Are we at a crossroads?

[roundhouse]

When fuel prices go up we all worry. When they come down we start heading to a so called recession.

 

It's a very unpredictable world

[brianusa]

Surely this has been hashed out many time already.  Aging enthusiasts, few new entrants, rising prices, general die off of those interested in the hobby.  Very few well be left to take up the hobby seriously other than R-T-R and train sets, if indeed any will still be made.  There will be enough used stuff on the market, that is if there will be a second hand store willing to sell it.  If the demise of the hobby shop continues as it has been, there will ne no other alternative to buy the much needed accessories that make up our layouts today.

 

Brian.

[APOLLO]

I don't think the hobby is at a crossroads, it is at a Summit, and it's all downhill from here, in any direction !!

 

 

For me, 65 next year, I've more or less finished major spending. Indeed this last year all my purchases have been sales items, Hattons, Ian Allan Manchester shop closing, etc along with a smattering of second hand. I am not downsizing or quitting the hobby, far from it, I have tons of things TO DO, and very little requirement TO SPEND.

 

A big question already mentioned is what will be the future "worth" of our models, will our collections be an inheritance or a burden to our survivors?.

 

Ah well, never mind. It's been good fun for me the last 50 odd years !!

 

Brit15

[Talltim]

If we're at the crossroads where's Robert Johnson and that other bloke?

That was the crossroads 80 years back

[jjb1970]

I think there is a cost to almost any interest. I enjoy cycling and have spent sums on bikes which I suspect most here would consider to be obscene without regretting it at all. Musicians accept that high quality instruments are not cheap. Hi-fi enthusiasts spend sums on hi-fi gear that pay for a good car, new. In business it'd be what's called the cost of doing business. I don't think model railways was ever a cheap hobby and the golden decade of the 00's was an aberration rather than representing the norm. I think there is more to any interest than just looking at it in terms of pounds and pence and I think that if you get pleasure from something then the provided you can afford the cost I don't think it should be an issue. I also think that price and value are often used as interchangeable concepts when a cheap model can represent poor value just as an expensive model can offer good value (and I'll admit that I wish more models were in that class of lower cost models that do offer very good value). I also think we need to accept that model companies are businesses who exist for one reason only, to return a profit for their owners, and further to return a profit which is large enough to make continued investment in the business worthwhile. They're not there out of a sense of altruism, or to be our friends or anything, they're there to make money. Personally I have no issue with that and a good business recognises that there is no conflict between offering the customer high quality and service and making a profit as the two things share a virtuous relationship. If a company offers me a top quality product with first class service then as far as I'm concerned they deserve to make a good return on their investment.

However, I also think that the price rises we're seeing in model railways are the result of a complex series of factors and relationships whilst being represented as the result of some simplistic result of wage inflation in China and things just costing more. The result of this is that when people scratch their heads and decide that the stories the manufacturers have fed us along with some magazines are a gross simplification then it leads to people feeling a sense of having been deceived I think. I don't doubt that things are costing more to manufacture in China, I also think that this is the result of a large range of factors (including correcting the margins from a point where product was sold below the price point it should have sold at to boost margins in the case of one manufacturer) and that it would have been better for the manufacturers if they'd either just kept quiet and told us that the price is what the price is or given us a fuller explanation rather than the half baked explanations they fed us. But that's just my opinion.

[woodenhead]

I think you probably are over-pessimistic for one important reason. While many people do travel by train - with varying degrees of comfort, reliability and punctuality - there is an equally valid, and probably more important to our hobby, way of getting introduced to railways. That is the heritage/leisure sector frequently worked by steam and often with matching stock - just the sort of things that can be bought as models and in fact probably more likely to be bought because they are associated with a (hopefully) nice day out.

 

So the big railway is far more present for many people than we might think - it is estimated that c.10 million people a year visit such railways and many of those probably go nowhere near the everyday railway. Equally many people seem to enter the model railway hobby with limited, or no, knowledge and experience of the real thing. While I'm sure the changed scene on the real railway has had some impact on those coming into railway modelling I definitely don't believe that all is lost.

