Musings on Rapido

[Talltim]

The impression I got was that some things are taking longer (more man hours) to make than planned. The cost will obviously rise for that. Other things are having to wait because staff are finite. Obviously they won't rise by the same amount, but if for example the moulding department ends up having to wait around for the detail fitting department that also costs, even if the man hours per model remains the same

[jjb1970]

Not denying these factors add to the cost, it is more a question of degree.

[Talltim]

Rapido have also said that they are opening another factory. Although this cost can't be directly tied any one model, I would imagine the start up costs are not insubstantial.

[jjb1970]

Is that opening another factory or sourcing models from another factory? If they are building a factory then that is pricey (but a cost of business) however if they're just using a second source of supply then any costs of building a factory are the concern of the factory owners. If their existing supplier really is operating inefficiently and not managing production effectively with the result schedules are opening up, man hours accumulating etc then it makes perfect sense to look at another source.

[JSpencer]

I don't really see how taking three times longer to do the production would triple cost as cost is not a function of production time, although clearly the production time will influence the cost. Quite aside from the contractual arrangement which may mean that a production delay could be cost neutral or potentially beneficial to the purchaser a big part of the cost is design, development, distribution etc and stuff like raw materials.

Rapido seem to actually own this new factory, in which case additional cost incurred fulls directly on them.

 

As for triple cost, the cost I refer to, is the cost of production itself only. Staff making these things are not going to work 2 months for free because someone screwed the mathes up. As production is one of several costs, it does not mean that the final overall cost is tripled.

Edited August 18, 2016 by JSpencer

[jjb1970]

If talking about time as opposed to man hours then that does not necessarily increase costs that much. Unless the factory has no other work then staff will work on other things and unless the purchaser has signed a poor contract then production delay costs for a fixed price arrangement will be to the factory account. If talking man hours then a tripling of man hours would have a much bigger impact but that would only impact the purchaser if they'd signed a reimbursable/cost+ contract as otherwise the added costs would again be primarily to the factory account. Ultimately it sounds like this issue is one of poor factory management in which case I'm not sure that it has much significance for model prices in general, if this factory is unable to produce efficiently then go somewhere else.

[Talltim]

From the email of 9th Aug

"We do have a plan to get us out of this pickle and the main reason I am in China is to set up Rapido factory number 2. We've toured a couple of industrial parks and we've interviewed an engineer with over 20 years' experience working in the model train industry. He looks very promising, and he knows a lot of experienced guys in the industry who would be willing to join our new team.

 

Today we visited a new mould shop in another city in Guangdong province and we were blown away by the quality of its castings. They were perfect right out of the moulds without any clean-up work, which will considerably speed up assembly time on future models.

 

We should have the new facility up and running within the next two months and then you will see the Revolution and other UK models start to pick up speed. Unfortunately until then we are still limited by our small size.

 

That's it, really. I'm not going to pretend that all is hunky dory. But I can assure you that we're working on increasing our capacity. "

[Ozexpatriate]

There's a lot of extrapolation in this discussion.
 
The latest Rapido UK newsletter can be found here.
 
It only speaks to production times, not production costs and actually says:

We've been producing trains in China since 2005, and our current factory - which we started with Huang and Zhou in 2013 - is our third. It's a small facility with about 40 employees. The trouble is that it's become too small for us. Rapido has more than doubled in size since 2013, and our little factory can't handle it.

In 2015 we were happily sending out models to stores and distributors well before their scheduled arrival date. However, it was our first UK model, the APT-E, that really stress-tested our factory. This project was a huge challenge for us, mainly in terms of engineering, but if reviews and customer feedback are anything to go by then we passed this trial with flying colours.

Once the dust had settled it was clear that the APT-E had taken twice as long to manufacture as we had budgeted for. We consider the time we put into the model well worth it, but this put the following round of North American production behind schedule.

We weren't able to make up time on the two North American projects so the delay rolled over to the start of the Revolution Trains N gauge TEA production. We've been working on this great little tanker for the last couple of months. It's a surprisingly complex wagon, with five different body/detail variations. And to be completely honest with you, we have never done a model with this many little logos and warnings and other printed doo-dads... not even close!

So what we thought would take one month to produce is actually taking us three months to work through the production process, and this has pushed our schedule back yet again.

My emphasis. There is nothing in here for which we can presume how much increased labour there was, though doubtless there was a lot. No doubt adding extra details also entailed extra staging time making the production process longer.

What it told me is that those people who purchased an APT-E got a real bargain.

