Hornby's financial updates to the Stock Market

[locoholic]

This thread is the oft-seen case of a hanging posse, the ugly side of humanity that has forgotten which side of the bread carries the butter.   If most folk on this forum removed their Hornby items from their layouts I bet they would look pretty bare and it doesn't matter if folk are RTR-dependent or people who build models.  

 

Reading this thread, one would think Hornby is generally held in low esteem, yet when threads are read about Hornby locos and rolling stock, the picture is well rosy with gushing reviews for GWR bow-end coaches and Stanier non-corridors and for the K1 and 01 and King and S15 and original Bullied Pacific and P2 and Crosti 2-10-0 and the 700 and the Britannia an so forth all the way down the track to the red box company....

 

I don't see this at all in this thread. What I see is recent Hornby models held in high esteem (apart from certain unfortunate models that needed surgery to deal with bent running plates, etc) but Hornby corporate performance rightly criticised. After all, the company is on the brink of collapse. I can recall some very negative comments about Humbrol paint from someone on here, and Humbrol is part of Hornby, isn't it?

[Clearwater]

He does not need experience of running a PLC sized hobby company.

 

He needs experience of running a large company certainly but, principally, he needs experience of managing an experienced team. They can each have their own disciplines but must work as a team.

 

The team being him (or her), an marketing manager who really does know and understands the hobby/toy industry and a good finance manager. Let that team be at the top of a structure that manages the development, production, sales and funding of the products. 

 

Sounds easy but, again as I know from personal experience, you can have all the correct elements but the mix together just does not work - just like a football manager and his team - new manager and (sometimes) a revived team. Or, indeed, schools in selection of headmasters.

 

When that team works well together, with everybody bringing their own expertise together and welded by a good CEO everything goes great.

They also need to think about the non-exec team. I do think it's right to have someone with toy experience around the board table. They should know toy market trends, how licensing agreements work and bring some creativity to that side of the business plus contacts as relevant in the toy market. They should also be up to date on manufacturing trends and developments and be able to suggest to the mgmt team new ideas they think could be applicable. For example, how you take the electronic miniaturisation present in most toys and adapt for the Thomas range and how you use the same technology to appeal to adults (cf TTS or platform announcements etc)

 

I also think they need someone with either rail or heritage rail sector experience. Failing that someone who is involved at a senior level in eg the RAF museum. That person should bring a perspective on what the enthusiast market in either rail or aviation is looking for. Based on posts here, most of us have more than a passing interest in planes, ships etc... Person needs to have board level experience, from a governance perspective. If I were the headhunter, I'd suggest someone like Simon Linnett, chair, at the NRM, Richard Croucher of GWS, or Bob Meanley of Vintage Trains. Equally a successful business person who is a rail enthusiast would also work. Clearly the gold standard is Jeremy Hosking. Another suggestion could be someone like Paul Francis who's run the porterbrook business for many years.

 

Given I don't think it is likely that an executive team can be found with an enthusiast background, I think it's important that there is that perspective around the board table

 

David

[dcroz]

I wonder if the volume of sales & profit margins for the serious models has now shrunk to the extent that it no longer justifies the big corporate structure that Hornby seems to think is necessary? Received wisdom on here is that the train set (& slot-car) market still exists, which would benefit from the larger number of sales outlets that Hornby has. But other manufacturers/commissioners have recently shown that expensive, detailed models can make do with a much lower (& cheaper) profile, & I suspect that the high-end Airfix kits are the same. There would therefore seem to be little logic in keeping all the businesses under the same roof. In fact, the serious model train business has probably been harmed by the corporate approach Hornby adopted, distancing itself from its customers and retailers in a way that a smaller business wouldn't have dreamt of doing. I would still buy a couple of S15s or a rake of coke hoppers even if the boxes didn't have the word Hornby on. The train sets probably need that name. So I think it's time to split the business up into toys and serious models, as they actually have very little in common.

 

Hornby has 252 employees, and a wage bill of just over £10 million on a turnover of £58 million. Directors renumeration was £800,000 in total, with the highest paid receiving £343,000 (all figures taken from 2015 annual accounts on FAME financial database).

