Dapol deferments - Class 50, Class 59, prototype HST, Battle of Britain - due to Brexit increasing tooling and production costs

[Revolution Ben]

I am fed up with everything from manufacturing disruption to the black death being blamed all Daily Mail like on Brexit! It hasn't even happened yet and for all anyone knows the current financial climate could still have happened anyway regardless of the vote result.

 

It just keeps being trotted out as a cover all excuse for pretty much anything.

Hello John,

 

In this specific instance there is a very clear cause and effect.

 

The referendum result went as it did, and virtually immediately Sterling dropped like a stone because financial markets like stability and certainty and while Brexit may offer many things it offers neither of these.

 

Chinese companies choose to do their international business in US dollars, so for British companies the fall in Sterling had a clear, unambiguous and damaging impact. Put simply: their money buys less, so they either charge us a lot more for the same, or produce less.

 

The Black Death, the Daily Mail, and even your level of fed-up-ness, are irrelevant.

 

Cheers

 

Ben A.

[tamperman36]

With all the complaints about 1 company deciding to reduce planned production incase of problems from Brexit fallout, don't you think that other big manufacturers should take a good look and reasses there planned production, or even better return production to Britian and possibly reduce production costs and potential import and trade costs. 

[Kelly]

With all the complaints about 1 company deciding to reduce planned production incase of problems from Brexit fallout, don't you think that other big manufacturers should take a good look and reasses there planned production, or even better return production to Britian and possibly reduce production costs and potential import and trade costs.

A number of manufactuers have stated that returning manufacturing to the UK is not a viable prospect, and not just for costs, theres not the skill base apprently in place either for it to be possible. Chinese workers get nowhere near the (from April) £7.50/hr min. wage, and UK workers would not do such a skilled job for anywhere near min. wage I'm certain.

 

The other manufacturers for all we know may well have hedged bets (there are ways of benefiting from changing currency value by buying ahead of time and hoping it doesn't dip further etc) and probably already have modesl too far along to delay them that hasn't already been announced.

 

Dapol aren't the first to 'delay' projects due to the currency situation, Rapido/Locomotion have 'Paused' the ProtoHST project as well remember.

 

Dapol operating in 3 scales possibly makes their situation more difficult, so cash flow atm could well be a factor, with so many models at the tooled or tooling stage and needing the return from those before going ahead with more.

[dibber25]

With all the complaints about 1 company deciding to reduce planned production incase of problems from Brexit fallout, don't you think that other big manufacturers should take a good look and reasses there planned production, or even better return production to Britian and possibly reduce production costs and potential import and trade costs. 

Does no one think that other companies haven't already done what Dapol is doing, but in a rather more circumspect fashion? The slow-down in production of new models from Bachmann over recent years and the dropping of items from the Hornby range, for instance? True, those things started before Brexit and different reasons have been given, but the root cause is the same - the increased cost of getting models produced in China and the failure to find anywhere else in the World that can match the Chinese production capability for a cheaper price. I'm sure it sounds good that Dapol will bring some manufacturing back to Chirk but I don't think they'll suddenly find an adept labour force willing to assemble Class 68s for Chinese-level wages, so I suspect - as they do now - it'll be wagons and simpler stuff, or a Heljan-style operation where moulding is done 'at home' and the parts shipped abroad for assembly. Manufacturers have to be realistic and we as customers have to learn to be realistic. In the past seven days, I've bought a Hornby 'MN', and a second Hattons '14xx',' won' a Bachmann Derby LIghtweight DMU on Ebay, and there are three Rapido RDCs waiting for me to collect them at Oundle Post Office. I'll be buying umpteen 121s/122s as soon as they are ready. I suspect I'm not the only person over-spending on their hobby at the moment because the stuff is there to buy and it's good, but the model railway market in its current form is unsustainable. (CJL)

[TomE]

Dapol's slow backing away from N Gauge has been obvious for sometime, so this hasn't really come as that much of a surprise. I would however be extremely surprised if this isn't just a temporary delay, but more a delayed cancellation.