[jjb1970]

There's a lot of extrapolation in this discussion.

 

The latest Rapido UK newsletter can be found here.

 

It only speaks to production times, not production costs and actually says:

My emphasis. There is nothing in here for which we can presume how much increased labour there was, though doubtless there was a lot. No doubt adding extra details also entailed extra staging time making the production process longer.

 

What it told me is that those people who purchased an APT-E got a real bargain.

That sounds reasonable. My comments were in response to those talking about a three fold increase in production time at the factory equating to a three fold cost increase.

[JSpencer]

If talking about time as opposed to man hours then that does not necessarily increase costs that much. Unless the factory has no other work then staff will work on other things and unless the purchaser has signed a poor contract then production delay costs for a fixed price arrangement will be to the factory account. If talking man hours then a tripling of man hours would have a much bigger impact but that would only impact the purchaser if they'd signed a reimbursable/cost+ contract as otherwise the added costs would again be primarily to the factory account. Ultimately it sounds like this issue is one of poor factory management in which case I'm not sure that it has much significance for model prices in general, if this factory is unable to produce efficiently then go somewhere else.

 

 

In Rapido's newsletter, they clearly state that the in crease in production time from 1 to 3 months of model A has pushed back model B's slot by 2 months. They then found model B is taking longer than expected as well.

 

This means that if they thought the average production time would be 1 month per model, but it is actually 3 months per model, then instead of doing the - say - 12 models planned in one year, they are only doing 4. The number of staff is 40 people for all cases.

The staff have plenty of work and work full time, but are producing - say - only a 1/3rd of what was expected. That is a big problem!

 

To catch up, Rapido's news letter says they are opening a second factory, which means more people (and more overheads). An important detail is that for these cases, Rapido do not seem to be outsourcing this so much anymore but actually doing it themselves, so there is no outsourced contract per-se meaning the costs full directly on them as it is now their factory.

 

They found they that they can barely get the British stuff out (APT-E, Revolutions N gauge Pendalino and tank wagon) let alone do their American stuff which is far bigger.

While there will need to be some re-organization, none-the-less this all equates to additional cost (absorbed by Rapido) which for future releases will mean increased prices (they are certainly not going to get cheaper). By how much? depends on what percentage the production cost is to the overall cost.

[jjb1970]

The thing is all of that comes down to basic production management and is no different to any other manufacturing activity. Ultimately manufacturers are responsible for managing their projects, budgeting, balancing resource and demand, staff utilisation etc etc. If they've dropped the ball then I'm not really sure why it necessarily needs to equate to higher costs in the future as if they get a grip on things they can do more with less. The cost of having a production capability is just a basic cost of business and there is no fixed cost of producing anything. Two different companies can often make equivalent products which sell at different price points not because one is better than the other or anything but just because one company can produce more efficiently.

Edited August 19, 2016 by jjb1970

[JSpencer]

The thing is all of that comes down to basic production management and is no different to any other manufacturing activity. Ultimately manufacturers are responsible for managing their projects, budgeting, balancing resource and demand, staff utilisation etc etc. If they've dropped the ball then I'm not really sure why it necessarily needs to equate to higher costs in the future as if they get a grip on things they can do more with less. The cost of having a production capability is just a basic cost of business and there is no fixed cost of producing anything. Two different companies can often make equivalent products which sell at different price points not because one is better than the other or anything but just because one company can produce more efficiently.

 

In defense, the factory is new and, despite their best efforts to organise (and doubtless reorganise), they found they cannot produce as fast as they first thought. How they greatly underestimated this in the first place is another debate which doubtless is providing many lessons learned right now. One conclusion is clear though, they decided to build a second factory to cope. Which is probably just part of a package of improvements.

[dibber25]

No contradiction at all, it is the fundamental difference between a determining factor and an influencing factor. To argue that to make production three times long will triple the cost indicates that time is the determinant, when it isn't. As an influencing factor it will affect price but so will a huge number of other variables.

Are we talking time here or man hours? If you argue that tripling time to produce will triple cost then this indicates that the argument is about man hours (no offence intended to the ladies who make models for us in China) but man hours and calendar time are completely separate and distinct. If something requires 10 man hours to manufacture then whether those ten hours are applied in the course of one day, two days or three months (with the material sat on a shelf for most of it) is not going to determine the cost of labour unless the factory is so woefully inefficient that a person does a few hours work and then just sits idle for most of the time. Labour in itself is only one cost, and more significantly so is the actual manufacture cost. Once the tooling is fully amortised and development costs written off then the cost of the manufacture of many products becomes a relatively minor part of the equation relative to inventory control, distribution, marketing etc.

