Hornby's financial updates to the Stock Market

[Legend]

The overall situation in SE Asia could yet derail all Model Railways , and of course much more important things . We obviously all hope there is no military intervention in Korea , but then again we seem to have a madman launching missiles . However even without that you can see relations with China deteriorating. Imagine Trump carries out his threat of imposing sanctions on those supplying N Korea, that's got to be China isn't it. So the political situation there could change quite dramatically . Will trade with China be quite as free as it is now? Where will Hornby be without any manufacturing plants?

Edited September 13, 2017 by Legend

[jjb1970]

I am curious to know what you mean by more responsive as there several senses here. It could mean producing what the market wants. I think a Hornby gave chosen much of its subject matter well - sure more Pecketts could have followed. It could mean lead times, but over the past couple of years Hornby have been faster than most. Only Hattons this year, with their own products have beat them. It could mean making improvements following feedback, here they do respond to feedback maybe not quickly but they do.

Most of the new entrants seem to be small companies and in some cases almost one person bands. This means that there are not the layers between decision makers and those tasked with product development, and those owning the companies can make their own decisions quickly and without having to worry about selling ideas to senior management and a whole internal approval process. Also, the fact that these people have a very clear stake in the success or otherwise of their decisions and potentially face financial ruin if things go wrong is a good incentive to make sound decisions, to keep on top of quality control and be attentive to customers. They can also define their own necessary rate of return on investment and take decisions uncoupled from short term pressures to deliver shareholder value within this reporting year. This should allow these new entrants to be more flexible and responsive, and also you’d expect them to be more on top of QC and making sure something is right. The downside of course if that they do not have the same resources to develop multiple projects, access to finance is probably much more limited (hence recourse to mechanisms such as crowd funding and/or staggered payment with deposits taken up front) and do not have the same resilience should a project go wrong.

Some of these new entrants seem to be working with more established suppliers such as Rapido or are working directly with Chinese manufacturers. Rapido are playing quite a smart game as their decision to design and produce models for other companies for the UK market removes commercial risk for Rapido whilst allowing access to design and production resources that their partner companies might not otherwise have. So it is a mutually beneficial symbiotic relationship. Working with a company like Rapido would I expect be more expensive than going directly to a Chinese manufacturer but should also be a lot less fraught with potential pitfalls and stress.

[The Stationmaster]

Point is though that with model prices rising faster than wages (and other thing like increased rent etc digging into disposable income), there is a limit to how many models people can buy. As long as there is a static (or more likely declining) number of active purchasers in the hobby, the number of sales is also limited. Which is why Hornby (and the other manufacturers - not just of rolling stock, but all the other suppliers too) need the hobby to grow, and that means making it more affordable.

 

I don't think 'making it more affordable' is necessarily the only route (and indeed might even turn out to be a dead end) when it comes to making the hobby grow.  We all tend to think of things from our own perspective and even if we wider that perspective a little it is still mainly one of people who have already committed to the hobby in one way or another and are already spending within it.  Interestingly Bachmann seem to be doing alright with their revised pricing policy, which has seen prices increase rather than fall, so clearly there is more to the overall situation other than a matter of price, and price in any case is not the same thing as perceived value.

 

The problem Hornby, and others, face is how to find and develop new markets and then how to channel or lead those new markets towards products offering the best rate of return.  Thus reducing prices could even have the opposite effect!   I don't know how Hornby, and others, can really solve this problem - some new markets are very simple to enter and even if potentially limited can offer good levels of return if tackled in the right way (e.g. going into r-t-r 0 gauge would probably meet that remit) but probably don't broaden the market very much.  So do you go for something that brings in youngsters - arguably a very sensible course - or do you go for 'older people' who are getting past many of life's larger personal and domestic costs and have money to spend and are looking for something to spend it on; or do you do both?  But both of those examples put you up against serious competition - going for youngsters and it' a battle with computer games and 'phone apps etc while going for the greying £ pits you against cruises and holidays.  So you potentially end up having to spend a lot of money on marketing, and even more on promotion, in two totally different market areas.  When you're looking at that sort of level the somewhat cluttered and ambiguous impression given by the Railroad range becomes something of minor significance and, probably, relevance.