 

Slack times for N Gauge Modellers. 

 

Tom. 

[adb968008]

I suspect I'm not the only person over-spending on their hobby at the moment because the stuff is there to buy and it's good, but the model railway market in its current form is unsustainable. (CJL)

An herein is the risk...

 

R&D is always the first victim of a downturn in any industry.

Discretionary spending is the first victim at home.

 

A few years back ebay was awash with cheap good stuff made in China, £50 would get you a black 5, Bulleid or Britannia. Everyone has filled their boots. Ebay prices have doubled.

 

However new prices of existing (now old) toolings are rapidly approaching £200.

Interest can be seen to be waning as more of this is longer "in stock" and everyones shed are sufficiently full.

 

Whilst eBay's second hand feed has faded, prices are definitely resisting +\- 10% above £100 for decent old stuff from the same toolings. It seems like the buyers apetite has peaked.

If you now consider already a 25% drop in the £ (everyone in the city is predicting (betting/encouraging/shorting) a recording breaking historical fall below £1.05 to make a stand to the government) you'd be mad to consider tooling up something new, at what will be a sustained 50% increase in price for the next few years, on currency alone.

 

Right now it's about survival and reducing inventory, the next two years I'd expect some suppliers to disappear from the market and similarly a number of collectors & some retailers having fire sales on ebay as their finances deteriorate, exacerbating low prices in the S/h market thus making it further unattractive for manufacturers to invest in new products further.

 

Oo gauge modelling peaked decades ago, but this latest cycle of reinvention using Chinese production In my mind oo gauge has peaked and 2018 will see its decline. The future reinvention is probably going to be more bespoke (3D / brass/ mega-detail/ minimal cost etc).

 

Once a tree cuts its roots, it's the leaves, not the trunk that die first, I'd expect a healthy second hand market at its current base for a few years, before interest starts to wane. I doubt once the Chinese manufacturers move on to tooling other plastic moulds for other industries in other countries, that they will return to modelling trains for the UK.

 

Brexit was a vote for change, for everyone from factory, manufacturer, retailer and modeller, as long as people want to model trains the hobby will continue, but in a changed form, Darwin tells us the ones most likely to succeed are those best able to accept and adapt to change.

[cornish trains jez]

Does this mean that production may return to the UK and be more cost effective due to the poor exchange rate?

[adb968008]

Does this mean that production may return to the UK and be more cost effective due to the poor exchange rate?

Model railways are not hi-tech or mass produced automated technology, it's low skilled manual labour that requires trained concentration and thought.

 

Squirting plastic is cheap, its attaching the hundreds of pieces, and painting the hundreds of Parts that gets expensive..

 

its the cost of someones time to put the Little dip of yellow paint on that miniscule air hose, before gluing it on that model that makes it expensive, if we went back to the 1980's with a coach consisting of 20 bogie parts and a 5 body parts with 8 different paint masks, maybe...

 

But some of the new coaches now have over 100 parts... each buffer alone has 4 pieces these days, in the 80's the buffers were a moulded part of the 1 piece frame, which included moulded on under carriage parts.

 

Back to that air hose, assume it's already trimmed & painted.. 2 minutes an hose to pickup and position the model, glue the part, teasers to fit it, maybe have to "adjust the hole", turn the model around, repeat the other end, put the model On a tray, pick up the next.... at £7.50 an hour in the UK.. that's 25p per loco just for an air hose that's already been prepared ...before overheads, then theirs vac hose, steam pipe, draw bar hook, buffers, screw link... then there's the body... grills, hand rails, wipers, door handles, lugs etc etc etc.....

 

A side example, I once saw a factory in the US making pierogi (a 1-2inch sized pastry dumpling with meat inside).. the process was automated making 100k per day and product averaging .50c each to make with overheads and costs of the factory... I saw the same in China... it consisted of hundreds of manual labourers doing it by hand.. costing a few cents each...both were fast cooked/freeze dried and shipped across to stores across the US.

