Alliant Techsystems (ATK), one of the largest aerospace and defense companies in the U.S., has been seeing huge growth in the form of its civilian ammunition through its 2001 acquisition, Federal Cartridge. Headquartered in Anoka, MN, the ammunition production for the “Security and Sporting” division of ATK has increased to the point of fulfilling $900 million in sales last year alone. The boom has been attributed by many to fears of tighter gun control following the coming 2012 presidential election, as noted by NSSF senior vice president Larry Keane, “It’s what’s referred to as ‘the Obama factor’. Individuals concerned about future restrictions have been stocking up.”
This so-called “Obama factor” is, in reality, a manifestation of basic market forces. There is widespread fear that the Obama administration will restrict gun rights during its tenure, and in response, many gun owners are buying and stockpiling huge amounts of ammunition. Because the demand for large volumes of ammunition is so high, the existing supply is depleted quickly, and manufacturers have difficulty with quickly ramping up production to meet said demand. Fitting the classic adage, low supply plus high demand equals high prices. This means ammunition manufacturers are doing very well and consumers are feeling the pain, just like it happened in 2008-09 when similar fears about the Obama and Biden ticket drove up prices across the board.
This news report about increasing firearms sales from 2009 looks strikingly, if not exactly, similar to those today:
Christopher Santarelli offered these statistics from last year as proof of the effect in The Blaze:
- Ruger’s firearm sales have gone from $117 million to $232 million, an increase of 98%
- Winchester’s sales of ammunition have gone from $431.7 million to $572 million, an increase of 33%
- Federal excise taxes collected on the sale of new firearms and ammunition has risen 48.3%
- January 2012 was the 20th straight month of increases in NICS background checks compared to the same month in the previous year
- December 2011 saw over 1.41 million NICS background checks run, the most ever for a single month
- The few states which regularly report concealed carry permit numbers have seen increases in active permit holders ranging from 46% to 161%
Curiously, however, this same market trend that is giving manufacturers a boon year is harming them in other ways. Because consumers are already contending with a long economic recession on top of the increasing prices of ammo, high-end and high-priced products are selling extraordinarily poorly. Premium ammunition has fatter profit-margins than bargain products for manufacturers like Alliant (both types, for the most part, cost close to the same for their base materials), meaning that while sales numbers are booming, Federal Cartridge is being forced to close a plant in Wisconsin and consolidate its distribution centers near Anoka. This will inevitably lead to a loss of at least a few of the company’s 4,000 jobs. To account for this, the Security and Sporting decision has been expanding its line of accessories, like holsters and apparel, to increase profit-margins.
It’s refreshing to see gun and ammunition sales making gains across the U.S. (22% in the last year for ATK), both for the benefits to the manufacturers that firearms enthusiasts rely upon and for the signaling of an improving attitude toward second amendment rights. Even if the progress is ultimately just politically motivated, it is progress, and in rough economic waters like these, it’s something everyone can get behind.
Photo: Alliant Techsystems Inc.