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Hornby APPOINTS NEW CEO


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Being just a cynical observer of these matters I had assumed Hornby ( after several false uptakes, or something the starts with FU) must have just looked around and thought "can anyone doe better for us?" - Oh yeah that OD guy seems better.... IF we bung him some money he may listen to us

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Well I am pleased. 

 

I simply want a strong Hornby recovery.  I am very impressed by Hornby's recent RTR steam products, quality control issues notwithstanding.

 

I think Simon will be a good asset too, and always was.

 

All power to the company.

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I'm HORRIFIED.

 

The Oxford LNER Cattle wagon wagon fiasco might be funny ha ha .....but in reality it is one of the most stupid and unforgivable blunders in model railway history.

 

Unless Oxford acknowledge their crass mistake and retool this stupid product I will fear for the future of Hornby.

 

The Parkside kit for the 9 foot wheelbase LNER cattle wagon is the only option.

 

If the quality and accuracy achieved by Hornby in recent years is compromised by Oxford's "style" then its back to kits folks and in spades.

 

Thank God Parkside will continue through Peco.

If Oxford were to correct their LNER cattle wagon (and I would love it if they did) they'd need to turn it into the 10' wb version while they are at it.

 

That's the only way they'll be able to legitimately produce it in BR livery.

 

John

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Hang on a mo! No one has said at this time that Hornby's in house design team - whom currently do a very good job IMHO - are going to be replaced by Oxford's or other.

 

You never know, they may end up designing Oxford's products too!

 

Another thing is, Simon is back as a "consultant". Meaning he will give his opinion on whatever marketing subject Hornby is looking at and suggest potential gaps that they could cover. I doubt he will over see actual design, just maybe what should be included in a range - which is marketing side of things.

 

With Simon back, I can see strong suggestions for the return of the APT-P for example. But design work (either up grading the old to modern motor/wheel standards or all new) would belong to the engine shed team.

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Merging the design teams is a clear example of a synergy. Doesn’t alter whether you’ll design to one spec for one brand and another for a different market. Look at cars for example. I doubt each marque within the VW empire has its own independent design team

 

David

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Big step up from running a £4m turnover company to a c£50m enterprise

In 2016 Hornby's turnover was about £47m and they made a loss of about £9m.  There have been losses in years previous to that, and the company has paid no dividend for several years.  The company's biggest challenge is to reduce and eliminate those losses.

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In 2016 Hornby's turnover was about £47m and they made a loss of about £9m. There have been losses in years previous to that, and the company has paid no dividend for several years. The company's biggest challenge is to reduce and eliminate those losses.

Yes, fully agree. However, that’s not the point I was making. Turnover is a good proxy for the size and complexity of a business. At the last accounts, Hornby employed c200 people, Oxford sub 20. Hornby is listed with the complexities that brings. Difficult banking relations ships as well. To state the obvious, Davies will now be accountable to third party shareholders not just himself. That said, Hornby is way simpler than any FTSE 100 company

 

I don’t doubt that he is a competent and successful businessman. My point was more that this role is a lot bigger than his prior one and the risks attendant to that step up

 

David

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. Perhaps the unfortunate duplication of the Adams and the poor reception of the `Dean Goods has had an effect.

 

Poor reception only with a few loud people on forums. If you look at Andy Y's review in BRM derived from a survey on RMweb, the picture looks very different - customers see the DG as value for money, something that can be seen in the trade where they are selling well with some shops very keen for more. The "terrible" cattle wagon also sells and I know several people who are perfectly happy with it on the basis of price and not being able to see both sides at the same time.

 

The decision for the business might be, do we want:

 

A) Kudos on web forums.

B) To sell lots of products and make money

 

Now, it might be possible to do both but if you have to choose, I suspect option B) wins.  I have no inside knowledge, but at a guess, a company that has been issuing profits warnings for years might have decided they would like B) as well.

 

(Before anyone says that all the mistakes would cost nothing to fix, unless you are privy to the finances inside a firm, you can't be sure of that. Another round of CAD reviewing, new EPs etc. will cost money and none of us knows how much, how it would affect the RRP or how many extra sales would result.)

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So Bachmann take over EFE and Hornby now have Oxford under their umbrella! Interesting times.

 

Comparing oranges and lemons?

 

Bachmann purchased EFE at a time when that very much smaller business was effectively dead in the water.   Perhaps because they had seen synergy between their products and viability in the EFE range.

 

Hornby happens to have appointed a CEO who is also at the helm of a much smaller business but from the business standpoint Oxford is profitable while Hornby manifestly is not.  An ailing giant clutching at straws or an astute business manager seizing a golden opportunity?  The truth probably lies shrouded in commercial confidence somewhere between the two.

 

Quite how comfortably SK will re-take his seat in Red Box Towers remains to be seen.