[James Makin]

I was really looking forward to the Class 59, can anyone confirm whether this announcement just relates to the N Gauge version and not the OO gauge one please?

 

The Dapol website appears down for me (any relation to this announcement?) but it'd be great to know if we need to crack open those Lima '59' boxes once more..!

[Chris Higgs]

Hello John,

 

In this specific instance there is a very clear cause and effect.

 

The referendum result went as it did, and virtually immediately Sterling dropped like a stone because financial markets like stability and certainty and while Brexit may offer many things it offers neither of these.

 

Chinese companies choose to do their international business in US dollars, so for British companies the fall in Sterling had a clear, unambiguous and damaging impact. Put simply: their money buys less, so they either charge us a lot more for the same, or produce less.

 

The Black Death, the Daily Mail, and even your level of fed-up-ness, are irrelevant.

 

Cheers

 

Ben A.

 

I agree with this in part at least. The pound has dropped against the dollar, and the euro too to an extent. Brexit plays a major role, but so does the underlying strength of the American economy. We are lower against the dollar than we have been in a long long time. However against the Euro we are at the same level as 3 years ago.

 

Where it goes next is the big question, and I surely wish I knew.

 

Chris

[woodenhead]

Dapol for a long time have been churning out a lot of the same models in N to create cash flow, most of the R&D seems to have been in 00 and O gauge.

 

Going to an N gauge society AGM a couple of years back told me the writing was in the wall then.

 

Although I am currently back in OO I do have an excellent N collection with plenty of Dapol stuff, what is it they say "make hay whilst the sun shines"?

 

There isn't a massive amount coming out of Bachmann at the moment in OO, even less in N so Dapol will be feeling it even more so as a smaller company. O gauge appears to be the healthy scale at the moment, though that itself too looks like a dash for cash with Dapol and Heljan running to get all the popular models done before the other one gets there.

 

Let's just be glad that Hornby began to sort themselves out and no one has gone out of business (so far).

[woodenhead]

Here's a question, the West Country was tooled but delayed for a new motor to enable locomotive drive and make space in the tender for sound.

 

Bachmann then came up with the next generation of chips and added sound into its locos and units.

 

Is it possible that the tech war in N is pushing the R&D to unacceptable levels for Dapol and they've effectively had to give the market to Bachmann with Rapido and DJM plugging gaps that even Bachmann cannot risk.

[adb968008]

I agree with this in part at least. The pound has dropped against the dollar, and the euro too to an extent. Brexit plays a major role, but so does the underlying strength of the American economy. We are lower against the dollar than we have been in a long long time. However against the Euro we are at the same level as 3 years ago.

 

Where it goes next is the big question, and I surely wish I knew.

 

Chris

The global economy is quite strong, British people are going to reign in their spending (save) during Brexit. As long as the global economy continues, and as the U.K. Is a bit of a bargain right now I'd venture US companies will go hunting for M&A, jobs will grow or at least be sustained, as UK employees salaries are costing overseas companies 25-50% less than they were last year.

 

If the politicians do their job, post Brexit very little will change, at the end of it we'd have large inflation, increased tax revenues and overseas companies willing to trade using U.K. Resources and a high level of employment.

 

Chances are we'll stop hoarding cash and start spending at new higher prices, which will then lead to wage inflation to keep the momentum, the £ then may start going up again... and it'll be less risky to invest in new toolings for model trains, but more likely in a more innovative form to start a new cycle and attract buyers away from their older stuff... (just like DCC revolutionised the hobby)...maybe more like Dapol A4's ?

 

Of course if they don't do a good job, then the US companies investing here will put pressure on the US government to force the EU to sort it out and protect their investments.if that fails, then it will be a global slowdown.

[Roy Langridge]

I agree with this in part at least. The pound has dropped against the dollar, and the euro too to an extent. Brexit plays a major role, but so does the underlying strength of the American economy. We are lower against the dollar than we have been in a long long time. However against the Euro we are at the same level as 3 years ago.

