12-23-2020, 05:40 PM
I agree that the US ammo manufacturers probably won't invest a huge amount into new equipment and buildings for what they see as a short-term issue. Although many people on this forum are high-volume shooters, most firearm owners are not. I know hunters that normally buy one or two boxes per year. That group suddenly buying even five boxes each has a huge increase on overall demand. They probably won't be buying more for a few years.
The lead time on specialized manufacturing equipment tends to be in the two-to-three year range anyway. It is usually not made in-house. It sounds like what the ammo factories have been doing is ramping up to 24/7 production to fully utilize what equipment they have. It takes time to do this and not have massive quality control problems. Some facilities push existing employees to 7 day workweeks for period of time, but at some point, they need to add shifts. It is big deal to switch a 3-shift operation to something else for long term 24/7 manufacturing.
When one component is a limiting factor, they might expend extra effort on that. On the other hand, I think that it is easy to understand why they would be especially cautious about something like primer production and not dare half-ass additional capacity here.
What really affects the ability to increase short term production is the original utilization rate of the equipment during "normal" times. It is not uncommon for the expense of specialized manufacturing equipment to be significantly larger than that of the labor needed to run it. The profit margin in these cases depends largely on being able to run the machine as much as possible with as little down-time as possible. When I worked in (non-union) factories that made automotive components, expensive new equipment was projected to run a bit more than 5 days per week, 24 hours per day. The highest profits for a 3-shift operation were actually 7 days per week, paying overtime. It was not uncommon for our people to work 7 days per week for a few months if demand was higher than anticipated. It could be grueling. It surprises some people that profits were higher even when paying overtime, but the increased utilization of equipment was a big part of that. It also makes a little more sense when you realize that that overtime take-home pay for employees is only part of the labor expense. At my facilities (admittedly a number of years ago) benefits like medical, worker's comp, disability and retirement, stayed the same for a 5, 6, or 7 day work week. When this is taken into account, the factory paying time-and-a-half overtime after 40 hours did not greatly change the overall hourly expenses. Depending on the equipment used, paying double time would often still yield higher profits.
The lead time on specialized manufacturing equipment tends to be in the two-to-three year range anyway. It is usually not made in-house. It sounds like what the ammo factories have been doing is ramping up to 24/7 production to fully utilize what equipment they have. It takes time to do this and not have massive quality control problems. Some facilities push existing employees to 7 day workweeks for period of time, but at some point, they need to add shifts. It is big deal to switch a 3-shift operation to something else for long term 24/7 manufacturing.
When one component is a limiting factor, they might expend extra effort on that. On the other hand, I think that it is easy to understand why they would be especially cautious about something like primer production and not dare half-ass additional capacity here.
What really affects the ability to increase short term production is the original utilization rate of the equipment during "normal" times. It is not uncommon for the expense of specialized manufacturing equipment to be significantly larger than that of the labor needed to run it. The profit margin in these cases depends largely on being able to run the machine as much as possible with as little down-time as possible. When I worked in (non-union) factories that made automotive components, expensive new equipment was projected to run a bit more than 5 days per week, 24 hours per day. The highest profits for a 3-shift operation were actually 7 days per week, paying overtime. It was not uncommon for our people to work 7 days per week for a few months if demand was higher than anticipated. It could be grueling. It surprises some people that profits were higher even when paying overtime, but the increased utilization of equipment was a big part of that. It also makes a little more sense when you realize that that overtime take-home pay for employees is only part of the labor expense. At my facilities (admittedly a number of years ago) benefits like medical, worker's comp, disability and retirement, stayed the same for a 5, 6, or 7 day work week. When this is taken into account, the factory paying time-and-a-half overtime after 40 hours did not greatly change the overall hourly expenses. Depending on the equipment used, paying double time would often still yield higher profits.