INDUSTRY NEWS: IRAQ WAR RESULTING IN AMMO SHORTAGES AT HOME

By Robert Hausman

America’s military involvement in Iraq is putting a heavy strain on ammunition makers. The demand for ammo by the U.S. military is resulting in a difficulty by manufacturers to keep up with demand for both the military and commercial sectors – including supply to police departments. The military’s seemingly insatiable appetite for ammunition, coupled with ammunition makers’ rising raw materials costs (due in large part to the burgeoning economy of China’s need for metals) is resulting in shortages of many types of ammunition on the domestic market, particularly military calibers such as 5.56mm and 7.62 NATO.

Ammunition shipments to local gun shops and police departments are being delayed for months because the Army has more than tripled its demand for small-caliber ammunition, according to trade sources. Ammunition plants have dramatically ratcheted up production, but company officials acknowledge delays to police and retailers of up to a year.

“There are millions of rounds back-ordered because the war has put such a demand on the manufacturers,” said Lana Ulner, manager of Rapid City, S.D.-based Ultramax Ammunition, a distributor for several manufacturers. “In some cases, it can take eight to twelve months.”

The Army’s demand for small-caliber ammunition has soared from 426 million rounds in 2001 to 1.5 billion rounds in 2006, according to the Joint Munitions Command at the Rock Island Arsenal in Illinois.

The government spent $688 million on ammunition last year, up from $242 million in 2001, said Gail Smith, a Joint Munitions Command spokeswoman. The most common bullets ordered are 5.56mm, 7.62mm and .50 caliber, she said.

Because of the increased demand, police in Des Moines, Iowa, for instance, said it’s taking twice as long to get ammunition orders as a few years ago – up to eight months. Still, the department has not decreased its use of ammunition.

“We’re not experiencing any shortages, but they are planning ahead to accommodate for the delay caused by the war,” said police spokesman Sgt. Todd Dykstra.

Much of the ammunition used by the Defense Department comes from a plant in Lake City, Mo., owned by Alliant Techsystems (ATK). The plant’s production has increased nearly fourfold, said company spokesman Bryce Hallowell.

“We have … hired hundreds of people and turned our plants into 24/7 operations where they weren’t just a couple of years ago to meet that demand,” said Hallowell, whose company also has plants in Anoka, Minn., and Lewiston, Idaho. “We’re running fullout.” He said that the war, the depleted ammunition reserves and the lack of foreign competition have all contributed to the surging demand.

Ann Pipkin, a spokeswoman for East Alton, Ill.-based Winchester Ammunition, said her company also is seeing a backlog on orders for certain types of ammunition.

At another retailer, Darr’s Shooting Supply in Chattanooga, Tenn., the wait for some types of ammunition was four months, said salesman Jeff Brewton. Additionally, buyers at gun shows (which normally are a source of plentiful and inexpensive ammunition) are finding a decreasing supply of ammunition available and what is available is subject to ever rising prices.

BAE Systems to Acquire Armor Holdings

Armor Holdings, Inc., owner of such well-established brands as Break-Free, Kleen-Bore and B-Square, has agreed to be acquired by defense industry giant, BAE Systems plc for $88 per share cash.

Armor Holdings is also a leading manufacturer and distributor of tactical wheeled vehicles, security products and vehicle armor systems serving military, law enforcement, homeland security and commercialmarkets. It has entered into a definitive merger agreement to be acquired by BAE Systems, Inc., a wholly-owned subsidiary of BAE Systems plc, a global company engaged in the development, delivery and support of advanced defense and aerospace systems in the air, on land and at sea.

BAE Systems has agreed to acquire all of the outstanding stock of Armor Holdings, Inc. for $4.1 billion, or a price per common share of $88 through a one-step merger. The transaction is subject to approval of Armor Holdings’ shareholders and to customary closing conditions, including regulatory compliance. The transaction is expected to close in the third quarter.

Robert R. Schiller, President of Armor Holdings, Inc., commented, “We are excited to move this business to the next phase of its development. We have no doubt that BAE Systems will place the needs of our customers and those of the men and women in uniform who depend on our products at the center of their ongoing effort. We owe a special thanks and a deep debt of gratitude to each of our over 8,000 employees around the world. Their tireless commitment to excellence and innovation has and will continue to make this organization strong for many years into the future.”