[Hroth]

I'm not so sure about this. In theory it's true, but people moan that retailers can't obtain stock of Hornby track, etc. I bet hardly anyone one here has an exclusively Hornby layout - Peco track, anyone?

Well, the "big" layout is code 100 Peco Streamline. However my 8x4 "tabletop" layout is a double oval of entirely Hornby sectional track, mainly used for running in and programming DCC locos, though it also serves as a DC layout for running legacy locos which are either well down the list for DCChood or will never get converted.  In terms of locos, the majority are Hornby, followed by Bachmann and Heljan (a weakness for unsuccessful Pilot Scheme diesels...).

Edited February 16, 2016 by Hroth

[MGR Hooper!]

I think you've made a typo there?

Class 60 ????

Shouldn't that be Class 66 ?

Yes...thanks, corrected that now

Edited February 16, 2016 by MGR Hooper!

[JohnR]

They also need to think about the non-exec team. I do think it's right to have someone with toy experience around the board table. They should know toy market trends, how licensing agreements work and bring some creativity to that side of the business plus contacts as relevant in the toy market. They should also be up to date on manufacturing trends and developments and be able to suggest to the mgmt team new ideas they think could be applicable. For example, how you take the electronic miniaturisation present in most toys and adapt for the Thomas range and how you use the same technology to appeal to adults (cf TTS or platform announcements etc)

 

I also think they need someone with either rail or heritage rail sector experience. Failing that someone who is involved at a senior level in eg the RAF museum. That person should bring a perspective on what the enthusiast market in either rail or aviation is looking for. Based on posts here, most of us have more than a passing interest in planes, ships etc... Person needs to have board level experience, from a governance perspective. If I were the headhunter, I'd suggest someone like Simon Linnett, chair, at the NRM, Richard Croucher of GWS, or Bob Meanley of Vintage Trains. Equally a successful business person who is a rail enthusiast would also work. Clearly the gold standard is Jeremy Hosking. Another suggestion could be someone like Paul Francis who's run the porterbrook business for many years.

 

Given I don't think it is likely that an executive team can be found with an enthusiast background, I think it's important that there is that perspective around the board table

 

David

 

I thought Jeremy was a shareholder in Hornby? Certainly read a few years ago that he owned 10%.

[doublecee]

what they need is a forward thinker who won't shy away from certain issues such as selling the Corgi Brand first, then Pocher and Scalextric, whilst focusing on Hornby Railways, Airfix and Humbrol.

 

Personally, I think Corgi, Pocher and Scalextric are dead weight and a distraction. 

[Clearwater]

I thought Jeremy was a shareholder in Hornby? Certainly read a few years ago that he owned 10%.

Yup - hence why I suggested him but given he is/was a major shareholder and hasn't been on the board, I'd concluded he wasn't interested for whatever reason (time I'd guess)

[Nearholmer]

Locoholic

 

You seem to be heading down the same track that I'm thinking about.

 

It struck me this morning that (I'm fairly certain) Hornby still own a brand that could be applied to a streamlined (whether still part of the same combine, or spun-off to different ownership) high-end model railway business, if they wanted to get clear differentiation, and keep the Hornby brand for something else: Bassett Lowke.

 

There would be a certain resonance in this, because BL started as a "commissioner", c1900, when low-cost, high-quality toy/model production was in Germany, rather than China, and when Hornby entered after WW1, they initially majored on the lower-end.

 

To me, the "problem" part of their railway ranges doesn't look like the toy-end (which, logically, sells as toys, through toy retailers) or (once streamlined to be more "commissioner-like") the high-end.

 

It is the stodgy stuff in the middle ......... I'm certain that very few children are pestering their parents to get one for Birthday/Christmas, and, judging by the withering comments on RMWeb, adult hobbyists are no longer enticed by them either.

 

And,while I'm on my soap-box: their websites are a bit clunky, aren't they?

 

Designing model/toy online sales points is clearly a difficult art, but there are certainly much, much easier-to-use ones around (Playmobil, Schleich, LGB to cite three), as well as much worse ones (MTH in the US probably won awards for terrible web-portal design!). But, if it is to be a major sales channel, it really ought to be fantastically good.

