Bachmann 2018 mid-year update

[Budgie]

As for the suggestion of cheap DC and expensive DCC, not likely and certainly is not what is happening in the US.  The only company I am aware of that sells their product in 2 lines is ScaleTrains, and both the Operator and Rivet Counter lines come in DC and DCC/Sound versions.  Even then it is worth noting that the latest announced product from ScaleTrains is a high end only model.

Yes, it is what is happening in the US. Looking at the October 2018 issue of Model Railroader, I see many examples of "cheap DC and expensive DCC" with nothing in between. Three examples will suffice:

 

p.3, advert, Walthers GEVO diesels: ESU Sound & DCC, $199.99; Standard DC $129.98.

p.12, news and products, Walthers EMD F7A&B diesels: dual-mode SoundTraxx sound decoder $369.98; DC $249.98.

p.62, product review, Athearn HO scale 'early' Challengers: DCC & Sound, $629.98; DC no sound $529.98.

[Mike Storey]

Yes, it is what is happening in the US. Looking at the October 2018 issue of Model Railroader, I see many examples of "cheap DC and expensive DCC" with nothing in between. Three examples will suffice:

 

p.3, advert, Walthers GEVO diesels: ESU Sound & DCC, $199.99; Standard DC $129.98.

p.12, news and products, Walthers EMD F7A&B diesels: dual-mode SoundTraxx sound decoder $369.98; DC $249.98.

p.62, product review, Athearn HO scale 'early' Challengers: DCC & Sound, $629.98; DC no sound $529.98.

 

Fair enough, but those differentials appear to be very similar to those by Bachmann (and the rest) in the UK, with the exception of Hornby's cheap sound cards.

 

I would say again, that the one to watch is Piko, with its three tier "price/quality" newish range. They appear to have the resources to both launch and produce these ranges in significant quantity (judging from the plethora of new product reviews in French mags and the apparent availability of stock from the usual (French) suspects. I would guess others, including our home-brews, are watching to see if this succeeds.

 

I would also hazard a guess that Kader are not that bothered about their sub's (Bachmann Europe) losses, for the moment, having largely engineered them in-house, and having stemmed their corporate profit reductions over the past year or two. They do not make a loss.

 

What strikes me about Bachmann's new ERP, is that, in my admittedly limited experience of the most modern versions, the key success criterion is matching production capacity to demand. The introduction of a new system will not improve upon their poor record unless Kader are willing to (or perhaps even demanding) control the supply side of Bachmann's system. In that respect, Kader must carry the can if Bachmann get stuffed once again.

 

Kader is becoming more dependent on its property income for profitability, although still a relatively low percentage of its total turnover. With the current hiatus in Chinese property markets, it is not clear to me what their long term strategy is, despite their statements in their last annual accounts.

 

We all thought Bachmann had one over on Hornby with its parent's production facilities. Maybe not.

[Legend]

A lot of hypothesis, but a dose of reality might be worth while..https://beta.companieshouse.gov.uk/company/02392907/filing-history

Last years company accounts for Bachmann reports a loss, 2016 reported a greater loss.

The directors report discusses reductions in field operatives in the UK and stock reductions.

Additionally the same including redundancies in Germany.

It does mention delays in China due to restructuring and a new ERP system in October 2018

(if it sounds familiar.. Hornby / Sanda Kan supplier issues also was followed by a new ERP system in 2014/5).

How that impacts company operations, I cannot speculate, the company looks to be heading the right way, but it’s lost £1/2mn in 2 years.

But you can’t look at Bachmann Europe in isolation . You have to look at it in the context of Kader , who own it , who I think recently have been doing pretty well. To an extent Bachmann Europe must be affected by the slow rate of new products from Kader . But someone high up in Kader must be aware of this , after all they are Bachmanns sole supplier . Edited September 9, 2018 by Legend

[philden]

Another interesting development in the USA is the new Bachmann HO ACS-64 electric locomotive:

http://shop.bachmanntrains.com/index.php?main_page=product_info&products_id=6495

 

This is only available with DCC sound. List price is $359, but I bought one for $199. Several on-line stores have them for around that price. It is a joint development with TCS who provide the sound - https://tcsdcc.com/node/1723

 

I have no connection with the makers, but it is a nice model. I suspect that modelers of passenger railways are a minority in the USA, so this might be an effort to streamline the options. At the discounted price it is certainly a good deal.

