A message from Hodgdon Powder

[isaaccarlson]

They don't necessarily need another factory. Just a couple more machines would help. I know most of the machines I have seen are OLD, but it shouldn't be too hard to get or make another one. They are not terribly complex, at least in my book.

And if the military is taking as much as I have heard, I want to know the hell WHY. We are not fighting a war, and if we were fighting a war, we would be sorely out ammo'd. Maybe they aren't sharing all, and if not, they should, because it might calm the fears. And if the fears are true, then heaven help us. Honesty is the best policy, and most of Americans have serious doubts about what is being said.

The news lies, politicians lie, city councils lie, school boards lie, mayors lie....some of us are just plain sick and tired of all the Bull$#it. It's way to easy to see the negatives right now, so if I'm wrong about all this I apologize.

 

[Hugnot]

My observations - I shoot once a week at a local range. Last year, just before hunting season, the range was crowded with many shooters waiting for a bench; once fired brass littered the ground and lots in trash cans. This year available benches at any time, rapid turn around at benches, no once fired brass. Ammo stocks at LGS' are down but possible to buy ammo at much higher prices with limited selection. Good selection of 9mm Luger ammo but higher prices. How long will the shortage last? When demand slows down production will catch up & components and ammo will be available but at higher prices. My policy is to buy 125% of what I use and I expect to have various items that have been stashed away for 3 or more years when demands slow down. Good business policies would be to maintain quality and avoid excess capital investments and over production of certain items caused by inability to easily and economically change production for different items. Seems like a good supply of .224 bullets of different types & hopefully production will be switched to other calibers.

Also, no extruded smokeless powders are made in the USA - OSHA regulations?

I recently found some CCI primers having red & silver colored containers in my primer storage- must be 20 years old.

 

[FEENIX]

They don't necessarily need another factory. Just a couple more machines would help. I know most of the machines I have seen are OLD, but it shouldn't be too hard to get or make another one. They are not terribly complex, at least in my book.

And if the military is taking as much as I have heard, I want to know the hell WHY. We are not fighting a war, and if we were fighting a war, we would be sorely out ammo'd. Maybe they aren't sharing all, and if not, they should, because it might calm the fears. And if the fears are true, then heaven help us. Honesty is the best policy, and most of Americans have serious doubts about what is being said.

The news lies, politicians lie, city councils lie, school boards lie, mayors lie....some of us are just plain sick and tired of all the Bull$#it. It's way to easy to see the negatives right now, so if I'm wrong about all this I apologize.

Two more machines require space (expansion); since it is not terribly complex, in your book, how long do you think the return on investment will pay off the capital investment? I am not a subject matter expert but have done activity-based costing for military organizations for over 25 years, and return on capital investment takes a long time. As a fairly new start-up company, ask Steve and Brian of Hammer Bullets how long it will take them to start seeing their return on investment on their bullet-making machines. Like it or not, no company will invest in anything above its current capacity to satisfy demand without generating a profit margin greater than the business risk they are willing and able to take.

We all want to see a readily available product on the shelves, but the reality is there is an associated cost for each day it sits on a shelf. Each day a vehicle on the inventory lot is a profit loss. In due time, supply and demand will find a happy medium for both the producer and end-user, and when that day comes, most consumers will still complain because it is no longer the normal they were accustomed to. No one company can satisfy everybody. Complaining about the current imbalance without doing anything to help individual situations does nothing. It is obvious that most of us here were able to prepare and sustain the current challenge. As the Boy Scout motto says, "Be Prepared." What you do with it is entirely up to you.

 

[FEENIX]

Good business policies would be to maintain quality and avoid excess capital investments and over production of certain items caused by inability to easily and economically change production for different items.

Well said, Sir!

 

[Mattbowen61990]

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.