 

Where it goes next is the big question, and I surely wish I knew.

 

Chris

But the euro here is a red herring, it does not feature for model production. As an aside, 3 years ago the euro was about 1.25, not 1.15 as it is today.

 

Roy

[Chris Higgs]

But the euro here is a red herring, it does not feature for model production. As an aside, 3 years ago the euro was about 1.25, not 1.15 as it is today.

 

Roy

 

OK, 4 years ago,and again 6 months later, when it was 1.14 for a while. I remember it well as I generally get paid in euros but have pound outgoings. I cursed myself for not changing more euros into pounds then, but I thought it might go even lower. The same thoughts occur again today.

 

I was using the euro x-rate simply as an indication that it is the dollar that is strong, and not only the pound that is weak. This suggests there are issues with the European economies in general, over and above any specific weakness in the pound from Brexit.

 

Chris

[TomE]

Here's a question, the West Country was tooled but delayed for a new motor to enable locomotive drive and make space in the tender for sound.

 

Bachmann then came up with the next generation of chips and added sound into its locos and units.

 

Is it possible that the tech war in N is pushing the R&D to unacceptable levels for Dapol and they've effectively had to give the market to Bachmann with Rapido and DJM plugging gaps that even Bachmann cannot risk.

 

 

There has always been an air of 'cut corners' in Dapol models when you compare them to offerings from Bachmann, so there may be some truth in in what you say about R&D. I know some will disagree with that sentiment, but it's based on my own experience of their products, of which I own several. 

 

The BoB & West Country were announced 6 years ago. Blaming Brexit at this point appears to me to be the latest glib excuse in a long line of excuses for delay after delay, and frankly, Dapol's credibility has just fallen through the floor faster than Sterling as far as I'm concerned. 

 

Tom. 

[No Decorum]

I was really looking forward to the Class 59, can anyone confirm whether this announcement just relates to the N Gauge version and not the OO gauge one please?

 

The Dapol website appears down for me (any relation to this announcement?) but it'd be great to know if we need to crack open those Lima '59' boxes once more..!

I was too, especially after the job done on the 68s. When Hornby announced a re-tooling of the 67, I thought that the 59 was much more in need of a re-tool. My only problem was the range of liveries offered. How on earth to restrict myself to an affordable number? Perhaps we can console ourselves with the thought that the 00 59 is too far along to be abandoned, especially as it’s likely to sell well.

 

Perhaps the wisdom of producing every single one of the 68s could be queried. I seriously doubt that there would be a demand for as many as that.

[woodenhead]

Perhaps the wisdom of producing every single one of the 68s could be queried. I seriously doubt that there would be a demand for as many as that.

 but that seems to be Dapol's preferred method - create a model and run the tooling into the ground, how many runs of the 2-6-2 and 0-4-4  tanks did they do towards the end and they were not even DCC ready.

[grahame]

In this specific instance there is a very clear cause and effect.

 

The referendum result went as it did, and virtually immediately Sterling dropped like a stone because financial markets like stability and certainty and while Brexit may offer many things it offers neither of these.

 

 

Although, of course, brexit is only a contributory factor and not the sole cause (and effect) of Dapols announcement. 

 

There has been Chinese inflationary pressures for many years especially with the Government decreed wage increases and, as the Dapol statement makes clear, tooling costs have more than doubled in seven years which can hardly have only be caused by Brexit and the recent sterling exchange performance. It was also claimed that sterling was overvalued on international exchange markets and was due a 'hit' even without Brexit.

 

Plus on top, as also cited by Dapol, is the relative small size of the N gauge market and the 'cap' on retail prices (which rather seems like a jibe at the very price sensitive, or perhaps overly, nature of many N gauge enthusiasts). The economic and production change factors do not appear to have affected the O and OO ranges to quite the same extend yet surely the brexit effect would have also impacted those.

 

G.  

