Has The Bubble Burst?

For the past few days we’ve been asking our industry contacts, insiders and observers a simple question: has the Obama gun-bubble burst?

Since President Obama’s election, certain segments of the firearms industry have been running at full -and beyond- capacity. Some, myself included, were quick to attribute the early surge in firearms and ammunition purchases to a fear that the Obama administration would move – quickly- against firearms. That, fortunately, has not happened.

Over the past few weeks, we’ve been hearing – quietly- of cutbacks, layoffs and other “right-sizing” going on at companies where extra shifts were the order of the day only a few weeks ago. With ammo supplies building up, components for reloading becoming more readily available, and the economy still wavering, it seemed the firearms industry might be slowing.

With that in mind, we’ve visited retailers, talked with distributors, manufacturers and industry observers with a single, simple question: has the Obama bubble burst?

We even asked you- our readers- for your insights, based on your own local experiences.

From those conversations, phone calls, observations and email exchanges, it has become abundantly clear there are two distinctly different schools of thought on the matter.

One says “yes” to the idea that the sitting president kicked off some panic buying. They also believe that bump-up in 2009 gun sales is effectively over.

From Oregon, reader Dave McFadden wrote “I think the first bubble has burst. The black hole that has been sucking away firearms, ammo and reloading supplies, has finally started easing off as other political interests have taken center stage in Washington. The American public has seen the courts stand up for gun rights, and the expected after-election run at gun rights failed to materialize. Again, hidden behind the Economy, increased Unemployment, Health Care, the Wars, and Haiti and a variety of other topics, people are becoming complacent about, and diverted away from, attacks on our rights.”

That’s echoed by Aaron Spuler, “I don’t believe it’s finally burst all the way – yet, but it’s beginning to. Hell, I’m seeing more ammo on the shelves lately than I’ve seen in 18 months, but calibers like .380 ACP are still hard to come by around central Texas….I think a large part of it is people thinking they need to get guns now (while they still can) and ammo now (for stockpiling) because one easy way to go around the Second Amendment is by limiting ammunition supplies.”

“Sure you can have all the guns you want,” he observed, “but without ammunition, it’s basically a funny-shaped rock.”

Sheriff Dave Medlin of Oldham County, Texas, also feels ammunition continues to be a major choke point. In fact, Medlin says continuing ammunition shortages have him concerned the absence of enough ammo will prevent his department being equipped and trained sufficiently to do their jobs.

“I’m still seeing ammo shortages from the retail stores in the Amarillo area,” Medlin wrote, “and I am having difficulty in replacing my existing stock on training and duty ammo.”

The second group, however, doesn’t think much about a “bubble”. In fact, this thought group gives Mr. Obama little, if any, credit for 2009’s surge in demand and sales.

The second group, in fact, seems to feel it’s not only unjustified, it’s inaccurate, to give credit for any of the sales to the administration. As an argument for their position, they point out that despite the anti-gun records of the majority of the administration’s members, no actions have been taken against firearms or firearms ownership – at least at this writing.

One member of that second group is Robert Morrison of Taurus USA.

“Not accurate at all to give him (Obama) credit for the good planning and responsiveness to customers wants that began in the gun business about four years before the elections,” Morrison says, “no one started designing the hot guns after his election in November and then started selling them in January. The smart companies were already responding to what customers said they wanted.”

“And those companies are still selling guns faster than they can make them. It’s the companies making products that aren’t what customers want today who are talking about a bubble bursting.”

Morrison also disagrees with anyone who says 2009 was an aberration.

“I heard someone say that if you tossed out 2009, they weren’t doing badly compared with 2008,” he scoffed, “well, 2008 wasn’t that good a year for the firearms industry. The innovative companies bringing out new products that customers want are doing even better in 2010 than 2009.”

“Smart companies are still doing well; dumb companies are suffering. That’s business.”

Freedom Group Chief Sales Officer Scott Blackwell says the business cycle is significant, but feels a long-term opportunity lies with the new gun owners, not the longtime enthusiasts or sales fluctuations.

