By Dean Weingarten
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. 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.
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 their 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 and for the price to drop below 4 cents a round. It has not happened yet, but the process is ongoing.
Prices will drop and demand will be satisfied. The .22 ammunition bubble is a fascinating example of the intersection of politics and microeconomics.
©2017 by Dean Weingarten: Permission to share is granted when this notice and link are included.
About Dean Weingarten
Dean Weingarten has been a peace officer, a military officer, was on the University of Wisconsin Pistol Team for four years, and was first certified to teach firearms safety in 1973. He taught the Arizona concealed carry course for fifteen years until the goal of constitutional carry was attained. He has degrees in meteorology and mining engineering, and recently retired from the Department of Defense after a 30 year career in Army Research, Development, Testing, and Evaluation.