You know that America has been gripped by an ammunition shortage since the beginning of the Coronavirus scare. Thankfully there has been some improvement, but ammo is still scarce, and costly. Americans have been spending more time in the outdoors hunting and shooting, but they’ve also been worried about spiking crime instigated by Democratic politicians. Feeding the demand for ammunition has been impossible for the country’s two major producers, Vista Outdoor and Olin Corp. The Economist reports:
Just two companies, Vista Outdoor and Olin Corp, meet the bulk of America’s demand for ammunition, and chiefly through two long-established brands. Remington, part of Vista, was founded in 1816, and Winchester Ammunition, owned by Olin Corp, started in 1866. Because of soaring demand for bullets, both firms are enjoying the sort of heady growth that only new businesses usually enjoy.
Three times a day, queues of pick-up trucks appear outside Remington’s ammunition plant on the outskirts of Little Rock, Arkansas, to bear away the fruits of round-the-clock shifts. It is a sharp reversal from last summer, when Remington went bankrupt for the second time since 2018. Production had been reduced to a trickle of bullets made from whatever raw materials could be coaxed from suppliers, who had no certainty of being paid.
Even as Remington languished—it was then owned by a private-equity firm, Cerberus Capital, which appeared more focused on complex financial transactions than on expanding the firm’s sales—the ammo market took off. The biggest factor was covid-19 and associated restrictions, which encouraged millions of people outdoors to hunt and target-shoot. Background checks on gun purchases, a measure commonly used to track the market, had been increasing annually, but last year they shot up by an unprecedented 40%.
Remington has been able to increase prices seven times. It has unfilled orders worth billions of dollars. Retailers of ammunition surveyed by the National Shooting Sports Foundation NSSF, a trade group, said they could have sold three times more ammunition during the first half of 2021 had it been available. Vista, Remington’s new parent, has infused working capital and increased the size of its workforce. The unit’s operating profits this year are expected to be similar to the $81m that Vista paid for the business. As for Winchester Ammunition, its revenues for the third quarter nearly doubled year on year, to $400m, and its gross operating profits nearly quadrupled.
Action Line: You never know when a shortage of ammunition or firearms will take hold. Get your guns and your training now.