Illinois Senate Votes to Ban Mags

At SAR press-time, the Illinois Senate had voted 31-26 in favor of a ban on firearm magazines that hold more than 10-rounds of ammunition. The measure was next heading to the House.

Sen. Mike Jacobs (D-East Moline), whose area of representative includes several firearms manufacturers, warned that passage of the bill would be a serious blow to the state’s economy as some of these manufacturers have threatened to move out of state if the bill is passed into law. Illinois is home to several manufacturers of ARstyle rifles and other firearms.

NICS Makes Changes on Delayed Transactions

The FBI Criminal Justice Information Services Division’s National Instant Criminal Background Check System (NICS) Section is implementing a change in how it obtains callback information on delayed background checks. Under current NICSSection procedures, when a background check is delayed at the NICS Call Center, the call is transferred to the NICS Section for further review. Prior to transferring the call, NICS Call Center personnel request the FFL’s callback information (name, callback hours and phone number).

Due to an influx of requests from FFLs, beginning July 1, 2007, the NICS Section no longer requests callback information on delayed transactions. The NICS Section will utilize the callback information provided by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) in order to notify FFLs of the results of a delayed transaction.

Starting mid-June 2007, the NICS Section began playing the following tentative message when calls are transferred to the NICS Section on delayed transactions: “Beginning July 1, 2007, the NICS Call Center will no longer be asking for callback information on transferred transactions. If your callback information has changed, please advise the NICS examiner that will be processing your transaction.” This message will play on delayed transactions from mid- June 2007 to July 1, 2007.

Beginning July 1, 2007, the transfer message stated, “As of July 1, 2007, the NICS Calls Center discontinued asking for callback information on transferred transactions. If your callback information has changed, please advise the NICS examiner that will be processing your transaction.”

The entire message was scheduled to be played until mid-July 2007, at which time the message will only play while the FFL is on hold.

If the FFL wishes to verify the callback information that the NICS Section currently maintains, they may (but are not required to) do so by contacting the NICS Section Customer Service at (877) 444-6427.

30-Day Rule on Transfers

Retailers are reminded in the latest FFL Newsletter published by ATF, that once a background check is initiated, the retailer has 30-days to transfer the firearm as long as the sale is not denied. The 30-day clock starts the day the transaction is initiated, not the day the NICS Section calls with a proceed. If 30-days have elapsed when the individual returns to pick up the firearm, a new NICS check must be conducted.

FFL Enhancements Underway

Based upon feedback from the industry and its own personnel, ATF has announced it is enhancing the Federal Firearms License to give it an updated look, including larger print for ease of readability. A wallet-sized information card with the license number will also be provided.

The new enhanced FFL will be mailed to all FFLs during this year. For those whose license is within two months of renewal, or for those in the process of renewal, a new FFL will not be issued until the renewal application has been approved.

Scanned & Emailed Copies of FFLs are Acceptable

ATF has determined that scanned or emailed versions of Federal Firearms Licenses are now an acceptable means of transmission.

Since the notice was printed in the August 2005 edition of ATF’s FFL Newsletter notifying the industry that Faxed copies of Federal Firearms Licenses are acceptable for transactions, the Bureau has received many inquiries from industry about the acceptance of other electronic versions of licenses, such as emailed or scanned copies. After further review of this issue, ATF decided to approve use of scanned and emailed FFL copies.

Alternate Forms of Original Signature Acceptable

Further, the regulations in 27 CFR 478.94 do not specifically address whether the license furnished to the transferor must have an original signature. However, the license itself indicates that the signature on each copy must be an original signature. It is thus ATF’s position that any signature – whether it is done by hand with a pen, stamped, or auto-penned – is an original signature, if the person whose signature appears intends it as an original signature.

