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Hornby secure £18 million loan


lapford34102
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They are doing some manufacturing in the UK - just got one or two of their acrylics in with the flag on, and they seem to be an improvement on the very hit and miss that has been the norm for the last few years of their range, if you could get them at all... Also some Airfix kits are being designed and tooled here - it has been mentioned before,IIR, and no doubt will be gone into more detail on plastic kit forums, but the latest 1/48 Stuka is all British, apparently.

 

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Not on topic, but I love the box art. None of this PC twaddle about not showing war or violence, as if the thing you're modelling was there for pleasure flights!

 

John.

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Past performance is, surely, what you build on? I can't imagine that assembling model locomotives with complex modern electronics and hundreds of parts can be learned overnight. (CJL)

 

Absolutely. What is more, I depend on past performance to judge the likely quality of a company’s products. It may not be entirely reliable as even the best manufacturers drop a clanger from time to time but, nevertheless, I look forward with confidence to new models from some manufacturers and avoid products from some others.

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Past performance is, surely, what you build on? I can't imagine that assembling model locomotives with complex modern electronics and hundreds of parts can be learned overnight. (CJL)

But your quote suggested Frateschi were basic, 10 years ago. (Maybe I misread it, but I took it to be demeaning on them).

I could say the same about Hornby 20 years ago.

Indeed Piko were the joke of Europe.

 

It needs investment, if Frateschi has the same injection moulding machines and assembly engineers as China, it could produce a competing product, that has no bearing on what they were doing 10-20 years ago.

 

But if you went to say neighbouring Paraguay with the exact same equipment your road to climb would be much harder to achieve the same quality as the under lying skills, knowledge & experience (starting with the difference between an Engine a Train ) is less available, but possible... depending on investment cost and potential return.

 

My main point is China today dominates, but that doesn’t mean it’s perpetual nor is it exclusive. If the economic drivers are there, things will change. If it’s like my industry it won’t be wholesale shift, more likely it will be scattered pockets devolved to several other countries, I couldn’t say if that’s a good thing or not.

 

For example I am lead to believe Frateschi supply (or at least used to) to Atlas in the US, given Atlas lost its supplier, AFFA, according to reports elsewhere, in China Last week, that’s possibly an easier road in which to start a conversation about expansion ?

 

I have both Frateschi and Fuggerth (Hungary) HO models, both are similar quality* and both 20 years old, is Fuggerth supplying super detailed HO to German suppliers now ?, if so then it backs up my point about what’s possible ?

 

* not confusing Deak which initially produced Brass v43/46/61 classes rtr, but later released via Fuggerth.

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But your quote suggested Frateschi were basic, 10 years ago. (Maybe I misread it, but I took it to be demeaning on them).

I could say the same about Hornby 20 years ago.

Indeed Piko were the joke of Europe.

 

It needs investment, if Frateschi has the same injection moulding machines and assembly engineers as China, it could produce a competing product, that has no bearing on what they were doing 10-20 years ago.

 

But if you went to say neighbouring Paraguay with the exact same equipment your road to climb would be much harder to achieve the same quality as the under lying skills, knowledge & experience (starting with the difference between an Engine a Train ) is less available, but possible... depending on investment cost and potential return.

 

My main point is China today dominates, but that doesn’t mean it’s perpetual nor is it exclusive. If the economic drivers are there, things will change. If it’s like my industry it won’t be wholesale shift, more likely it will be scattered pockets devolved to several other countries, I couldn’t say if that’s a good thing or not.

 

For example I am lead to believe Frateschi supply (or at least used to) to Atlas in the US, given Atlas lost its supplier, AFFA, according to reports elsewhere, in China Last week, that’s possibly an easier road in which to start a conversation about expansion ?

 

I have both Frateschi and Fuggerth (Hungary) HO models, both are similar quality* and both 20 years old, is Fuggerth supplying super detailed HO to German suppliers now ?, if so then it backs up my point about what’s possible ?

 

* not confusing Deak which initially produced Brass v43/46/61 classes rtr, but later released via Fuggerth.

 

I wasn't intending to demean them. At a time when the likes of Hornby and Bachmann were producing models that were ever more complex (both in detail terms and electrically) the Frateschi models that I bought were very simple - which I called 'basic'. I haven't bought any Frateschi models more recently and it may be that those I bought were among the oldest items in the range. I am very happy with them. They offered a model that no one else did. I have two and they run OK and look OK. I certainly wasn't intending to suggest that they were poor quality and I apologise if my comment has offended you. I certainly don't intend to get into an argument over who might do what depending on how much you invested in them. (CJL)

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I believe Vi-Trains still make their stuff in Italy (Vicenza) and whilst a limited range, it is very good and slowly becoming more sophisticated, and not that much different in price to Chinese made Rivarossi. Such a pity they gave up on the UK market.

