When the wheels fall off, they really fall off.

The recent buying binge of ammo and tactical guns that swept the firearms industry to record-sales in the first six months of 2009 has come to a rubber-burning, tire-squealing halt.

It was great while it lasted. Or was it bit like a whopper of a hangover after a great party?

A well-known manufacturer of AR magazines was running full-bore, cranking out as many magazines as possible but still unable to keep up. Talking to the Insider on the condition that his name and company not be revealed, this well-placed source told me, “We had backorders for 80,000 mags. In two weeks, we dropped to 4,000. Distributors are cancelling POs [purchase orders] left and right.”

Frank Brownell, of Iowa-based Brownell’s, has always had his finger on the pulse of the industry because his core business of distributing parts, accessories and specialized tools to the gunsmithing trade lets him see trends before they emerge in the overall market.

Frank said this on the sudden hiss of air from the tires: “Most all of us in the industry have had a fantastic run of business. Our industry has been recognized by shooters, non-shooters and even the economic whiz-kids on Wall Street as one of the very few bright spots during this economic downturn.

“You probably saw it in the huge volume of sales starting right at the election in November 2008, peaking somewhere around Easter of this year and then sliding back closer to the traditional summer slow-down we always see.

“In doing our analysis here, we asked ourselves the following three questions:

1) Is this ‘Obama gun bubble’ over?

2) Is demand for firearms and ammunition coming down to the standard demand curve for our business?

3) What can we do for the remainder of 2009 and all of 2010 to match or beat those high sales in the bubble?

“We believe the insane demand level for tactical firearms is over and future demands for these products will come back down to the industry norms.

“Keep in mind, though, there have been a huge number of non-traditional firearms buyers making purchases of AR-15s, so there are a lot of customers out there who will still want to accessorize and modify. There’s definitely still a market for AR-15 stuff, but a much softer one for the basic platform itself.

“The concealed carry and home defense market; however, is starting to heat up and right now is the beginning of a short boom, not as significant as we saw with tactical rifles, but a surge nonetheless. We don't know how much leg this market can get under it or how long it might run.

“We strongly believe the reloading and ammo markets are still under-served and have strong growth ahead of them. It will take longer to get these markets back to a norm because the primer shortage. The deep fluctuations in the metals markets from which most of these ammo components are has had an impact on availability and prices. Our industry's share of these markets is not even a wrinkle, and we have neither control nor any leverage we can bring into play. We just have to wait for the metals markets to settle out.

“Shotgun and hunting markets did not seem to have had the favorable run-up as the tactical market. From what we think we see, there might be some returning strength.”

Industry Insider