[adb968008]

The overall situation in SE Asia could yet derail all Model Railways , and of course much more important things . We obviously all hope there is no military intervention in Korea , but then again we seem to have a madman launching missiles . However even without that you can see relations with China deteriorating. Imagine Trump carries out his threat of imposing sanctions on those supplying N Korea, that's got to be China isn't it. So the political situation there could change quite dramatically . Will trade with China be quite as free as it is now? Where will Hornby be without any manufacturing plants?

No Chance.

There might be a lot of shouting, but China won't risk its economy to save North Korea. NKorea might be the protected spoilt child in the class, but if it needs a slap it will get one if they go too far, China will do it long before Trump threatens.

 

As always it's not the "what" they are doing, that is the question but, why are they doing this ? .and why now ?... Almost always it's about food, money and recognition, once they get it, they'll put the nukes back in the silos again. You could almost treat North Korea like a typical unloved trade union, sulks, demands, strikes then compromise until next time.

 

The real solution to North Korea is investment, in materials, manufacturing, trade and education, but first the rulers need to trust and overcome fear that opening up brings, but the fear isn't misplaced, after all most communist dictatorships' leaders end quite badly.. something the Chinese too are worried about still.

China is the natural country to do this, but unfortunately China's interests are in countries with more lucrative resources to exploit.. Africa, SE Asia.. North Korea doesn't have much to offer (apart from potential Nukes to sell to US enemies, which is why they do what they do).

Edited September 13, 2017 by adb968008

[Legend]

No Chance.

There might be a lot of shouting, but China won't risk its economy to save North Korea. NKorea might be the protected spoilt child in the class, but if it needs a slap it will get one if they go too far, China will do it long before Trump threatens.

As always it's not the "what" they are doing, that is the question but, why are they doing this ? .and why now ?... Almost always it's about food, money and recognition, once they get it, they'll put the nukes back in the silos again. You could almost treat North Korea like a typical unloved trade union, sulks, demands, strikes then compromise until next time.

Hope you are correct , and certainly agree there is a lot riding on it. Probably China will draw back from ruining its economy, but it does assume everyone plays ball and they are not exactly seeing eye to eye at the moment . What with renewed Chinese interest in the South China Sea , the Spratlys etc, you can see there is considerable Political risk. Would you have all your eggs in the Chinese basket? Small currency fluctuations, or duty increases could deal a major blow to several companies Edited September 13, 2017 by Legend

[adb968008]

Hope you are correct , and certainly agree there is a lot riding on it. Probably China will draw back from ruining its economy, but it does assume everyone plays ball and they are not exactly seeing eye to eye at the moment . What with renewed Chinese interest in the South China Sea , the Spratlys etc, you can see there is considerable Political risk. Would you have all your eggs in the Chinese basket? Small currency fluctuations, or duty increases could deal a major blow to several companies

If Asia kicks off, we've more to worry about than model trains.

 

But in reality it's not quite Germany in the 1930's.. China hasnt got a sparring partner, people aren't threatened and it's not about land (as its seawater), if they took the shoals (they have already), but if they pressed to close the sea lanes (which would hurt their economies too), then there really isn't anything anyone local can do about it, not even if they all formed an alliance.

 

China doesn't care about piracy or a bunch of sand banks, and neither does anyone else, it's oil under neath them they want, so whilst everyone stamps their feet, the Chinese won't do anything to close the seas, and so will get the oil they want... (and when it's gone, or none is found) most likely they'll cease pressing their claim again... The Americans have no real interest here so beyond sailing through it, they too won't do anything either and there's no population at risk.

 

Put it differently, if the Chinese weren't making a claim, it would be US companies moving in to drill the oil, it certainly wouldn't be anyone local due to the sheer logistics and investment required of it...which is why the oil hasn't yet been drawn before.

