Hornby's financial updates to the Stock Market

[Legend]

All been covered by Jason Shron in past issues of Model Rail. From memory, a Rapido passenger car with around 300 parts takes 8 hours to assemble.

 

That's extreme and by no way typical. At the other end are probably Railroad Mk1s with no more than 12 parts and Bachmann coaches, I think the Stanier Portholes are something like 50 . So the labour time and hours is not so huge.

 

The trick of good design is to minimise the number of parts while making the product attractive to the customer. I'm not exactly against the idea of design clever , but where Hornby went wrong was a) promoting it and b) applying it stupidly, so you end up with obvious issues like the moulded handrails on the Saint. On the other hand moulded door handles on the 2Bil and cable runs were well executed and the general modeller accepted them

[Ian Abel]

But once again - a pre-order....................................

 

It should have been on the shelves surely?

 

 

Emma

Certainly agree, but hardly surprising since they had 50 YEARS to plan for the Winston Churchill funeral pack/train and still managed to deliver that A YEAR LATE!

 

Looks like with the price for the new Flying Scotsman they are planning to solve their monetary crisis with one item too

[Joseph_Pestell]

Kickstart/Katy

 

I think the time taken to assemble and paint a model is significantly more than you think.

 

Try buying yourself a cheap plastic loco kit and see how long it takes you to put this together and paint it.

 

Now divide that time by 2 to allow for automation of some of the assembly processes.  There has to be debate about the level of automation possible with short production runs, but I suspect there will be things like assembly jigs that a 5000 run allows and that a one off does not. 

Now divide by two again for  "familiarity effect".  The more you do the quicker you can do them.  Still rather a long time I think.

 

In a recent-ish BRM  Mr Tony Wright of this parish timed the construction of a small tank loco (SECR P class??)  and IIRC it took him around 40 hours.  Now admittedly this was white metal and not plastic, but soldering and glueing take very little difference in time.  The chassis construction will have been a bit more complex than an rtr model but probably not that much more.  If we now use that as a base and divide by 2 for the automation effects (and I know that Tony does use some jigs for assembly himself, so the complications of the chassis are ironed out here), and divide again by 2 for the familiarity effect (and again Tony has built so many locos that I am sure he can do it much quicker than me), we come down to a construction time of around 10 hours (plus/minus).  At UK minimum wage that is around GBP70 labour, plus materials, plus packaging plus distribution.  So say a delivered cost of GBP85.  Hornby make 45% margin on their overall operations, so this would be a sales price (to the trade) of GBP123.  Traders margin 10% - gives a retail price of GBP135 - for a tank engine.

 

Also consider that Hornby in their design clever phase chose to simplify assembly by moulding in ventilators and hand rails etc.  This was to help keep costs down, so clearly such processes suck up production time.  Otherwise why would the risk the wrath, that actually befell them.

 

I can understand why people are keen that production should be brought closer to home and to a measured level I agree (as I suspect do Hornby), but at current labour cost levels I see no imminent likelihood. 

 

EDIT:  after half an hour's reflection I can see there are some major problems with my calculation.  Namely I have only included the minimum wage element in the cost of labour. In fact as employer, Hornby would have to make additional payments - pension contributions, employers NI etc.  So my GBP135 must be regarded as too conservative!

 

It's a false comparison: an industrial product designed for easy assembly vs. an artisan product designed for assembly by an individual hobbyist.

 

But certainly, we have to allow that the greater detail that modellers want in the 21st century does add exponentially to assembly time. Go back to the models of Margate days, and I doubt if any of them had more than an hour of manufacturing time and no more than ten minutes of assembly time. Don't believe me? Take an old Hornby model. Strip it down to its component parts. See how few there are. Then put it together again. You won't be as quick as one of the girls in the factory (they had jigs to help them) but it won't take you long. One of the more recent detailed models would be en entirely different matter.

 

Edit to add: In my retail days, I  used to do a lot of repair work which is what I am basing this on. I could strip down a Jouef loco and reassemble in well under an hour - and some Jouef were a nightmare because poor engineering design meant that parts could be put back in the wrong way round. Something well-engineered like Minitrix was much easier and quicker.

Edited February 25, 2016 by Joseph_Pestell

[Legend]

Funny you should mention this, Hornby must have read your mind   

 

http://www.Hornby.com/uk-en/shop/locomotives/steam-locomotives/flying-scotsman.html

 

Nope. That's an LNER Scotsman. There is a BR Scotsman there with support coach for £174 which you can preorder. My point is they haven't got a replica of what was running today (and it has been known about for some time) available for sale to the interested public. So they miss out again.