 

Phil.

[piranha230]

I think the reason they have lost 12 million pounds over 2 years is the fact that many people including myself are not buying brand new models as they are at ridiculous unaffordable prices, they tried blaming rising wages in China, I could buy a brand new Bachmann class 150 for about £67.00 when they first came out, they are now around £250.00, same mould but slightly altered smaller motor enclosure.

[darren01]

I think the reason they have lost 12 million pounds over 2 years is the fact that many people including myself are not buying brand new models as they are at ridiculous unaffordable prices, they tried blaming rising wages in China, I could buy a brand new Bachmann class 150 for about £67.00 when they first came out, they are now around £250.00, same mould but slightly altered smaller motor enclosure.

Well said Sir, I stopped buying new models over two years ago and started buying a lot more second hand one's at shows and my local shop.

 

£19.95 for a Box van, That's the price on the Bachmann site is a joke, A guards Van at £27.95, When Oxford Rail sold theirs at just over £13.00?.

 

I was at a show last year and a Young lad with his Dad where looking on one of the stands, When his Dad saw how much was being asked, i head him say, "I am not paying that much for that, Lets go to the toy shop in town i get you something from there".

 

Don't get me wrong i am not asking for the models to be rock bottom prices, But prices that are not in cloud cuckoo land, If we want to bring new modelers in and not end up with a niche market things have to change.

 

Even my local shop is not ordering any new model in, unless you pre order it, He just can not sell them for the price that are being asked anymore.

 

My other model shop now only sells mostly second hand stuff and is doing well, again due to crazy new prices.

[Andy Y]

But then a visiting Stationmaster looked at Bachmann's accounts - which seem unlike those of many other & commissioners manufacturers to have escaped public RMweb notice in recent months - and saw that their key emphasis was on getting product delivered from the factory so they could get it into the market place and meet the £10 million's worth of orders they have sitting on their books.  Their problem is that they have been unable to get the model railway products they wish to sell and have orders for therefore they have again sustained a financial loss (albeit a reduced one) on their trading for the year ended 31 December 2017.

 

 

A lot of work has been going on behind the scenes as referenced in my opening post to this topic.

 

 

Whilst Bachmann Europe Plc has recorded a small loss in the past financial year, our parent company Kader remains in a strong trading position as outlined in their own accounts.

 

Kader has undergone a major restructuring process and this has returned the company to profitability. Kader have invested heavily in a new model railway only factory which is now coming on stream. This will be a totally dedicated facility which will benefit not just the in-house Bachmann companies of which Branchline, Graham Farish and Liliput are an integral part but also our OEM (Original Equipment Manufacturing) customers in the model railway world.

 

The new facility will enable us to provide more resources than before and will enable us to invest further in bringing award winning models to our valued customers across the world.

 

Dennis Lovett

Public Relations Manager

Bachmann Europe Plc

 

Overall the trading has been healthy with growth in Pocketbond, Woodland Scenics, Proses overcoming the slightly reduced output from the railways side although from the pile of boxes I reviewed last week supplies are coming in quite fast at present.

 

A lot of comment seems to have been on the 94xx and it was evident from the research there was a lot of variation within the class. I've seen the situation where research on one item can be slower than others and also situations where the research files have all been completed but then have to await CAD capacity within Kader to accept the projects. Even then and through the EP stages some things can take longer than others. The whole process can look a bit like this at times from the outside with unforeseen slowing down whilst something else overtakes it.

 

 

None of the items announced at the same time arrive at the same time and putting 2p in the slot to guess which will cross the line first is a gamble.

[Andy Y]

I think the reason they have lost 12 million pounds over 2 years is the fact that many people including myself are not buying brand new models as they are at ridiculous unaffordable prices, they tried blaming rising wages in China, I could buy a brand new Bachmann class 150 for about £67.00 when they first came out, they are now around £250.00, same mould but slightly altered smaller motor enclosure.

 

You're comparing a discounted sale price from almost 10 years ago with a current RRP so the comparison is skewed and, yes, costs have risen (a fact, not a 'blame').