We all know what happens every 4 years, what happens in the US when mass shootings happen.
No matter the business, when demand goes up like it has, you would expand.
Right now I have a perfect example of this:
Company called Everything Attachments based here in NC, makes USA built tractor implements. They make the best in the business for compact tractors. Right now they have a 14 week wait (at least) for grapples. Keep in mind this is not something MOST tractor owners buy. So you are talking a minority within a minority. Guess what they have done? Expanded 2x in 3 years. Building a brand new facility as we speak. Why? Because the demand is so high they don't want customers to wait 14 weeks for what they have purchased.
I know the explosives business is different, and different variables are at play, but you can't deny MILLIONS of new gun owners, MILLIONS of gun owners purchasing guns, doesn't warrant expansion. It's like a BBQ joint that's open thurs-Sat, make enough on 3 days to not be open the other 4. Same concept here. When you have demand at an all time high, and nothing to supply it with, if you had expanded 4 years ago it would pay for itself in 2 or 3 election years. Even if it sets and you use the open space as a warehouse your profit generated those few years will be significant, especially if your competitors set on their hands. How much more money has Hodgdon made this year on powder sales vs. Alliant? Tons. They have actually sold some powder, can find it here and there in LGS. Alliant has been non existant in my LGS. They are still making bank, but could fund an expansion, and make even more.

 

[The Oregonian]

We all know what happens every 4 years, what happens in the US when mass shootings happen.
No matter the business, when demand goes up like it has, you would expand.
Right now I have a perfect example of this:
Company called Everything Attachments based here in NC, makes USA built tractor implements. They make the best in the business for compact tractors. Right now they have a 14 week wait (at least) for grapples. Keep in mind this is not something MOST tractor owners buy. So you are talking a minority within a minority. Guess what they have done? Expanded 2x in 3 years. Building a brand new facility as we speak. Why? Because the demand is so high they don't want customers to wait 14 weeks for what they have purchased.
I know the explosives business is different, and different variables are at play, but you can't deny MILLIONS of new gun owners, MILLIONS of gun owners purchasing guns, doesn't warrant expansion. It's like a BBQ joint that's open thurs-Sat, make enough on 3 days to not be open the other 4. Same concept here. When you have demand at an all time high, and nothing to supply it with, if you had expanded 4 years ago it would pay for itself in 2 or 3 election years. Even if it sets and you use the open space as a warehouse your profit generated those few years will be significant, especially if your competitors set on their hands. How much more money has Hodgdon made this year on powder sales vs. Alliant? Tons. They have actually sold some powder, can find it here and there in LGS. Alliant has been non existant in my LGS. They are still making bank, but could fund an expansion, and make even more.

Still supposition and anecdotal evidence without data, yet you are making strong statements like the bold above, which is not a true statement anyway.

 

[isaaccarlson]

Ok, here we go. You referred to hammer bullets. Those are made on a 'swiss' lathe. I was looking into getting one several years ago for my own business needs. They cost a bit, but the turnout time is short. They spin the entire 20+ft rod of material and make parts at a very fast rate. I would expect each machine to be paid for in two years or less. I expect his operation is very simple, streamlined, and cost effective. He should have very limited overhead. He probably has maybe 10 employees at most, and packaging/shipping is going to be his bottleneck. One, maybe two guys to change tooling/setup on machines. One to load the racks with copper rods. The cut bullets drop into hoppers. Change out hoppers and inspect/package bullets.

If you program the machines right, you can make parts faster than injection molding. I don't need confirmation on this, but he is making some serious money making bullets and his machines are likely already paid for, or could have been if he is stretching out the payoff period.

This is just my viewpoint from my own experience on what you brought up.

Most businesses waste a ton of money because the people in charge don't really know what they are doing or what they need. They see $ as the end goal AND as the way to get there. I have been hired to cut costs and double the revenue of 2 businesses so far, and neither onw listened, because they were too focused on the money. They could have worked less hours, had a lighter work load when they did work, had reliable equipment, and lower overhead, but they refused to listen. They insisted on "working harder and faster" as they put it. The problem is you can work harder and faster, but if you aren't doing it right its just wasted effort.
You have to have an efficient system and employees who understand the system and work with it. It's a group effort. You have to involve your employees and communicate about everything. There are no boss's sectrets. Everyone helps and has input. You have to hire people who understand what they are doing and are willing and able to learn more.

I'll stop there because now I'm rambling. My point is that a business owner who understands the entire process of what they are doing will have it streamlined and be able to expand or change a process very quickly and without excess cost. This is something not often seen in industry.