 

Kevin

Edited February 16, 2016 by Nearholmer

[Joseph_Pestell]

 All I can say is what would Frank  Hornby think knowing what a mess management people have got his

family firm into or even present day family members of Hornby.

 

That all happened nearly 50 years ago. The Hornby of today has little to do with what was then (in 00 and in HO) a premium brand.

 

Let's be clear, I am not saying that today's Hornby does not make premium products because it does. But the brand, as demonstrated by the Press coverage, is perceived as being about trainsets.

 

This sort of muddled thinking, exemplified by the half-hearted creation of Railroad, has been endemic in the industry for many years. Hornby could have taken over Jouef and put the better, modern models under the Hornby brand, Hornby being very much remembered in France for quality. In the event, Lima/Rivarossi took over Jouef and then incorporated some Lima and Jouef items into the Rivarossi range - thereby devaluing that brand's reputation as premium quality.

 

And since Hornby International came into being, it seems to be a total cross-border muddle.

 

I think, as a former retailer, that we have reached the point in the UK that France was at 25 years ago. The toy train market is no longer viable and the future is with low-volume, high-quality models. Does that fit with PLC-type companies? Perhaps not. The demise of Lima/Jouef actually proved beneficial in France with new entrants (SAI/Piko, LS, and others) filling the gap.

[melmoth]

 All I can say is what would Frank  Hornby think knowing what a mess management people have got his

family firm into or even present day family members of Hornby.

 

Well, Frank Hornby's son, Roland, had his hand on the tiller (and his head in the sand) in the late 1950's when Triang emerged as a serious threat to Hornby Dublo with cheap, detailed injection moulded plastic models and 2-rail operation...

[doublecee]

what they need is a forward thinker who won't shy away from certain issues such as selling the Corgi Brand first, then Pocher and Scalextric, whilst focusing on Hornby Railways, Airfix and Humbrol.

 

Personally, I think Corgi, Pocher and Scalextric are dead weight and a distraction. 

 

and bring back S.K

[Ron Ron Ron]

....Personally I think Hornby (with the models they currently have) should have 3 ranges low, mid and high.

RailRoad with the ex-Lima tooling is perfect for the low end.

The mid range can have models like the Mk1s, Mk2Es, DoG, P2, Hall and Crosti 9F etc.

And the main range can hold those excellent models......

 

..... I've always maintained Railroad should be the bridge between trainsets and main range......

 

For one I think the RailRoad range should expand.

 

Personally speaking, I cannot believe there is the size of market, or requirement to sustain three tiers of product quality.

It could possibly result in a drain on the manufacturers resources in designing, producing, the logistics and servicing for that many product ranges.

 

Railroad sells apparently, but who buys it and why?

Add-on purchases for a child's train set (e.g. purely as toys)?

More affordable models for those who can't afford or justify the high detailed models?

Some feeling it's Hobson's choice, as there's no alternative available, e.g. Class 87 etc, (i.e. cheap low detail/quality or nothing)?

I suspect it's all of those, but I agree, in marketing terms it's a mess.

 

If Hornby are going to stay in the toy/train set market and/or the Railroad market, in addition to the detailed model market, then I agree with many others here that there needs to be a clear delineation between these product sectors.

 

I think we're more likely to see either....

toy/trainset plus detailed models, or....

Railroad plus detailed models.

 

 

 

Coaches and wagons IMHO can be lower spec. Or it gets too expensive to run proper rakes.

The HST does well here, amazing power cars and lower spec coaches.

EMUs and DMUs tend to be a hard one, detailed ones will cost money, budget ones will displease a lot.

Why should coaches and wagons not be built to the same standard as locos?

Other manufacturers have been producing some very good and some high quality wagons for years and it was Bachmann who raised the stakes when their Mk1 appeared on the scene.

Should Hornby drop its high detailed, steam era coaching stock? I don't think that would be very popular.

