A message from Hodgdon Powder

[FEENIX]

The supply curve can shift with investment….Hodgdon is looking at the demand wrong.

They will only respond to the demand based on their current capabilities.

 

[martinakl]

They don't manufacture all of their powders. They're resellers of other manufacturers powders. They buy and rebrand under the Hodgdon name.

The do own IMR and GOEX

All Hodgdon branded powders are rebranded. Many or all are from ADI in Australia.

Some good background on Hodgdon:

Hodgdon Powder and ADI; The Australian Connection - Revivaler

Hodgdon has been supplying shooters and reloaders with top quality powder since the end of the Second World War. They are a company that has earned the respect and trust of people involved in the shooting...

revivaler.com

 

[Chadp82]

Some of these components (mainly powder and primers) would take a lot of permitting, and a huge investment to get up and running. The planning is probably 1-2 years, the construction is 1 year (or more). With all the red tape and timeline, it may not be feasible to build and the risk is once they start what happens in 2-3 years? If the political things change, they may have just built a big pile of nothing.

It's not a light switch. They don't just say hey, let's build a plant. And next week production is up.

Businesses don't always ramp up to match current supply needs. An increase in demand over 1-2 years is really short term in the big picture. If it continues, they may look differently. Or for all we know maybe they already are, it just doesn't happen overnight.

There could be supply issues also. The chemicals & minerals that go into powder may not be available either to support another manufacturing facility.

Just some things to think on…..

 

[Earnhardt]

Some of these components (mainly powder and primers) would take a lot of permitting, and a huge investment to get up and running. The planning is probably 1-2 years, the construction is 1 year (or more). With all the red tape and timeline, it may not be feasible to build and the risk is once they start what happens in 2-3 years? If the political things change, they may have just built a big pile of nothing.

It's not a light switch. They don't just say hey, let's build a plant. And next week production is up.

Businesses don't always ramp up to match current supply needs. An increase in demand over 1-2 years is really short term in the big picture. If it continues, they may look differently. Or for all we know maybe they already are, it just doesn't happen overnight.

There could be supply issues also. The chemicals & minerals that go into powder may not be available either to support another manufacturing facility.

Just some things to think on…..

Great post!

 

[Mike D Texas]

Well it's been a year and a half and demand hasn't diminished so what is the solution?

 

[Earnhardt]

Patience grasshoppa.....

 

[Mike D Texas]

Patience grasshoppa.....

I don't see it returning to any semblance of normalcy as long as the current administration is in office.

I don't have that much patience.

 

[isaaccarlson]

It isn't difficult to make nitrocellulose. You can make it at home with basic equipment and a lot of care.

 

[isaaccarlson]

 

[Mattbowen61990]

That is a lot of supposition without any data.

First sentence: They are content: Hodgdon has said "we shipped more powder last year than ever before, and will ship even more this year". That means they are making bank, and are content with what they are supplying. If they were not, they would be making the same changes my company made, and the changes my last company made. Increasing capacity any way possible, including expansion.
For demand being up 300%, go stand at the gun counter at any gun shop that has ammo. How many people have walked up in the last year and asked for a box of 270 win? How many boxes are on the shelf? 0. Demand is through the roof, and has been for 1.5 years. Next time you see primers make sure and drop the location in the reloading for sale section and see how quick they are gone.
Manufacturers waiting on raw components? Lead-Foundries in the US? Disappearing all the time. Same thing with other components. Buy from China, and when China shuts down we set on our hands until they start back up. Check out anything made with Titanium on a mass scale.
It's not that hard to have a pulse on manufacturing in the firearms industry when you cant buy primers for less than $60/1000 in most places, yet there isn't ammo hitting shelves. The excuse of "they are all being allocated to loaded ammunition" is not holding true. If it were, we would see shelves being replenished, but they stay empty. The most common calibers are just empty on the shelf, I've looked for waster 7mm-08 ammo (literally any ammo) for almost a year, and haven't seen a box.
If my LGS could get an 18 wheeler full of primers or powder, it would be empty in a few days, and we don't even have that high of a population within 100 miles of it. It's been so long that people have been able to buy they would wipe it out just buying 1 brick of primers. Now multiply that across the country, and the information is there.

