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LEAD... The sky is not falling!

Discussion in 'Uncategorized Threads' started by Baber, Jan 3, 2008.

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  1. Baber

    Baber TS Member

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    Over the last few months I have heard from numerous quarters especially on this forum that shooting is heading down hill because of the price of lead and ammo. Well guys I am hear to tell you the the end of the problem is in sight. 2008 will be a bad year for shell and lead pricing as we witness the 07 comodity price run up wave flow through the industry. The sky is not falling. Shooting is not doomed. Lead has already fallen from $1.80 per lb to less that $1.20 and this is in just the last 60 days. I suspect that we will see $25 or less per bag of shot within the next 12 months.

    When I first came into this game in the mid ‘70’s Winchester AA’s were $80 per 500 round case. Now they are $80-100 per flat. Now this is in over 30 years! Prices go up and more importantly competition force them down as well. I have one gun scribe state that Winchester and the other US Ammo companies were overcharging then but that's another subject. My point is that adjusted for inflation ammo is not out of line. Lead is but its changing. Market forces will fix the problem.

    Will we see sub $20 a bag for Magnum shot again... probably not but we will see sub $25. I saw this same thing happen in the early ‘80’s. Shot went from $8-10 a bag to $20. After about a year it cooled off and came back to the $12-15 range. This is going to happen again. Its the same wave. It will soon be over but it will come again in another 10-20 years.

    Now in closing I asked that you don’t do anything stupid like sell your guns and quit shooting. Just use some common sense and use less lead. 1 Oz or 7/8 loads are great. I never could understand why the ATA has not reduced its load to 1 oz. Just calmly shoot what you can. Support your gun clubs and especially the junior programs and ride the wave out it will soon be over.

    TB
     
  2. pendennis

    pendennis Well-Known Member

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    TB, what has normally driven ammo prices, is labor. Labor costs, are constantly upward moving, with the cost of benefits, hourly rates, etc. You are correct. It's been high before, and will be again sometime in the near future. The supply pressures are already being eased with increasing mining and smelter capacity. Chinese and Indian consumption will also ease, since ecnonomic movement never occurs in a straight line.

    Thanks.

    Dennis
     
  3. Shooting Coach

    Shooting Coach Well-Known Member

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    FINALLY, a cool head, or two. Don't sell out, keep your presses, and shoot smart! I will stay with 24 gram loads for everything except caps, and 28 gram for the 25, even if shot goes to $10 a bag! It does what I need, and I like these loads. They are easy on shooter AND gun.
     
  4. timb99

    timb99 Well-Known Member

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    Shhhh!

    I was hoping a bunch of guys would throw in the towel and give me great deals on their reloading equipment.
     
  5. grammie

    grammie TS Member

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    Just remember,,,this is an "election year"!!!!!

    AKA Grammie..........
     
  6. Jeff P

    Jeff P Well-Known Member

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    AH, yes, grammie...thanks for providing the chicken little outlook again.
     
  7. lumper

    lumper TS Member

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    Excuse me for just one second ... if the sky aint falling then why does the Dr tell me I have to wear this helmet all the time?
     
  8. phirel

    phirel TS Member

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    TBaber- Both your logic and facts seem flawless. But, so many have predicted that shot will get to $100 per bag and trapshooting will soon be a sport of the past, how could they be so very wrong?

    Dennis- Labor costs in shell manufacturing and shot production are very low. Both processes are automated.

    Grammie- How can an election in this country influence an international commodities market?

    Pat Ireland
     
  9. wolfram

    wolfram Well-Known Member

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    Lumper,

    You can always go back to the two layers of aluminum foil shaped into a cap if the helmet gets too heavy.
     
  10. halfmile

    halfmile Well-Known Member

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    foil hat......much better........keeps the control brain waves from taking over.

    And I get a better selection of radio stations.

    HM
     
  11. pendennis

    pendennis Well-Known Member

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    Pat, I'm not saying that labor costs are a major factor, but they are a factor, automation or not. I would imagine that Federal, Remington, and others have unionized work forces. Unless they make major concessions, labor costs from the 1970's have continued upward. Actual direct labor costs have probably gone down with automated processes. However, material handling costs of raw materials, final packaging, etc., are still manual.

    As a former cost accountant, I know there are a myriad of factors in product cost, therefore product price.

    Best,
    Dennis
     
  12. nipper

    nipper TS Member

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    Some smelters that were down a while are comming back on line.

    Bill
     
  13. grammie

    grammie TS Member

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    Pat:

    About 4 months before the election,,,the market will get comfy with the idea of a new president,,perhaps a democratic one,,,They intend to raise taxes on everything!!! Another wave of inflation will strike,,inflating prices even higher!!!

    Again,,,what we are seeing is a "two-second blip" on a chart 20 years long!!! Thats all,,,just a blip!!!! Just as we are just now feeling the Chinese Economy,,,its still just the beginning with another 20 years of growth down the road coming on!!!!!!!

    And again,,,,,we are stepping up to a new platuea of WORLD PRICING,,,A new NORM is being created!!!!!

    Ohh by the way!!!!! Watch close for a freeze in Florida!!! The price of Orange Juice is about to be "influenced" on the options market!!!!!!!!!!!!!!

    And,,,,another round of shell price increases is coming due!!!! So you see the price of shells is not being influenced by the price of lead,,,,but by the price of fuel to "recover it",,,,,,and fuel is about to take a big leap---UP!!!!