 

With increasing production costs for the very highly detailed wagons, I agree that assembling decent side rakes is becoming an expensive exercise, but that just reflects the current state of play with the Chinese and world economy v.v. the hobby.

 

I also beg to differ on the matter of the HST and the lower spec trailer cars.

Many people have been calling out for improved HST Mk3's ever since the re-tooled power cars appeared.

There's also been plenty of criticism of the mis-mash of poorly matching Hornby and ex-Lima vehicles in the current Hornby Mk3 range.

As Hornby haven't obliged with newly tooled replacements, thankfully another manufacturer has now finally stepped in (Oxford).

Incidentally, have you seen any of the higher quality European, or Rapido's coaching stock?

 

EMU's and DMU's may be a hard one, but just compare the overall quality of almost all the DMU's and EMU's Bachmann have produced, against the mostly lacklustre and in some cases extremely dated Hornby offerings.

Also, look at what RealTrack have achieved with their Pacer.

It can be done.

Possibly Hornby should leave this field to others?

 

 

 

.

Edited February 16, 2016 by Ron Ron Ron

[rovex]

 

Should Hornby drop its high detailed, steam era coaching stock?

 

.

Not until they've done some GWR non-corridor stock 

[highpeakman]

 

 

Railroad sells apparently, but who buys it and why?

 

 

 

 

.

 

It would be really interesting to know which sells more between:

 

Hornby 4F and Bachmann 4F

Hornby 9F and Bachmann 9F

etc.

 

i.e. Is it price and/or detail that sells more?

 

More to the point perhaps - which makes more profit? (Theoretically it should be the cheaper (older) version but updating of design might discount that idea).

[The Stationmaster]

They also need to think about the non-exec team. I do think it's right to have someone with toy experience around the board table. They should know toy market trends, how licensing agreements work and bring some creativity to that side of the business plus contacts as relevant in the toy market. They should also be up to date on manufacturing trends and developments and be able to suggest to the mgmt team new ideas they think could be applicable. For example, how you take the electronic miniaturisation present in most toys and adapt for the Thomas range and how you use the same technology to appeal to adults (cf TTS or platform announcements etc)

 

I also think they need someone with either rail or heritage rail sector experience. Failing that someone who is involved at a senior level in eg the RAF museum. That person should bring a perspective on what the enthusiast market in either rail or aviation is looking for. Based on posts here, most of us have more than a passing interest in planes, ships etc... Person needs to have board level experience, from a governance perspective. If I were the headhunter, I'd suggest someone like Simon Linnett, chair, at the NRM, Richard Croucher of GWS, or Bob Meanley of Vintage Trains. Equally a successful business person who is a rail enthusiast would also work. Clearly the gold standard is Jeremy Hosking. Another suggestion could be someone like Paul Francis who's run the porterbrook business for many years.

 

Given I don't think it is likely that an executive team can be found with an enthusiast background, I think it's important that there is that perspective around the board table

 

David

Sorry for the 'laugh' David but I think you should more carefully research the 'person profiles' having set a job profile?

[Clearwater]

Not until they've done some GWR non-corridor stock 

You've added a sunshine emoji / emocotion or whatever they're called

 

Wasn't sunshine stock corridor stock

[Joseph_Pestell]

Hornby has 252 employees, and a wage bill of just over £10 million on a turnover of £58 million. Directors renumeration was £800,000 in total, with the highest paid receiving £343,000 (all figures taken from 2015 annual accounts on FAME financial database).

 

For a company that has outsourced so much, that seems like rather a lot of employees and a high percentage of turnover going in wages.

[Ron Ron Ron]

...To me, the "problem" part of their railway ranges doesn't look like the toy-end (which, logically, sells as toys, through toy retailers) or (once streamlined to be more "commissioner-like") the high-end.

 

It is the stodgy stuff in the middle ......... I'm certain that very few children are pestering their parents to get one for Birthday/Christmas, and, judging by the withering comments on RMWeb, adult hobbyists are no longer enticed by them either.....

 

I go along with that.

I asked earlier, who's buying it and why...

 

 Railroad sells apparently, but who buys it and why?

Add-on purchases for a child's train set (e.g. purely as toys)?