 

[Kimber7man]

First sentence: They are content: Hodgdon has said "we shipped more powder last year than ever before, and will ship even more this year". That means they are making bank, and are content with what they are supplying. If they were not, they would be making the same changes my company made, and the changes my last company made. Increasing capacity any way possible, including expansion.
For demand being up 300%, go stand at the gun counter at any gun shop that has ammo. How many people have walked up in the last year and asked for a box of 270 win? How many boxes are on the shelf? 0. Demand is through the roof, and has been for 1.5 years. Next time you see primers make sure and drop the location in the reloading for sale section and see how quick they are gone.
Manufacturers waiting on raw components? Lead-Foundries in the US? Disappearing all the time. Same thing with other components. Buy from China, and when China shuts down we set on our hands until they start back up. Check out anything made with Titanium on a mass scale.
It's not that hard to have a pulse on manufacturing in the firearms industry when you cant buy primers for less than $60/1000 in most places, yet there isn't ammo hitting shelves. The excuse of "they are all being allocated to loaded ammunition" is not holding true. If it were, we would see shelves being replenished, but they stay empty. The most common calibers are just empty on the shelf, I've looked for waster 7mm-08 ammo (literally any ammo) for almost a year, and haven't seen a box.
If my LGS could get an 18 wheeler full of primers or powder, it would be empty in a few days, and we don't even have that high of a population within 100 miles of it. It's been so long that people have been able to buy they would wipe it out just buying 1 brick of primers. Now multiply that across the country, and the information is there.

Why would they increase capacity if they can't increase their incoming component inventory? So they can say "Look at us, we just spent millions to expand" and then not be able to run the equipment because of component shortage?

 

[Mattbowen61990]

None of what I am hearing is adding up, and that's:
Record gun sales
Record ammo sales
Active/Imminent tyranny
Military contracts are taking 100% of winchester's capacity (seems very strange)

This means permanent increased demand. Now add in panic buying and stockpiling and target shooting for new gun owners and you have multiplied the demand several if not many times. And yet there is ZERO increase in manufacturing capacity. Companies are tooling up like crazy to make more guns, but there is no increase in ammunition production.

I think the number of guns in the US has doubled in the last 10 years? (That's a ballpark statement as an example) But no increase in ammo??? Something stinks here. What makes them think they will ever catch up? Or have they been running at 20% capacity for years with the reserve capacity already there and they just try to play catch up? There are so many questions I want to ask, but nobody will answer them with any kind of answer that inspires confidence in what they are saying. It's easy to cast doubt and point fingers, but right now it's hard to to anything else because of what we are shown/told.

Crazy times and crazy people, right?

I can say this part, remington was down for a year. Remington probably supplies 25% of the US ammo market, and 25% is quite a bit of ammo. So you remove that portion, the import portion due to no shipments, and the panic buying and we are here. Hopefully the people running vista get everything cooking at 110% and start supplying the market that 25% again.

 

[Mattbowen61990]

Why would they increase capacity if they can't increase their incoming component inventory? So they can say "Look at us, we just spent millions to expand" and then not be able to run the equipment because of component shortage?

China will supply them with whatever they want at whatever price they want.
Right now isn't the best time to do an expansion, but 4 years ago would have been a good time to start. After the times people have had the past 2 years, reloading is only going to get more popular, thus increasing demand. It's not very capitalist to set idle when someone else figures out where to source components. Vihtavuori although with lower demand, has been supplying the US a decent load of powder more frequently than Hodgdon or Alliant.
Keep in mind all of the brand new gun owners that were recently added, they are funding an entire innovation driver, it's up to the companies to capitalize on it.

 

[The Oregonian]

First sentence: They are content: Hodgdon has said "we shipped more powder last year than ever before, and will ship even more this year". That means they are making bank, and are content with what they are supplying. If they were not, they would be making the same changes my company made, and the changes my last company made. Increasing capacity any way possible, including expansion.
For demand being up 300%, go stand at the gun counter at any gun shop that has ammo. How many people have walked up in the last year and asked for a box of 270 win? How many boxes are on the shelf? 0. Demand is through the roof, and has been for 1.5 years. Next time you see primers make sure and drop the location in the reloading for sale section and see how quick they are gone.
Manufacturers waiting on raw components? Lead-Foundries in the US? Disappearing all the time. Same thing with other components. Buy from China, and when China shuts down we set on our hands until they start back up. Check out anything made with Titanium on a mass scale.
It's not that hard to have a pulse on manufacturing in the firearms industry when you cant buy primers for less than $60/1000 in most places, yet there isn't ammo hitting shelves. The excuse of "they are all being allocated to loaded ammunition" is not holding true. If it were, we would see shelves being replenished, but they stay empty. The most common calibers are just empty on the shelf, I've looked for waster 7mm-08 ammo (literally any ammo) for almost a year, and haven't seen a box.
If my LGS could get an 18 wheeler full of primers or powder, it would be empty in a few days, and we don't even have that high of a population within 100 miles of it. It's been so long that people have been able to buy they would wipe it out just buying 1 brick of primers. Now multiply that across the country, and the information is there.

My point is that you don't know the economics of their situation. How much does it cost to build another factory? How long does it take? Do they own the land or have to purchase that as well? How much is demand really up (my guess is much more than 300%)? What will it be in 1/3/5/10 years? What if materials were/are/will be as much of a constraint as capacity? How much cash do they have? How much debt? What other growth or investment opportunities do they have (given that resources are finite), and what are the projected risk-weighted projected returns? Etc, etc, etc.

So, like I said, suppositions without facts.