Gun and ammo makers are staying cautious ahead of the election despite surging sales, because they remember all too well the crash that happened after the election of President Trump.

Gunmakers can barely keep up with demand. Sales have been booming since the start of the pandemic, fueled by fears of coronavirus and civil unrest. FBI background checks have been breaking records. Makers of guns and ammo are reporting double-digit increases in revenue. Handguns are flying off the shelves and ammo is selling out and getting scarce.

“It’s the 2013 shortage all over again,” said Brian Rafn, a gun industry analyst who recently retired from Morgan Dempsey, referring to the run on ammo during the Obama administration. Rafn, whose family owns shares in Sturm, Ruger, said that nowadays buyers of popular ammo like 9 mm have to hunt for it from store to store like “the guy who’s buying milk during the hurricane.”

But gun and ammo makers are hyper-cautious about ramping up manufacturing capacity. They don’t want to get burned like in 2016, when sales surged to record levels only to implode on Election Day. Sales then were driven by fears of gun control fueled by mass shootings, but those fears evaporated with the election of President Trump, a Republican endorsed by the National Rifle Association. Gun sales plunged immediately after his election, resulting in layoffs and sliding stocks for Sturm, Ruger and Smith & Wesson.

Gun makers fear that fickle consumers could slow down spending, depending on election results, the severity of the pandemic, or the persistence of clashes between police and protesters.

“Firearm manufacturers are making prudent decisions to keep up with extraordinary demand during these past few months,” said Mark Oliva, director of public affairs for the National Shooting Sports Foundation, a gun industry group. “Manufacturers are producing firearms and ammunition as quickly as they can to meet customer demand.” But he said that gunmakers must meet the skyrocketing demand, which has outstripped production, “in a way that is going to ensure sustained participation in tomorrow’s market.”

Sturm, Ruger displays the words “WE’RE HIRING” in a banner across its website, advertising 26 job openings in four states as it fills out shifts. Job listings range from tool maker to manufacturing engineer to the water spider who stocks manufacturers with enough material to keep production running smoothly.

But 26 is less than what one might expect for a company of about 1,580, according to 2019 figures provided by Rafn.  Smith & Wesson is also advertising for 20-plus job openings, which pales compared to its recent tally of 1,970 employees. Liz Sharp, vice president of investor relations for Smith & Wesson, said the company maintains flexibility by outsourcing production of certain gun components when needed.

“While we may see some changes to our number of employees, we are likely to see more of that impact occur in outsourcing levels,” she said.

Rommel Dionisio, a firearms industry analyst for Aegis Capital, said the popular AR-15s have a marketplace advantage: they were designed for wartime production.

“When you have these cyclical moves in the firearms industry, manufacturers can ramp up manufacturing quickly because many of these designs, like the AR-15 platform, were designed to be mass-produced quickly,” he said.

Spikes in demand result in bullet shortages because the ammo manufacturing industry, dominated by Vista Outdoor and Olin’s Winchester, is less flexible than guns. Dionisio said bullet makers manufacture huge batches of ammo with massive machines to maximize efficiency, with no wiggle room to match fluctuations in demand.

“That’s an industry that has less of an ability to max up or max down,” he said. “You’re not going to buy this expensive machine just because demand is going to be up for six months.”

Manufacturers are trying to forecast the future for firearms. Will the election results increase sales or trigger a decline?  Will civil unrest and coronavirus continue to drive sales?  

“Like any other manufacturing base, firearm and ammunition makers forecast their best analysis for what the demand will be for their products in the coming year,” said Oliva of the NSSF. “That includes placing orders for raw materials, including bar stock to make barrels, component materials to make ammunition and predicting labor, warehousing and shipping costs, distribution channels and retail demand.”

Volatility makes this tricky to predict. Soaring demand in 2016 leading up the election was followed by a glut in the market in 2017 and 2018. Some smaller manufacturers didn’t survive the transition and went out of business. The larger survivors learned valuable lessons, making them cautious even in times of record sales.

“Whipsaw reactions, to meet demand spike, come with risk,” said Oliva.