Point taken and I actually believe that the steam engine railtour will outlast the diesels in preservation - ultimately people hanker for something old and a steam engine will always trump diesels and electrics as they display a glamour that is forever lost even though most of us now were never around in the 1930's when the romance of the railways was at it's peak for the travelling public.

 

It all depends how long this sort of train can be maintained on the railway, I would like to think for a long time but you never know.

[Tony Wright]

There is a further factor to consider - the age profile of the hobby.

 

Tony Wright has been very pessimistic - both in discussion here , and in talks elsewhere - about how many modellers will still be active in the hobby in 10 years time. I think he is overly pessimistic, and there will still be a substantial hobby in 10-15 years time, perhaps 2/3rds of its current size. But that still means a sharp contraction in the size of the market for RTR.

 

And then there's the other issue he's touched on in recent discussions about models from deceased estates - saturation. While kit-built and scratchbuilt models are probably more likely to end up in the skip than RTR, there's clearly an issue brewing as ever more existing material resurfaces from the estates of deceased modellers. This is probably going to be even more acute with RTR - especially the high spec superdetail stuff , that has only really existed for 15-20 years. A look at the traders at any show will reveal that "it hasn't gone away, you know" when it comes to old RTR

 

In other words, I think that the RTR manufacturers are going to be in desperate trouble in 10-15 years with a sharply smaller market, saturated with ever larger amounts of ever higher quality secondhand RTR, kits and other material, and a much higher cost base. I'm starting to feel very pessimistic that there will be scope for more than a limited number of RTR manufacturers operating on a limited run basis with semi-niche products. That starts to look very much more like the world of say Australian-outline RTR

 

But.. but... but - this is NOT the same as saying the hobby faces a bleak future. Rather I think the hobby will start to detach from "new-production" RTR. Sourcing your models from second-hand sources instead of buying new production RTR will become very much more the norm, and as costs rise kitbuilding will start to come back into fashion. Not for locos - the cost of kits is far too high for them to be "priced back in" and the skill set needed to build successful chassis is beyond most people's easy reach. But we're starting to see it happen with wagon kits - in 5 years time Parkside and Cambrian may look startling value compared to RTR - and in 10 years time a new injection moulded range of coaches in the "modern day equivalent of Kirk" style may have a real chance against RTR coaches costing about £75 each new in todays money, and quite possible out of production (the manufacturer has folded, the tooling's we know not where) or given a limited  production run once every 5-8 years only

 

That would be a world where the culture of the hobby would look a lot more like 7mm in the 1950s-1980s , or like 3mm today. Obviously on a very much larger scale of operations , but the continued re-use of things like old Kitmaster and Triang mouldings you see in 3mm would be going on in 4mm

My apologies for my pessimism, though I've always found it better to be pessimistic than optimistic because if things turn out as expected, one is proven right, or, if not, one is happily surprised. However, that could also be construed as cynical. 

 

I certainly wasn't pessimistic this weekend just gone. Why? Because I spent time with a merry band of men involved in the Grantham project. Naturally, by some distance, I'm the eldest (not counting the leader's dad), but the building of the layout is a return to what I might call 'old-fashioned' railway modelling values. By that I mean self-reliance, the pooling of skills and resources and the tenacity to see a project through. It matters not a jot to them what wish-list moaners complain about, either with regard to availability (or non-availability) of models or the cost of RTR items. If something isn't available, it's made. If something needs fixing, it's fixed. There's no waving of cheque books or wringing of hands because so-and-so manufacturer hasn't produced exactly what they want. 

 

I was also pleased that I was able to sell-on models built/modified by the late Gerald Scarborough, at prices his widow and surviving family (I hope) will be happy with. Though not wishing to end on a pessimistic note, it seems to me that, although all modellers (like all living beings) are mortal and their models normally survive their deaths, the number of collections coming on to the market appears to be growing. Who then buys them? Many of the same generation. 

 

I hope my comments don't go too far off topic, but I'll be commenting more on Wright Writes. 

[Legend]

Thanks for the thoughtful and incisive posting Andy . I must admit, you surprised me by raising such an issue . I agree with much if not most you say. The golden years are behind us . The future may not be bad but it will be different.

