More Hornby financial woe

[dibber25]

Bit of a mixed bag that one. Hornby were well into the King class project when Hattons/DJM announced theirs. Knowing Hatton's DJM were less advanced, Hornby then showed their cards, possibly hoping the competition would leave the field free. What then happened was a slug fest for the best CADs, but again Hornby were well advanced and I suspect Hattons orders foundered. They then focussed on the new 14XX and waited to see how things played out. Now the end of the story (or volume 1 at least) was Hornby could not shift their's leading to deep discounting which then made Hattons non viable and dropped (or handed back to DJM).

A similar thing also happened with the class 71, though both probably started at the same or maybe  Hornby had completed a lot of ground work just before. However Hornby's was announced a few months after DJMs and again early in the process. Again the other player did not back down as they may have hoped; The end result was 2 class 71 models which could be picked up cheaply several months after release.

 

So when Hornby did announce their's early, they found themselves competing to get out the best model rather than an open field.

 

Third case, Oxfordrail and Hornby Adams - both fairly advanced when announced and too late for either to back down. End result, cheap models several months after release.

 

Forth case. Bachmann said a Q6 never. DJM announced it. Behind the scenes Hornby was working on the same, kept mum for a couple of years and finally announced it just before release. Hornby swept the ground clear with DJM dropping theirs. However some over production lead to bargains probably because getting a good fix on the amount to produce was hard to do without the normal several months of pre orders to gauge production size.

 

The above 4 prove that announcing it early just after the competition failed to remove it and lead to a head on head slug fest. While announcing it late just prior to release drove the competition out. Announce too early = duplicate race and deep discounting. Too late = complete field but risk of over production (or under production).

dammed if they or if they don't.

 

Hornby do have an advantage of speed of competing manufacturers but would loose out against shop direct commissions which have proved to be very fast.

 

I'm not sure if the smaller niche players are more dynamic as I doubt they have the resources to switch over to different models or retool parts to meet the latest market needs. However niche players are numerous which could give that impression.

 

I hate to think how many times I've said that duplication is a disaster for BOTH parties, and it has been right back to the days of the BR 4MT 4-6-0s. However, there are still those in the hobby - some purchasers - who seem to think that it's far more important that they have choice. With today's high standards, that 'choice' usually means deciding which one has the better windshield wipers, which one makes provision for EM/P4, which one has the better provision for sound etc. In reality, those considerations affect only a handful of purchasers, and if the perfect model to suit their requirements wasn't available, there's every chance they'd take the next best and work their own magic on it. (CJL)

[alfsboy]

Hornby will keep going ,along with Keef and cockroaches.

[Fireline]

I am so glad that no-one at Hornby, such as Islesy, has to read this. For everyone in here, it's just a brand. If it goes, so what? For them, it's their jobs, their livelihoods. I think it's time that everyone treated it with just a little bit more sensitivity. We know people at Hornby read this forum. Paul sometimes takes the trouble to reply to things. Consider the effect your pointless speculation will have on them before launching into another keyboard diatribe.

[The Stationmaster]

I am sure there is much truth in the comments about marketing and end-customer relations.

 

But the CEO is pointing to two things leading to the current warning; supply problems again, which have reduced income in the last quarter, and a concentration on reducing costs and improving processes.

 

They thought they had solved the former, and it is worrying to see that resurrected, and just when it would have been most predictable, at Chinese New Year. So no amount of improved marketing would have sorted this, although perhaps a more proactive stance in PR, explaining the problems, rather than hiding from them.

 

The latter is something many on here have been saying they should have been doing for ages. A leaner organisation with hopefully a better system for production decisions, is what is needed, if they are to compete with the newcomers.

 

It would appear that their attention has been diverted to these issues, so it is little wonder that we are not seeing a concentration on marketing for the moment. Of course, a smoother operator would be able to do both, but this is a company in the middle of major change.