[Ouroborus]

The 150 could recently be had (and may possibly still can) for around £95, so long as you like centro.  A better example for his point would have been the second runs of the 4cep or the nanking blue pullman

Edited September 10, 2018 by Ouroborus

[Dunsignalling]

The 150 could recently be had (and may possibly still can) for around £95, so long as you like centro.  A better example for his point would have been the second runs of the 4cep or the nanking blue pullman

Isn't the fact that it did hang around for so long, and eventually require such pricing to clear the unsold inventory, clearly indicate that there are not enough people do like Centro?

 

The last few sales are likely to have gone to Centro fans snapping up an extra one cheaply and modellers with the inclination and ability to repaint them into liveries they did want.

 

John  

[Dunsignalling]

I think the reason they have lost 12 million pounds over 2 years is the fact that many people including myself are not buying brand new models as they are at ridiculous unaffordable prices, they tried blaming rising wages in China, I could buy a brand new Bachmann class 150 for about £67.00 when they first came out, they are now around £250.00, same mould but slightly altered smaller motor enclosure.

Whilst I'm fully convinced that the price rises of the past few years were inevitable, and that it was the ready availability, of greatly-improved models for little more than we previously paid for (mostly) much cruder UK-built products, that represented the real aberration.

 

However, given that Bachmann's best coaches come out at £55 - £70 each; charging another £110 to £140 to make a pair move around and light up does seem somewhat excessive. Even if they treated a 2-car set as a loco plus a coach for pricing purposes, it shouldn't come out at more than £200. 

 

John

Edited September 10, 2018 by Dunsignalling

[Ouroborus]

I'm not sure of your point.  I also think its unwise to speculate on the popularity of a livery based on its current price.  Those bargain bucket 150's were green or blue/grey 101's not too long ago. 

[Andy Y]

Something else that is worth getting grey cells around (for some) is that the total spend on the hobby is probably not vastly different in 2018 from 2008 and possibly 1998 but there are more manufacturers producing more lines in more liveries than ever. Thinner slices of pie. Which means smaller production runs with costs amortised over lower quantities which means higher prices. Even now when a product announced there will always be someone saying that they won't be buying it because it's not available in a particular livery etc so it seems like vocal demand will always outstrip actual supply. Competition and wishlisting has given us more but there is a price to pay and no manufacturer has the capacity or cash to produce everything in one year they have tooling for.

[Dunsignalling]

I'm not sure of your point.  I also think its unwise to speculate on the popularity of a livery based on its current price.  Those bargain bucket 150's were green or blue/grey 101's not too long ago. 

My point was simply that it's always the versions for which the makers most overestimate the potential popularity/demand that hang around longest and get cleared out cheapest in the end. Simple fact is, whether it was the Centro 150 or a BR-liveried 101, they clearly made too many of them. 

 

John

Edited September 10, 2018 by Dunsignalling

[Andy Y]

Did you take any photos of the 90s in their livery sample. Most interested to see how authentic the pantograph is looking.

 

There is a short bit in the video we made discussing updates with Bachmann's R&D manager in the digital edition of BRM and it was also in last Thursday's free BRM Express email - worth signing up for!

[Dunsignalling]

Something else that is worth getting grey cells around (for some) is that the total spend on the hobby is probably not vastly different in 2018 from 2008 and possibly 1998 but there are more manufacturers producing more lines in more liveries than ever. Thinner slices of pie. Which means smaller production runs with costs amortised over lower quantities which means higher prices. Even now when a product announced there will always be someone saying that they won't be buying it because it's not available in a particular livery etc so it seems like vocal demand will always outstrip actual supply. Competition and wishlisting has given us more but there is a price to pay and no manufacturer has the capacity or cash to produce everything in one year they have tooling for.

True. I am nowadays spending much the same in cash terms but buying fewer individual models. Nothing to do with price sensitivity, just whether I'm inclined to purchase what is being released, given that a fair chunk of what I've ever wanted has already been produced.

 

What did come a something of a shock (though perhaps not a surprise) is how much of my expenditure in the past twelve months has been on items that didn't come in boxes labelled Bachmann or Hornby.