 

As no doubt, following my posting on Railway Modeller thread, I'm the person who thinks that the one statement from Phil Sutton means we have been fed a line by the manufacturers, let me reply. Phil Suttons statement that "factory prices have not been rising" just confirms my own experience of prices from China . I had already formed my opinion but I'm glad he confirms it. Ok it's not model railways, but I do cost some relatively complex components from Shenzhen and a film product from Guangdong , certainly the latter is less labour intensive, neither are showing significant increases at the factory door.Even if you accept that labour costs are increasing at 10% per annum then per their last accounts labour costs are 30% of Kaders turnover so a 10% increase would get that to 33% and of course that's the wholesale price from Kader . It's an even smaller % of the final selling price to the consumer. Yes some increase is necessary but no where near the last 3 increases from Bachmann. Couple this with general consumer experience of goods from China. No where else are they increasing to such an extent, so Phil Sutton is again just confirming that. It's Bachmann that's out of line.

 

No conspiracy theory , it's obvious that three years ago Kader decided they needed a greater return from their UK operation, possibly to bring it in line with Europe.They attempted to pass this off with reference to labour costs, and the media went with them. Even last week MREmag referred to increase between first and second batches of Blue Pullman as being down to labour. Sorry it still doesn't wash. There may not be BMWs or Mercs in the car park at Barwell but I bet there is at Kader Hong Kong.

 

While Phil Sutton may be doing a bit of marketing spin , the reality is he is selling a high spec item for £160 , whilst Bachmann latest Warship is just under £150 , so not a huge differential . A step increase in spec at much the same cost. I seriously doubt Phil Sutton is making a loss on his model. So again confirms his view on factory pricing.

 

Hornbys position was different . They had all their eggs in the Sanda Kan basket and had to find capacity quickly (not that quickly as it turned out) so they had to pay top dollar. Design Clever was probably an attempt to moderate these costs.

 

Are we at the crossroads ? No , I think we are two years past it

 

Bachmann embarked on a higher price strategy . We will see the effect of this, but comments on pricing on here , people I've talked to at exhibitions , suggest people are not going for it. Yes you will still buy a model if you really want it but discretionary spend has ended. I certainly haven't bought Bachmann for a year now and I don't think I'm alone

 

Hornby are over supplying and having to"dump"stock. Their selling direct model has seriously backfired alienating their retailer base . All is not bad but they are going to have to rationalise their range and get used to supplying smaller quantities. While I hope they can get back on the route there is no doubt they have gone the wrong way. I worry that in the 71 and Radial they are not going to get an adaquate return.

 

Thanks for your analysis on the market . It does look like the sizeable majority will either spend the same or less, so as you rightly point out with rising prices, that means we are buying less models. Couple that with the distorting effects of limited or Special editions taking a larger proportion of that spend and that people are moving into the second hand market then you can see the big manufacturers are taking less and less of the market. I think this is Hornbys current problem, they are simply producing too much for that smaller market.

 

The future ,smaller production runs. More limited editions . There will be increases in prices but I don't in any way accept that as inevitable. You can do something about it. Don't buy. Eventually people will get the message and moderate their prices or if they genuinely can't make a living they will leave the market. But there is no shortage of new entrants to take their place, and the likes of Rapido and Oxford are now delivering.

 

Thanks for allowing a good discussion

[Geoff Endacott]

Maybe we need to move from OO to HO in order to become part of a larger market.

 

Geoff Endacott

[coachmann]

Is who at a crossroads? Certainly not the traditional railway modeller and probably not the much maligned checkbook modeller, so I assume we are talking about the RTR-dependant sector. Considering RTR is about mass-production and mass sales, I'm not sure there is a continuing future for everyday plain black locos unless they can be propped up by pre-group 'collector' liveries. But I am sure the trusty, green named locos are still the core model to carry proprietary toy manufacturers through. A lot of the jitters is probably as a result of the uncertainties surrounding Hornby.  Many of their locos are on the market at £100 and below and this in turn has become the market.  Only a fool would hope to sell his locos for £150.00 in the current climate and so the market is also affecting other RTR companies.

