Shooting Tragedies As Greatest Demand Drivers for Gun Industry? Part One

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If you’ve been living in any English-speaking nation (and not in a cave) for the past few weeks, you know that civilian possession of firearms, and especially semiautomatic handguns, has resurfaced as a white hot topic since Jared Lee Loughner shot Rep. Gabrielle Giffords of Arizona and many others in a Tucson supermarket in early January. While the auto market drives (no pun intended) supply and demand for lead almost singlehandedly, the metal does factor into ammunition for firearms.

Certain environmental groups petitioned to ban lead ammunition and fishing tackle in August 2009, citing harm to wildlife, but the Environmental Protection Agency rejected the petition, saying it did not have authority to authorize such a ban.

That was virtually the only notable speed bump for the fate of lead in the ammunition manufacturing process. (Lead, being much softer than steel or copper, makes for a much more forgiving munitions material.) As MetalMiner has reported in the past, President Obama’s election proved the primary demand driver for handgun and ammunition sales in early 2009:

“Distributors put the demand down to fears that the new administration’s political pledges will be put into effect limiting the personal ownership of handguns and the general economic malaise that folks perceive as being the precursor to a rise in theft, burglaries and muggings.

The election helped contribute to the sale of a record 9 million handguns in 2009, according to data from the National Shooting Sports Foundation, and a 26.1 percent increase in total production from the previous year to meet the increased demand.

Now, unfortunately for gun-control advocates but fortunately for gun and ammo manufacturers, distributors and sellers that trend seems to have hit again with a vengeance. (Examining the policy implications of bolstered background checks or guns getting into the wrong hands is a different post entirely; we’re setting out to focus on the industry numbers and effects here.)

A recent front-page story in Bloomberg Businessweek magazine profiling Glock, the Austrian handgun manufacturer, notes that there are an estimated 100 million civilian handguns in the US. Theoretically, if each of these handgun owners paid the full retail price of a Glock at today’s prices $499 the total revenue for gun companies would be nearly $50 billion!

Clearly, this isn’t the case, Andrew Molchan, director of the Professional Gun Retailers Association, has said. About 300 companies comprise the industry with $5 billion in sales in 2009.

But renewed fear that the current administration will crack down even harder on citizens’ Second Amendment right to bear arms in the wake of such tragedies is keeping gun manufacturers in the black. And this is good news for metals suppliers, as steel, lead or other alloys factor into most every piece of gun hardware or ammo magazine (even though plastics and polymers are becoming more and more prevalent). The indication from the data below seems to be that personal defense or family protection, rather than hunting or skeet shooting, drives recent firearms purchases:

Source: shootingindustry.com

US FIREARM PRODUCTION, 1989-2008 below:

Source: shootingindustry.com

MetalMiner has reached out to representatives at Beretta USA, among other manufacturers, and has yet to hear back. But stay tuned to see what the metal spend is like within the gun manufacturing industry, and whether it is forecast to increase or decrease in the coming years.

–Taras Berezowsky

MetalMiner and its sister site, Spend Matters, along with Nucor, will host a live simulcast, International Trade Breaking Point on March 1, 2011. If your company sources products from overseas, you will not want to miss this half-day event:

Register for the live simulcast today!


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