by Mark Keefe - Wednesday, October 1, 2014
The issues behind lack of .22 Long Rifle ammunition on the shelves of your local retailer are complex and not easily explainable. Demand currently exceeds supply. Beyond the laws of simple economics, there are side effects due to lack of said supply and high demand. The two most obvious are speculation and hoarding. If you can hit the local big box store because you have the time to wait for the ammo truck to arrive and resell $20 worth of .22 for $60 through the Valley Trader or at the next gun show, you are an opportunistic speculator. There are some other words I might use, but I will restrain myself. And if you are a guy that typically buys .22 Long Rifle 250 rounds at a time who just bought 10,000 because you could not find 250 when you wanted them, then you are a hoarder. It does not make you evil, it simply means your buying habits changed due to market or external conditions. And your changed behavior likely led others to change theirs as well.
When demand exceeds supply, feeding more product into distribution is the obvious answer. It’s just good business. But what if you can’t? That’s where we are with .22 Long Rifle.
We have been resoundingly criticized for reporting manufacturers all say they are running full out in .22 Long Rifle production (some of the kinder messages had more expletives than a Quentin Tarantino movie). The ammo makers are not making that up. It is not a conspiracy. I have been in two of the major rimfire plants in the United States since this “crisis” hit, and they are, indeed, running three shifts, full out. But there are not that many rimfire plants in the United States. There are foreign makers, too, with Mexico’s Aquila, Italy’s Fiocchi and Sweden’s Norma in particular stepping up to meet demand. Also making .22 LR are England’s Eley, Germany’s RWS and SK and Armscorp in the Philippines.
For domestic rimfire plants, ATK/Federal has one in Minnesota, there is the ATK/CCI plant is in Idaho, Remington has one in Arkansas, and Winchester has one in Oxford, Miss. The latter used to be in East Alton, Ill., but in order to remain profitable and competitive, Olin Corp. moved the plant about a decade ago. Notice those two words, “profitable” and “competitive.” One of the reasons we shoot so much .22 is that it is cheap. At least compared to center-fire ammunition. Granted, material costs (i.e., lead and copper) have increased but at around 5 to 10 cents a round in normal conditions, .22 Long Rifle is remarkably reliable and inexpensive. But it is not terribly profitable. Much like the promotional dove loads that hit every big box store in the country this time of year (remind me to pick up a case), they are designed for mass production and have low profit margins. Pricing, at least from the manufacturer, is extremely sensitive and competitive. They sell huge amounts of rimfire and dove loads, but no company’s bottom line financial success is made by these products. Loss leaders or thin margins, they may not be pork bellies, but sure seem like commodities.
If you have even seen .22 being made (and my friend Mike Bussard wrote an excellent piece on how they actually make it), you know it is a huge capital expense to set up a rimfire plant. It’s not like you can order a high-speed rimfire loading machine out of the Staples catalog and set it up in your garage. It takes time, land and, literally, a lot of dollars to establish a rimfire factory. Then you have to train the workers and ensure the safety of your workers and the area in which the plant resides. Priming rimfire cases is not something best left to amateurs. The question is, though, would it be worth it to go to the expense of, say, building a $250 million rimfire plant to make your company’s money back at a penny a round over the next 10 to 20 years? The answer, so far, has been a resounding no.
This demonstrates prudence on the part of ammo manufacturers. No one can predict how long the current bubble will last. It has more than burst on the firearms side as demand for new firearms has predictably dropped from last year’s hyper-inflated levels. A company cannot plan soundly based upon a bubble. But a company can plan based on known variables. Variables such as a substantial increase in the number of .22s sold and a change in the type of .22s being shot by their new owners. This may make a new rimfire plant worth it. Time will tell.
There are, literally, millions more .22 Long Rifle firearms owned and shot that have entered civilian hands in recent years. Based on BATF data, Sturm, Ruger alone in 2012 (the most recent year for which date is available) produced 254,991 “up to .22” pistols, in addition to 68,001 “up to .22” revolvers. Heritage in Florida made 88,778, while North American Arms trailed with a still impressive 54,511. And remember, those “up to 22” pistols made by Ruger were pretty much all semi-automatics with 10-round capacity magazines. If each new Ruger buyer purchased just 100 rounds, that is an increase in demand of 25,499,100 just for those buyers. If they bought 200 rounds, you are looking at an increase of demand of roughly 51 million rounds.
Imports are an area in which we can see how the universe of .22 rimfires has increased, and those numbers are from the Foreign Trade Division, U.S. Bureau of Census, and published every year by Shooting Industry. Take Canada for example. In 2013 alone 292,394 rimfire rifles were imported from the Great White North, which was about 30,000 more than the year before. If you are wondering why you weren’t aware of this Canadian invasion it’s because the guns come from Savage’s plant in Ontario. But it’s not just Canadians. In 2013, 29,618 rimfire rifles were imported from Italy.
The number for Germany is even more telling. In 2012, 46,942 rimfire rifles were imported, while 2013 saw that number increase to 60,795. I have news for you: There were not more than 60,000 Olympic Free rifles imported into the United States last year. Of those more than 100,000 rifles, I suspect many of them were semi-automatics that came from Walther/Umarex. We identified this trend in the December 2010 issue of American Rifleman with a story “A New Class of Rifles: The ‘Tactical’ .22s” In it “The term 'tactical .22 rifle' is essentially an oxymoron. It’s unlikely that a single military or police force on Earth uses .22 Long Rifle arms for small-scale combat operations, at least as primary guns. Nevertheless, this burgeoning class of firearms has taken hold in recent years in the civilian market.” The author then proceeded to evaluate eight different .22s in this new category from ATI, Colt, Heckler & Koch, Mossberg, Ruger, Remington, SIG Sauer and Smith & Wesson. And two of those guns came from guess where? Umarex. In Germany. The minimum magazine capacity for any of the eight was 10 rounds, but most were—and are—20- to 25-round magazines. What that means is that when shooters take such guns to the range, they shoot more ammunition.
Let’s face it, if you have a 10- or 25-round capacity magazine, how often do you say to yourself, “I’ve only fired five so far, maybe I should unload the rest, put them back in the box and save them for later.” No. If you have a semi-automatic carbine with a 25-round capacity magazine, odds are you will shoot more rounds at the range than if you had brought a single-shot Winchester Low Wall Winder Musket. There’s nothing wrong with that. It is merely a behavior change based upon the kinds of guns consumers have been purchasing for recreational shooting. So if the million or so owners of the million or so .22s sold over the past few years each bought just one 325-round can of Federal Champion (try not to confuse it with your cashews), you are looking at a minimum increase in demand of 325 million rounds.
External factors also effect demand for ammunition. Whenever major anti-gun legislation makes headlines, people react to it. We saw it with semi-automatic rifles over the past few years (which demand has now slowed). If there is a perception—real or imagined—that one cannot purchase something, then there is increased demand. If word leaked out that the government was about to ban toilet paper, you can be rest assured, my cart would be stocked with 96 count bulk packs of my favorite rolls. The same logic applies if you tell people that toilet paper is rare and not on the shelves. At some point, ammunition demand will reach its real level, not the snow-maggedon-like “bread, milk and toilet paper” frenzy we are experiencing now. At that point, the major ammo makers will look and see if there is sufficient demand for a new rimfire plant or line. I think there will be, but we will have to wait until conditions stabilize at the new normal.
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