The cost of a process is complex and I'm guessing that at the moment currency fluctuations are causing more headaches than just about anything else. One of the problems with most of the arguments over model pricing (and btw, I am not in denial of price inflation or ignorant of the reasons for price increases) is that a very complex set of conditions has often been reduced to a simplistic linear relationship between Chinese staff costs and model prices ignoring the efficiency of development, manufacture and production, currency risks, the required margins of each player in the chain etc.

When you read Jason's message (from memory) he quotes things such as the printing of large amounts of tiny labels onto N gauge tank cars. To me this means that: Precise registration takes longer because of the size issue and the convex surface, failure rates are therefore higher, so more shells have to be produced and printed. So it's easy to see that tripling the time taken to complete that part of the job will triple the cost of that part of the job. Because of the large number of hand processes involved in making model trains, labour cost is a hugely significant factor in the sale price, that's why manufacture moved to China where labour rates were cheaper. Of course there are other factors involved in the final price but there is also the consideration for Rapido's customer base in North America. It is evident from Jason's comments that he feels his home market is suffering (or is potentially going to suffer) because of issues in the production of British-outline products. There has been, I'm sure, a substantial commitment of development time and cost in developing North American models such as the Budd RDC but as yet, no product to bring income, presumably because they can't be manufactured until the British items are out of the factory. We have to hope that his second factory operation will be successful (but it may well draw experienced people away from other manufacturers, worsening the production difficulties that they have started to overcome). We may well be coming to a time when manufacturers will be reluctant to take on third party work. The warning signs are already there. (CJL)

[jonklein611]

When you read Jason's message (from memory) he quotes things such as the printing of large amounts of tiny labels onto N gauge tank cars. To me this means that: Precise registration takes longer because of the size issue and the convex surface, failure rates are therefore higher, so more shells have to be produced and printed. So it's easy to see that tripling the time taken to complete that part of the job will triple the cost of that part of the job. Because of the large number of hand processes involved in making model trains, labour cost is a hugely significant factor in the sale price, that's why manufacture moved to China where labour rates were cheaper. Of course there are other factors involved in the final price but there is also the consideration for Rapido's customer base in North America. It is evident from Jason's comments that he feels his home market is suffering (or is potentially going to suffer) because of issues in the production of British-outline products. There has been, I'm sure, a substantial commitment of development time and cost in developing North American models such as the Budd RDC but as yet, no product to bring income, presumably because they can't be manufactured until the British items are out of the factory. We have to hope that his second factory operation will be successful (but it may well draw experienced people away from other manufacturers, worsening the production difficulties that they have started to overcome). We may well be coming to a time when manufacturers will be reluctant to take on third party work. The warning signs are already there. (CJL)

 

This times a thousand.

 

I'm from the States and have quite a few Rapido Orders (both North American and British models).  There are quite a few of the projects on the states side that have been delayed due to capacity.  I'm waiting on my RDC's, FP8B's, and mid train domes (and Pendolino).  Hooray for Rapido pushing to get more capacity to make us all happy.

[dibber25]

This times a thousand.

 

I'm from the States and have quite a few Rapido Orders (both North American and British models).  There are quite a few of the projects on the states side that have been delayed due to capacity.  I'm waiting on my RDC's, FP8B's, and mid train domes (and Pendolino).  Hooray for Rapido pushing to get more capacity to make us all happy.

Not to mention the new 'Prime Movers' Dash-8 and the 'Royal Hudson'.......(CJL)

[Ozexpatriate]

I love the 'generic' destinations on the destination blind for the Rapido bus illustrated in the new US newsletter (Rapido News 83).

 

(Don't let the Brits see the last destination on the roll.)

 

The Edmunston livery looks terrific.  I'm amazed how much that blue changes colour with different lighting and angles.

[No Decorum]

(Don't let the Brits see the last destination on the roll.)

[Budgie]

When are they going to start the British Ambassadors for Rapido?

[SD45T-2]

Apologies for hi-jacking this thread but...

 

Is there any possibility of Rapido satisfying the demand among Southern Pacific fans for a model of the Series Krauss-Maffei ML4000s?

 

15 original locos, with a wide range of detail changes through their short lives, umpteen different "Bloody Nose" treatments and the camera car variants - surely they're just what Jason needs as his next project?

[steam-driven boy]

Hi,

Apologies for hi-jacking this thread but...