 

Personally I find it more concerning the WW2 battleships in the region have been raised and sold for scrap, including HMS Prince of Wales and Repulse, several Dutch ships have completely gone from the sea bed ! Due to their proximity to land. If the local navy can't protect its own shoreline, what chance have they hundreds of miles out in open sea ?

Edited September 13, 2017 by adb968008

[The Johnster]

We haven't been blown up yet, and this latest face off is more than a week old.  If Trump and the North Koreans can't arrange a Nuclear Armageddon between them in over a week, I'd say we're fairly safe (you can quote me as you're being incinerated if you like).  China needs to make profit out of trading with the rest of the World in order to keep it's population happy with a rising standard of living, and as more cash is to be made for them that way than frying everything, will continue to restrain Korea from the ultimate idiocy, and nuke them themselves in order to do it if they have to. 

 

The existing model railway trading situation is safe for now (but I would expect a 40 or 50% increase in prices over the next couple of years, which we'll pay and enjoy moaning about, followed by stabilisation as the Chinese economy finishes it's task of providing it's new middle class with cars and holidays and hits market saturation and a credit squeeze).

 

But only for now, mind...

[Mike Storey]

I am not sure if this thread has not already ventured too far out into the "WW3" thread, although I see the connection with disruption to world trade etc etc and Hornby's prospects.

 

If we dwell there a moment, a much more realistic and likely threat is the debt bubble, both there and here.

 

Hornby has brought its corporate debt under much more manageable control, albeit through a rights issue and much reduced capital investment. The market is however threatened by a personal finances debt bubble in the UK, about which the BofE seems very concerned. That potential problem is delaying them in raising interest rates, along with the hard-to-explain lag of earnings rises in a time of high employment (please let's leave theories about cause to another thread). The GBP will not rise sustainably back to rates we have become used to, until interest rates rise (or some other, unpredictable reason occurs). If they do raise rates, even marginally, then UK personal buying power reduces. If they don't, then UK corporate buying power worsens as the pound dwells or drops further. Lose-Lose. The one hope and expectation during this cheap money period had been in a significant rise in investment in efficiency improvements. That has not happened in the UK, partly due to cheap wages (and a large degree of short termism by investors). Raising wages, whether by a shortage of workers or by removing controls, will simply allow the BofE to raise interest rates, improving the exchange rate and thus making imports more affordable again. At what point does it become attractive to a UK company to invest in new production capacity in this vicious circle (to break the dependency on imports), rather than pay out better dividends? Go Keynes (National Investment Bank and all that stuff) or Go Friedman (Market will decide and deliver). Answers to the Rt Hon P Hammond on a postcard please.

 

Meanwhile, over in China, there is an even larger debt bubble iceberg, both corporate and increasingly personal. The state can more than afford to cover this from its reserves, but most of those are in dollars. If the bubble bursts, the dollar plunges and the pound (and most other major currencies) almost certainly with it. Buying power reduces, orders slow, and those Chinese companies on the edge will go down. Having already seen the vulnerability of companies producing model railways in China, not just from this but also from internal, competing demands for skilled labour, speculative development, and so on, such companies may well be the first against the wall.

 

Hornby (and Phoenix) must be pondering all this, or at least their advisors and bankers will be. Any gamble is not just in new product lines or marketing strategy. Whether to go for a P2 or a Q (or whatever) is almost certainly near the back of their bottom clenching pile of issues. Dapol have invested in a bit more UK manufacturing capability, and Hornby have brought a smidgen of products back home. What to do next? I do not envy their challenge and I admire their tenacity. Lesser people would have already broken up the company and sold the widows. They are not without sin, but cast ye the first stone, and other such homilies......

[Gerald Henriksen]

I would like to quote a line from the 2017 Hornby Annual Report, which should put a lot of the angst and wringing of hands about the future of hobby into perspective:

 

 

Building on the strong profitability of the Hornby and Airfix brands (page 7)

[Finsbury]

While I am not a financial whizz, I remember not so long ago China demanding steel, so much so that scrappage schemes got rid of many valuable motors. Such demand resulted in a £300/ton valuation for recycled steel. We set up machinations to ship the stuff almost daily.