[Andy Y]

No conspiracy theory , it's obvious that three years ago Kader decided they needed a greater return from their UK operation, possibly to bring it in line with Europe.They attempted to pass this off with reference to labour costs, and the media went with them. Even last week MREmag referred to increase between first and second batches of Blue Pullman as being down to labour. Sorry it still doesn't wash. There may not be BMWs or Mercs in the car park at Barwell but I bet there is at Kader Hong Kong.

 

No; it isn't just labour. We have covered it on here before several times and it's been reference above by others that there was a re-alignment of pricing. If you wwere Bachmann Europe 4 years ago and you wanted an XYZ then Kader said how much it would cost $x. Kader subsequently realise there's been an increase in costs, probably both material and labour, in producing and adding ever increasing levels of detail; time and motion studies are carried out and an accurate assessment of costs plus factory margin is then made determining the new price the products could be sold to Bachmann for. Included in these revised costings would be the currently increasing labour rates. Bachmann Europe still have to cover their costs and demonstrate a margin above the price they've bought in at. I'd forecast that when their next accounts are visible you'll see the same percentage gross margins.

 

I therefore stand by the assertion, backed up by reference to external sources that costs have risen for any factory producing for this market (if they've been doing it for longer than a short spell).

 

 

While Phil Sutton may be doing a bit of marketing spin , the reality is he is selling a high spec item for £160 , whilst Bachmann latest Warship is just under £150 , so not a huge differential . A step increase in spec at much the same cost. I seriously doubt Phil Sutton is making a loss on his model. So again confirms his view on factory pricing.

There is an important difference between the breakdown of costs from a major 'manufacturer' and a smaller importer.

 

Simplistically:

 

Major manufacturer: 

Initial Research, CAD for tooling, tooling costs, review process, component production, assembly, packaging, shipping, marketing, distribution to buyers, VAT costs, service/warranty provision, administration/payroll/support functions, re-investment; retailers margins to cover their overheads and their profit/wages.

 

Small importer: Red = costs absorbed into overall role of director/proprietor  Green = dependent on annual sales volume

Initial Research, CAD for tooling, tooling costs, review process, component production, assembly, packaging, shipping, marketing, distribution to buyers, VAT costs, service/warranty provision, administration/payroll/support functions, re-investment; retailers margins to cover their overheads and their profit/wages.

 

I'd say that the bits in red would add £50-£60 per unit if they were costed in within the process from a major so the differential is still there when comparing apples and grapes.

[PhilH]

Reckon you're forgetting the all important progression

 

Blokes- toys- logic- window- out.

 

We want, we get.

[grahame]

Can I just pick up on your comments about a honeymoon period for Oxford Rail's factory? I though Oxford Diecast owned their own production facility in China? Obviously they are not immune from state imposed wage increases, but they should have more control over production slots and costs etc than Hornby or Bachmann seem to.

So too should Bachmann ( if that theory holds water) as AFAIA, being part of the Kader empire, they also own factory/production facilities, although model railways is only a small part of their output.

 

G.

[Andy Y]

part of the Kader empire, they also own factory/production facilities, although model railways is only a small part of their output.

 

 

Which means, as an 'internal' customer that there may be occasions when an external or more profitable contract has to be fulfilled that resources get diverted. It is our understanding though that additional resources are currently allocated to support the needs of Bachmann Europe. The latest Collectors Club mag shows that a lot of projects have moved from 'Forthcoming' to 'In the Drawing Office' as a consequence of this.

 

If you are a small importer but have enough dollar bills to wave around production slots can be found.

[RJS1977]

Very, very true. I know of several heritage line shops that have a wider and deeper range of RTR products than many independent model shops these days and I think it's one of the most appealing routes into the hobby for a newcomer or returnee.

 

Mind you, I spend more on books in such places!

 

I was thinking that the other day - but there are probably some good reasons why heritage railway model shops seem to be doing well while high street model shops are closing.

 

One reason of course, is the passing trade - particularly when a gala or similar event is on at the railway.