 

John

Edited September 10, 2018 by Dunsignalling

[Fenman]

I think the reason they have lost 12 million pounds over 2 years is the fact that many people including myself are not buying brand new models as they are at ridiculous unaffordable prices, they tried blaming rising wages in China ....

So, both Hornby and Bachmann have lost squillions when charging the current prices for models, but you believe these prices are so high as to be “ridiculous”.

 

Every shareholder has subsidised every model you’ve recently bought, but you want prices to be lower?

 

I can see why lower prices would for you be more desirable, but I’m curious how you think charging lower prices - on which they would then lose even more money - will turn them into profitable, sustainable businesses?

 

As far as I’m concerned the price of a brand new Aston Martin is completely ridiculous and utterly unrealistic, and unless they start charging lower prices I absolutely refuse to buy one of their cars. How very dare they?

 

Paul

[JSpencer]

Something else that is worth getting grey cells around (for some) is that the total spend on the hobby is probably not vastly different in 2018 from 2008 and possibly 1998 but there are more manufacturers producing more lines in more liveries than ever. Thinner slices of pie. Which means smaller production runs with costs amortised over lower quantities which means higher prices. Even now when a product announced there will always be someone saying that they won't be buying it because it's not available in a particular livery etc so it seems like vocal demand will always outstrip actual supply. Competition and wishlisting has given us more but there is a price to pay and no manufacturer has the capacity or cash to produce everything in one year they have tooling for.

 

Re - liveries...

I think people have wised up to manufacturers eventually producing their preferred livery now. It seems odd that we see the top two players producing just 2 or 3 models of an all new class when it is first released and following on with other liveries slowly over time often 20 to 40% more than the initial run. We have been told by many manufacturers that it is also easier to produced several colours in one go than re-setting up the line again a few years later to do just one more member to the class. Even Bachmann admitted as such to ModelRail for the USA tank leading them to expand on the range of liveries and options in the first run.

Yet there is still this somewhat obsolete marketing ploy by the top two of doing a few regular liveries in year one and follow on with more exotic liveries in later years. While Hattons and others just announce a huge number of variants in one hit.

 

Today we should see about 6 liveries in the first year of production.

 

Agree though we are probably spoiled for choice in all new releases being announced all the time. Due to this, my Yearly expenditure has been thrice that of 2008 for the past few years but I think I will return to just twice that in 2019 and maybe the same level in 2020. Although I won't really know for sure until Warley and early 2019 announcements are done.... I suspect many are not able to increase expenditure like I can but equally I will not be alone so total spend may even have increased.

Edited September 10, 2018 by JSpencer

[Andy Y]

 

Today we should see about 6 liveries in the first year of production.

 

 

And split sales further with greater cost per unit?

 

It may make sense if you are one retailer commissioning a product to reduce per unit costs overall but it doesn't necessarily make sense if you are producing for 500 retailers. Also, bear in mind, not all retailers can afford to stock every livery release if they all come at once.

[Legend]

Re - liveries...

I think people have wised up to manufacturers eventually producing their preferred livery now. It seems odd that we see the top two players producing just 2 or 3 models of an all new class when it is first released and following on with other liveries slowly over time often 20 to 40% more than the initial run. We have been told by many manufacturers that it is also easier to produced several colours in one go than re-setting up the line again a few years later to do just one more member to the class. Even Bachmann admitted as such to ModelRail for the USA tank leading them to expand on the range of liveries and options in the first run.

Yet there is still this somewhat obsolete marketing ploy by the top two of doing a few regular liveries in year one and follow on with more exotic liveries in later years. While Hattons and others just announce a huge number of variants in one hit.

 

Today we should see about 6 liveries in the first year of production.

 

Agree though we are probably spoiled for choice in all new releases being announced all the time. Due to this, my Yearly expenditure has been thrice that of 2008 for the past few years but I think I will return to just twice that in 2019 and maybe the same level in 2020. Although I won't really know for sure until Warley and early 2019 announcements are done.... I suspect many are not able to increase expenditure like I can but equally I will not be alone so total spend may even have increased.

