U.S. bullet makers rush to ease pandemic ammunition shortage
JUST TWO Vista Outdoor and Olin Corp meet most of the US demand for ammunition, primarily through two long-established brands. Remington, which is part of Vista, was founded in 1816, and Winchester Ammunition, owned by Olin Corp, started in 1866. Due to increasing demand for bullets, both companies are experiencing the kind of breakneck growth that only new companies usually appreciate it.
Three times a day, lines of pickup trucks appear outside the Remington Ammunition Plant on the outskirts of Little Rock, Arkansas, to pick up the fruits of 24-hour shifts. a sharp reversal from last summer, when Remington went bankrupt for the second time since 2018. Production had been reduced to a net of balls made from any raw material that could be coaxed from suppliers, who had no certainty of being paid.
Even as Remington languished (he was then owned by a private equity firm, Cerberus Capital, which seemed more focused on complex financial transactions than expanding the company’s sales), the ammunition market took off. The most important factor was covid-19 and the associated restrictions, which encouraged millions of people outside to hunt and shoot. Background checks on firearms purchases, a measure commonly used to track the market, had increased every year, but last year they rose an unprecedented 40%.
Remington was able to raise his prices seven times. He has backlog orders worth billions of dollars. Ammunition retailers surveyed by the National Shooting Sports Foundation (NSSF), a trading group, said they could have sold three times as much ammunition in the first half of 2021 had it been available. Vista, Remington’s new parent company, injected working capital and increased the size of its workforce. The unit’s operating profits this year are expected to be similar to the $ 81 million Vista paid for the company. As for Winchester Ammunition, its third-quarter revenue nearly doubled year-over-year to $ 400 million, and its gross operating profit nearly quadrupled.
The ammunition and gun industries pray that the good times will last. In the past, demand increased when gun owners, mostly white and male, feared further restrictions. These are now new demographic groups. An investigation by the NSSF shows that the proportion of recreational shooters who are female increased from 19% to 25% between 2006 and 2019. Currently, 28% of gun owners are Hispanic, 25% are black and 19% are Asian. Shooting clubs are popping up for every niche. The Pink Pistols, for example, a shooting and social group for sexual minorities, have 48 chapters across America. His motto: “Choose someone of your caliber”.
Political opposition to guns remains strong, which has prompted companies to move their businesses recently to places that could be a bit friendlier. Remington’s licensed firearms division is moving from New York to Georgia, where gun laws are more permissive, and Smith & Wesson, another legendary brand, recently announced it will move from Massachusetts to Tennessee. But customers for guns and ammunition seem to be popping up everywhere.■
For a deeper analysis of the biggest stories in economics, business and markets, sign up for Money Talks, our weekly newsletter.
This article appeared in the Business section of the print edition under the title “Reloaded”