 

But perhaps more significantly, running costs are lower. The staff may well be volunteers, and if the railway owns its premises then there may well not be any rent to pay either. If the heritage railway is a registered charity and the shop is a part of that, then there may also be business rate/tax advantages.

 

Edit - and one other point - some customers may well buy from the heritage railway shop rather than the normal model shop because its profits go to support the railway in question (e.g. a while back I purchased several PECO 009 points by mail order, originally thinking to use the 009 Society discount with Parkside Dundas. However a quick search on the web showed that the Ffestiniog's shop's prices were the same as the discounted Parkside ones, so I put my order there in order to help support the FR).

[Pacific231G]

We probably are at a crossroads and there's probably not been a time when the hobby wasn't at some sort of crossroads.

 

The funny thing is that you can read the letters pages and sometimes the editorials of model railway magazines from almost any decade from the 1960s on and find similar concerns expressed.

• Young people won't be interested now that steam has gone (those "uninterested" young people are probably a large proportion of us here now).
• Railway preservation has overreached itself (with far fewer preseved lines than now)
• People are more interested in playing with newer toys like Sinclair Spectrums and Atari micros than with model trains (I have an original Speccy and I don't think I have any railway models quite that old) 
• Too much RTR and a lack of real model building is killing the hobby
• There are too many exhibtions for the number of layouts availalble and the public interested enough to attend them.
• There are more model railway magazines than the market can sustain.

I think there is a major change in that people now have less leisure time from their teens to perhaps their mid fifties than they used to but far more in later life (if only because we're living longer)  but I suspect that the total hours available for non waged activity over an average lifetime is probably rather more than it used to be. 

[Andy Y]

The funny thing is that you can read the letters pages and sometimes the editorials of model railway magazines from almost any decade from the 1960s on and find similar concerns expressed.

 

 

I've tried to keep away from commenting on external influences as that's a whole area in itself and just look at what's happening with the hobby as we are now and who is supplying us.

[robmcg]

....

 

So what do want? More choice? Lower prices? Better quality? Better value? Or all of it? If you listen to the conspiracy theorists then there seems to be some perception of entitlement to the latter. I couldn't quite catch my breath when it looked like someone was hopeful of currency value collapses post-referendum if it meant they could get cheaper models overseas.

 

...

 

Actually Andy that was me who mentioned the word 'plummet' for the value of the Pound in the context of [despised word] ... the EU referendum,   and irony is that i would prefer the Pound to rise , as this would increase the value of the models I sell...   having mentioned that I buy, collect and sell models.

 

So I was in no way hoping that the Pound would fall, I was musing about the possible effect of a 'leave' vote, offended a lot of people, and again, I apologise for that.

[Revolution Mike]

 There is an important difference between the breakdown of costs from a major 'manufacturer' and a smaller importer.

 

Simplistically:

 

Major manufacturer: 

Initial Research, CAD for tooling, tooling costs, review process, component production, assembly, packaging, shipping, marketing, distribution to buyers, VAT costs, service/warranty provision, administration/payroll/support functions, re-investment; retailers margins to cover their overheads and their profit/wages.

 

Small importer: Red = costs absorbed into overall role of director/proprietor  Green = dependent on annual sales volume

Initial Research, CAD for tooling, tooling costs, review process, component production, assembly, packaging, shipping, marketing, distribution to buyers, VAT costs, service/warranty provision, administration/payroll/support functions, re-investment; retailers margins to cover their overheads and their profit/wages.

 

I'd say that the bits in red would add £50-£60 per unit if they were costed in within the process from a major so the differential is still there when comparing apples and grapes.

 

 

This is hugely important - selling direct vs through a retail network is not a fair comparison. It is not to criticise Phil for selling direct, but just to recognise the difference it creates in pricing. The rest of things like admin/support functions are part and parcel of the advantage (?) that SMEs tend to have.

 

Cheers, Mike

[AndyID]

Are there similar concerns about the US, or is the market here substantially different from the UK?

[trisonic]

It’s a bit bigger (the market that is).

 

The biggest complaint I’ve heard is the one about having to pre-order  New Products and lack of stock actually in stores. Then again that only seems to apply to HO as there seems plenty of N stuff in store (at least around here).