 

But they were, in a rather novel way, doing rather well with the market contact part through The Engine Shed in times of not much coming forward.  Its advantage was that it kept them in customers' minds when there was little else to talk about and it was used to drop hints that got the chatter going - they've thrown out that advantage by reverting to what 'Legend' has identified as 'remoteness' and that doesn't work too well in a vibrant market where just about everyone else is managing some sort of 'excitement' even if it's Bachmann actually producing an EP of an item announced three years ago.

 

Hornby isn't alone in having 'supply problems' - Bachmann referred to it in their 2016 accounts, others have also suffered if the way in which releases are slid backwards by just about everyone.  Sorry but Hornby are missing something and just not keeping pace with where the UK outline r-t-r market is moving.

 

And currently as I look at this thread it has an ad for the Accurascale 24.5ton hopper at the top   

Edited April 4, 2018 by The Stationmaster

[davetheroad]

I thought the swelling was confined to mazakitus in a batch of 31s Keep selling the revamped Lima stuff, good repowering projects and good old school tooling.

Neil

 

And loads of space for the batteries

[Barry O]

I take it everyone is aware of the 4 week "Chinese New Year" break (so delayed delivery and higher prices) heading our way from all items being made in China.

 

At least Hornby have admitted the delays impacting their bottom line. They, like others also have problems with Quality Control (and its not just in model railways) from items received from the Chinese factories.

 

Give them a break you gloom mongers....they are trying very hard to make the Company a great one again.

 

Baz  

Edited April 4, 2018 by Barry O

[Oldddudders]

Scalextric seems to get in the neck in this thread. Why? Resentment from people of a certain age who recall the impact of the late-60s bouyant slot-car craze? Plastic moulding and accuracy suddenly met - with success to a degree that Hornby-Dublo and Tri-ang could not approach. Certainly the Cox Ford GT I had for my 17th birthday in 1965 was quite something, a beautiful bodyshell, full of all the right subtle curves, with magnesium alloy wheels and chassis. And, while I don’t generally buy model railway items unless they fit in some way with my layouts - existing or planned - I regularly buy slot cars that I wouldn’t dream of putting on a track and risking damage. Some 1/32nd scale models cost three figures. I was happy to pay that last year for a model of the Ford J Type of 1966, which Ford never even intended to race, but used as a development mule. Sure, Scalextric is not the dominant brand of car for me, but their products are by and large on the money for quality and authenticity, and I have no hesitation in buying a Scalex model if the era and livery are right. And I did buy a dozen extra straights last year so some youngsters - online gamers all - could get a decent racing circuit on my terrasse.

 

Looking into ranges and activities we don’t understand, and making snap pronouncements, may not add credibility to arguments about what Hornby should and should not do.

[JSpencer]

I hate to think how many times I've said that duplication is a disaster for BOTH parties, and it has been right back to the days of the BR 4MT 4-6-0s. However, there are still those in the hobby - some purchasers - who seem to think that it's far more important that they have choice. With today's high standards, that 'choice' usually means deciding which one has the better windshield wipers, which one makes provision for EM/P4, which one has the better provision for sound etc. In reality, those considerations affect only a handful of purchasers, and if the perfect model to suit their requirements wasn't available, there's every chance they'd take the next best and work their own magic on it. (CJL)

And I do remember you saying that at the start when these makers started duplicating.

[Islesy]

I am so glad that no-one at Hornby, such as Islesy, has to read this. For everyone in here, it's just a brand. If it goes, so what? For them, it's their jobs, their livelihoods. I think it's time that everyone treated it with just a little bit more sensitivity. We know people at Hornby read this forum. Paul sometimes takes the trouble to reply to things. Consider the effect your pointless speculation will have on them before launching into another keyboard diatribe.

Ah, but we do read these threads, including some of the sexist rubbish that’s been written earlier. Thank you for your sensible take on the subject.

 

Paul.

Edited April 4, 2018 by Islesy

[maq1988]

I certainly wouldn't want to see Hornby go under - I want a Peckett!