More affordable models for those who can't afford or justify the high detailed models?

Some feeling it's Hobson's choice, as there's no alternative available, e.g. Class 87 etc, (i.e. cheap low detail/quality or nothing)?

 

 

I haven't a clue really, but I suspect it's more of the second two categories I listed, than the first (children's train sets).

Then again I could be totally wrong?

 

An insight from the model shop owners might assist here, bearing in mind that most of the toy sales will taking place through different channels to model shops.

 

 

 

.

[JSpencer]

It would be really interesting to know which sells more between:

 

Hornby 4F and Bachmann 4F

Hornby 9F and Bachmann 9F

etc.

 

i.e. Is it price and/or detail that sells more?

 

More to the point perhaps - which makes more profit? (Theoretically it should be the cheaper (older) version but updating of design might discount that idea).

The make also plays an influence. It is far more likely that a newcomer will go for Hornby before Bachmann.

 

I am not sure if we can compare the 4Fs though, being 2 different (though related) designs. Price wise there is not much to choose but one benefits from completly modern tooling, the other getting on for a bit. Bachmann's 3F is a competitor to both, IF you are looking for just one LMS 0-6-0 tender engine. Otherwise you are likely to own all 3 (and maybe several versions where offered). Either way the 4F is not going to appear on many newcomers lists (unlike evening star)

[Paddy]

I would like to see a consortium come forward made up of railway and modelling enthusiasts plus some good business people.  It would be great to see names like Simon Kohler, Pete Watermann, Rod Stewart and so on - people passionate about the hobby.  They could take Hornby private and transform the company.

 

Paddy

[highpeakman]

There has been some discussion on the cost of the ERP system that was installed at considerable cost and not without problems.

 

ERP can be a very good tool for many companies but suitability for the company and products needs to be very carefully considered before purchasing. 

 

Many years ago I was involved in the installation of a MRP system (a predecessor of ERP) in a mid size electronics company. It was a horrendous process and resulted in one module, the sales module, being rejected as far too inflexible. An example being that when a communications system was sold, bearing in mind that every customer wanted a slightly different variant with a different list of parts and spares, we either had a choice of allocating a fresh part number for every single order (even when the principal equipment was identical) or we had to list every single component (down the the last fuse - could be several hundred items) on every single Invoice, etc.

 

It took a long time to get the system working properly and it was over complicated for the size of company.

 

As I mentioned in a previous post, the MRP set rules that made it difficult to work with.

 

The classic story was that I once entered a substantial order on the factory knowing that we should be able to meet the customer demands but was told by the MRP manager that it could not be done and he showed me the MRP schedule to prove it. My reaction was to say that the MRP indicated that there was a problem in meeting the schedule but it was then his job to use that information and plan to overcome the problem. (Not quite as arrogant as it sounds as I knew product and manufacturing well). The dispute was finally taken to the MD who agreed with me. I did get my goods when I wanted.

 

i.e. Like most such systems the MRP/(ERP) is a tool to be used to manage but not to be the manager itself. This fundamental is still not recognised in some quarters.

 

I have no doubt that modern ERP is vastly improved over that system and if I were running a Dixons, Sainburys, or a large manufacturing operation it would be invaluable but I can have a great deal of sympathy for the employees of Hornby initially trying to get to grips with such a system especially with diverse countries, production lines and languages, etc involved. 

 

If it is now resolved completely by Hornby then it could be good for the future.

[Ron Ron Ron]

.....This sort of muddled thinking, exemplified by the half-hearted creation of Railroad, has been endemic in the industry for many years....

 

 

.....I think, as a former retailer, that we have reached the point in the UK that France was at 25 years ago.

The toy train market is no longer viable and the future is with low-volume, high-quality models.

Does that fit with PLC-type companies? Perhaps not.

The demise of Lima/Jouef actually proved beneficial in France with new entrants (SAI/Piko, LS, and others) filling the gap.

 

The toy train market has undoubtedly shrunk to a fraction of what it once was, but do we know it's no longer viable for Hornby?

Is it a market sector they see themselves vacating? 