“I don’t wake up every morning worrying if a bubble has burst or not,” he wrote, “It’s about the long-term affect that it has on the shooting sports as a whole, as well as our industry, and how we collectively (manufacturers, channel partners, retailers, writers, industry orgs, etc) can do a better job at educating, informing and ultimately leveraging all the new customers who purchased product over the past 18 months during the ‘bubble’ and grow our ‘army’ of passionate sportsmen, to create a sustainable influx of new customers into a sport/market that was not growing.”

“Think of all the new pistol and AR purchases by people who didn’t own them before,” he wrote, “How do we as a group get them out shooting their new product more and enjoying the sport – use 2009 as a ‘renaissance’ or re-invigoration of our sport.”

The NSSF’s Steve Sanetti also discounts the idea of a bursting bubble -and while he sees opportunity in the uncertainty-he believes the need for vigilance is more real than ever.

“…the bubble just keeps…burbling…,” Sanetti says, “Just when you think it’s calming down, you open the paper and read ‘Hillary Clinton blames U.S. for Mexican violence’. And so the pot keeps boiling. Maybe simmering is a better term — but like pasta, it can boil over at any time, particularly if you don’t keep an eye on things.”

Responses from some readers seem to reinforce the assertion that, despite the passage of Mr. Obama’s signature Health Care Reform Act, the bloom is most definitely off the rose of the Obama presidency.

The feelings of resentment over that legislation -and the continued ignoring of the desires of a large majority of the population – show no sign of easing. Instead, “average citizens” seem to be buying into taking personal responsibility for their own well-being. They say those steps are not only timely, they’re prudent.

That position continues to be nurtured by the increasingly negative news coming from Washington -and Wall Street.

That assumption of personal responsibility seems to be echoed across our readership:

“If anything, here at a little shop in the midwest, sales are up. Yesterday, with just two of us in the store, sales were so brisk that we barely had time to unpack our supplier’s weekly shipment. Some ammo is still near impossible to obtain and handguns and ARs are still big sellers with revolvers and the ‘black’ 22s close behind. I that that now, after this past weekend’s debacle, people will buy even more, knowing that BHO doesn’t have to follow any set rules or principles.”
– Stan, Washington, IL

“I don’t think the bubble burst, it just lost some air. We still cannot meet the wholesale demand for pistol ammo, powder and primers.”
– Jim Post, Sales Manager, Chattanooga Shooting Supplies

“As a FFL Dealer here in Vermont right now it looks like this. The sales of AR – type guns have gone down. They are now just sitting on my racks. My wholesalers all have them in stock now which tells me it is the same in other parts of the country. The 223 ammo is now in stock. The sales of small compact 380 and 9MM are hot. The ammo for these is very hard to get so that tell me the wild swing is now to these handguns.
Bullets and powder are very shot supply.”
– David Pidgeon, Pidgeon’s Gun Shop, New Haven, Vermont

“The Obama bubble is still an issue locally as far as ammo is concerned. Firearms are available, ammo is not. In the retail outlets I have visited searching for ammo, there are still more “empty shelves” than “stocked shelves”. The only issue I have had in regard to weapons is ordering a high-end 7.62 on a AR platform and being told there is a eight month waiting list. I know of one store with basic AR15s new in the box for $599; an upgraded model for $699. They have not sold out and have been there for two weeks. Unheard of prices just a few short months ago. The same retailer had similar product at $899 and it flew out the door in hours a few months back. It appears, at least locally, that the arms rush is almost over. Now if we can get the ammo inventory to stabilize.”
-Stuart J. Payne, Birmingham, Alabama

As one member of a big-box retailer’s gun department wrote: “there is still the feeling of impending doom with firearms owners. It has slowed, and will slow more if the Dems can keep quiet. But this morning Mrs. Clinton said we need to ‘stem the tide of firearms flowing into Mexico,” again. If the Democratic party feels confident and starts talking, sales will spike again.”

This growth in personal responsibility and concern over an uncertain economic future may be where the opportunity for the firearms industry lies: taking those uncertain first-time gun buyers and turning them into enthusiastic participants in shooting, whatever their individual preference.