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I believe Vi-Trains still make their stuff in Italy (Vicenza) and whilst a limited range, it is very good and slowly becoming more sophisticated, and not that much different in price to Chinese made Rivarossi. Such a pity they gave up on the UK market.

 

It is a pity but it would be very difficult to know where to get a toe in these days with so much covered. I have Vi-Trains 37s and 47s and I’m very pleased with them, although when I first got them and found sprues of stuff to attach which didn’t fit very well, I wasn’t quite so pleased. Perhaps by leaving off the final stages of assembly, Vi-Trains was able to produce stuff at a price to match China.

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I believe Vi-Trains still make their stuff in Italy (Vicenza) and whilst a limited range, it is very good and slowly becoming more sophisticated, and not that much different in price to Chinese made Rivarossi. Such a pity they gave up on the UK market.

I don’t think Vi were ever interested in the british market.....everything they made was a commission from hobbyco ltd in Milton Keynes. They called the shots totally.

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Indeed, it wasn't ViTrains who entered the UK market but rather they supplied Hobbyco who in todays market would be described as a commissioner.

 

I always think ViTrains are an elephant in the room of the hobby as they demonstrate that contrary to accepted wisdom it is possible to manufacture high quality models in a Western European country and sell them at prices which are competitive with Asian manufactured competition. True they leave fitting of many of the separately applied detail parts to the consumer but that was normal in Europe and North America until production moved to China so many consumers are quite comfortable with the concept.

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The move from production beyond China is not going to happen overnight and is not going to be complete but it is happening right now.

 

Customers of factories in Guangdong have seen how the area is transitioning away from toys, clothing and plastics to high-tech consumer electronics.  Western retailers and brands are seeing factories close that have supplied them for over twenty years.

 

The problems Hornby is experiencing with sourcing outside China will be largely down to micro-volume categories like model railways being pretty unattractive for factories.  Who would want to set up a factory to make low volume production runs for a category where the retail network is shrinking and the core customer base is dying?

 

The big risk for the hobby is if any of the remaining factories decide to close to model railway production.  We already see the challenge that the UK brands have getting production slots in China.

Pretty much nail on the head. Whatever the reason, we have seen the end of cheap, fine detail model railway products. When I came back to the hobby less than seven years ago, you could get a new Bachmann Mineral wagon for £4.50. The latest version of that same product will now cost you almost three times that. I bought a baccy Standard three tank in 2012 for £62.50 - at least a 50% increase in six years. That's what, a 7.5% increase year on year?

We've had a liberal supply of cheap, high quality items for a decade now, and like a lot of products we import from China, we're loth to quit our supplier, even as we demand ever-more complex 'fixes'. I suspect we've already passed the high-water mark of new product supply. In future we'll have to expect a lot less new items.

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I see over on the Lord Nelson thread that its pushed back to January 2019(you have to be clear on the years these days!) and the Streamlined Coronation to February . The J36s which I think were originally due around now since they were announced were put back to October , then December now January 2019. It looks like the 87, in executive livery at least, is imminent , but was originally supposed to be here by Jan 18

 

To us that probably doesn't matter much that something is delayed , we just need to wait a few more months . But this can have a big effect on companies cash flow and declared sales . No stock to sell= no sales= no cash coming in to pay expenses. Also who is to say that these are the last delays , I'll take bets on times slipping again , and if they slip past 31/3/19 then they don't make Hornbys financial year. Could be another low sales year for them . It does underline that they need better control over their supply chain. I think this is the major weakness here, from Frank Martins day, that until its addressed will constantly undermine their efforts to get the ship on an even keel. The factory that closed , Affa, probably hasn't helped , either because they seemed to produce components (screws and wheels) used by other model manufacturers, or because Affas customers are scrabbling around other factories for manufacturing volume.