 

[FEENIX]

Ok, here we go. You referred to hammer bullets. Those are made on a 'swiss' lathe. I was looking into getting one several years ago for my own business needs. They cost a bit, but the turnout time is short. They spin the entire 20+ft rod of material and make parts at a very fast rate. I would expect each machine to be paid for in two years or less. I expect his operation is very simple, streamlined, and cost effective. He should have very limited overhead. He probably has maybe 10 employees at most, and packaging/shipping is going to be his bottleneck. One, maybe two guys to change tooling/setup on machines. One to load the racks with copper rods. The cut bullets drop into hoppers. Change out hoppers and inspect/package bullets.

If you program the machines right, you can make parts faster than injection molding. I don't need confirmation on this, but he is making some serious money making bullets and his machines are likely already paid for, or could have been if he is stretching out the payoff period.

This is just my viewpoint from my own experience on what you brought up.

Most businesses waste a ton of money because the people in charge don't really know what they are doing or what they need. They see $ as the end goal AND as the way to get there. I have been hired to cut costs and double the revenue of 2 businesses so far, and neither onw listened, because they were too focused on the money. They could have worked less hours, had a lighter work load when they did work, had reliable equipment, and lower overhead, but they refused to listen. They insisted on "working harder and faster" as they put it. The problem is you can work harder and faster, but if you aren't doing it right its just wasted effort.
You have to have an efficient system and employees who understand the system and work with it. It's a group effort. You have to involve your employees and communicate about everything. There are no boss's sectrets. Everyone helps and has input. You have to hire people who understand what they are doing and are willing and able to learn more.

I'll stop there because now I'm rambling. My point is that a business owner who understands the entire process of what they are doing will have it streamlined and be able to expand or change a process very quickly and without excess cost. This is something not often seen in industry.

You seems to have all the answers; do it then and see how you can fill the gap demand.

 

[gpo1956]

Let's try and be a little more realistic here. First off, what is the actual demand? Wants and needs are different. I'd just like to buy what I NEED. Most others like to buy what they WANT. How many times do we see folks bragging and crowing about how much powder they bought, or how many bullets or how many thousands of primers they have. Look at all the posts on here from people that are obviously spending WAY too much time watching all the suppliers so they can be the first to post about a new shipment of supplies. This only feeds the frenzy that is a huge part of this record demand. I'm gonna have to call bs on all these posts about "I shoot 10,000 rounds a year so I NEED 10,000 primers and bullets and 100 pounds of powder." And lastly, I think it's very naive to expect these companies to just open the checkbook and shell out millions just to satisfy the lust of a bunch of hoarders. A reputable business would not consider such a move based on a 1 1/2-2 year demand like we've seen. That kind of dollars would require at least a multiple years forecast to justify the expenses and would base the decision on how long it would take to pay it off that investment. I know there is a huge demand right now, but I'd bet a very large percentage of it is self induce.

 

[Mike D Texas]

Let's try and be a little more realistic here. First off, what is the actual demand? Wants and needs are different. I'd just like to buy what I NEED. Most others like to buy what they WANT. How many times do we see folks bragging and crowing about how much powder they bought, or how many bullets or how many thousands of primers they have. Look at all the posts on here from people that are obviously spending WAY too much time watching all the suppliers so they can be the first to post about a new shipment of supplies. This only feeds the frenzy that is a huge part of this record demand. I'm gonna have to call bs on all these posts about "I shoot 10,000 rounds a year so I NEED 10,000 primers and bullets and 100 pounds of powder." And lastly, I think it's very naive to expect these companies to just open the checkbook and shell out millions just to satisfy the lust of a bunch of hoarders. A reputable business would not consider such a move based on a 1 1/2-2 year demand like we've seen. That kind of dollars would require at least a multiple years forecast to justify the expenses and would base the decision on how long it would take to pay it off that investment. I know there is a huge demand right now, but I'd bet a very large percentage of it is self induce.

I'm the sole person that can determine what I need. If I have the means to buy it then it doesn't matter what anyone else thinks I need.

 

[gpo1956]

Let's try and be a little more realistic here. First off, what is the actual demand? Wants and needs are different. I'd just like to buy what I NEED. Most others like to buy what they WANT. How many times do we see folks bragging and crowing about how much powder they bought, or how many bullets or how many thousands of primers they have. Look at all the posts on here from people that are obviously spending WAY too much time watching all the suppliers so they can be the first to post about a new shipment of supplies. This only feeds the frenzy that is a huge part of this record demand. I'm gonna have to call bs on all these posts about "I shoot 10,000 rounds a year so I NEED 10,000 primers and bullets and 100 pounds of powder." And lastly, I think it's very naive to expect these companies to just open the checkbook and shell out millions just to satisfy the lust of a bunch of hoarders. A reputable business would not consider such a move based on a 1 1/2-2 year demand like we've seen. That kind of dollars would require at least a multiple years forecast to justify the expenses and would base the decision on how long it would take to pay it off that investment. I know there is a huge demand right now, but I'd bet a very large percentage of it is self induced

I'm the sole person that can determine what I need. If I have the means to buy it then it doesn't matter what anyone else thinks I need.