 

Two major problems for all companies is not being able to deliver in a reasonable timeframe or, even worse, having too much stock sitting around not being sold. I highly doubt anyone at Hornby is intentionally trying to destroy the company. Maybe it is time Hornby reviewed the number of railway-based products they have and start to trim down. Maybe there will need to be a tough choice between 'train sets' and 'railway models' soon. I don't think you can continue to cater for both markets with the same number of products.

 

Another option is to produce on-demand, so when a certain level of pre-orders for a loco have been reached they'll do another run.

 

Personally the only three items of interest in the current range are the Peckett, a coupled Sentinel and the 21 ton hopper.

 

Anyway - I hope they can turn their fortunes around and I might just pre-order a second Peckett... just in case.

[Steamport Southport]

What a curious comment given multiple examples! I remember the Woking branch stocking Hornby, and excitedly checking that aisle every time I went in 20ish years ago.

 

 

I was asking a valid question as to when this was.

 

I worked at the Liverpool branch for approximately five years and spent most of my time stocking shelves and warehousing. This was about 1997 until 2002 when I was an impoverished student. I never in that time saw a Hornby, Airfix or Scalextric item. Other parts of the country may have been different. But I doubt that one of the largest stores in the country would be having fewer lines of stock.

 

I also regularly shop(ped) there and still have a loyalty card. It was the only toy shop in town apart from the "one brand stores" such as LEGO and Disney so I spent a lot of money in there.

 

 

But my point about the article still stands as the demise of Toys R Us has no bearing whatsoever in Hornby's finances as they don't stock them, certainly not in great numbers. It's just lazy journalism.

 

 

 

Jason

[Legend]

Would be very interesting to photograph a Hornby Gresley bogie next to the new Bachmann model under the Thompsons.

The Hornby Gresley bogie has multiple separate parts, including the spring hangers, and the brackets that support the step boards are all separate components. Very fine stuff.

The Bachmann version has fewer parts, but what is the visual difference.

You mean Bachmann actually went on with design clever to good effect but without making a song and dance about it. Surely one of Hornbys most spectacular own goals .

[sp1]

I was asking a valid question as to when this was.

 

I worked at the Liverpool branch for approximately five years and spent most of my time stocking shelves and warehousing. This was about 1997 until 2002 when I was an impoverished student. I never in that time saw a Hornby, Airfix or Scalextric item. Other parts of the country may have been different. But I doubt that one of the largest stores in the country would be having fewer lines of stock.

 

I also regularly shop(ped) there and still have a loyalty card. It was the only toy shop in town apart from the "one brand stores" such as LEGO and Disney so I spent a lot of money in there.

 

 

But my point about the article still stands as the demise of Toys R Us has no bearing whatsoever in Hornby's finances as they don't stock them, certainly not in great numbers. It's just lazy journalism.

 

 

 

Jason

Back in the late 80’s and early 90’s our local Toys R Us used to have a large part of an aisle filled with glass cabinets displaying Scalextric cars, along with boxes of sets filling shelves, not sure about Hornby railway models as I was out of the hobby at this point, but I seem to remember shelves full of train sets.

[robertcwp]

Would be very interesting to photograph a Hornby Gresley bogie next to the new Bachmann model under the Thompsons.

The Hornby Gresley bogie has multiple separate parts, including the spring hangers, and the brackets that support the step boards are all separate components. Very fine stuff.

The Bachmann version has fewer parts, but what is the visual difference.

Overall, I find Hornby's models to be rather on the fragile side and more prone to failure than Bachmann's. Bachmann's seem to be built to last and still look plenty good enough on a layout. Having said that, Hornby has produced stacks of very good models in recent years, albeit some with rather suspect mechanisms. Having said that, Hornby is not alone there as I have had issues with Dapol motors too. Heljan and Bachmann seem more robust in that regard.

 

Hornby's pre-nationalisation coaching stock ranges have been excellent except for the Gresley gangwayed stock, but that came out quite a while ago now.

[peach james]

 

 

Would bringing production back to the UK be viable? With shipping rates from the far east increasing and production costs rising in china, delivery times of a few months by ship, it must surely be getting to the point where home production would be worth it? But then we've lost the skills to do such fine mass production of stuff here.