[Dunsignalling]

A number of points have occurred to me after reading the announcement three times to ensure I hadn't missed anything.

 

• The deferments so far apply to N Gauge products only. It is not impossible that OO plans are still under review and may yet be affected but, if I were Dapol, I would have wanted to get all the bad news out in one go. If not, I'll be hoping that the OO B4 is sufficiently far advanced to make cancellation uneconomic!

 

• Dapol already have a goodish presence in O Gauge and customers for that scale are used to spending more per item on their hobby. Also, having not experienced the cheap r-t-r supermodels released during the early years of Chinese production, their perception of relative value is likely to be less harsh.

 

• If any production were to return to the UK, I'd expect it to be the O Gauge products; the market is more likely to stand any resultant price rises and, so far, Dapol have picked small simple locos that should require less manual skill to assemble than more complex items in N or OO.

 

It is apparent from more than one subsequent post that pounds-per-inch is still the criterion applied by some when judging value. On that basis, N has always looked "expensive", simply because good models of large complex locomotives are little, if any, cheaper to produce in that scale than in OO.

 

Like Dibber, I am currently hitting my reserves pretty hard to keep up and anticipate doing so for a while yet. I model in OO but, after this year, and maybe next, I suspect there will fewer new products to buy and I'll be able to sit back and enjoy the fruits of what may well prove to be the zenith of British outline r-t-r while my coffers hopefully refill.

 

Regards (and sympathy to disappointed N Gauge enthusiasts)

 

John

[Mooresby]

Its clear to me that Dapol are much more committed to keeping their customers informed than any of the other major manufacturers.  The whole Dapol digest, including the project managers blog, ensures that we as modellers are kept as much in the loop as is feasible whilst also giving us the opportunity to feedback to them during the development lifecycle.

Additionally, whilst the content of Joel's message is not what anyone wants to hear, I think that he and the team deserve credit for being so transparent, both in terms of updating us as customers and also for being circumspect enough to admit to previous misjudgements in terms of communications.

I find Dapol's approach to customer relationships refreshing and appreciate their efforts.

[woodenhead]

If it wasn't for the complete blanket of silence over the Pendolino and Class 92 before they got dropped then perhaps.

 

Or the years of delays on tooling the 142 and the fact it has taken 6 years to get nowhere on a BOB/WC then perhaps.

 

Perhaps Dapol have known for a long time their ambition in N had been lost to O gauge, what with first it's partnership with a renowned O gauge modeller to then joining with Lionheart trains his company.

 

Dapol have produced some wonderful N gauge models, they got me back into modelling with the 14xx and Prairie, but along the way the mechanisms have been somewhat unreliable for some though personally I hadn't suffered any failures.

 

I don't think they communicate any less than other other companies just differently.

[Will J]

Slack times for N Gauge Modellers. 

 

Tom.

Not a bit of it Tom.... it simply re-ignites my project to suitably detail and generally 'pimp' an old Farish Class 50 into something more proper.

 

I already have the LoadHaul transfers..... he he...

 

Light Pacifics for my various SVR projects are going to be trickier, but will also involve delving into Farish's oddly shaped back catalogue!

[davy crockett]

I cant find this on the Dapol website.

[phil-b259]

The global economy is quite strong, British people are going to reign in their spending (save) during Brexit. As long as the global economy continues, and as the U.K. Is a bit of a bargain right now I'd venture US companies will go hunting for M&A, jobs will grow or at least be sustained, as UK employees salaries are costing overseas companies 25-50% less than they were last year.

 

 

You are rather forgetting Mr Trumps vow to punish US companies that don't keep production at home. Thus the emphasis for US business is NOT to invest in overseas development at present, if they do they are expected to use that to take work and jobs back to the US.

 

That is the other big worry - not only are we placing ourselves outside the biggest trading block in the word economically, but those countries that have been touted as replacements all have protectionist trading policies in place that deliberately seek to dissuade outsiders from entering their markets or domestic companies from relocating overseas.