You just made my point. And sadly, you're not even a little embarrassed to openly admit it. Me, me, me.

 

[Mattbowen61990]

Still supposition and anecdotal evidence without data, yet you are making strong statements like the bold above, which is not a true statement anyway.

If you are a company that believes in capitalism, when demand rises, you try to meet that demand. That is money to be made and money you leave on the table if you don't. If you don't believe that demand is up 300+% compared to years past, I can't help you with that. As long as a (D) outside of 44 is in the presidential seat demand will always be high. I think people believe that we are talking chump change here, there are millions to be made right now on powder and primers if you have them. Gun shops around have actually started buying primers from individuals, which was a huge no-no years ago, I seen 20 year old primers in a gun shop for $15/100 recently. I have never seen it like this.
The only time companies wont respond like this is if they feel they have a monopoly on the system. Can't say yay or nay on that for Hodgdon. I do use primarily Hodgdon powders, but they still have some competition. See above example about tractor implements, they are catering to a minority of a minority. Gun owners and reloaders outnumber that minority quite a bit. Yet they are investing millions into a new factory to meet demand. But somehow people think they cant pay for an expansion easily at this point. (Remember 20 year old primers). Another LGS put up bricks of pistol primers for $80. If they stocked the shelves today at $60 ($20 more than 2019 prices) they would empty in an hour or two. Even hoarders will buy them at this point.

 

[tribb]

Comes down to they realized they can't control gun ownership, too much pushback….. liberal solution, take the ammo away, they will let you buy all the guns you want, you will just have to throw them at each other. Our enemies are in our own country, and they play dirty

Amen brother

 

[The Oregonian]

If you are a company that believes in capitalism, when demand rises, you try to meet that demand. That is money to be made and money you leave on the table if you don't. If you don't believe that demand is up 300+% compared to years past, I can't help you with that. As long as a (D) outside of 44 is in the presidential seat demand will always be high. I think people believe that we are talking chump change here, there are millions to be made right now on powder and primers if you have them. Gun shops around have actually started buying primers from individuals, which was a huge no-no years ago, I seen 20 year old primers in a gun shop for $15/100 recently. I have never seen it like this.
The only time companies wont respond like this is if they feel they have a monopoly on the system. Can't say yay or nay on that for Hodgdon. I do use primarily Hodgdon powders, but they still have some competition. See above example about tractor implements, they are catering to a minority of a minority. Gun owners and reloaders outnumber that minority quite a bit. Yet they are investing millions into a new factory to meet demand. But somehow people think they cant pay for an expansion easily at this point. (Remember 20 year old primers). Another LGS put up bricks of pistol primers for $80. If they stocked the shelves today at $60 ($20 more than 2019 prices) they would empty in an hour or two. Even hoarders will buy them at this point.

You are acting like all companies are the same. They have different capital structures, which impacts their ability to borrow…they have different balance sheets and some have lots of cash while other don't. And different industries face different types of expansion.

You know what a SW company has to do to meet stronger demand for their product? Not much but hire more sales people and more support people, with some additional misc expenses. HC can be let go at any time and can be brought on rather quickly, so there is little risk involved.

You know what Intel has to do to expand? Build multi billion dollar fabs and spend several years building it. There is a ton of risk involved.

You don't know any of this for Hodgdon, so again, few facts brought to the table.

You also originally said demand was up 300%…I told you I thought it was up more than that. So other than knowing it is up, we don't know how much, that and is an important thing to know. But more importantly, what will demand be like in 1 year? 3 years? 5? 10?

Again, few facts brought to the table. Statements like "But there is no way that a demand of 300% at the current times wouldn't fund an expansion" is not bringing facts to the table, and that statement has tons and tons of assumptions in it that could easily swing a go / no-go decision, yet you are convinced you know the answer.