 

The Daily Belly-laugh has suggested Hornby is steaming towards a merger.  http://www.telegraph.co.uk/…/Hornby-steams-towards-merger-…/  

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Good to see Simon Kohler back with Hornby, wonder what that will mean for MREmag which has been floundering ever since it changed format etc?

 

I didn't realise MREmag was still going. I confess, I got out of the habit of looking at it when it ceased being a daily production, some years back.

 

Paul

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So we have lean and profitable Oxford collaborating in as yet undefined ways with larger but unprofitable Hornby.

 

This will be all about culture transfer between the two.  See what each company does the best and transfer it to the other.  Plus economies of scale through dovetailing of production and back office operations.

 

Logically:  Railroad brand to become more obviously basic models aimed at toy train and 'trackmat' market.  Oxford Rail to be their mid-market, mid sized brand opposite Dapol.  Hornby to be more focused on the premium end, opposite Bachmann and looking to meet the needs of cash rich baby boomers.

 

But yes, leaner/meaner and making money across the board.

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So we have lean and profitable Oxford collaborating in as yet undefined ways with larger but unprofitable Hornby.

 

This will be all about culture transfer between the two.  See what each company does the best and transfer it to the other.  Plus economies of scale through dovetailing of production and back office operations.

 

Logically:  Railroad brand to become more obviously basic models aimed at toy train and 'trackmat' market.  Oxford Rail to be their mid-market, mid sized brand opposite Dapol.  Hornby to be more focused on the premium end, opposite Bachmann and looking to meet the needs of cash rich baby boomers.

 

But yes, leaner/meaner and making money across the board.

 

Collaborating?  Really?  Where does the announcement say that?

 

We have Lyndon Davies, proprietor of Oxford, being appointed by Hornby as CEO.  We have an announcement that Hornby are considering investing in his company, not will be, or have, but are considering.  That's all, the rest is pure, uninformed speculation by model railway enthusiasts reading between the lines and some Daily Torygraph journos who probably are too tanked up on Conference champers to have read the press release.

 

Until there is proof, either by an official announcement or by an actual merger/collaboration/sharing of resources, all other speculation, froth, portents of doom, Mystic Meg commentaries are pointless and frankly tedious.

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I can't help thinking of Monarch and Ryan Air.

 

One is long-established has made significant efforts to improve the quality of its service.

 

The other attracts a lot of criticism for its offering, but its product is cheap, people buy it and it's profitable.

 

Is the price of survival adopting a Ryan Air model?

 

I hope not!

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So we have lean and profitable Oxford collaborating in as yet undefined ways with larger but unprofitable Hornby.

 

This will be all about culture transfer between the two.  See what each company does the best and transfer it to the other.  Plus economies of scale through dovetailing of production and back office operations.

 

Logically:  Railroad brand to become more obviously basic models aimed at toy train and 'trackmat' market.  Oxford Rail to be their mid-market, mid sized brand opposite Dapol.  Hornby to be more focused on the premium end, opposite Bachmann and looking to meet the needs of cash rich baby boomers.

 

But yes, leaner/meaner and making money across the board.

 

1) Oxford Rail is Railroad quality at best (I am assuming that Hornby's Railroad level products are more accurate than Oxford's offerings).

 

2) our hobby is no where near big enough to support a 3 level product line

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For me frequent changes at the top or mergers / acquisitions / divestments are destabilising and expensive. I agreed with much of what Steve Cooke said in his published interviews insofar as they went, although I thought his progress updates erred on the optimistic side.

 

I am not convinced Hornby know what their business or purpose is. I can't produce quotes now because my job applications were over six months ago, but IIRC some internal emails had quite a good sign off, whereas other descriptions of the firm were very generic, marketing/distribution waffle, i.e. introverted and not clearly customer focused.

 

Lack of consistency is certainly highlighted by very detailed models and great care shown on the Engine Shed blog versus a train pack that mixes late BR livery with PO wagons, not to mention no guards van. For a company that emphasises quality and attention to detail in its recruitment, what is going on? For me, part of Hornby's role is educating us about our history, passing knowledge down the generations, not coming up with any old cr#p for a quick buck. (I was born in 1969 after mainline steam.) Others have also mentioned the price discrepency between the new H Class 0-4-4 (£110) and the older M7 (£155). How do you explain that to a customer?

 

Lack of 'vision' may also explain the diversification and Olympics fiasco at the other end of the scale. Hornby has been battered by outside events but I think some of its wounds are self inflicted due to lack of passion at the top.

 

 

PS  Like someone else has mentioned, how can a cash starved firm that went begging to investors only a year ago and has performed below expectations since, have spare money lying around to "invest in LCD"?