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I see over on the Lord Nelson thread that its pushed back to January 2019(you have to be clear on the years these days!) and the Streamlined Coronation to February . The J36s which I think were originally due around now since they were announced were put back to October , then December now January 2019. It looks like the 87, in executive livery at least, is imminent , but was originally supposed to be here by Jan 18

 

To us that probably doesn't matter much that something is delayed , we just need to wait a few more months . But this can have a big effect on companies cash flow and declared sales . No stock to sell= no sales= no cash coming in to pay expenses. Also who is to say that these are the last delays , I'll take bets on times slipping again , and if they slip past 31/3/19 then they don't make Hornbys financial year. Could be another low sales year for them . It does underline that they need better control over their supply chain. I think this is the major weakness here, from Frank Martins day, that until its addressed will constantly undermine their efforts to get the ship on an even keel. The factory that closed , Affa, probably hasn't helped , either because they seemed to produce components (screws and wheels) used by other model manufacturers, or because Affas customers are scrabbling around other factories for manufacturing volume.

 

The surprising thing is the Nelsons look set for production a few months ago (and doubtless other subjects) with fully painted samples. There could be reasons they missed the slot. But the H class did advance and the late surprises are coming out and that could be one of the reasons.

 

Agree though, nothing coming out means no cash going in. They may not need to pay production costs right away but it does mean tooling costs won't be recovered soon and staff still need their wages. Tooling costs not recovered can lead to delays in tooling the as yet to be revealed 2019 program.

From all makes, by March 2018, it looked as though I was set to buy 15 locos this year:

 

5 Hattons P class (received)

2 Dapol B4s (received)

1 Heljan class 07 (received)

1 Heljan 47xx replaced by 2nd hand WD 2-8-0 (in WWII colours) after review of freight engines (received)

1 Bulleid diesel (received)

1 Bachmann H2

1 Bachmann H1

2 Hornby H class (263 put back to 2019 then reset for December - but will probably be in 2019)

1 Hornby Nelson (put back to 2019)

1 Heljan class 33 Burma Star

1 extra Hattons P class (2nd batch  - received)

 

You can see that Hornby have a smaller share this year - if anything appears. Last year we brought from Hornby:

1 The last golden arrow Steam service

3 Merchant Navies

3 H class

1 class 71

1 Original west country

1 Sir William Stanier

1 Britannia

And maybe more if I can remember

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Plenty of experience of Hornby and other hobby/model rail operations with Stansfield, Mulhall, Kohler and Davies but are these the right people?  What worked in the 1990s is almost certainly not the solution as we head into the 2020s.

 

Corgi, Hornby, Scalextric and Airfix all face the same problem of having moved from mass market toys to niche hobby brands with a declining (dying) customer base and virtual extinction of the high street model shop.

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Plenty of experience of Hornby and other hobby/model rail operations with Stansfield, Mulhall, Kohler and Davies but are these the right people?  What worked in the 1990s is almost certainly not the solution as we head into the 2020s.

 

Corgi, Hornby, Scalextric and Airfix all face the same problem of having moved from mass market toys to niche hobby brands with a declining (dying) customer base and virtual extinction of the high street model shop.

Hornby has quite a boyant market in "OO" model railways - I think the problem seems to have been the ability to buy other brands as a "Bargain", and possibly to stop them going into other hands, but ultimately, like the Banks found out (for example Lloyds buying HBOS), sometimes what looks like a bargain, isnt.  To buy brands like Corgi, you need a very robust turn-around plan, and strategy that will make them add value to the Hornby portfolio.  

 

Regards,

 

C.

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Plenty of experience of Hornby and other hobby/model rail operations with Stansfield, Mulhall, Kohler and Davies but are these the right people?  What worked in the 1990s is almost certainly not the solution as we head into the 2020s.

 

Corgi, Hornby, Scalextric and Airfix all face the same problem of having moved from mass market toys to niche hobby brands with a declining (dying) customer base and virtual extinction of the high street model shop.

 

It certainly appears not to be working very well so far with Hornby's 'back to the past' approach in model railways, especially in the marketing area, although other brands might be benefitting (I would have thought the Corgi brand would have had a major 'going over' by now).   The big problem at the moment, apart from the move to niche you mention, seems to be that Hornby still don't recognise the role and value of the remaining High St model shops and model railway specialists and in fact don't recognise it to the same extent as the previous regime was beginning to do.  Equally it seems they similarly don't recognise the value of building mutually beneficial relationships with the model railway media - in the UK at any rate.  So if nothing else is to happen the marketing of the model railway brand needs to be propelled into the 21st century and relationships rebuilt with retailers (=orders) and the media (= promotion of the brand and development of its market).

 

So as much smoking hole in foot time as anything else so far I think and some seemingly poor decisions (plus decisions made, then countermanded, then remade etc).  Fortunately Mr Stansfield is an accountant so he might actually have some idea about how they will  repay the £18M loan or maybe meet the interest payments on it?