But I think too that that shows the market has changed and that the big two have yet to catch up. In modern image liveries are complex. There is no doubt that manufacturers can achieve results that are much better than most can achieve . At the same time , while people would set about a £50 Lima loco and repaint it , they are much more reluctant to do so with a £150 Bachmann/ Hornby one. So as a result enthusiasts would like to have the livery they want supplied and not have to modify a model themselves The perceived wisdom even two or three years ago , was produce a new model in two liveries then release further variants maybe every two years to extend the life of the tooling , manufacturers were frightened they would saturate the market with too many variants too quickly . But that's what we now expect . Hattons have picked up on it with all the different variations of P class , Andrew Barclay, and most obviously the 66. Dapol seem to be following suit with various 68s. So I do expect future new releases to be more variations on liveries but overall smaller quantities of each. I think its also likely that supply will be much more intermittent , it wont be that models stay in the catalogue available for years . They will be available when produced. Maybe there wont be any subsequent production runs , the models will be costed to recover costs on the first run, but if there are further runs it wont be for years after.

 

Having said that modern liveries are too complex I can see a demand for decals/ transfers to update old versions of models as new versions become extremely expensive . As an example I'm thinking Scotrail Turbostar here . I think the new DCC ready Bachmann one is quoted at £270. At that price its an irrelevance to me . But I do already have Scotrail Swoosh and First liveries . The base livery of Spotrail is simply blue .Actually there are base blue ones running around now prior to transfer to Northern. With ribbon glazing its relatively easy to mask and repaint . Railtec do decals for 156 and 158s but I haven't seen ones for 170s. My point being that as prices go up people will look at the older models which will be much cheaper and update them . So I think there could well be an upsurge in railway modelling and cottage industry supplying them, but again with much more specific products eg Spotrail specifically for a 170

Edited September 10, 2018 by Legend

[The Stationmaster]

I think the reason they have lost 12 million pounds over 2 years is the fact that many people including myself are not buying brand new models as they are at ridiculous unaffordable prices, they tried blaming rising wages in China, I could buy a brand new Bachmann class 150 for about £67.00 when they first came out, they are now around £250.00, same mould but slightly altered smaller motor enclosure.

 

Don't go confusing Bachmann numbers with Hornby numbers or misreading a post in this thread.  Bachmann had a loss of £256,000 in 2017 and a loss of £377,000 in 2016 and the sum of those two numbers is way short of of £12 million and at a total of £633,000 is also some way short of £1 million.  And read what they have said about sales.

 

I'm afraid that turning their words and numbers into a massively exaggerated loss to support moans about price increase does debate on the subject no good at all.  In fact if you look at it, and although there are other reasons, the interesting thing is that the loss reduced year on year from 2016 to 2017 and the report makes it very clear that the damage to sales comes from poor supply of model railway product, not price resistance although it does note the overall sales improvement resulting from acquiring lower margin ranges such as Pocketbond.

True. I am nowadays spending much the same in cash terms but buying fewer individual models. Nothing to do with price sensitivity, just whether I'm inclined to purchase what is being released, given that a fair chunk of what I've ever wanted has already been produced.

 

What did come a something of a shock (though perhaps not a surprise) is how much of my expenditure in the past twelve months has been on items that didn't come in boxes labelled Bachmann or Hornby.

 

John

 

I think we have all changed our buying habits and for a variety of reasons.  I have - with one significant exception - pulled back from 'nice to have but it doesn't fit my era/chosen location' and the 'it's WR so I must have it' types of buying which past lower prices facilitated although I will freely admit to some occasional lower priced things in that category still creeping in through the front door.   But that is a change I made some years back.

 

I think that as ever we come back to the double whammy of rising prices (for a variety of very good reasons) and the ending of the worst of deep discounting which had greatly distorted many buyers' perceptions of what model railway items could be bought for (ref Post 134 above).  The simple facts are that manufacturers have had to raise prices to stay in business and they realised too that allowing (in effect) retailers to deeply discount prices was causing distortion so it was effectively more tightly controlled.  In simple terms retail pricing has changed, upwards, for a variety of reasons and it ain't going to revert to 'pile it high and sell it cheap' and the same applies to RRPs (for want of a better acronym) unless a newcomer comes along and seeks to build market share by accepting a lower level of return and profitability (and in any case might have a much leaner organisation with lower overheads to cover).  