[wombatofludham]

People have been predicting the end of railway modelling for decades.  In the 80s when I was doing my degree the then new computers (ZX Spectrum, Commodore 84 etc) were going to be the death of traditional toys and hobbies.  Then ten years ago Microsoft Train Simulator was going to kill the hobby.   I was involved in creating content for it and made a number of friends through the community.  We've all come back to railway modelling and very rarely fire up the simulators today.  The limited exhibition experience I've had has shown to me there are young children interested in trains, who have a train set or layout, and will no doubt drop it when they get older and have to concentrate on schooling/college/career but will almost certainly come back to it when they get older.  Just like I did and my modelling friends did.

 

Considering my generation would never touch traditional model railways because of the growth of computer technology, according to the pundits of the time, five of my friends are active modellers and a couple more are thinking about it.  Frankly I take predictions or punditry on the demise of the hobby with a mine's worth of salt.

[Andy Hayter]

Oh dear

 

It seems my example which was meant to be indicative has been taken far, far too literally.  I thought I had made that obvious by using times quoted as "-ish"  and "plus/minus".

 

Equally there is no justification for using factors of 2 for mechanisation or for familiarity.  It was simply a means of getting towards what I hope is an indicative number.

 

However to answer a few points.

 

Is a kit directly comparable to an rtr construction?  No of course not.  To start with the rtr manufacturer does not start with any parts.  Just metal in ingots and plastics as chips.  probably the only finished items are the motors, gears, screws and the axles.  Although moulding and milling processes are highly mechanised, they still require labour to feed the machines, take off the sprues, regrind/re-melt the sprues to feed back into the process and check the mouldings for quality.  So yes the assembly process is simplified, but there are many steps before you get to that point and there is labour cost involved. 

 

The assembly process will be split between several workers, but it does not matter whether it takes one worker x hours to  assemble a model or x workers one hour, you still pay for x hours labour. 

 

Traders' margins?  This is what we are being told Hornby have reduced the margins to - and if a trader then discounts that margin would be cut.

 

VAT?  Good point - Something I forgot completely about.

 

So please do not take my numbers too literally, the objective was to show indicative labour cost input to producing a model and why  UK  production is currently an unlikely possibility. 

[Coryton]

 

People have been predicting the end of railway modelling for decades.  In the 80s when I was doing my degree the then new computers (ZX Spectrum, Commodore 84 etc) were going to be the death of traditional toys and hobbies.  Then ten years ago Microsoft Train Simulator was going to kill the hobby.   I was involved in creating content for it and made a number of friends through the community.  We've all come back to railway modelling and very rarely fire up the simulators today.  The limited exhibition experience I've had has shown 

 

Some years ago I went to a big model exhibition. There was a display where people sat in front of computers running train simulators. Despite a big "Do ask us questions" sign, I didn't see any signs of interest from the passers-by, whereas elbowing your way in to get a space to see some of the real layouts was difficult.

 

(Edited because I somehow quoted the wrong post).

Edited February 25, 2016 by Coryton

[dibber25]

Anyone who thinks assembling a modern ready-to-run loco is a simple 'assembly' job that takes very little time, should look at the exploded diagram with DJM's Kernow 'O2' (a mind-boggling number of SMALL components) or the parts list with Heljan's 2-8-0. The only way to produce such models quickly is to have lots of people doing it, and that's where the cost escalates. The Rapido models that I quoted are merely models of the standard which we expect nowadays. Hornby Railroad Mk1s are a design-clever product deliberately engineered to be cheap to assemble, but design clever got the thumbs down. We either have models with separate parts and pay the cost of assembly or we have design clever. Cut corners and speed up the assembly process on complex models with lots of parts and you get the Quality Control issues that we've been seeing lately, as manufacturers try to do the impossible. (CJL)

[Legend]

I think that could be precisely the point Chris. We now demand so much detail that we have effectively priced these models out of the more general market and in some cases even the more specialist market too . I completely accept that the O2 is a fine model and I can also see the fine detail. It must take a long time to assemble with some very intricate parts. But not all models are like that or need to be. If you need an O2 for your region /period you would buy it. But for the person who just likes nice models and for which it's a discretionary buy , he probably won't spend the money. Hornby are caught between a rock and a hard place. They can produce these specialist models at a price or more general models , which might appeal to the discretionary buyers. As I've said before Design clever was probably a reasonable idea , just badly executed and it went too far (handrails on Saint)

 

Personally I'm happy with my Railroad Mk1s . If there was a train pack of a Railroad Flying Scotsman in BR Green with three crimson and cream coaches available now, I'd bet it would sell well in the general market.