From Oklahoma City’s H&H Gun Range and Shooting Sports Complex, owner and founder Miles Hall suggested that the so-called bubble had not burst; but it had certainly shifted , with new customers appearing at his sales counters, and continuing to return.

“The clear majority of people who came in over the last two years were first time buyers,” he wrote, “They are still in – along with their friends. Sales numbers are just under last year by single to very low double digits. When comparing to 2008 sales, 2010 are up in the mid- to high double digits. The issue is that this industry is not reconnecting to them.”

Hall has backed that position with definitive actions. For six weeks, H&H hosted free lectures on the Second Amendment led by Don Powers, a professor at UCO and former judge. The response? “started off as a handful of people,” Hall told a local TV station, “and it has morphed into close to 100 people.”

“That,” he said, “is an awakening.”

Hall also says the new shooters are definitely not the normal buyers of old- and require a different mindset. “They watch the major networks, not outdoor channels,” he says, “they identify with dealers, not manufacturers, and -universally- they do not understand the shooting sports.”

That, Hall believes, is the true opportunity the industry should be addressing, saying the consumers are making it known through their actions that they want to get involved.

“…we see classes booking months in advance and ranges are at capacity not just on the weekends but during the week and mid day,” he explains, ” The worry for us here is in the ability to reconnect to these folks. Advertising is the means that this group will respond to, but dealers are severely held back by low margins and little to no co-op money to buy air time.”

“I worry, Hall says, “this group -and it is in the thousands just here in Oklahoma- will move on with their lives if not made to feel wanted and welcomed. We are doing all we can, but sure could use some help.”

Hall’s shifting sales position is echoed by Jeremy Jester of Birmingham, Alabama-based Bangers Distribution.

“The Obama bubble has certainly deflated,” Jester wrote, “yet a few market segments remain strong…ammunition supply continues to fail to satisfy demand, small handgun inventories turn at high rates, and certain price point ARs turn quickly.”

Legendary Berryville, Arkansas-based custom gunmaker Bill Wilson agrees. “Our business is about the same as it was prior to the election – OK, but not great like it was for the first 6-8 months after the election. Pistols and accessories are selling the best, with complete ARs selling the worst,” Wilson says.

“I think the overall poor economy is hurting us like all industries,” he continued, “People are so uncertain about the future overall- and specifically their economic future that they seem to be in a wait and see mode.”

“You certainly can’t blame anyone,” Wilson says, “everything Obama/Pelosi and the Dems have done is bad for the economy. That adds to instability/insecurity…nothing they do surprises me anymore.”

Jim Willert at Galco Gunleather agrees any slowing in sales is due to economic, not political concerns. “The recession,” Willert contends,”is catching up to funds available for gun purchases.”

“But, he added, “All that has to happen for the bubble to grow again is either Obama or Pelosi making one mention of passing ‘sweeping reform of our archaic gun laws’ and sales will blossom again. The hunting market, I believe, will stay flat unless they go after all those semi-auto rifle caliber firearms with a detachable magazine or ‘sniper rifles’ -any rifle that will shoot better than a two-inch group at 100 yards.”

Beretta USA General Manager Christopher Merritt III says the NICS checks for 2010 versus 2009 demonstrate a change in buyer preference; not a dying out of desire or bursting of the demand bubble.

“Last year,” Merritt said, “ARs were in demand. This year, it’s about home and self-protection. Your piece about concealed carry was timely- and the amount of firepower mentioned was timely as well. People are buying close contact protection, like pistols and shotguns.”

So, it seems the question we asked may have refocused attention from a fixation on a bursting, shifting or shrinking bubble to identification of continuing choke points in the supply chain and opportunities that are emerging from the increased sales.

Accepting the position that sales haven’t slowed, but have shifted to the personal protection area, a new, yet historically puzzling question faces the firearms industry:

Knowing the industry will eventually catch up with supply and demand, what can the firearms industry and longtime enthusiasts do to keep new shooters enthused and involved?

That is a question we’d all best ponder. Over the next few weeks, we’re going to be looking at some of the more innovative ideas, including some of our own. From television to the internet and new sales channels, there are big ideas emerging.

We’ll keep you posted.

–Jim Shepherd
www.shootingwire.com