 

And, on a more general point, don't forget that research costs money and that can sometimes amount to a lot of money if the full costs have to be covered.

[34theletterbetweenB&D]

... I am nowadays spending much the same in cash terms but buying fewer individual models. Nothing to do with price sensitivity, just whether I'm inclined to purchase what is being released, given that a fair chunk of what I've ever wanted has already been produced.

That must be a major factor in the purchasing of those who are modelling specific subjects. There are still 11 traction subjects without OO RTR models that I will largely purchase just one of if produced, Oxford Rail having bagged one of the three remaining definite multiple purchase items with the N7. So the manufacturer subject choice to seriously engage my wallet is very much more restricted now, after 36 loco classes produced and  all purchased in multiples, between Bach., Heljan and Hornby. There's money still available for the right new product introductions, but the unit sales volume remaining in my case is about 6% of what was available just past 18 years ago, prior to which there were zero (nul, nada, 0) OO RTR locos attractive enough to make OO worth purchasing.

 

...It may make sense if you are one retailer commissioning a product to reduce per unit costs overall but it doesn't necessarily make sense if you are producing for 500 retailers. Also, bear in mind, not all retailers can afford to stock every livery release if they all come at once.

It's a classic 'horses for courses' situation. But I do feel the tactic of not initially releasing the most popular livery choice(s) is getting 'old', and will show to disadvantage against those competitors operating a different business model that enables them to get a high proportion of the entire livery selection onto the market in a short timescale.

[Mike Storey]

At least Bachmann are beginning to justify some of the increased price for their models, with improved facilities/functionality. I was pleased to see the meticulous detail applied to the EP1 for the 2 HAP, the easy interchangeability of the headcodes, and not least the inclusion of a speaker, which is often the hardest aspect of installing sound.

 

Of course, it is arguable whether this suits many, both because it is something that will never be used by a large number of purchasers, and also because the speaker may not be the one of choice for those that will. But, at probably just a few sovs cost to the model, it will save many of us a good deal of sweat and fear, when having to cut up a £200 plus model, to fit a speaker in. I think this is a step forward from offering just installed sound or no sound, as factory based sound cards have often been inferior. So it leaves the choice of sound chip to us.

[JSpencer]

And split sales further with greater cost per unit?

 

It may make sense if you are one retailer commissioning a product to reduce per unit costs overall but it doesn't necessarily make sense if you are producing for 500 retailers. Also, bear in mind, not all retailers can afford to stock every livery release if they all come at once.

 

The thing is though, currently they are not coming all at once and new releases from Bachmann have been slow, some new all new releases taking nearly 6 months to get just three liveries out between the first and last release. My suggestion of 6 liveries in the first run is just for all new loco releases which are few are far between. Re-runs can keep to their current low levels. For certain classes, it could even be REP releases, targeting locos to certain areas (or if 4 classes are coming out covering 4 regions, have a REP version of each one targeting shops for that region only).

Currently they and the 500 or so small model shops are loosing out against bigger shops with their special commissions which today probably outnumber a general release.

 

At the end of the day, a business model adapts to the market (though complex this one has become) and not vice versa. Bachmann had small losses each year due to too few releases, it costs more to set up re-runs rather than run off twice as many variants in the first batch, they face strong competition from new players not playing the same game. They need to recover costs in year 1 not year 2 or 3. There are not too many conclusions. When Modelrail added extra USA tanks to their initial release, I brought more of them. Overall sales were better even if some dilution occurred. I agree that they should not go Hattons extremes of 12-16 releases in one go. But 2 or 3 - in a day when they are very slow to get a release out - is not enough.

[locoholic]

And split sales further with greater cost per unit?

 

It may make sense if you are one retailer commissioning a product to reduce per unit costs overall but it doesn't necessarily make sense if you are producing for 500 retailers. Also, bear in mind, not all retailers can afford to stock every livery release if they all come at once.

How comes Heljan manages exactly that, then? They are one manufacturer that doesn't indulge in the teasing strategy of releasing less popular liveries first, to try to tempt us suckers to buy liveries we wouldn't normally buy.