Edited February 25, 2016 by Legend

[Talltim]

Nope. That's an LNER Scotsman. There is a BR Scotsman there with support coach for £174 which you can preorder. My point is they haven't got a replica of what was running today (and it has been known about for some time) available for sale to the interested public. So they miss out again.

They've delayed the release because they didn't know how many trespasser figures to include in the set until today

[Willie Whizz]

I've been having a bit of a think about this the last few days based on other things I've read in this thread. What are the factors which encourage a child from playing with a train set to being a fully-fledged modeller?

 

First of all of course, there has to be parental encouragement ... 

 

Conversely, what are the factors which discourage a child from developing into a fully-fledged modeller?

 

Apart from the usual suspect of the "quick fix buzz" of computer games, I would suggest that among the factors would be (in no particular order):

• Less exposure to railways generally these days - except perhaps in the South-East many children these days live miles from an active railway line and seldom, if ever, travel by train.  (I live in a fair-sized city, not the Back of Beyond, but I doubt my son who is now over 30 has got far into double figures for rail journeys even as an adult; as [say] a 10-year old you could have counted them on one hand).
• 'Parental encouragement' may not be forthcoming if it involves moving-on from a dismantlable train-set oval of track to a requirement for two or more sizeable baseboard(s) that need to be stored away from scope for damage and/or erected on a semi-permanent basis, or bracketed to walls.  Modern houses in particular are increasingly tight for suitable space, especially in areas away from the main bedroom.
• 'Parental support' (not quite the same thing) may not be forthcoming if the parent themselves lacks D-I-Y skills and tools to help the child with baseboard construction and wiring, and such skills and inclinations are in steep decline among younger adults according to recent research.  The children themselves are not often taught suitable skills at school either; therefore if it doesn't 'plug-in and go' they may feel it beyond them even to try.
• 'Parental financial assistance' may not be forthcoming once the scale of outlay on a hobby with which the child may not persist becomes apparent.  Consider:  a basic train-set may be had for a hundred pounds or so ... but start to factor-in three or four locos; more rolling-stock for it to pull; a DCC system, track, points and motors; half a dozen R-T-P buildings acquired before kitbuilding skills reach a comparable level; and so on ... and where's the change out of a £Grand or more?

All sad developments, but such facts have to be faced and overcome ... somehow.

[Ozexpatriate]

@legend - Hornby has just tweeted....

Cheers Clearwater. What does that mean though. I'm not into twitter. Is there a link to something they have available?

Yes. It may not be green with smoke deflectors - wasn't that the NRM edition? but it is available. This image is the masthead on the US and UK websites today:

 

 

You can pre-order the current livery.  There is a nice web page showing no fewer than seven variants for purchase and this infographic.

 

I don't think they missed out here.

 

EDIT: bit late to the party here. "ToBoldyGo" has it covered already:

 

Funny you should mention this, Hornby must have read your mind     

 

http://www.Hornby.com/uk-en/shop/locomotives/steam-locomotives/flying-scotsman.html

 

Edited February 25, 2016 by Ozexpatriate

[Ozexpatriate]

I think the time taken to assemble and paint a model is significantly more than you think.

All been covered by Jason Shron in past issues of Model Rail. From memory, a Rapido passenger car with around 300 parts takes 8 hours to assemble. 

Oh dear

 

It seems my example which was meant to be indicative has been taken far, far too literally.  I thought I had made that obvious by using times quoted as "-ish"  and "plus/minus".

 

Equally there is no justification for using factors of 2 for mechanisation or for familiarity.  It was simply a means of getting towards what I hope is an indicative number.

Anyone who thinks assembling a modern ready-to-run loco is a simple 'assembly' job that takes very little time, should look at the exploded diagram with DJM's Kernow 'O2' (a mind-boggling number of SMALL components) or the parts list with Heljan's 2-8-0. The only way to produce such models quickly is to have lots of people doing it, and that's where the cost escalates.

The costs of building contemporary models have been well explained by Mr. Shron, not just in Model Rail (thank you Chris) but on his website as well.

 

Even if you take exception to the level of detail in Rapido Trains excellent models Jason provides enough 'back of the envelope numbers' to scale the estimates down to less detailed models. There's still no comparison between pricing in British and Chinese labour and even with British (or Canadian) labour, there are substantial assembly costs.