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Hornby has quite a boyant market in "OO" model railways - I think the problem seems to have been the ability to buy other brands as a "Bargain", and possibly to stop them going into other hands, but ultimately, like the Banks found out (for example Lloyds buying HBOS), sometimes what looks like a bargain, isnt.  To buy brands like Corgi, you need a very robust turn-around plan, and strategy that will make them add value to the Hornby portfolio.  

 

Regards,

 

C.

 

I certainly agree with you that they have failed to deliver value from Corgi, Airfix and their non-UK brand acquisitions.  Sure, some great looking new tooling from Airfix but have they grown the category or found new retail channels?  Corgi is as good as dead.

 

I am not sure I would agree with any part of the UK model railway market being buoyant.

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Corgi used to be a major toy car maker, I remember them as kids and somehow they ended up being an expensive diecast maker targeting grown up collectors who had Corgi as a kid. Yet I still see lots of diecast toy cars in toy shops so we cannot really say that kids don't buy toy cars anymore. Today's kids don't grow up with Corgi toys, they do grow up with Burago that targets both collectors and kids.

You need both really or else this will be a brand that will die.

 

Airfix could take a few pages from Revel but do show progress.

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That would Revell that under the Hobbico brand filed for bankruptcy?

 

I am refering to Revell Germany which did end up as part of Hobbico but now under VC group. The other, US part (now merged with Germany part), I found to be less innovative although Monogram was OK. Revell Germany's part into starter ranges etc have kept themselves in toy shops. Their pre-painted easy build aircraft are quite encouraging. Airfix have come along too but not as present abroad as Revell Germany.

Other makes like Dragon, Trumpeter etc remain pretty high level items and have somewhat stagnated these last years. Instead we are seeing more Russian and other eastern European makes with a growing presence and some interesting items (finally someone did a British 2 pounder anti tank gun in 1/72nd scale!).

 

Airfix/Humbrol brands are known worldwide and they need a different marketing/distribution model than Hornby brand which is a house hold name mainly in the UK and a few other countries.

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Not on topic, but I love the box art. None of this PC twaddle about not showing war or violence, as if the thing you're modelling was there for pleasure flights!

 

John.

 

There is - No Swastikas. Pain in the Ass having to order extra decal sheets.

 

But as you say better then previous offerings.

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I am not sure I would agree with any part of the UK model railway market being buoyant.

Half of the considerable thickness of every month's Railway Modeller is made up of adverts for businesses of all sizes, all of whom would appear to believe that there is an income to be made from the model railway market. That might not make it buoyant, exactly, but it suggests there is still a significant amount spent on toy trains.

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Half of the considerable thickness of every month's Railway Modeller is made up of adverts for businesses of all sizes, all of whom would appear to believe that there is an income to be made from the model railway market. That might not make it buoyant, exactly, but it suggests there is still a significant amount spent on toy trains.

 

Volume of advertising doesn't necessarily equate to value of sales - or more importantly to profitable sales.

 

What it may indicate is the hobby moving toward a cottage industry model both in terms of supply and retail.  The sustainability of a PLC like Hornby in a low-volume hobby with a large overhead is very unclear and has been for a number of years.

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I don't share the downers on Airfix. I have been very surprised at the level of new and re- releases over the past few years. They have certainly attempted to enter a new market, in their easy-build range, and their gradual re-patriation of some of their manufacturing, is to be applauded.

 

But, I do not understand their pricing. I would understand a £20 plus price for the easy-build kits, which include paint and glue. But then I see 1/72 classic kits at similar, or even higher prices. What??!! I remember buying some of these as a kid, for 2/6 (12.5p) or maybe 4/6 (22.5p), in the 1960's, when a Triang 3F or Jinty would have been maybe 39/6 (or £2 for youngsters). Today you can buy a low-detail, Jinty for £38, a 19xfold increase. A 19xfold increase of, let's be fair and say a 4/6d kit, would be about £5. But they are from £9 up to an astounding £19, for much the same thing I bought as a child. 

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I am not sure I would agree with any part of the UK model railway market being buoyant.

 

I think its a double edged sword..traditional market has lost ground due to high prices, and competition from the "new Boys", brought about by the high prices enabling them to enter the market.  

 

But Accurascale, Rapido, Realtrack, Revolution, Hattons, Kernow etc., ....  These guys would not be entering the market with new products, if there was not demand.  Yes, their business model may be leaner, but modellers/customers are pretty happy, with the added choice and variety, and people must be buying products in sufficient quantities.  I do wonder how long its going to be before "someone" announces a new Class 37 and Class 47.....

 

Regards,

 

C.

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