Without statements of intent and policy, we don't know.

I suspect they will attempt to follow the money, wherever they think it lies.

 

However, I do believe that the tenuous link between the toy train market and the model railway hobby that some people seem to have nostalgic dewy eyes for, has long since been broken.

Railway and model railway enthusiast parents and grandparents, buying toy trains for their children or grand children, or exposing them to the hobby at close quarters, are the exception and will undoubtedly have a skewed view on this.

 

 

.

[Fenman]

This thread is the oft-seen case of a hanging posse, the ugly side of humanity that has forgotten which side of the bread carries the butter.   If most folk on this forum removed their Hornby items from their layouts I bet they would look pretty bare and it doesn't matter if folk are RTR-dependent or people who build models.  

 

Reading this thread, one would think Hornby is generally held in low esteem, yet when threads are read about Hornby locos and rolling stock, the picture is well rosy with gushing reviews for GWR bow-end coaches and Stanier non-corridors and for the K1 and 01 and King and S15 and original Bullied Pacific and P2 and Crosti 2-10-0 and the 700 and the Britannia an so forth all the way down the track to the red box company....

 

I rather agree with you. Earlier, someone pointed out that Hornby has a turnover 5x Bachmann's (and I would guess Bachmann's turnover is, in turn, probably at least 5x the size of the next largest turnover in the UK market); while some of Hornby PLC's turnover will be Airfix, etc, it is clear that it is still a giant in model railway supplies. If that much supply is suddenly removed, I think most of us would feel some pain.

 

Some people have complained that Hornby has ignored their particular modelling interests (D&E, for example - though I rather like Hornby's 08 and 31, and I have a very soft spot for the HST): I find this a bit odd (a bit like arguing that Rapido deserves to be bankrupt because its catalogue only consists of an APT and a Stirling Single - "they are completely ignoring privatisation era railways"!).

 

Equally, there are whole areas/times that can't be easily modelled using RTR without Hornby: my own interest in early BR (ex-)Great Eastern and M&GN lines would be almost impossible without Hornby coaching stock (no other RTR manufacturer produces anything of the slightest use, unless I move into the middle era when Bachmann's Mk1s are of interest - though pricier than Hornby's); and while Bachmann's 4MT, 3F and 4F are very nice additions to the scene, I would struggle without Hornby's J15, D16 and B17, let alone the forthcoming B12. It would be almost impossible without Hornby's non-gangwayed Gresley and Thompson stock (not just one range but two of them!), plus their Staniers. The situation may of course be reversed in other areas/regions, but the sheer volume of Hornby's turnover suggests that, more often than not, some of its products will be likely to have a place on most layouts. And, of course, in case anyone thinks me impartial, I am very grateful to Bachmann for their 105 and Derby Lightweight, and to Heljan for some of their eccentric Modernisation Plan locos.

 

I am also finding some of the ad hominem stuff a bit unpleasant - the thread where some people seem to be almost laughing at the idea of Nat Southworth losing his job feels to me to be particularly vile on a purely human level. Whatever the rights and wrongs of Hornby's management and their decisions, they are all humans and nothing they have done will have caused anyone to die. And at the very least the current incumbents seem to have done a pretty decent job at tackling the horrendous supply chain issues (let's not forget just how dire things were a few years back, when the absence of almost any saleable product threatened to kill the company stone dead). Apart from anything, none of us externally knows who is responsible for what decisions: for example, the criticism of Simon Kohler's choice of liveries could be utterly misplaced, and his own blog is rather good at illustrating how complicated decision-making in the company can be and just how many people are involved.

 

It's all pretty ghastly: I hope something good will come out of it, and I very much hope that all the designers and others who have done so much to produce excellent RTR products should not suffer.

 

Paul

Edited February 16, 2016 by Fenman

[Clearwater]

Reading "inside the railway room" in RM suggests that there are a fair few wives who buy a set for retiring husband who then expands collection. Again a shop perspective would be helpful but I'm sure wives will go for a brand they've heard of, eg Hornby, and a sub brand they've also heard of such as flying Scotsman or Pullman coaches

 

David