In answer to your final question there's more than one way of investing.  Hornby has plenty of unissued capital so, albeit with an element of risk and no doubt at considerable discount (because of its share price and financial state) it could trade shares for shares but equally LCD's accounts show a positive return so cash for shares might be an option.  It all depends on how Hornby's principal shareholders see their business developing or how they wish to protect or cash-in on their past investment.

 

One suspects they know what they're doing and one assumes that have faith and purpiose in what they're doing otherwise they wouldn't have done it and they have publicly stated that, and I quote -

 'Hornby is exploring the opportunity to invest in LCD. Further information will be released in due course.'  

 

Now we can make what we want of that but if that is the precise truth they will either decide to invest in LCD (by whatever means), and thereby gain a measure of control over Oxford Diecast and LCD's offshore holdings or they will decide not to invest.  The other alternative of course is that LCD's share capital could be increased rather than the family selling part of their solely owned share but that still means that Hornby might get a chunk of LCD, and thence Oxford, although LCD could possibly even divide and separate LCD shareholdings along the lines of the various businesses it owns/controls.

 

In simple terms we don't know what might happen but Hornby has made its position quite clear and I still remain to be convinced that anyone will be able to maintain solid 'Chinese walls' between two business in which he is deeply involved be it either by dint of employment or by ownership.  And that, in my view leaves only one logical course.

 

In ythe meanwhile Hornby continues to be house of many colours with not only a diverse set of product ranges but conflict within its UK market railway range.   They seem to have been unable to resolve that along what the hobby, if no one else, has considered more sensible lines for a very long time and of course at the end of the day apart from what we see siting on dusty shelves none of us (except the retailers present here) knows what sells and what doesn't however daft it might seem to those of us with greater railway/model railway knowledge.

 

And of course as far as prices are concerned I doubt if Hornby cares one jot about the price differential between the new H and the older M7 as long as the newly introduced model is marketed at a price which guarantees sales and profit which covers development and production costs - in other words the H is market priced.

 

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The decision for the business might be, do we want:

 

A) Kudos on web forums.

B) To sell lots of products and make money

 

C) Get the basics of a model correct, and sell even more than in B), and thus make even more money.

 

It continues to amaze me how people in this hobby will justify almost any mistake as being okay.

 

While I am not familiar with the Oxford Diecast line up I have to assume that they aren't making the same mistakes in the design and production of those vehicles.  Would Oxford Diecast be the success it is if their vehicles had sides wrong, or other equivalents to the multitude of errors that are deemed acceptable in their rail models?

 

(Before anyone says that all the mistakes would cost nothing to fix, unless you are privy to the finances inside a firm, you can't be sure of that. Another round of CAD reviewing, new EPs etc. will cost money and none of us knows how much, how it would affect the RRP or how many extra sales would result.)

Tooling is a very significant expense. and in that context catching a mistake before tooling does cost nothing - if an additional round of CAD wrecks the finances of a model then they can't afford the tooling anyway.  Better yet, not making these mistakes in the first place is even cheaper.

 

As for the other comment about production slots, not an issue when you own the factory as Oxford has claimed.

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Hang on a mo! No one has said at this time that Hornby's in house design team - whom currently do a very good job IMHO - are going to be replaced by Oxford's or other.

 

You never know, they may end up designing Oxford's products too!

 

The design of the models is at the whim of the CEO.

 

You have a new CEO who has learned that our hobby will purchase anything put in front of them as long as it is cheap regardless of accuracy let alone detail (on the assumption that Oxford Rail as a division of Oxford Diecast is profitable).

 

You also have a new CEO who has been brought in to turn around the financial fortunes of the company, and will need to be at least seen to be doing something to accomplish that.

 

While we can't predict what he will do, the somewhat standard MBA response is to cut staff (as, regardless of the long term health of the company, it is a quick way to get some quick results - a bump in the stock price if nothing else).  Hornby doesn't have a lot of staff to choose from if that becomes a chosen path.

 

Thus I don't think it unreasonable for those of us who are not just concerned about wanting models that are correct, but prefer our models to be detailed, to have some misgivings about this change at Hornby (and to be fair to the new CEO, some of these concerns would also be on the minds if not said for any new management at Hornby).

 

With Simon back, I can see strong suggestions for the return of the APT-P for example. But design work (either up grading the old to modern motor/wheel standards or all new) would belong to the engine shed team.

I think Mr. Kohler may have indicated in a past blog that the APT-P tooling is useless and thus a model would need to be all new tooling.

 

While a new model to current Hornby standards would be a way for the new CEO to distance his new job from Oxford Rail, I don't think anyone would touch a project the size of the APT-P until there is more certainty as to what is going to happen with outside forces/influences.

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C) Get the basics of a model correct, and sell even more than in B), and thus make even more money.

 

It continues to amaze me how people in this hobby will justify almost any mistake as being okay.