 

 

See Rapido's explanation- the short answer is Not Even Close... like 3-4x the price for the same detail.

 

James

[andyman7]

I think the old Hornby was fatally wounded when production went to China and was finally put out it’s misery when they moved everything out of Margate . So the names the same but that’s about it.

 

 

 

My opinion (and I claim it to be no more than that) is that H lost it in the 90s and noughties at the same time that Bachmann, the only serious competitor then and still the main competitor, were going from strength to strength in terms of detail and and running quality.  H's roots are in the trainset world and the ghosts of Rovex and Lines still haunt it's corridors; plastic moulded. trains for people who couldn't afford Hornby Dublo.  There are too many dinosaurs (14xx, auto trailer with the old Airfix bogies complete with brake shoes swinging in the breeze miles away from alignment with the tyres when better bogies could be substituted for more or less no cost), 'Railroad' which is a marketing disaster that condemns models as inferior but charges full whack for them.

 

I understand the emotional effect of the move to China but I'm afraid that in respect of the decision in the 1990s, the move of production to China saved the company back then. Those dirt cheap superdetail models that are now assumed the benchmark (I want a completely accurate model of a 1926 Maunsell coach with full lining and separately fitted handrails...and I want it for £30!) were the result of China coming on stream as a fully functioning manufacturing base with a fraction of the production costs of the west.

 

The problems emerged post 2008 when market saturation, a drop in discretionary spending income (vital for a company like Hornby) and inflationary pressures in China created a perfect storm. Misguided attempts to cash in on the Olympics and cut out the retail supply chain didn't help, but the real problem is that the 50-somethings that bankrolled the resurgence from 2000 onwards are all 70-somethings now and the following generations are faced with much higher RRPs, a pretty saturated market, and the days of property and pension rich 50 years olds are unlikely to persist given current demographics.

 

I hope the current business can find a stable platform to rebuild from; I'm sure the name will survive in any case (as it did in 1964, 1971 and 1980 when the parent companies collapsed....). The world is changing and technology is likely to mean that a market can be sustained for high quality models in some form without the need for a mainstream market as was the case from the 1950s until recently. Hornby has a very poor presence on the high street but given the future shape and evolution of the high street that may not be an issue. I may miss the myriad retailers of my youth but I can sit in my living room and access more product than I could ever imagined.   

 

Hornby potentially has a USP for providing all the parts needed for a complete train set but the supply problems from China have really screwed with that. I fully understand that an £150 loco cannot be made competitively in the UK but I think the basics like track and platform sections should perhaps be repatriated and a supply chain established that ensures that the average person should they feel the urge can browse and buy the parts for a train set. Why not go further and allow the train set package to be customisable at purchase? It's all about thinking about customer bases and viability.

[PanzerJohn]

With coaches approaching £60 and big loco's £200 with no discounting that's me out I'm afraid. I'll just have to hover looking for bargains or minty s/hand.

[adb968008]

I’m probably wrong but the cynic in me says that someday Oxford will wake up owning a nice bunch of superdetailed Hornby and Corgi toolings and maybe the Name, and next day see headlines of Hornby heads to the wall taking Railroad, Airfix, Scalextrix and all the European brands with it.

 

The enthusiast in me isn’t over enthused by the changes, but the business head also isn’t convinced in the changes either. The day I buy Hornby shares and pass on a model is the day i’ll be convinced.

 

Competitors don’t coexist, they might walk together but unless they fully merge at some junction the roads will part, and as ABBA says.. the winner takes it all.

