Monday, March 27, 2017

Ammunition Maker Reduces Staff in Idaho, Minnesota



Vista is the corporation that owns CCI and Federal brands. They have been increasing production of .22 rimfire ammunition. It was expected to be ramped up 20% this year.

Following the election of President Trump, demand for ammunition has dropped. According to an article from Lewiston, Idaho, Vista has laid off employees in both the Lewiston and the Anoka, Minnesota ammunition plant locations.  From the postregister.com:
The number of people who work at Vista Outdoor’s ammunition-making operations has been shifting since February. A month-long voluntary, temporary furlough for about 100 Lewiston employees ends Thursday and will bring the number of employees at the operation to 1,465.

Vista’s Lewiston operations also shed about 10 positions through attrition in February.

The measures Vista has taken in Minnesota were more sizeable. That plant permanently lost 130 employees in early March. It had about 1,430 employees prior to the cuts.
Lewiston laid off 15 salaried employees.  The Anoka facility laid off about 10% of its 1,430 employees. The presumption is that it is not employees at the rimfire production facilities that are being laid off.

Centerfire ammunition shelves tend to be well stocked. But that is not the case with rimfire ammunition, especially .22 Long Rifle cartridges. The .22 LR continues to be the most popular cartridge in the world. Annual production for the U.S. market is estimated at 5 billion rounds.

There are many stores that have little to no .22 rimfire ammunition on their shelves.  Prices are high compared to the historical average.

Only five years ago, .22 ammunition could be found at 3 cents per round in bulk packs.  Now it is unusual to find .22 Long Rifle at less than 5 cents a round.  A Dallas WalMart had 22 boxes of Federal Champion 40 grain loads at $2.47 last week. That is slightly less than 5 cents a round.

Is is unlikely that Vista would be laying off employees involved in .22 Long Rifle production. Demand for rimfire ammunition is far from saturated.

Update:

 I expect that .22 long rifle prices will drop, but there is significant pent up demand. People who would not buy at 10 cents a round for .22 Long Rifle Ammunition would buy it at 9 cents a round. People who would not buy it at 6 cents a round will buy it at 5 cents a round. At each point in the price curve the demand increases and has to be filled as purchasers want to stock up on a desired ammunition.  This is keeping the price from falling precipitously.

Eventually the price will drop back to where it is close to the cost of production, marketing, shipping, and retail sale. I expect the price to fall to 4 cents a round by October of 2017.  The price is down slightly below 5 cents a round in some stores now; but there are still limits on purchase.  WalMart limits purchase to three boxes a day, per customer, in most stores.

Supply will have to satisfy demand enough for those limits to come off, for the price to drop below 4 cents a round. It has not happened yet, but the process is ongoing.


©2017 by Dean Weingarten: Permission to share is granted when this notice and link are included.

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2 comments:

Anonymous said...

This sort of makes it clear that the manufacturers are helping to dive the price up. retailers are simply price gouging because of the supply and demand issue. If I had the money I would start a protest by buying a tractor trailer load and selling it for a small markup. I know how to drive the price down but it takes money. enough money to buy in very large quantities like a jobber. let the gougers eat their inventory. I have put gougers out of business before. You have to sell for just enough to cover expenses and replace and increate the next load with just enough profit make it work. Advertising is a waste really the be of money. sell for the right price and you will not need to advertise. when I was in business my advertising budget consisted of business cards and hand made signs in my window. regular customers came from as far away as 150 miles. they bought enough to make it worth the drive. other shops had to pay 3k a month for their floor space and five employees. they went bankrupt. I had my inventory sold before I could get it on the shelf. I made a lot of custom order sales. really the best way to drive prices down is to just stop buying any ammo for a year. keep what you have and sit on it.

Pat Daly said...

Earth to CCI, Wal-Mart will purchase every SINGLE round of .22LR ammunition that you can produce.

We will then riot to be the first one in line to purchase said CCI ammo.

Just filling Wal-Marts pipeline will take all you have for several years.

Don't play games, CCI is the best .22 stuff, but we will purchase whoever makes and sells it for a honest profit.