 

While I am not familiar with the Oxford Diecast line up I have to assume that they aren't making the same mistakes in the design and production of those vehicles.  Would Oxford Diecast be the success it is if their vehicles had sides wrong, or other equivalents to the multitude of errors that are deemed acceptable in their rail models?

 

Tooling is a very significant expense. and in that context catching a mistake before tooling does cost nothing - if an additional round of CAD wrecks the finances of a model then they can't afford the tooling anyway.  Better yet, not making these mistakes in the first place is even cheaper.

 

As for the other comment about production slots, not an issue when you own the factory as Oxford has claimed.

 

Yep, making an accurate model only costs more than making an inaccurate one if you have to alter tooling to correct mistakes.

 

Measure twice, cut once, is surely the answer.

 

I'd rather pay full price for a complete book than half price for one with pages missing, but that's just my little old subjective view-point.

 

That said, some inaccuracies will be associated with conscious cost savings, e.g. tooling used for more than one prototype, product or version, or livery, where the results are often, more or less, inaccurate.  This used to be the norm once upon a time, and still happens to some extent, e.g. with PO wagons by all the RTR manufacturers.   Oxford, no doubt taking a leaf from its diecast catalogue, are particularly adept at this and it probably allows them to charge less for product.

 

So, yes, milking the tooling probably trumps accuracy when it comes to sales.  People liked the Monarch service, and complained about Ryan Air's, but consistently bought Ryan Air's cheaper tickets.

 

I realise that I am not typical of the market, but, these days, I realise that I really don't have to fly anywhere, but if I do decide to, it might as well be a good flight.   

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2) our hobby is no where near big enough to support a 3 level product line

That is conventional wisdom but it is something that Piko are doing in the HO market, and they appear to be doing it very successfully and growing both their market share and their status amongst modellers and enthusiasts. They offer Piko Classic to the high end, Piko Expert to the serious but perhaps more cost conscious enthusiast segment and Piko Hobby to the entry level and residual trainset segment (although even the Hobby models can be pretty good). Yes, the German market is probably bigger than ours but Piko started from a pretty low level in terms of market standing and product quality relative to competitors like Marklin, Trix, Roco, Fleischmann, Liliput etc and have grown and improved steadily as others have struggled. So if developed and marketed properly I think a multi-tiered approach can work.

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The biggest issue I see having the CEO of Hornby also the owner of Oxford is that the two companies will no longer be competition to one another and when it comes to certain new lucrative models do you give it to your daughter or your current paymasters to produce.

 

Having Oxford Mk3s and Hornby Mk3s - do you drop one in development or strangle the existing tooling so that the new one is the only one you can buy?

 

Now I don't know Lyndon Davies so I cannot really say how he will perform in this dual role but it is going to be a challenge to two sets of shareholders as to where his loyalties fall.

 

That said, how many CEO capable businessmen are there available who also know the markets Hornby operate in and have some success behind them to suggest they can steer Hornby in the right direction, they probably can be counted on my thumbs.

 

I think the Hornby group is trying to find profitability in the core markets and stay away from the Olympics so maybe this move though it looks difficult and may result in some challenges for both the shareholders and the customers might in the long run be the correct choice

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I think appointing Lyndon Davies is a really smart move. Here is a man who knows channels into the market and what they should cost. As has been said he runs an organisation with 20 employees which still manages to serve all model shops etc, distribute goods. You then have Hornby which seems to have many more people , confused channels and generally seemed to be hacking its independent retailers off. They have handed over storage and distribution to a third party. was this wise and how much is it costing? I expect Lyndon will be looking at that with his Oxford experience and streamline accordingly.

 

As to product development, he would be mad to interfere with the existing team, who have brought us the Peckett etc. I don't think they will be under threat. What would be a win win is retaining this team and combining with a streamline distribution set up  that delivers well detailed products as efficiently and cost effectively as possible

 

If , indeed, there is a formal tie up with Oxford, or Hornby takes them over then they finally get their hands on in house manufacturing in China, which cannot be a bad move. While this may have limited capacity initially I'd imagine it will be a good base to expand from rather than acquiring an unknown manufacturer or worse still setting one up from scratch

 

I do think JJBs Piko example something that Hornby could do with emulating. There are clearly people on here disparaging about Oxfords products, likening them to Railroad models, which is unfair. However I think its now clear that the market is splitting itself in two . The top end "I will pay anything for that" market and the bottom much more price sensitive range. If Hornby can be transformed with Oxfords cost structure, with which Lyndon Davies is obviously familiar then there's money to be made in both.  So it makes sense to compete with Bachmann /DJ/Dapol(hopefully at a slightly lower price level) and still have a lower price range to attract new entrants and those of us who can live without DCC toilet flushing carriages etc

 

So I can see a bright future for Hornby. But I do think Oxford Rail will quietly fade away, which is not so good for competition.

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