Important: anyone with experience in ammunition industry?

[Mark21]

I am posting this in the 6.8 forum rather than general discussion because a large part of this idea stems from the unavailability and the high cost of 6.8 brass I have been witnessing lately.

I wanted to see if anyone on this board works or has worked in the loaded ammunition or unloaded brass cartridge industry -- someone who would be knowledgeable of the suppliers, the machinery, the labor needs, etc.

It doesn't have to be a single person, as I am gathering information. Some of you know that I work in venture capital, where we invest in start-up businesses. I have a few private theories of what is going on regarding prices, and I would like to explore the possibility of starting up a new production company. There are some large obstacles, but at least startup capital will not have to be one of them if the other arrows line up correctly (capex needed, sourcing of supplies, labor needs, legislation risk, etc).

Currently this is just an idea on a napkin, but I figure I need to run this out a little bit.

[owenslee]

Mark,

You need to talk with Art at SSA before going any further.

I worked as an outside process improvement engineer for a short time at the Winchester Olin facility in Alton IL and their secure R&D facility in Carbondale IL. I also worked for a company that made tungsten carbine penetrators for military AP rounds. I had enough exposure to the industry to learn that this is a very specialized business with industry specific equipment. Equipment that requires long lead times to produce and high costs to manufacture.

Having said that...Art is light years beyond me in experience in this industry. I know just enough to be dangerous...

Although I have not shared the following information publicly with the forum, I did shared it with the moderators and a few select members many weeks ago...so I'll share it with the rest of you now.

There is a multi million $$ ammunition plant being build 15 miles from me in Bonne Terre MO. It is owned by Arnold Defense and Electronics out of Arnold MO.(http://www.adelect.com/) It has been over two years since the owner began locating a building and acquiring machinery. I have been to the plant and have spoken to the plant manager. There is considerable machinery on the shop floor yet they have yet to hire their first production employee or make their first round. They are waiting on machinery from other sources and legal issues have prevented them from going any further. To design and manufacture new equipment would be both time and cost prohibitive. So they are waiting... Some are questioning if the plant will ever be completed. One of the early principles has already parted ways from the present owner and the project.

What makes this plant especially noteworthy...is that they have shared that three rounds will be produce at this plant. .556 initially...7.62 x 51 to follow...and finally...6.8 SPC. The reason that this is noteworthy is that ALL plant production will be dedicated to government/military contracts. This suggests...that there are military contracts pending for 6.8 SPC in quantity larger than what current government suppliers, such as SSA, can provide.

Anybody getting the picture yet?

Why would there be capital equipment being bought to produce 6.8 SPC in large quantities...unless...the military or large federal agency is on the verge of acceptance of the 6.8 SPC as a mainstream round...? This is just speculation on my part...but how else could such an expenditure of capital and material resources be justified?

BTW, the plant manager went on to share that at some point in the future, after military requirement are met, it would be only logical that they would then expand into the commercial market.

The downside to this project is that the equipment they are wanting to add to this operation to produce brass has not had a good track record for quality at it's previous location.

I hope I have not let too much information out of the bag... Art may want to chime in and add his perspective but please talk to him if you are looking for some industry insight.

Kerry

[Empty Brass]

That place is right across the street from Browning Service Center. I've been there before.

Thats cool info Kerry.

Art would be a real good contact. Starline might be also. They are right next to Sierra in Sedalia MO. Hornady may talk also. I wouldnt waste time with Olin or Rem. I doubt they would even answer the phone.

[Mark21]

Kerry -- I sincerely appreciate the long and detailed reply.

I was not aware of the specialization of the machines and the lead-times necessary. What you are describing is a nightmare for my business -- getting money all tied up in capex and then having to wait on supplies, or even worse, dealing with legal hurdles; all the while the clock is ticking on coming up with a return on investment.

I am not surprised to hear about this new plant. Having watched these shortages for quite some time, it seemed to me that it was only a matter of time before someone steps in to take some of these excess profits for themselves. Or even that the govt might subsidize an effort to increase capacity and/or competition.

Art has done a lot for the 6.8, which I truly appreciate. I would not ask him to divulge information that I could use to potentially compete with him, nor would I expect such info to be offered in the first place. And from what you have stated, it appears that starting up the business from scratch is a little more hands-on than what my partners would want. However, maybe if Art is finding himself capital constrained, that may be a way we can work together. Since SSA is successful to date, has existing machinery, suppliers, a brand, etc -- that is a lot of heavy lifting already taken care of. I will give him a call shortly just to throw some ideas around.

Thanks again for the insights. I hope you are right about an adoption of the 6.8; what a wonderful development that would be (until the military sucks up all 6.8 supply... :? )

[Jack-O]

I'm in a position now where I may start working more in depth with a manufacturer on 6.8 stuff myself. Load development, market expansion and production are all major factors, but they would be head and shoulders farther ahead than starting from scratch.

If i can get things to progress along these lines, then a venture capitalist might be able to recoup some investment by looking at this operation.

Right now I know that capacity and personnel are of primary concern to this operation, so capital might not even be and issue.

What exactly are you looking to invest in? a company to make ammo or just some way top make money in the current market?

maybe we have coinciding needs/goals and can make something work.

[Mark21]

I'm in a position now where I may start working more in depth with a manufacturer on 6.8 stuff myself. Load development, market expansion and production are all major factors, but they would be head and shoulders farther ahead than starting from scratch.

If i can get things to progress along these lines, then a venture capitalist might be able to recoup some investment by looking at this operation.

Right now I know that capacity and personnel are of primary concern to this operation, so capital might not even be and issue.

What exactly are you looking to invest in? a company to make ammo or just some way top make money in the current market?

maybe we have coinciding needs/goals and can make something work.

Jack, drop me a PM and we can discuss more off-line.

To make real money in this current market would have required making the investment two years ago. :( The guys building that plant in MO had the right idea at the right time.

Our firm is looking for possible investments into the firearms/military area (optics, firearms, ammunition, etc), and since I am very familiar with the 6.8SPC from my own hobby, and I see the scarcity of ammunition in general, it seems to make sense to explore the area. The way we typically invest is to put money into the company for a % ownership. We do not take controlling stakes, but we add value through business, finance, and other expertise we bring to the Board and the CEO. Hopefully the company grows quickly and it is sold or taken public 5-8 years down the road.

[kalwasart]

Gents,

Take it from someone who started two ammunition plants from the ground up and both are profitable and still in business, you have no idea what is involved. Just think, you can count on one hand the number of rifle brass manufactures in this country while the ones that failed are countless. Some who claim to make rifle brass actually purchases the case's from oversea's suppliers, or they come to us. Its not just the machines its knowing how to make it.

Art - SSA

[Jack-O]

Jack, drop me a PM and we can discuss more off-line.

To make real money in this current market would have required making the investment two years ago. :( The guys building that plant in MO had the right idea at the right time.

Our firm is looking for possible investments into the firearms/military area (optics, firearms, ammunition, etc), and since I am very familiar with the 6.8SPC from my own hobby, and I see the scarcity of ammunition in general, it seems to make sense to explore the area. The way we typically invest is to put money into the company for a % ownership. We do not take controlling stakes, but we add value through business, finance, and other expertise we bring to the Board and the CEO. Hopefully the company grows quickly and it is sold or taken public 5-8 years down the road.

I'm not sure that is where they want to go. I'll PM you once I have some more information later this week. I'm kinda working an angle of my own here and that will take priority unless I can figure a way to get us both profitably involved. I'm leaning towards small and conservative right now tho. but there may be an opportunity.