Edited February 25, 2016 by Ozexpatriate

[robmcg]

Yes. It may not be green with smoke deflectors - wasn't that the NRM edition? but it is available. This image is the masthead on the US and UK websites today:

 

flyscotusa.ppg.JPG

 

You can pre-order the current livery.  There is a nice web page showing no fewer than seven variants for purchase and this infographic.

 

I don't think they missed out here.

 

EDIT: bit late to the party here. "ToBoldyGo" has it covered already:

 

Alas the model shown on the masthead is not quite the same as the collector's club special, which has a white cab roof and is left hand drive, altogether a different model.  It would be nice if when they say 'shop now' a person could buy what is illustrated, but the very nice rhd version in the masthead is not so far as I can tell actually for sale. 

[Clearwater]

The costs of building contemporary models have been well explained by Mr. Shron, not just in Model Rail (thank you Chris) but on his website as well.

 

Even if you take exception to the level of detail in Rapido Trains excellent models Jason provides enough 'back of the envelope numbers' to scale the estimates down to less detailed models. There's still no comparison between pricing in British and Chinese labour and even with British (or Canadian) labour, there are substantial assembly costs.

Interesting link, thanks. I was surprised by how much waste there was. In itself, perhaps, an indication of where the costs lie in the models. That said, I wonder if the waste body shells can be recycled and melted down for new moulds.

 

David

[jjb1970]

Unfortunately Hornby mismanaged design clever and the concept is now toxic, yet in principle if a model can be engineered for easy assembly and simplify things that do not have an impact on the appearance of the final model or its running qualities then that is a smart way of designing a model. There are techniques to mould detail convincingly and all the manufacturers use a combination of moulded and separately applied detail. Whilst I like high detail a working model is a compromise between detail and being robust enough and having suitable mechanical clearances to use on a layout, I do sometimes feel that some detail is added more as part of an arms race and effectively is the equivalent of answering questions that nobody has ever asked. Which is a long winded way of saying that I believe models can be engineered to minimise manufacturing cost and still provide competitive levels of detail and performance. I'd imagine that the capability to do this to a degree is already a part of competitive advantage in manufacturing models.

On the hobby, I do not think the hobby will ever die (well, not in my lifetime anyway) but I do think that the loss of model shops and the seeming reductions in production runs indicate significant shrinkage to the hobby. I think there will be a lot of nice second hand sloshing around for entirely predictable reasons that I won't be vulgar enough to spell  out but I think a healthy hobby does require a viable RTR supply. Not everybody can or wants to scratch build or build kits and I really don't see that modelling in RTR makes anyone a lesser enthusiast.

[New Haven Neil]

Yes. It may not be green with smoke deflectors - wasn't that the NRM edition? but it is available. This image is the masthead on the US and UK websites today:

 

flyscotusa.ppg.JPG

 

You can pre-order the current livery.  There is a nice web page showing no fewer than seven variants for purchase and this infographic.

 

I don't think they missed out here.

 

EDIT: bit late to the party here. "ToBoldyGo" has it covered already:

 

I disagree, sorry.  They have missed their opportunity again, totally and absolutely.  The FS has had huge TV coverage here today, showing it's current livery and specification, and the Big H can't sell you one like that TODAY.  I thought the Churchill year-late scenario was a spectacular fail, but this beats it.  It would appear whoever drives actual production hasn't got a clue about railways but probably knows all about 'management'. 

[Coryton]

Unfortunately Hornby mismanaged design clever and the concept is now toxic, yet in principle if a model can be engineered for easy assembly and simplify things that do not have an impact on the appearance of the final model or its running qualities then that is a smart way of designing a model. There are techniques to mould detail convincingly and all the manufacturers use a combination of moulded and separately 

 

The new(ish) Hornby Mk 1's may not officially be "design clever" (horrible phrase!) but they seem to have been designed to require considerable less assembly than the Bachmann coaches. The Hornby ones look OK to me - I can live with moulded toilet filler pipes and the like, and I much prefer the price. They seem to be selling so I can't be the only one. If only they would do something other than the "parcels coach" in blue and grey.

[Coryton]

I disagree, sorry.  They have missed their opportunity again, totally and absolutely.  The FS has had huge TV coverage here today, showing it's current livery and specification, and the Big H can't sell you one like that TODAY.  I thought the Churchill year-late scenario was a spectacular fail, but this beats it.  It would appear whoever drives actual production hasn't got a clue about railways but probably knows all about 'management'. 

 

Unfortunately I think the reality of production in China is that with the best will in the world, it's very difficult to successfully aim for a particular delivery date. I think all they could have done is to try to have them ready well ahead of time, which would then mean stock sitting around taking up space, having been paid for but not making them money.

