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May Want To Stock Up On Reloading Components
- Thread starter Csbc4fun
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I buy alot of components for 75-85cents on the dollar locally because people panic buy 1000s of primers and bullets and several pounds of powder that end up not working in a rifle or a barrel or rifle they hadn't bought yet.
The hazmat really puts peopel in a pickle. Same with bullets when people are trying to keep the lots the same and buy 1500 bullets and realize that's 50 lbs.
I don't want to pay higher prices on anything either. But the shooting community doesn't always help itself.
The hazmat really puts peopel in a pickle. Same with bullets when people are trying to keep the lots the same and buy 1500 bullets and realize that's 50 lbs.
I don't want to pay higher prices on anything either. But the shooting community doesn't always help itself.
western living
Member
Here's two charts that explain Vista's past and present course:
From this first chart, we can see Vista's revenue over the last two cycles. At the end of 2019, they're revenue had bottomed and they'd endured three years of negative growth. 2020-2022 were banner years, but they were right not to expect that to be the "new normal." We can see that by mid-2022, they were already seeing negative growth. The bubble was over. This was true for Vista and it was true for Ruger and S&W and a lot of other US firearms businesses. They all saw steep drops in revenue/growth/profit, not so much because business was bad, but because there was nowhere to go from 2021 but down.
This chart doesn't paint a picture that calls for an increase in capacity -- not unless those green bars could be sustained for more than a two-year cycle.
The next chart shows gross profit for FY18 and FY19 broken down by the Outdoor division vs. Shooting division:
This is what Vista sees when there isn't the windfall from unusual events (2020 etc.).
The bottom line is outside extraordinary global catastrophes, Vista makes more profit through REI than they do through your LGS.
They've already witnessed a rapid decline in Shooting Sports revenues and negative growth in that segment for over a year now. So I am convinced they have no plans to increase supply. I know they refused to increase capacity when it was needed, and now they have already decided (last month) to increase prices to do "demand destruction" instead of increasing supply.
Perhaps, if the shareholders approve the sale (I think it's in March), the new owners of the Shooting Sports division will change the plans, but for now, nothing new.
From this first chart, we can see Vista's revenue over the last two cycles. At the end of 2019, they're revenue had bottomed and they'd endured three years of negative growth. 2020-2022 were banner years, but they were right not to expect that to be the "new normal." We can see that by mid-2022, they were already seeing negative growth. The bubble was over. This was true for Vista and it was true for Ruger and S&W and a lot of other US firearms businesses. They all saw steep drops in revenue/growth/profit, not so much because business was bad, but because there was nowhere to go from 2021 but down.
This chart doesn't paint a picture that calls for an increase in capacity -- not unless those green bars could be sustained for more than a two-year cycle.
The next chart shows gross profit for FY18 and FY19 broken down by the Outdoor division vs. Shooting division:
This is what Vista sees when there isn't the windfall from unusual events (2020 etc.).
The bottom line is outside extraordinary global catastrophes, Vista makes more profit through REI than they do through your LGS.
They've already witnessed a rapid decline in Shooting Sports revenues and negative growth in that segment for over a year now. So I am convinced they have no plans to increase supply. I know they refused to increase capacity when it was needed, and now they have already decided (last month) to increase prices to do "demand destruction" instead of increasing supply.
Perhaps, if the shareholders approve the sale (I think it's in March), the new owners of the Shooting Sports division will change the plans, but for now, nothing new.
nksmfamjp
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I'm saying. Go ahead and raise prices when you think you can and check your profits. If they go down, might want to lower your prices and push back to your suppliers by reducing orders. The suppliers will get the hint when buried in their own product!
What do you think is driving primer prices down and available types up? Price pressures….
The letter is not informing your customers of anything. It is to create a buying surge to clear inventory space so they don't have to spend money to store the excess coming or clearance what the have….and it maybe allows them to raise prices without affecting sales as much.
nksmfamjp
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I'm going to buy components as I need them. I will build, hold and use based on price available.
For example, I did pay $130 for primers once. If I find them at $80-$90 per box now, I buy one, but not to grow my supply. At somewhere around $50, I would consider growing my supply.
I have been recently trying to minimize panic. This mostly includes pointing out economic principles, not creating posts to announce components availability, showing the current trend of price reductions, etc. I also am eating some of my inventory.
My point is….if I'm sitting on a warehouse full of components that I overpaid on, I too would issue letters of increasing prices. Think how hard it will be on cash flow to sell primers I paid $80 for today. That is what the wholesalers have right now as primers drop below $100 a box.
That is true all the way up the supply chain. The ammo is stocked and price dropping. They need a subpanic to cover the OT rates and storage costs they paid to get it made to sell at top dollar.
I'm sure at a normal pace, primers are still profitable at $35 per box!
Hmm, so basically with all of the new gun owners there aren't many reloaders yet.
western living
Member
Not anymore. Break-even, maybe. Wage inflation has averaged about 4.5% since 2020, so about 14% higher. If we suppose that primer manufacturing is not labor intensive, the cost of capital has also gone up since 2022. The cost of corporate debt has risen from practically free to about 5.75% and the cost of equity debt has risen to about 10%. The cost of materials has also gone up. That's the main reason Vista cited for increased prices. They have to buy from suppliers, and those suppliers costs have also gone up.
I wouldn't be surprised if the cost has gone up 20%. At $35/box, the margins were thin. That was at the bottom of the slump and if they could have sold more for less, they would have dropped prices lower. So, I imagine they would need 40-something per box just to avoid losses without major cost-cuts (reducing workforce, idling capacity, cutting down leased space, etc.).
Obviously, inflation doesn't justify a 100% price increase or 150%, and that's what we still have on primers. We don't see that kind of increase in powder, or bullets, or brass or other consumer items. If we use the CPI, things have gone up about 18.9% in the last three years.
So, it would be fair to figure that if supply and demand were normalized, you could get a box of primers for $50 or maybe a little less. But we're still seeing a great deal of demand, especially from military consumers, and there is a lot of pent-up demand from individual consumers like us who are waiting for prices to come down. As long as there are a lot of people ready to pounce when they go to $55, we won't see $50 for a long time. As long as militaries are demanding a large portion of capacity, we won't see the supply increase such that there would be stock that won't move at current prices.
The producers need more capacity before we can expect to see an increase in supply in the next few years. Look what they're doing for artillery shells. Nothing like that is happening for small arms ammo.
Our labor has gone up way more than 14.5% in the last 4 years. probably closer to 30%
Actually, it is labor intensive, but you decide. The video below is not the greatest, esp. the audio towards the end, but you get the gist.
Primer cup manufacturing ...
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cohunt
Well-Known Member
Normal store shelf prices are now at or over the "gunbroker scalper prices" from the obummer era.
I remember the harsh words people used for the scalper prices, now those same people are paying the same prices for off the shelf inventory.
I also remember the harsh words some people had for "horders", and some of those people are now saying "stock up before it goes up"
Life is interesting sometimes
I remember the harsh words people used for the scalper prices, now those same people are paying the same prices for off the shelf inventory.
I also remember the harsh words some people had for "horders", and some of those people are now saying "stock up before it goes up"
Life is interesting sometimes
nksmfamjp
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Would be interesting to know where that first video was made.
I just found my answer. That video is a cut out of an American Shooter TV show episode. So, it looks like Federal USA production.
That guy is one of 2 people shown in the videos!
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IIIRC(?), it was Federal. Hopefully, someone chimes in that has a definitive answer.
Added.
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FrogFire7
Well-Known Member
Funny, I was thinking that same thing, almost verbatim, yesterday afternoon.
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