 

I don’t claim to conduct Market Research, however......

 

Best, Pete.

[martin_wynne]

Hi Andy,

 

Who's this we in your topic title?

 

I'm not at a crossroads. When I first got into the adult model railway hobby, Peter Denny was building Buckingham out of Seccotine and old postcards, Roye England was building Pendon out of empty cereal boxes. I joined the local club and found them building a model of Bewdley in EM gauge, where all the stock was built from white-metal kits.There wasn't an RTR model in sight on any of those, because RTR models at that time were children's toys.

 

Later in life I got involved in building a large P4 layout of an Irish prototype in 21mm gauge, where all the stock was scratch-built, with a few etched kits. Again not an RTR model in sight.

 

Look at all the classic layouts from the past, and you find very few RTR models on them. How much of Frank Dyer's Borchester was RTR?

 

There is nothing to stop anyone doing the same now. Traditionally this hobby has been about making things. Expecting a Chinese worker to do it for you is a recent phenomenon. If they have now got fed up of doing it for poor wages who can blame them?

 

But the making things hobbies will continue because it is a basic human instinct -- see: http://www.hobbycraft.co.uk

 

And cereal boxes are still made of thin card -- rather better quality nowadays than in Roye England's day.

 

Martin.

[Dunsignalling]

Maybe we need to move from OO to HO in order to become part of a larger market.

 

Geoff Endacott

But it wouldn't be a larger market as we would still want models of UK prototypes. If they had considered British HO as being commercially viable, the continental manufacturers would have jumped on it decades ago. In reality, they saw the prices our producers got for OO models and reached for their collective barge pole. 

 

There are, even now, relatively few locations where British and Continental rail systems come into contact or where stock regularly works over both. It is, in any case, something that has largely developed since the opening of the Channel Tunnel. In times past continental stock to be seen in the UK was pretty much limited to Ferry Vans.

 

I have amassed a pretty comprehensive selection of OO models almost sufficient to stock what I am currently working on and any other layout I am likely to build in the future and there's quite a lot more still on the way that will fill many of the gaps that do remain.

 

A new range of British HO would, realistically, have a breadth of coverage more akin to that of Tri-ang TT (at least for the first few years) than even what is available in N today, let alone OO.

 

So, a limited range, of which (at best) a quarter would be prototypes that I would want to buy, and the only benefit a more accurate scale/gauge ratio. If the latter mattered, I would have converted to EM years ago. Irresistible.

 

On the most optimistic estimates (of both my own longevity and the development of such a product range), I'd be a centenarian before any range of British HO covered even half what I already have in OO. I'll hang on to my existing OO stuff, thanks, though I have been known to have a "dabble" in 7mm scale and/or narrow gauge.

 

If I were ever tempted into HO, I'd go for American prototype, not a duplication of a twentieth of what I already own.

 

John

[Dunsignalling]

Which means, as an 'internal' customer that there may be occasions when an external or more profitable contract has to be fulfilled that resources get diverted. It is our understanding though that additional resources are currently allocated to support the needs of Bachmann Europe. The latest Collectors Club mag shows that a lot of projects have moved from 'Forthcoming' to 'In the Drawing Office' as a consequence of this.

 

If you are a small importer but have enough dollar bills to wave around production slots can be found.

The position of Bachmann UK within the Kader Group also means that they are unable to "shop around" for better terms from other factories as all their competitors can.

 

They can thus enjoy the worst of both worlds at times.

 

John

[Torr Giffard LSWR 1951-71]

Mornin' all,

 

When it comes to manufacturer announcements, accepting all information put out from any one of them is about as reliable as making it all up for yourself. Therefore, when different manufacturers appear to make opposing statements on similar topics, e.g. costs in specific production areas, then until proved one way or the other it is obviously wise to accept that the truth probably lies somewhere inbetween. It wouldn't take much digging to unearth various examples of individual manufacturers laying the blame for their own production woes/chosen manufacturing route issues, at someone elses door. Also, it is useful to have information from manufacturers using different factories/countries/methods etc because it helps to demonstrate that different production routes/levels are available, each with individual shortcomings and advantages.  

 

Dave