An ammo shortage is being witnessed nationwide as Americans react to civil unrest by buying up firearms and the ammunition needed to defend themselves their property and their liberty.

Below I will attempt to explore the various factors causing and even increasing the shortage. In addition I will also explain why I believe this shortage will last for the foreseeable future and may even worsen.

Primer Shortage:

As with previous surges in ammunition sales, primers are the current weak link in the supply chain. After speaking with several of our suppliers I learned that the lack of primer supply is the primary item that is preventing ammunition makers from increasing production and attempting to meet the unprecedented demand.

We have seen shortages before. When the semi-auto ban was passed in 1994, there was a shortage. In 2008, when Barack Obama was elected president and again in 2012 through 2013 during the aftermath of the tragic Sandy Hook School shooting. All previous shortages were caused by increased demand only, there were no supply chain disruptions enhancing to problem. According to various sources, manufacturers are confirming that we are in the midst of the greatest primer shortage in the history of the world.

Bullets are relatively simple to produce. Brass cases can be reused and powder is still plentiful. Hence, primer production is the bottleneck in the ammunition production process. Though there are dozens of major and minor ammunition manufacturers in the U.S., only four domestic manufacturers produce primers: Federal, CCI, Remington and Winchester. Those four firms feed the entire primer supply including ammunition sold to the military and law enforcement. Federal, CCI & Remington are all owned by Vista Outdoors, so effectively primer production in the United States is controlled by two companies (More on this later). Billions of primers are produced every year by these companies in the US.

Internationally, primers are manufactured by four additional firms in different parts of the world. Armscor in the Philippines, Sellier & Bellot in the Czech Republic, Fiocchi in Italy and JSC in Russia. As you can imagine there is an increased demand for ammunition in most of the world so these international companies have little interest in shipping their limited supply to the United States.

Record First Time Gun Buyers:

Remember, the shortage in ammunition comes as background checks for gun sales were at record-setting levels for eight straight months. In other words, a record for monthly background checks was set every month January 2020 through August 2020. The surge in gun sales is having a corresponding effect on ammunition. NSSF estimates there are nearly 5 million first-time gun buyers in 2020. That also means there are 5 million new ammunition buyers who are learning to use their firearms. There are 5 million new people who do not have a supply of ammo at home. There are 5 million new people looking for ranges for safe, recreational shooting. There are 5 million new gun owners filling up classes at their local ranges for instruction.

This year, gun sales rose 165 percent year-over year as of June , totaling around 2 million plus purchases per month, according to an August Report from Small Arms Analytics and Forecasting. The report estimated that “the market for the first seven months of 2020 now has nearly matched that of the entire year of 2019.” A similar report from the Brookings Institute found that 19 million firearms were purchased in the first half of 2020. Brookings pointed out that this figure can be translated to one firearm for every 20 Americans. Both reports used data from the FBI’s Criminal Background check system.

Political Unrest:

While the media often frames gun ownership as a conservative issue driven by paranoia, the language from Democrats and progressive outlets this year has helped to blur any line that exists between paranoia and preparation.

Earlier this year, Odyssey published a piece fantasizing about the possibility of an “armed revolution” made possible by conservatives and liberals “unit[ing] under the cause that this fascist must be stopped.

“For this to happen, the President would need to do something drastic that only a miniscule minority of citizens would approve of (ethnic cleansing, nuclear war, etc). This regime would need to face large-scale opposition from the citizens, select members of the government, and most importantly, the military,” read the piece.

Former Secretary of State John Kerry recently made comments suggesting that a  “revolution” of sorts is imminent.

“If people don’t have adequate access to the ballot, I mean that’s the stuff on which revolutions are built,” Kerry said. “If you begin to deny people the capacity of your democracy to work, even the Founding Fathers wrote in the Declaration of Independence, the Constitution, we have an inherent right to challenge that. And I’m worried that increasingly, people are disaffected.”

In March, New York Post reported that Democratic Congressman Tom Souzzi (D-NY) hinted at an armed rebellion against the President, specifically citing the 2nd Amendment:

“It’s really a matter of putting public pressure on the president,” Suozzi said in a newly released video of the March 12 talk in Huntington. “This is where the Second Amendment comes in, quite frankly, because you know, what if the president was to ignore the courts? What would you do? What would we do?”

A listener then blurts out, “What’s the Second Amendment?”

The left-leaning Democrat says, “The Second Amendment is the right to bear arms.”

In July Rep. Steve Cohen (D-TN) seemed to suggest a military coup against the President, tweeting “Where are our military folks ? The Commander in Chief is in the hands of our enemy!”

Perhaps one of the most relevant voices on the topic, notorious Weather Underground leader Bill Ayers claims the civil war has already begun. “Am I the only one, or do you feel eerily that we’re living in Kansas, 1859, and that tensions are boiling over, but only years later will people say, ‘Yes, the Civil War began there and then?,” said Ayers

Ayers took part in the Weather Underground Bombings of the early 1970’s targeting the New York City Police Department headquarters, the U.S. Capitol building, and the Pentagon.

Federal Government Purchasing:

There have been numerous Internet blogs and emails describing how various agencies in the federal government are purchasing large quantities of ammunition. These rumors and half-truths surrounding these stories are largely exaggerated and mostly untrue. During the Obama administration the federal government purchased billions of rounds of ammunition and stockpiled it. The federal government is still ordering millions of rounds of ammunition per year but they are not purchasing any more than their normal amounts. The difference is that nearly all the ammunition manufacturers (some by law, others voluntarily) fill the government and law enforcement orders first, before any civilian orders. During a global shortage this adds to the overall supply shortage.

