ammo shortage???

[Kamakazee]

I talked to a guy at the local range last weekend he had been recently been employed at CCI.
He said they are stockpiling ammo in a warehouse to keep the prices up, that figurers.

[MikeBjerum]

Welcome to the forum Kamakazee!

Several questions come to mind about this guy's information:

1.  What were the terms of his leaving CCI - is he a disgruntled employee or was it a good departure;
2.  Was he in a level of employment that made him "in the know" of the business operations - was this stock piling to make short supply, was this normal cycle for shipping cycles, were they stockpiling to fill a large order (we have a manufacturer in our region that is filling a multi (multi, multi, multi) million round order with the government);
3.  Does he have similar info from #2 from other companies - one company can not create a shortage by lower production or limiting shipment;
4. And I will finish my list with a basic logic question - I can understand a company making and selling all they can at a profitable level, I can see lowering production numbers when prices are well over the cost of production, but what do they have to gain by producing high levels (many industry experts have gone on record that ammo manufacturers are producing higher levels than ever) with high cost components and then putting it in storage?  High retail pricing means nothing if they aren't going to liquidate, and unsold inventory in the warehouse costs them in terms of interest and other loss factors.

I'm not calling him a liar, but I won't relay this industry info until I understand some of these basic factors.

[Kamakazee]

I will talk to him in a month at the next match and will get the full story.I know ya got to take everything with a grain of salt.

[Pathfinder]

Welcome aboard K. Swing on by the Cafe and find the new member's thread, tell us about yourself. We're an odd bunch of folks here (some odder than others - I ain't naming names) but we're all about guns, so not as odd as we could be.

Enjoy!

[ghostman1960]

I don't know about any ammo shortages. I saw 3 boxes of .40 the other day at Walmart. 

[Sponsor]

[Walkeraviator]

. And I will finish my list with a basic logic question - I can understand a company making and selling all they can at a profitable level, I can see lowering production numbers when prices are well over the cost of production, but what do they have to gain by producing high levels (many industry experts have gone on record that ammo manufacturers are producing higher levels than ever) with high cost components and then putting it in storage?  High retail pricing means nothing if they aren't going to liquidate, and unsold inventory in the warehouse costs them in terms of interest and other loss factors.


You know I asked myself this question once before...but it is done in other industries.  If DeBeers were to release every diamond they had stockpiled onto the market, a cracker would bring more money. 

[Big Frank]

Welcome to the forum Kamakazee.

[WatchManUSA]

. And I will finish my list with a basic logic question - I can understand a company making and selling all they can at a profitable level, I can see lowering production numbers when prices are well over the cost of production, but what do they have to gain by producing high levels (many industry experts have gone on record that ammo manufacturers are producing higher levels than ever) with high cost components and then putting it in storage?  High retail pricing means nothing if they aren't going to liquidate, and unsold inventory in the warehouse costs them in terms of interest and other loss factors.


You know I asked myself this question once before...but it is done in other industries.  If DeBeers were to release every diamond they had stockpiled onto the market, a cracker would bring more money. 

I don’t think you can compare CCI and the other ammunition manufactures to the diamond cartel.

De Beers was a diamond monopoly controlling mining, production, distribution and sales.  Now-a-days De Beers is not a monopoly like it once was.  The diamond business is more akin to a cartel.  De Beers is one company in a larger diamond market but is still has 40% of the market.  The other diamond companies like De Beers operate in a similar fashion.

On the other hand the ammo business is a highly competitive market place.  I suspect that, during a shortage of supply, it would behoove a business to get product out the door and in stores to capture market share.  In my area you still can’t walk into a store and see piles of ammo on the shelves.  If you are lucky there might be one or two boxes on the shelf but in most cases the shelves still nearly bare.

Now a business may not ship everything out the door for many reasons.  One might include a planned shut down for repair or line change.  Another reason is to build up inventory to cover another anticipated surge in purchases.  Another might be circumventing anticipated regulatory changes.  The list is almost endless.

[rj112275]

Stopped by Dick's yesterday and they had about 10 boxes of WWB 380ACP and at least 2 UMC Value pack (250round) 380ACP... lots of 223 and 9mm. I didn't look for anything else. Went by again today... still there. No shortage here.

[alfsauve]

De Beers is one company in a larger diamond market but is still has 40% of the market.  The other diamond companies like De Beers operate in a similar fashion.

Plus now they manufacture artificial diamonds for industrial purposes (a company in Sarasota, FL I believe).  I'm not sure why they don't sell to consumers, but I hear that the diamonds they make are truly flawless.     I don't think the diamond cartels have anything to do with it, though.  I'll have to ask.