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A photo from The Time Before (Dan Z for TTAG)

The previous three years in the ammunition market was over-capacitized. We had more capacity in the market than we had buyers for. So prior to that, we had invested tens of millions of dollars in the last ten years in capacity expansion and efficiencies.

So when we got the slump over the last three years, we didn’t expand capacity because we didn’t need to. We had expanded capacity in previous years, which we weren’t using that capacity in these last three years. 

So as the market had picked up in March, first off, we had to go hire a bunch of direct labor. We’ve hired literally hundreds of people in Anoka [Minnesota], hundreds of people in Lewiston, Idaho, and hundreds and hundreds and hundreds in Lonoke, Arkansas as we’re doing right now. 

So we have to hire that many people. We can’t train all of those people at the same time. But at the same time, we had some brand new equipment — I call it brand new, I mean it was a couple years old — new equipment that we hadn’t fully utilized, so we were actually kinda lucky for the investments that we made, you know, five to seven years ago, we are reaping the rewards today. 

So that’s why we have shipped a lot more ammunition this year than we had in the previous…last year. Just look at our publicly disclosed earnings remarks. You’ll see just how much more dollars of ammunition that we shipped this year versus last year. We wouldn’t have [been able to do] that if we wouldn’t have made the investment five years ago to get the capacity expansion. 

So we always get asked, every day, ‘Why aren’t you adding capacity?’ Well, we did add capacity. We added a lot of capacity. That’s what we’re getting from today. 

As far as new capacity, obviously we don’t talk about that. We don’t want some of our information disclosed. But I think it’s good to know for our listeners that we are investing where we need to invest.

But at the same time, we need to be aware of the supply chain. You know, it’s always, ‘Just make more, build more factories, become more efficient.’ Well, it doesn’t do any good if you can’t get the materials. 

So we certainly know there’s a national coin shortage going on, which takes brass. Well brass is in every round of ammunition that every factory makes. So it doesn’t matter if you’ve got a brand new factory. If you can’t feed it raw materials, then what did you do? You have a bunch of depreciation.

So it’s not only the manufacturing that we’re taking the brunt of the criticism, and rightfully so. But it’s also people need to understand that the supply chain was really affected as well and you can’t have capacity or factories if you don’t have raw materials to put it in. 

— Federal Ammunition President Jason Vanderbrink on It’s Federal Season Podcast #18



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