Production Limitations:

Most ammunition manufactures normally run production at near 80 percent of operational capacity under normal circumstances. One problem is the difference in elasticity (responsiveness to price changes) between supply and demand. Compared to firearm demand, the supply side of the industry is considerably inelastic. This means that the supply does not respond dramatically to either increases or decreases in demand, impacting the price people are willing to pay,  but remains relatively consistent.  Manufacturers max out production increases at around 20-30 percent above normal production compared to the current consumer demand that has increased nearly 300 percent.

The component suppliers can’t expand more than 20-30 percent before they max out their material suppliers and even the physical limitations of the production lines. Nearly all the supply chains are simply maxed out.

Increased Profit Margin:

It is important to understand that ammunition pricing is not set by what the ammunition costs to produce, rather it’s determined by what the next batch is going to cost to produce. The profit margin is a set percentage that will typically remain constant as long as production costs remain constant (Even though most companies have increased their margin by 10-20 percent recently). The most important factor in production is labor costs, which are similarly constant unless demand increases or decreases and affects long-term projections. As you can imagine during these unprecedented times costs are fluctuating dramatically.

It is important to understand that ammunition pricing is not set by what the ammunition costs to produce, rather it’s determined by what the next batch is going to cost to produce. The profit margin is a set percentage that’s typically going to remain constant as long as production costs remain constant. An important factor in production are labor costs, which are similarly constant unless demand increases or decreases and affects long-term projections. As you can imagine during this unprecedented event, costs are fluctuating dramatically.

Due to factors beyond the control of the ammunition companies, the cost of components and raw materials has more than doubled this year. Labor costs are up 30-70 percent due to overtime cost, employee shortages, increase minimum wages and government mandated sick leave pay.

Even though the manufactures have not increased their profit margins by more than 10 percent the manufacturing cost has nearly tripled this year effectively increasing their profits by 40 percent. Because of this increase in profit the manufactures have little if any real motivation to solve the ammunition shortage in the US. If they were to suddenly meet the current demand with increased production their profits would be cut by half and they would need to manufacture nearly double the amount of ammunition for the same total gross profit.

Reduced Imports:

It’s also worthwhile to consider how Covid-19 is affecting the smaller small arms and ammunition providers abroad that we generally rely on for imports . Turkey, home to the manufacture of much of the imported shotguns and handguns has been getting frisky with Syria. Even if Turkey’s munitions factories could bear some of the production output in support of their American clients, the shipping ports are generally closed due to covid. The same applies to our allies in the Czech Republic. The Czechs could be sitting on mountains of propellant powder, but there is no way to get it to us. Russian-sourced ammo and components are also affected by both politically based import restrictions and Covid-19 closures as is Chinese imports.

In a best-case scenario, it takes more than 20 days for a shipping container to arrive to the U.S. from any of those locations. If cargo has to arrive on the west coast, shipping can take more than 30 days. Plus, a typical minimum of 10 days is required to embark and disembark on each side of the trip, them we have to clear customs. So, once the ports reopen, a realistic time frame to see supply reach the US is four months — just to get the ammo to U.S. distributors. And that’s if those foreign manufacturing continue to manufacture their product and have them crated, bonded and stocked. According to Fiocchi, that that’s not likely. So figure another 40-60 days to return to manufacturing again if they have the raw components such as primers and brass, which they may not because closed ports affect them obtaining raw materials as well.

Forced Closures:

back in March various state governments engaged in a somewhat arbitrary practice of designating some gun and ammunition manufacturers to be “essential” while refusing to allow others to remain open. This coupled with increased demand and other various factors started the inversible downward spiral that has lead us to the current situation.

Fiocchi as well as numerous other manufactures were shut down for commercial business and operating with minimal staffing allowed for their military customers only. Some of these companies were closed for more than 30 days.

There are other, not so front page COVID-19 restrictions that affect the supply lines for raw materials and components. Raw materials like lead, copper, and brass for projectiles, primers, and casings is one piece, and the other is gunpowder itself. The forced closures of mines, shipping, production plants, processing facilities and packaging plants are all contributing to the overall supply chain disruptions.

Panic Buying:

Demand is also driven by the same psychological factors that caused the toilet paper shortage: hoarding. According to recent research (Sheu & Kuo, 2020) “hoarding stems from a human’s response, either rationally or emotionally, to scarcity, and so may occur on either the supply or the demand side. As argued by [other researchers], hoarding can be an overall response that involves a mix of a strategic, rational and emotional human responses (such as anxiety, panic and fear) to perceived threats to supply.” That’s a smart person way of saying that when people think we’re going to run out of ammo, they buy as much as they can and sit on it, which contributes to the scarcity by artificially inflating demand.

Return To Normal?

Most industry experts estimate that we won’t see a return to normal inventory levels for at least 12 months, even when assuming a Republican presidential victory in the 2020 race. Normal inventory is defined as being able to buy as much as ammo as you want and can afford from the internet or your local retailer. Worse yet, prices may not return to pre-COVID levels for a minimum of 12 months after that. The long term disruption to the supply chain tends to result in increased costs for manufacturers which will get passed on to the consumer until we see a full economic and political recovery. Unless one of the factors causing massive demand suddenly changes or disappears, we can expect to see increased prices and rationing for some time to come and we face the real possibility that there will not be a return to “normal”.