 

Is there any possibility of Rapido satisfying the demand among Southern Pacific fans for a model of the Series Krauss-Maffei ML4000s?

 

15 original locos, with a wide range of detail changes through their short lives, umpteen different "Bloody Nose" treatments and the camera car variants - surely they're just what Jason needs as his next project?

I've had one of these:

http://www.shapeways.com/product/7H3MFPJJV/n-krauss-maffei?optionId=43709920

languishing in my 'to-do' drawer for a long while, there'll plenty more time for Jason and chums to get one to market before I'm likely to get to it    

 

Regards, Gerry.

[Ozexpatriate]

Some interesting musings from Jason Shron in the latest Rapido Trains North American newsletter, in particular the section on "The Hobby and International Trade".

 

Regular boosters of the idea of selling stripped down base models with extra detail parts to fitted by the purchaser might be interested in the section on the Rapido "Prime Movers" line which you'll find at the end of the "Dash 8" section of the newsletter.

 

Let's hope the economics of model railways continue sufficiently that *some* RTR production remains economically viable in a changing world.

 

I presume Jason has carried that Jefferson $2 bill around for a while now. I can't remember the last time I saw one in regular circulation.

Edited February 4, 2017 by Ozexpatriate

[BR60103]

 

I presume Jason has carried that Jefferson $2 bill around for a while now. I can't remember the last time I saw one in regular circulation.

We got ours in the change when we toured Monticello.

[railroadbill]

Some interesting musings from Jason Shron in the latest Rapido Trains North American newsletter, in particular the section on "The Hobby and International Trade".

 

Regular boosters of the idea of selling stripped down base models with extra detail parts to fitted by the purchaser might be interested in the section on the Rapido "Prime Movers" line which you'll find at the end of the "Dash 8" section of the newsletter.

 

Let's hope the economics of model railways continue sufficiently that *some* RTR production remains economically viable in a changing world.

 

I presume Jason has carried that Jefferson $2 bill around for a while now. I can't remember the last time I saw one in regular circulation.

Very interesting newsletter. Agree about the "hobby and international trade" section, think Jason hit the nail right on the head there and was indeed being very honest about it.

 

And again, about the result of their "prime movers" trial.

 

 

On a technical note, the pic of the dcc chip mounted in the fuel tank reveals a very good idea, especially for models with so much detail to be dislodged taking the body off.

 

 

 

The "Mike McGrattan memorial train"  was a nice touch in memory of their colleague.

[jjb1970]

An interesting news letter for sure. The argument about pricing won't go away, and given the price rises we've seen in recent years I think it would be unrealistic to expect prices not to be a recurring topic for discussion in the hobby. I'm conflicted really. There can't really be any dispute that a currency devaluation of the magnitude and speed of that which hit sterling last year will have a sharp impact on any companies manufacturing overseas. Also, there is no dispute that living standards in China have been rising and wage inflation over there is real. Yet for all that, companies still control their own costs (or should) and the costs of development and design in particular are a variable under the control of the supplier, whilst factory prices will also be subject to all sorts of variables. Manufacturing is like many other things in that the end cost is largely determined by managerial skills, technical efficiency and how smart the process is (in particular, designing in ease of manufacture). There are very few genuinely fixed costs in any business and different companies will expect different margins and will have very different internal cost bases. So it is far more complex than just pointing to a devaluation of sterling and wage inflation in China. There is an assumption that if a model is not viable for one manufacture then it is not viable, I work in an industry where there is a whole sector which specialises in buying assets and operations from majors who cannot operate them profitably and making a tidy profit out of it. There is also a bit of a contradiction in a lot of the debate. Note, this is not aimed at Rapido or this newsletter, but traditionally many have pointed to the effort needed to assemble ever more finely detailed models as a major engine of rising prices, yet then we're told that making a stripped down model is no cheaper. There is something of a contradiction there.

For all that, my own opinion is that if you like a model, you think it is fair value and can afford it then buy it. I think any hobby is about much more than £ or $ signs. On the other hand, if people do not think a model offers value or that it is over priced then my advice is not to buy.

[jjb1970]

Where I'd disagree with Rapido is the idea that since the skills base is in China then the jobs won't return to the USA. I'm not saying the jobs will return to the USA, but if there was a sound argument for manufacturing in the USA then you'd build the necessary skills. I've seen processes way more technically demanding than making models and where the necessary technical skills are extremely demanding where established players assured the world there was no way those processes could be done elsewhere which were mastered very quickly by new players if the figures make sense.