Edited April 4, 2018 by adb968008

[jjb1970]

I hate to think how many times I've said that duplication is a disaster for BOTH parties, and it has been right back to the days of the BR 4MT 4-6-0s. However, there are still those in the hobby - some purchasers - who seem to think that it's far more important that they have choice. With today's high standards, that 'choice' usually means deciding which one has the better windshield wipers, which one makes provision for EM/P4, which one has the better provision for sound etc. In reality, those considerations affect only a handful of purchasers, and if the perfect model to suit their requirements wasn't available, there's every chance they'd take the next best and work their own magic on it. (CJL)

It might be a disaster, it's also normal commercial risk and what is the alternative? Collusion is (quite rightly) illegal and cartels benefit nobody (not even the cartel holder in the long run). A business is a commercial undertaking designed to make a profit for its owners or shareholders, with potential for profit comes potential to make losses. And in my opinion that's the way it should be, I have no issue with companies selling their wares and making a profit (admittedly a moot point in this case) but part of the deal for that acceptance is that it is Hornby and their owners making the effort and taking the risk.

[jjb1970]

But they were, in a rather novel way, doing rather well with the market contact part through The Engine Shed in times of not much coming forward.  Its advantage was that it kept them in customers' minds when there was little else to talk about and it was used to drop hints that got the chatter going - they've thrown out that advantage by reverting to what 'Legend' has identified as 'remoteness' and that doesn't work too well in a vibrant market where just about everyone else is managing some sort of 'excitement' even if it's Bachmann actually producing an EP of an item announced three years ago.

 

Hornby isn't alone in having 'supply problems' - Bachmann referred to it in their 2016 accounts, others have also suffered if the way in which releases are slid backwards by just about everyone.  Sorry but Hornby are missing something and just not keeping pace with where the UK outline r-t-r market is moving.

 

And currently as I look at this thread it has an ad for the Accurascale 24.5ton hopper at the top   

Completely agree, their decision to promote direct communication between their design team and customers, the engine shed and sending them to exhibitions was IMO a really smart move and put Hornby at the front of the pack in terms of marketing and comms. I remember when a recurring complaint was their poor communication, they went from (near) zero to hero in that respect largely thanks to the decision to let the design team speak. The Engine Shed did a terrific job of generating excitement and froth, it's still there admittedly but it's just lost its mojo and their marketing and comms is back to where it was three or four years ago which I find terribly sad.

[Mike Storey]

But they were, in a rather novel way, doing rather well with the market contact part through The Engine Shed in times of not much coming forward.  Its advantage was that it kept them in customers' minds when there was little else to talk about and it was used to drop hints that got the chatter going - they've thrown out that advantage by reverting to what 'Legend' has identified as 'remoteness' and that doesn't work too well in a vibrant market where just about everyone else is managing some sort of 'excitement' even if it's Bachmann actually producing an EP of an item announced three years ago.

 

Hornby isn't alone in having 'supply problems' - Bachmann referred to it in their 2016 accounts, others have also suffered if the way in which releases are slid backwards by just about everyone.  Sorry but Hornby are missing something and just not keeping pace with where the UK outline r-t-r market is moving.

 

And currently as I look at this thread it has an ad for the Accurascale 24.5ton hopper at the top   

 

Completely agree Mike. But if they are in the middle of very difficult downsizing and trying to resolve investment needs on the back of forecasts based on a problem they thought they had solved already, I would guess their marketing arm is feeling a bit of a sideshow right now (indeed, has marketing been part of that downsizing?). If they cannot get their costs down, they cannot sell whatever they make, at sustainable margins. You have been one of the greatest advocates of that.

 

We have a lot more info about Hornby than we do about anyone else, because they are a publicly quoted company. But of the things we do know about the "competition", nothing is very rosy. Supply has gone to the dogs for most of them (that is why one very reputable "newcomer" has lost out to more direct commissioning, when it was largely beyond that concern's control) and the others have kept up the razmatazz, but have backlogs just as great, if not greater than Hornby's. The others do control their PR better than Hornby has done lately, but chickens are starting to come home to roost.

 

I have two, high priced new models, several of each on order, which I have seen deferred across three subsequent years. Three. Neither are by Hornby. But neither yet have my money and will not do so for a year or two yet, it would seem. I also have another, much more niche model on order, as part of a crowdfunding exercise. That too, is some years beyond what we had hoped, for different reasons, and my money is already sunk into that. I think Hornby-bashing has become unbalanced - it seems we expect much more of them, just because the name has been around for longer, but these problems are greater than any one company.