China then valued it's steel reserves at this price and got massive loans against this eleventy trillionty pie in the sky, whilst sitting on a pile of rusting Allegros, Cavaliers and Escorts. I guess there is a silver lining.

State subsidised postage will end, the common worker will soon be demanding a decent motorcar, costs will spiral.

We will remember moaning about cack three poles' with fondness.

And that goes for all of the 'manufacturers'.

£££

 

Interesting times.

Edited September 13, 2017 by Finsbury

[adb968008]

Wages aren't rising because jobs are not being created.

They are just being moved.

 

So 100k Europeans people leave the country, 75k take their jobs, 25k jobs disappear as there's no demand, due to uncertainty 50k high wage contractors switch to lower paid more full time..net result wage figure averages show no growth.

(Which means the tax intake Will go down, even though more people are working).

 

Yes more people are working, but in general they are earning less and spending more.

Then comes inflation at which everyone is a loser.

 

How about trains,

It's fairly clear there's been a mass amount of caution since Brexit all manufacturers cut back (Heljan hasn't announced any new oo tooling at all for some time, once the 47xx and 07 are out they've nothing new announced in the oo pipeline).

 

There was an assumption post Brexit vote the pound would rebound, but reality is the pound is in long term decline with negative outlooks, as such again outlook is down.

Rather than more new models coming, I suspect the 2nd hand market could end up swamped as people pay down debts. The hobby will enter the 1980's again, I'd wager the foreign companies will leave the market before the British ones do. Hornby will be here, I suspect others may not, Hornby may even be able to be acquisitive of toolings in this situation if manufacturers conclude the UK market is permanently done for them.

 

As for Brexit, this whole negotiation in Brussels is nothing more than a stage show, no huge future deal will come from it as neither party really wants one, they are just playing to the cameras. Small deals on people etc probably will, but I expect the outcome will be a "leave it as is" arrangement as there isn't an alternative...

 

EU decisions are always about kicking the can down the road, and the uncertainty hurts investment in the U.K. More than it does the EU, they can afford to stall and let us continue to bleed, the longer it goes on the more decisions will swing in Europes favour, as its got more certainty, sure after Brexit we may be better positioned, but we'll be economically poorer before it.

 

As for interest rate rises... it's a loaded gun awaiting the panic, when the government is forced to defend the £, for servicing of its own debts and market /global confidence in the U.K.

 

https://en.m.wikipedia.org/wiki/Black_Wednesday, a rise from near zero to 5% overnight will hurt less than a rise from 5% to 10%, and chances are they could get away with "a return to normal levels" with only damage to the housing market as a consequence (and damaging the housing market is government policy right now anyway) this be able to sustain this new rate going forwards.. the £ won't rise..it'll stay the same as stopping it sinking in a panic will be the reason for firing the interest rate weapon.. of course it hurts creditors with bad debts, but isn't those cash reserves what QE was created for ?

Edited September 14, 2017 by adb968008

[Mike Storey]

I would like to quote a line from the 2017 Hornby Annual Report, which should put a lot of the angst and wringing of hands about the future of hobby into perspective:

 

Nice but no cigar for Hornby on this statement. You can increase "profitability" by cutting investment on new tooling (as with Hornby during 2016/17) or slash production down to a core line of best sellers (as with Airfix in the same period). Good for short term stability and investor confidence, but not necessarily sustainable. That is why we wait with interest to see what forward strategy Phoenix allow Hornby to develop. I agree with many others on here that we are likely to see a narrower product range for Hornby trains (if not for the accessories like Skaledale - or is that the Bachmann brand? Anyway, that stuff which is expanding exponentially). The question remains which way to go with the remaining product development - high spec, high price, or pile em high sell em cheap, or continue with the mixed bag we have seen lately? Dunno, which is why I have not been invited to sit on their Board.