ATF Buying Shotguns from Remington

This writer has heard through a source that ATF intends to negotiate a sole source award to Remington Arms Company, Inc., Madison, NC for Remington 12 gauge shotguns, model 870POL 12/14P MOD RS SFIV-S TL (100 ea) to include the following specifications: Model 870POL 12/14P MOD RS SFIV-S TL EXT 1 Barrel Length: 14″ barrel w/modified choke 3.6″ sights: Rifled Finish: Parkerized Grips: SpeedFeed Synthetic Full Pistol Grip Solid w/13″ LOP Light: Surefire #618 Tactical Light Forend.

New Hall at 2008 SHOT Show

A new hall will open at the 2008 SHOT Show to be held February 2 – 5 at the Las Vegas Convention Center in Las Vegas, Nevada.

The Gold Hall, across Paradise Road from the Las Vegas Convention Center, will provide 85,000-net-square-feet of additional exhibition space, featuring as many as 650 exhibitors primarily in the general shooting and hunting, and law enforcement segments. At press-time, about 75% of the space has already been sold.

Getting to the Gold Hall will involve use of a footbridge connecting the North Hall of the Convention Center to the Gold Hall which spans Paradise Road. Additionally, a shuttle service will be offered.

The 2007 show in Orlando filled 656,100-net-square-feet with exhibits, andthe 2008 show in Las Vegas is projected to offer 685,000-net-square-feet of exhibition space.

The Law Enforcement section of the show continues to grow. The segment made a modest debut at the 2001 show in New Orleans, when 41 exhibitors occupied 7,600-net-square-feet. At the 2008 SHOT Show, Law Enforcement will exceed 125,000-net-square-feet of exhibition space.

Obituary Phyllis Sucher, Co-Founder of Century Intl. Arms

Phyllis Sucher, 79, of Bay Harbor Islands, FL passed away on May 14, 2007 from Acute Myeloid Leukemia. Born in Montreal, she was predeceased in death by her husband of 25 years, William Sucher, in 1976. Century is now America’s largest importer of surplus hunting and shooting sports goods, including mainly tactical and Class 3 firearms.

BlackHawk Opens Fourth U.S. Factory

BlackHawk Products, producer and marketer of tactical gear, has further expanded its U.S. production capabilities with acquisition of another U.S. production facility in Boise, Idaho.

The 100,000-square-foot factory is the company’s fourth in as many years. Their stated goal is to reduce the time-to-market by reducing production lead times. Formerly the products were mainly produced overseas.

Brian Schroeder has joined the firm as General Manager, Boise Division. Schroeder formerly spent 14-years at Michaels of Oregon Co. where he was Vice President of Manufacturing at the Michaels of Oregon Boise production and warehous ing facility. Following the acquisition of Michaels of Oregon Co., Bushnell closed the 5-year-old Boise facility as a result of moving their production overseas.

BlackHawk moved its Norfolk, Virginia headquarters to the newly-constructed 64,000-square-foot complex at Commander Corporate Center in Norfolk this past July.

Beretta Names New VP for LE & Defense Group

Beretta USA has named Elio J. Oliva as its new vice president, Law Enforcement and Defense Group.

Oliva was most recently Director Business Development – Strategic Products with Qualcomm in San Diego, a firm in the embedded wireless data card arena. Prior to his position at Qualcomm, Oliva was Director of Business Development at Carrier Relations from 2005-2006. He also held various positions in the USA, Chile and Spain with Motorola from 1990-2005. He holds an MBA in International Business Management and a BS in Electrical Engineering and Computer Engineering from the University of Miami.

Glock Receives NRA Recruitment Award

Glock, Inc. was recognized for its new member recruitment efforts during the NRA Annual Meetings & Exhibits in St. Louis this past April. Glock, Inc. has brought 10,000 new members into the NRA over the past 9 years.

Wayne LaPierre, CEO of the NRA presented the award to Ed Fitzgerald, Glock’s Assistant National Sales Manager and Glock’s celebrity spokesman R. Lee Ermey.

The NRA has begun an effort to get all industry firms involved in NRA recruitment to strengthen the organization for the legislative battles it will face in the near future

The author publishes two of the small arms industry’s most widely read trade newsletters. The International Firearms Trade covers the world firearms scene, and The New Firearms Business covers the domestic market. He also offers FFL-mailing lists to firms interested in direct marketing efforts to the industry. He may be reached at: FirearmsB@aol.com.