 

I don't see how they could have won on this one. 

[Legend]

They are good, are significantly lighter than Bachmann , run well and have less uncoupling problems. Like you I wonder why blue grey has not appeared. Another miss for marketing dept , I think! If I remember correctly they replaced the 1962 range of coaches because they were more efficient to make . So design clever can work

[Coryton]

They are good, are significantly lighter than Bachmann , run well and have less uncoupling problems. Like you I wonder why blue grey has not appeared. Another miss for marketing dept , I think! If I remember correctly they replaced the 1962 range of coaches because they were more efficient to make . So design clever can work

 

That and possibly the old tooling was wearing out.

 

It does seem odd to produce the full brake in blue and grey and nothing else, especially when they are selling plenty of Mk2s (old and new tooling, with free extra sole bars on the new ones) in blue and grey. I suppose maybe they think that with the blue grey Mk2's they don't need Mk1's (and the full brake fits because of course there isn't a Mk 2 full brake) - but it seems a bit odd that it would be worth making Mk2d's and Mk2e's but not Mk1s....

[Legend]

Unfortunately I think the reality of production in China is that with the best will in the world, it's very difficult to successfully aim for a particular delivery date. I think all they could have done is to try to have them ready well ahead of time, which would then mean stock sitting around taking up space, having been paid for but not making them money.

 

I don't see how they could have won on this one.

 

It's called control of supply chain and organisation. Other companies outside the world of model railways manage it. It has been known for sometime the colour that Scotsman would appear in . I'm sure they could have fine something despite fact production is in China. Ironically Crimson and Cream coaches became available last month, so they just needed the loco. We do know that FS is going to be in this livery for sometime, but I bet that doesn't stop Hornby churning the Railroad model out in Apple Green ad nauseum. I appreciate there is an NRM limited edition , but it is exactly that , most people would expect a trainset for substantially less.

 

Just a bit of memorabilia. Was it Feb 81,they announced the wedding of Charles and Di. It took place in July the same year . Somewhere in between BR painted a 47/7 in large logo blue and call it Lady Diana Spencer. Hornby had their model out that July, capitalising on the event.

Edited February 26, 2016 by Legend

[Coryton]

It's called control of supply chain and organisation. It has been known for sometime the colour that Scotsman would appear in . I'm sure they could have fine something despite fact production is in China. 

 

It seems that "control of supply chain" is difficult when having (relatively speaking) small runs produced in Chinese factories. Bachmann seem to have a similar problem and they own the factory (or perhaps the factory owns them, but either way.....) 

 

I am very familiar with relying on suppliers who don't keep to schedules, and having to apologise to customers for letting them down, and it's not a pleasant place to be.

 

Just a bit of memorabilia. Was it Feb 81,they announced the wedding of Charles and Di. It took place in July the same year . Somewhere in between BR painted a 47/7 in large logo blue and call it Lady Diana Spencer. Hornby had their model out that July, capitalising on the event.

 

Well there were clearly advantages to having production in house. The reasons that it doesn't happen any more have been well documented in this thread and elsewhere.

[Ozexpatriate]

Yes. It may not be green with smoke deflectors - wasn't that the NRM edition? but it is available. This image is the masthead on the US and UK websites today:

 

You can pre-order the current livery.  There is a nice web page showing no fewer than seven variants for purchase and this infographic.

 

I don't think they missed out here.

 

EDIT: bit late to the party here. "ToBoldyGo" has it covered already:

I disagree, sorry.  They have missed their opportunity again, totally and absolutely.  The FS has had huge TV coverage here today, showing it's current livery and specification, and the Big H can't sell you one like that TODAY.

I don't and won't argue that they missed an opportunity today, but not 'totally and absolutely'.

 

I'd go as far as to say that even if you pre-ordered the current livery, given the tenuous business state of the company there's no guarantees about when (if ever) you would see it.  Were it in stock today, they'd certainly sell a lot more of them than they will see pre-orders tentatively scheduled for June. They missed that opportunity for sure.

[Ozexpatriate]

It's called control of supply chain and organisation. Other companies outside the world of model railways manage it.

Just about every model railway company in the world has had supply chain issues since the credit crunch - many of them due to the failure of Sanda Kan. I think I waited four or five years for some US items. Whatever the hold up with the Bachmann SECR Birdcage stock ends up being, supply chain factored somewhere.

 

Hornby's current financial problems - notwithstanding the non-availability of the present livery of Flying Scotsman today - don't appear to be primarily supply chain related.