[The Johnster]

I suspect we will see a new brand, actually Hornby but renamed in order to concentrate either on the high end quality stuff or the more basic and outmoded tooling Railroad.  There is too much of a crossover at the moment, the Railroad Crosti 9F commanding a premium model price for instance.  The Railroad brand is most likely to be re-inforced and marketed with less reference to or emphasis on it's Hornby parentage, 'Railroad (by Hornby TM)' sort of thing, as opposed to 'Hornby Railroad'.  This is what will be marketed, possibly by concessions, through chain stores, Toys r us, garden centres, mail order catalogues and the like. 

 

But there will always be Hornby train sets for xmas, consisting of Flying Scotsman and 2 teak coaches...

[RJS1977]

I don't think 'making it more affordable' is necessarily the only route (and indeed might even turn out to be a dead end) when it comes to making the hobby grow.  We all tend to think of things from our own perspective and even if we wider that perspective a little it is still mainly one of people who have already committed to the hobby in one way or another and are already spending within it.  Interestingly Bachmann seem to be doing alright with their revised pricing policy, which has seen prices increase rather than fall, so clearly there is more to the overall situation other than a matter of price, and price in any case is not the same thing as perceived value.

 

The problem Hornby, and others, face is how to find and develop new markets and then how to channel or lead those new markets towards products offering the best rate of return.  Thus reducing prices could even have the opposite effect!   I don't know how Hornby, and others, can really solve this problem - some new markets are very simple to enter and even if potentially limited can offer good levels of return if tackled in the right way (e.g. going into r-t-r 0 gauge would probably meet that remit) but probably don't broaden the market very much.  So do you go for something that brings in youngsters - arguably a very sensible course - or do you go for 'older people' who are getting past many of life's larger personal and domestic costs and have money to spend and are looking for something to spend it on; or do you do both?  But both of those examples put you up against serious competition - going for youngsters and it' a battle with computer games and 'phone apps etc while going for the greying £ pits you against cruises and holidays.

 

The difference is - bring someone in their 60s into the market and you have a customer for maybe 20 years.

 

Bring a child into the market, with the right items available for them/their parents to expand the collection into a sustainable hobby, and you may well have a customer for 70 years.

[Clearwater]

The difference is - bring someone in their 60s into the market and you have a customer for maybe 20 years.

 

Bring a child into the market, with the right items available for them/their parents to expand the collection into a sustainable hobby, and you may well have a customer for 70 years.

Yes but you need to consider the timing of the spend. If a 60 year old spends £200 for the next 5 years, that will yield £1000. A 10 year old spending £50 will take 20 years to spend the same amount. Even without considering discounting the money to today's prices (and Hornby's discount rate will be 15-20%), the near term cash from the higher spender, albeit with a shorter remaining life, is more valuable. If you were to discount, then the break even between the two spend profiles is going to be even longer.

 

David

[manna]

G'Day Gents

 

I've just done a few calculations, it may be faulty, so bear with me, back in the mid 80's I bought a Hornby B17 for approx 35 pounds, now the 'Average' wage was 8,890 pounds per year, so someone working in a factory would be earning about a 100 pounds a week, Today a factory worker in China earns about 107 pounds per week, but the full price for a B17 is about 150 pounds. so it begs the question, "Where is all the Profit going"

 

manna

[Gerald Henriksen]

Nice but no cigar for Hornby on this statement. You can increase "profitability" by cutting investment on new tooling (as with Hornby during 2016/17) or slash production down to a core line of best sellers (as with Airfix in the same period). Good for short term stability and investor confidence, but not necessarily sustainable. That is why we wait with interest to see what forward strategy Phoenix allow Hornby to develop. I agree with many others on here that we are likely to see a narrower product range for Hornby trains (if not for the accessories like Skaledale - or is that the Bachmann brand? Anyway, that stuff which is expanding exponentially). The question remains which way to go with the remaining product development - high spec, high price, or pile em high sell em cheap, or continue with the mixed bag we have seen lately? Dunno, which is why I have not been invited to sit on their Board.

