situation remains, in ways, difficult to fully describe. Increasing production is certainly risky and obviously expensive, especially given the short term nature of our current demand spike. A boom/bust business cycle is, long term, a losing situation and to consistently profit along the ups and downs is a difficult proposition. Given the industry's collective experiences since the Y2K bubble, I wager many decision makers in our industry chose to "wait out" 2020's demand spike. Add in the increased uncertainties and challenges of the pandemic, with so many factors simply out of any one business' control, a waiting things out short term strategy reduces certain risks and additional complexity. "

    I read that as the people at the manufacturer's he is talking to are leaning toward waiting this market out rather than expanding capacity.

    Sentiment is it is all temporary, and they are making so much money, selling everything they have, but don't expect it to last. So why make more capital investments in capacity and hire lots more people if the odds are you are going to have to idle the capacity and lay the people off to remain profitable a year or two from now.

    Speculation of course, but more informed than any of mine.

  2. #2
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    I’d wait it out too.

    The mouth breathing fuckwads panic buying ammo (still) at $.70 per round deserve the BK coming their way.

  3. #3
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    I just retired from heavy industry as a senior operations leader. We made and sold a lot of toilet paper. We focused on making as much toilet paper as we possibly can (note the machines run 24-7 anyway) by being even more efficient and investing in Industry 4.0 ("Skynet" - AI, ML, etc.). We made targeted capital improvements but in general did not add lots of new capacity because one day the surge will be over and we would have to idle, layoff, etc.

    I assume the firearms and ammo business will do the same. Make as much as they can, make a few targeted investments, etc.

  4. #4
    Quote Originally Posted by fixer View Post
    I’d wait it out too.

    The mouth breathing fuckwads panic buying ammo (still) at $.70 per round deserve the BK coming their way.
    BK?
    #RESIST

  5. #5
    Quote Originally Posted by LittleLebowski View Post
    BK?
    Bankruptcy.


    Okie John
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  6. #6
    There are several type 07's in the process of adding capacity.

  7. #7
    Chasing the Horizon RJ's Avatar
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    Butt Kicking?

  8. #8
    Four String Fumbler Joe in PNG's Avatar
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    I would also venture that there's a lot of 'wait and see' in regards to what regulations & restrictions the Harris-Biden admin may possibly pass.

    Making a big investment in tooling to produce something that just might be banned or seriously restricted right when you get your line up and running is a bad time.
    "You win 100% of the fights you avoid. If you're not there when it happens, you don't lose." - William Aprill
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  9. #9
    Member iWander's Avatar
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    Quote Originally Posted by Joe in PNG View Post
    I would also venture that there's a lot of 'wait and see' in regards to what regulations & restrictions the Harris-Biden admin may possibly pass.

    Making a big investment in tooling to produce something that just might be banned or seriously restricted right when you get your line up and running is a bad time.
    That's what I was thinking as well. Consumer demand will certainly continue throughout 2021 as long as a Corona/Harris AWB isn't passed.
    Cross your fingers and help the Georgia election...

  10. #10
    Member olstyn's Avatar
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    Quote Originally Posted by Joe in PNG View Post
    I would also venture that there's a lot of 'wait and see' in regards to what regulations & restrictions the Harris-Biden admin may possibly pass.

    Making a big investment in tooling to produce something that just might be banned or seriously restricted right when you get your line up and running is a bad time.
    I imagine there's a lot of that going around on both the supply and demand side. I want CMMG RDB 9mm carbine to play with in USPSA, but their lead time page says they're 20+ weeks out on production right now, and they never got back to me when I emailed asking what happens if an order gets queued up for production and then the rules about what I can legally receive change. I have to imagine elevated demand/maxed out production capacity leads to a higher than normal incidence of quality issues too, so I'm kind of in "wait and see" mode. At least I'm good on ammo for now...

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