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Thread: Problem for the Hobby

  1. #1
    Join Date
    Dec 2009
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    Cape Girardeau, MO
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    Bullet Problem for the Hobby

    Just received this from a friend. From the sound of it, you'd better like products by Bachmann.

    GS

    Industry Update

    The [model railroad] hobby is in a manufacturing turmoil, due to a lack of production capacity now.

    There is no question; you have seen the delays from virtually all manufacturers. Pick any manufacturer’s name and their products are delayed. Why you ask? There are several reasons.

    The primary one is that the largest factory which produced models for a wide variety of manufacturers has shut its doors to those manufacturers. After it had been bought and sold several times, it was bought out by the Bachmann group and now produces models solely for Bachmann. This was a huge production facility, about 10 times the normal size of a typical Chinese factory. Or think of it as 10 factories operating under one name.

    There is no other "big" factory, equivalent in size. As a result, many manufacturers have been forced to scramble and find another factory that can produce their models.However, there is no other "A" size factory, the next size is "B" size, 1/10th of the "A" size.

    If you can imagine the size of China ’s manufacturing sector, you might well say to yourself there should be lots of factories. There is, they produce lots of electronics, such as games, toys, appliances, telecommunications, etc. However, model trains are way down at the bottom of the list, as it is such a small market.

    Believe it or not, there are very few companies capable of model train production. There are about three "B" size main factories and some smaller "C" size factories.

    Then you have the issue of complexity. Our hobby products involve tool and die making, electronics, motors, plastic extrusion, assembly, and painting. All of this has to be done with fine tolerances. All of these areas require dedicated areas and skilled employees. Compare all of that to an example, a “Barbie doll”, with much greater tolerance for error.

    The result to you the modeler is that your promised future models have been delayed.

    As dealers, we and all other dealers are the recipient of modelers’ frustrations, as we are their direct contact. I can certainly understand and empathize with modelers’ frustrations. We have the same frustration, except it is multiplied a hundred times or more. We, as dealers and distributors, plan on models delivered in future months for our cash flow planning, staffing and other commitments. Every store, distributor and manufacturer is experiencing the same problems. There is no immediate fix or date when “normalcy” will return to the hobby.

    Another issue affecting production is working capital, or more specifically, the lack of working capital, both in North America and in Asia. The financial crisis of 2008 has hammered businesses around the globe. Working capital has dried up for many manufacturers. In foreign countries, a number of manufacturers may be taking funds from one customer and applying them to another, they are “robbing Peter to pay Paul” to stay in business.

    I know of a number of our North American importers, with manufacturers overseas, who are in this position of waiting, and waiting, and waiting. They have supplied funds to their overseas manufacturers for research and development, tooling, raw materials and production costs, and are waiting on receiving a pre-production sample. They may even have approved the sample and are waiting for production to occur, but they are still waiting. It is out of their control.

    Now is not the time to berate manufacturers for not delivering products to you. It is a global issue.

  2. #2
    Join Date
    Jan 2009
    Location
    Kansas City, MO
    Posts
    2,141

    Default Re: Problem for the Hobby

    Greg, thanks for sharing this crucial information. The financial woes we face in this country are global and your post reflects it. Without readily available capital, no new companies can start up to fill whatever demand there may be, geography notwithstanding. I doubt that we would see new manufacturing develop in this country for our hobby unless prices and guaranteed volume were high enough.
    Keith Robinson
    KC, MO North
    Southeast...........Southwest
    Ship It on the Frisco!

  3. #3
    Join Date
    Dec 2009
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    Cape Girardeau, MO
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    Default Re: Problem for the Hobby

    Should have indicated this in my original post. The information came from a magazine called Canadian Model Trains, which appears to have some relationship with Rapido.

    GS

  4. #4
    Join Date
    Jan 2009
    Location
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    Default Re: Problem for the Hobby

    After thinking more about Greg's original post, one can see through the volume of new plastic product offerings, that Bachmann did, in fact, come up with more production somewhere. Bachmann has released a very large volume of new products that they never had before.
    Keith Robinson
    KC, MO North
    Southeast...........Southwest
    Ship It on the Frisco!

  5. #5
    Join Date
    Apr 1970
    Location
    Wichita, KS
    Posts
    1,276

    Default Re: Problem for the Hobby

    Quote Originally Posted by gstout View Post
    Should have indicated this in my original post. The information came from a magazine called Canadian Model Trains, which appears to have some relationship with Rapido.

    GS
    Canadian Model Trains is actually a major dealer in Canada where some of us buy our brass from.
    Bob Hoover
    FriscoFriend
    Modeling a small segment of the Wichita Sub-Division, circa. 1980, in HO called the
    "River City Railroad & Amusement Co."

  6. #6

    Default Re: Problem for the Hobby

    Can not model trains be produced in the US with employees being paid even the minimum wage? American workers have skills and need jobs and it seems that a factory could be built in Alabama or Mississippi for example and receive tax break benefits from the state governments for locating within their borders and creating new jobs. I don't want to start a geographical war but a lot of industry moved South to enjoy the low tax benefits and the milder winters which can be quite costly if located in a "Cold Zone".

    With "Mom & Pop" manufacturers providing trucks, couplers. parts and packaging for freight and passenger car kits as an example, we might even see a return of economical "blue box" kits perhaps. Would not this be a win-win-win for manufactureres and modelers alike?

    Joe Toth
    Last edited by Joseph Toth; 08-17-2012 at 11:47 AM.
    Joseph Toth
    The Trinity River Bottoms Boomer

    Email: railroadjoe@hotmail.de

  7. #7
    Join Date
    Apr 1970
    Location
    Wichita, KS
    Posts
    1,276

    Default Re: Problem for the Hobby

    Quote Originally Posted by Joseph Toth View Post
    Can not model trains be produced in the US with employees being paid even the minimum wage? Joe Toth
    This very issue was brought up and addressed at last Springs Layout Design and Operations Meet in Tulsa, OK. An employee of Intermountain was in attendance and stood up and gave the numbers in a very frank and comparative manner. If I remember correctly he said the Chinese will work for $2.00 to $4.00 an hour where people skilled enough here would require paying them $12.00 to $14.00 an hour. I can't remember how much he said it would raise the price of a freight car for example, but I do remember that it was enough to discourage most from buying one. For the time being, it's just a fact of life.
    Bob Hoover
    FriscoFriend
    Modeling a small segment of the Wichita Sub-Division, circa. 1980, in HO called the
    "River City Railroad & Amusement Co."

  8. #8

    Default Re: Problem for the Hobby

    I can give you a real life example, although it is a steel wire product with some welding. We can make the product here and sell it for $7.00, or we can import it from China, same product, and sell it for under $3.00, making the same margin. Not everything is that way, this same company is moving it's US production from CA to MO before the end of the year...yes they still produce some product here, but they do shop everything all over the world, trying to get the best product for the price.
    Kent Hurley
    Kansas City, MO
    www.nvrr49.blogspot.com

  9. #9

    Default Re: Problem for the Hobby

    Quote Originally Posted by Joseph Toth View Post
    Do these "under $3.00" welded steel wire products meet US Safety Regulations?
    Yes, that is why I said, "same product".

    Unfortunately, with this particular item, the minimum that most customers would need to buy would be nine of the items, so the price difference would be $27.00 vesus $63.00. Again, the same company still makes product here, when they can be competitive. Generally speaking, from my experieince, unless it is 20% cheaper from a foreign source, it is better to build it here. Lead time and inventory costs can be crazy when importing.
    Kent Hurley
    Kansas City, MO
    www.nvrr49.blogspot.com

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