 

Accurascale, as you illustrate on the banner, are the latest entrant to the UK market, with an impressive record so far in the Irish market. But let's not kid ourselves. They will be selling at premium prices, and at relatively low volumes, to hard-ar$ed, sophistikated enthusiasts (like wot we is), happy to buy direct off the internet. Maybe they will get much bigger, but one announced model, which already nearly duplicates a model announced by another nearly-new newcomer, and the promise of two more eventually, does not a summer make. It would certainly not support several thousand jobs, or dozens of retailers, not yet anyway.

[JSpencer]

It might be a disaster, it's also normal commercial risk and what is the alternative? Collusion is (quite rightly) illegal and cartels benefit nobody (not even the cartel holder in the long run). A business is a commercial undertaking designed to make a profit for its owners or shareholders, with potential for profit comes potential to make losses. And in my opinion that's the way it should be, I have no issue with companies selling their wares and making a profit (admittedly a moot point in this case) but part of the deal for that acceptance is that it is Hornby and their owners making the effort and taking the risk.

They don,t need to collude but clearly this has served as a big lesson. It was almost a clash of egos. I feel both parties lost and now means resources for other projects are reduced.

[sidmouth]

A young family and limited disposable income means I have to shop very carefully and often means purchases are second hand via well know auction sites , social media and friends . I can't regularly justify £150 for a loco or £50 for a coach however nice they are 

 

Hornby produce fabulous engines but I do feel that they are too fragile . I also question that we have recurring Mazak issues , motor issues, fiddly parts easily knocked off,  all highlight quality challenges that we should not expect at a premuim price

 

We have also been spoilt not just by Hornby in terms of the breadth of the ranges and many wish list engines now in production . The diminishing pool of prototypes will be a challenge for all manufacturers . Hornby also can't keep recycling existing models, what are we on the third iteration of the King , Third of the Duchess , second of an unrebuilt Bulleid . are we as modellers going to keep spending on upgraded models and was the third iteration a giant leap forward from what was already a super detail model. 

 

You can see why Dapol and Heljan are heading in the direction of O gauge and I know of many friends of  mine who are forsaking 00 for O 

 

The dynamic of the hobby is changing others are grasping it and have a strategy to change direction

[Corbs]

I love Hornby and it's what got me into railway modelling. I admit this news did shock me, after the first run of Pecketts sold out and was met with such widespread approval, to name just one of the newer releases. 

 

I would be very interested (though I have no doubt that I will never know) in what sells and what doesn't. For example, is the received wisdom that kids don't want train sets any more actually true, in which case is there a business case for reducing that side of production and making smaller runs of high quality models for enthusiasts? Or is that all garbage and do parents still buy as many Flying Scotsmans and Smokey Joes as before?

 

Are Scalextric sales falling? If you've ever played the Gran Turismo or Forza series of games it could be easy to see why. But then again I'm using no facts at all to support a supposition and the same argument could be said that Train Sim and Trainz mean that the expensive and space-hungry Model Railway falls by the wayside, but with no data on the subject I can't say.

But I am intrigued by it.

[woodenhead]

 

You can see why Dapol and Heljan are heading in the direction of O gauge and I know of many friends of  mine who are forsaking 00 for O 

 

The dynamic of the hobby is changing others are grasping it and have a strategy to change direction

Or put another way, there was little to go at in OO for Dapol and Heljan without going head to head with Bachmann and Hornby so they set forth to claim the O gauge RTR market - Heljan from the expensive end and Dapol from the cheap end with Lionheart in the middle.  If anything this is actually helping Hornby as it means less competition in OO though the escalating retailer direct commissions is going to impact them taking out potential models of the future.

 

It's exactly what Dapol were doing in N, they saw a gap, exploited it and then moved on when things got harder.

 

Who can blame them, why play in the stream when you can have a vast ocean at your disposal.

Edited April 4, 2018 by woodenhead