    AKA Grammie..........
     
  14. Uncle Sam

    Uncle Sam Member

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    TB....are you sure your decimal points are in the right place?? 180 bucks a pound or 120 bucks a pound just seems "a little" high!! Did I miss something??????......Uncle Sam, Pa.
     
  15. Cold Iron

    Cold Iron Active Member

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    I’ll do my part to help. When lead hits $24.99 a bag in a couple of months I’ve already planned to get a ton instead of the 10-15 bags every couple of months that I have been doing lately. That way it is guaranteed to hit $19.99 the next day.

    Fantastic post TB, thanks for saying what I've been thinking. And you did a MUCH better job of it!
     
  16. omahasportingsupply

    omahasportingsupply TS Member

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    Pendennis

    I have enjoyed your economics threads in the past but a cost accountant? Say it ain't so! That is the traditional "bean counter" icon. LOL I have have both econ and accounting also, so I have a lot of room to talk.


    What I don't understand, is if your post above is true, how is Walmart buying the same shells from the same factories, and yet undercut many of the other sporting goods big box stores (permanent lost leader) ? I visited Walmart today and was doing a price check. Some ammunition is priced (retail) cheaper than I can buy it from my wholesaler. I realize that Sam Walton hated unions, but aren't they buying from the same factory? Could it be that some of the ammunition manufacturers have the high priced lead and are forced to raise prices to reflect their costs of raw materials? I called my shell provider today and they stated that some of the cheaper shells (not AA or STS) were going to cost me 49.75 at wholesale.
    http://www.kitcometals.com/charts/lead_historical.html This shows that in October lead was $1.80 and dropped to $1.12? before rebounding to $1.20 today. Omaha



    Subject: LEAD... The sky is not falling!
    From: pendennis
    Email:
    Date: Thu, Jan 03, 2008 - 04:46 PM CT
    Website Address:

    Pat, I'm not saying that labor costs are a major factor, but they are a factor, automation or not. I would imagine that Federal, Remington, and others have unionized work forces. Unless they make major concessions, labor costs from the 1970's have continued upward. Actual direct labor costs have probably gone down with automated processes. However, material handling costs of raw materials, final packaging, etc., are still manual.

    As a former cost accountant, I know there are a myriad of factors in product cost, therefore product price.

    Best, Dennis
     
  17. Ahab

    Ahab Well-Known Member

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    Jeeeese! I was hoping the price of lead would keep going up!

    That would drive the riff raff out of Trap Shooting!

    When I started shooting Trap, it was a Gentlemen's Sport! All wore shirt and tie plus a jacket or Snookums's Sweater. Also...they played the Options instead of bitching about the Big Dogs winning all the money!

    :(
     
  18. pendennis

    pendennis Well-Known Member

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    Omaha, my education was in finance, economics, IT, and accounting. I worked in finance for many years at Ford Motor Company. Most folks just don't understand the money volumes at which they operate. When financial people at Ford refer to the term "tenth", it means $100,000. Budgets are calculated in the millions and billions. $10,000 is two positions to the right of the decimal.

    Plants routinely build over 1,000 cars per day. Most people can't comprehend that type of volume, and the costs it generates.

    Walmart, like many other big operations, runs on bigger is better and cheaper. Federal, Remington, Winchester, et al, will sell to Walmart just a little cheaper than they sell to even the larger jobbers or wholesalers. They make up for slightly smaller profit per unit by selling lots of units. As long as the pricing allows Federal, et al, to make a profit, they will sell to Walmart for less money. Federal, et al also knows that they can increase volume to an extent, and make more money through efficiencies. Walmart will also write longer term purchase orders, and this becomes acceptable to suppliers, since it guarantees a more steady income stream for the suppliers.

    Even the auto companies sell vehicle in volumes. Fleet and government sales are frequently written for x number of units at y amount of dollars. Don't think that for a minute that Escorts were sold at a loss. Maybe less profit, but not a loss. The same holds true for retailers. They may not make very much money on so-called loss leaders, but a lot of state laws prohibit companies from selling at a loss.

    PS - I wasn't a real bean counter. My jobs in accounting were on the systems side of accounting, determining how best to move accounting processes into more efficient methods using computer systems, and how we could integrate accounting, material, and engineering systems.

    Best,
    Dennis
     
  19. lumper

    lumper TS Member

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    Wal-Mart is buying direct from the manufacture and you are buying from your wholesaler who is buying from the manufacture thus there is a middleman now involved.

    Wal-Mart is buying in the quantity that your wholesaler dreams they could buy in and the manufacture will give Wal-Mart a better price since they are not just placing an order but committing to a set amount over the course of a quarter or the year.

    The manufacture looks at big box stores and there orders for ammunition as what keeps them in business with operating capitol and the wholesalers who order and distribute there product as there profit money.

    I would suspect that the big boxes are committing to purchase in 1qtr of the year what the wholesalers purchase in a year ... just something for you to think about when considering who sells for what.
     
  20. omahasportingsupply

    omahasportingsupply TS Member

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    Lumper

    All that makes sense as quantity usually dictates price. What I don't understand is why Walmart is so much cheaper than the OTHER big box stores? I have seen flats walk out in mass at Dicks Sporting Goods, but all I ever see leave Walmart is single or double BOXES. Wouldn't they be committing to quarterly purchases also? Inquiry minds want to know. Omaha
     
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