 

Admittedly no context for previous years, and not just Hornby, but:

 

 

• Brands supported by £1.8 million of capital investment in new tooling

 

But I just had a quick look at past Engine Blogs and in the last year (starting Sept. 2016) Hornby announced the following new tooling:

 

1) SECR H Class

2) AA15 Toad

3) Class 800 (big project)

4) Class 87

5) Modified Princess Coronation

6) Mk1 BSO / Mk1 FO

 

And re-engineered B17 (minimal amount of new tooling for the Railroad range).

 

That looks pretty respectable to me.

[Gerald Henriksen]

I've just done a few calculations, it may be faulty, so bear with me, back in the mid 80's I bought a Hornby B17 for approx 35 pounds, now the 'Average' wage was 8,890 pounds per year, so someone working in a factory would be earning about a 100 pounds a week, Today a factory worker in China earns about 107 pounds per week, but the full price for a B17 is about 150 pounds. so it begs the question, "Where is all the Profit going"

 

 

A couple of points:

 

1) each model now requires more money to make compared to the 80's - more parts resulting in more material, more assembly time, more prep (ie. paint) and manufacture time, and higher molding costs (this will be the big one).

 

2) while China's costs may be approx to the 80's, there is still a lot of stuff in the UK (USA, etc) - head office, distribution, design, research, warranty support, plus the retailers - and they are all paying current western costs (not just wages but insurance, land cost (mortgage or rent), etc.

[Gerald Henriksen]

The difference is - bring someone in their 60s into the market and you have a customer for maybe 20 years.

 

Bring a child into the market, with the right items available for them/their parents to expand the collection into a sustainable hobby, and you may well have a customer for 70 years.

 

I am guessing the UK is the same, but the stats for the hobby in the US (I believe from the NMRA) is that it has always been a hobby for the 40+ demographic.

 

Yes, there are always some in the various age groups, but for the majority the hobby gets entered once the big costs (in money and time) are done with - children gone, house paid for, higher wages.

 

The biggest thing is that the hobby, over the decades, has continued to evolve and change with the times, and this has also consistently resulted in complaining - in the past in magazines, now online - that the hobby is dying simply because the previous generation don't like the changes.

 

While it may be hard for some to accept the idea of people entering the hobby as a kid via a trainset is dead - kids today simply have far too many other options for their time than previous generations.  Yes, there will still be some, but for most it won't happen.

 

The flip side though is that things like the Internet offer many new ways of discovering and getting into the hobby, thus offsetting the loss of the trainset at Christmas.

[RJS1977]

 

 

While it may be hard for some to accept the idea of people entering the hobby as a kid via a trainset is dead - kids today simply have far too many other options for their time than previous generations.  Yes, there will still be some, but for most it won't happen.

 

 

 

I've attended plenty of the smaller shows over the last few years and they seem to be well attended with lots of families with young children who want to get into the hobby. But they don't. Why? Because the parents see what's for sale on the trade stands and decide it's too expensive a hobby! If they do get a trainset, it gets played with a few times and then packed away because there aren't the affordable after-market extras (more locos, accessories etc) to expand it.

 

I - and I am sure many like me - are trying our utmost to encourage youngsters into a hobby that's more productive than sitting in front of a screen or kicking a piece of leather around but we are constantly being undermined by the manufacturers and the "the more expensive the better" brigade. 

Edited September 15, 2017 by RJS1977

[GordonC]

I am guessing the UK is the same, but the stats for the hobby in the US (I believe from the NMRA) is that it has always been a hobby for the 40+ demographic.

 

Yes, there are always some in the various age groups, but for the majority the hobby gets entered once the big costs (in money and time) are done with - children gone, house paid for, higher wages.

 

The biggest thing is that the hobby, over the decades, has continued to evolve and change with the times, and this has also consistently resulted in complaining - in the past in magazines, now online - that the hobby is dying simply because the previous generation don't like the changes.

