.22LR HAS LOWEST PROFIT MARGIN
That may be, but can the machines used to manufacture .22 rimfire be used to manufacture anything else?
“.22LR HAS LOWEST PROFIT MARGIN”
Not only does it have the lowest profit margin, the manufacturing machinery is complex and expensive. Which makes it difficult for any ammunition maker to expand output.
And for many reasons - regulatory, liability, occupational safety, environmental, raw materials, competitive - makers must undertake much larger risks in modern times, to enter the business or to expand.
Flexibility (”agility”) is more valued, and a firm incurs more penalties nowadays, if it keeps “excess” inventory on hand. Makes it that much more difficult to secure raw materials, or to build new plants. Unsurprisingly, businesses fear they will get stuck with excess (”slack”) production capacity when demand tapers off.
Barriers to entrepreneurs intent on entering the business have been piled progressively higher: regulatory approval is more vital than ever, and in multiplying areas. Difficult enough even before a plainly unsympathetic Administration took over the regulatory apparatus. Since then it’s only gotten worse.
The propensity to sue frightens the makers of guns and ammunition - they cannot count on goodwill from customers. Even rock-ribbed, socially responsible, ruggedly individualistic American gun lovers are much more in a hurry to file suit against a beloved supplier, if one of their loved ones chances to get shot - even when it’s their own fault.
So manufacturers are reluctant to make any move to meet demand, even if they face short-term ire from customers.