 

While it may be hard for some to accept the idea of people entering the hobby as a kid via a trainset is dead - kids today simply have far too many other options for their time than previous generations.  Yes, there will still be some, but for most it won't happen.

 

The flip side though is that things like the Internet offer many new ways of discovering and getting into the hobby, thus offsetting the loss of the trainset at Christmas.

 

I think a number of those previous factors will have changed now too though. With the rise in house prices will people in their 40s still have their house paid off? Increasing wage multipliers in mortgages will shift that time when the house is paid off to be later in life if at all. There may not come a bumper sales period as purchasers get older now.

 

I do fear for the hobby as I'm not sure where I can see new entrants coming from - if kids aren't interested these days will they suddenly take an interest later in life? also I dont find the prototypes as interesting on the modern railway, I miss the loco hauled era and units get more difficult and expensive to model with the rainbow of liveries

[Clearwater]

@rjs1997

 

I think the Hornby Junior set, which is apparently now available, should fit that market very well. At £40 it's not too expensive and I would hope avoids the problems of a true trainset (eg wiring). Probably worth noting that brio and similar wooden railways sell very well. As do the various Thomas systems (take and play, track master as well as wooden railway). A new wooden starter set is often £50+ however the add ons are from a few pounds all the way through to the hundred plus mark. Given Hornby=toy trains for many people, the brand should give them an advantage over the marklin my world system.

 

If I were a retailer attending a show, I'd have this new item out on display and ready to be played with, with a "show special" offer and several in stock

 

David

[Legend]

I think RJS1977 makes a really good point . There might be some cheap train sets around (although not that cheap compared to some other activities) . But how fulfilling is it having an 0-4-0 with three trucks running around an oval, compared to say an XBox game or computer game? Then to expand the set , costs considerable money. Track is often overlooked but that's pretty pricey . Then a larger Railroad tender engine to run on it , what £60. The cost just keeps on mounting. And I think to a certain extent the hobby has been hijacked by those wanting increasing fidelity and accuracy at any price e.g. lights in coaches , DCC In coaches . It really just drives costs up. Ok for the top end of market , but not for starters . I think there are a lot of people at exhibitions, generally interested, enthusiastic about building a model railway, whose hearts sink when they realise the prices. They then go onto do something else instead.

 

And I'm sorry I don't think this Hornby Junior set is going to bring a renaissance to Trainsets. How do you expand it? It's a train going round in a circle with a battery and switch on it.

Edited September 15, 2017 by Legend

[The Johnster]

Yes but you need to consider the timing of the spend. If a 60 year old spends £200 for the next 5 years, that will yield £1000. A 10 year old spending £50 will take 20 years to spend the same amount. Even without considering discounting the money to today's prices (and Hornby's discount rate will be 15-20%), the near term cash from the higher spender, albeit with a shorter remaining life, is more valuable. If you were to discount, then the break even between the two spend profiles is going to be even longer.

 

David

 

 

No.  A 60 year old at £200 a year (me) will be dead in about 20 years, 20x200=£4k.  A 10 year old spending £50 a year will be spending £200 a year at a very conservative estimate by the time he is 20, and continue until he dies at 80, 60x200=£12,000

 

Unless of course he discovers girls in his teens, then he's f**d for the next 40 years at least. Literally.

[The Johnster]

G'Day Gents

 

I've just done a few calculations, it may be faulty, so bear with me, back in the mid 80's I bought a Hornby B17 for approx 35 pounds, now the 'Average' wage was 8,890 pounds per year, so someone working in a factory would be earning about a 100 pounds a week, Today a factory worker in China earns about 107 pounds per week, but the full price for a B17 is about 150 pounds. so it begs the question, "Where is all the Profit going"

 

manna

 

Average dividends on shares have remained vaguely constant in terms of percentages but the amounts have risen in accordance with inflation.  As have raw materials and production costs; the modern B17 is a better model than the one you bought in the mid 80s but costs proportionally more to produce.  And wages are rising in China.