Hornby announcement 8th May

[fezza]

 

But I have re-read the Hornby interim statement to the Stock Market from early April, in conjunction with their planned reduction in capital investment in 2017/18 (to £1.5m), from last year's Annual Report. The statement recognised the need for far greater investment, and was seeking banking and shareholder agreement and arrangements to secure that. The extra capital was raised through extra share issue (hence the almost automatic reduction in share value that resulted). The banking convenant waiver must have been successful. Full details will be explained in their Annual Report in mid-June.

.

I read that as them struggling to raise investment. When you have to devalue shares to raise cash you can easily end up in ever decreasing circles. Unless your new investments improve yields of course but recent products don't inspire confidence.

 

Okay they produce some good products but the range is very limited. For example the 31 is great but there are no pre-privatisation ones available - and the little older stock hanging around often has the mazak rot problem.

[TheSignalEngineer]

................ although the Pecketts will no doubt continue to go like hot cakes and we'll be getting one or two a year until the next millenium (fortunately),

 

What is this thing that builds our dreams,

Yet slips away from us?

Who wants to live forever?

[autocoach]

Naught news of something new for me.

[Dunsignalling]

Yes:

 

- Class 66 is the "standard" Type 5 of today - everything else (67, 68, 70) is pretty niche. EWS replaced a lot of Modernisation Plan diesel locos with these : there's a reason why enthusiasts nick-named them "red death". Hundreds of 'em

 

- Bachmann already make a current generation 66 in OO - generally reckoned pretty good. Can't recall any significant complaints about it.

 

- Hornby have the elderly Lima effort.

 

- Class 59 was the "first draft" of the type , a dozen locos for the West Country quarries. Class 66 is the developed production version

 

It's a slightly curious announcement, in that Bachmann already have a well-regarded model in production. Unless Hattons really up the spec - in which case the price will be much higher - I don't quite see what extra Hattons have to sell.

 

Many modern generation models of diesel locomotives in OO have been sharply criticised and retools demanded - but I just don't recall any demands for retooled 66s 

Although older and producing the same bhp, the Class 59 is actually a more developed, powerful and capable locomotive than the 66, largely due to the much more sophisticated (and expensive) transmission and control system that enables it to generate a maximum tractive effort around 25% higher than its younger brothers.

 

The 66 was built down to a price and omitted the clever bits to save money. I remember it being reported at the time that the intention was to get 250 locos for the cost of 200 Class 59s, though I don't know if that was actually achieved.

 

This is one reason that DBS had to revive the Class 60 which, whilst a different design, built by BREL, shares many of the performance characteristics of the 59.

 

They were, and are, needed for duties beyond the capacity of a single 66 but which involve working into or out of locations that cannot accommodate double heading.   

 

John

Edited May 8, 2018 by Dunsignalling

[Mike Storey]

I read that as them struggling to raise investment. When you have to devalue shares to raise cash you can easily end up in ever decreasing circles. Unless your new investments improve yields of course but recent products don't inspire confidence.

 

Okay they produce some good products but the range is very limited. For example the 31 is great but there are no pre-privatisation ones available - and the little older stock hanging around often has the mazak rot problem.

 

Their share price is of little significance these days, given the balance of ownership. I am not at all sure why they remain public, given the vast majority of the new shares were bought by the largest shareholder anyway. They struggled to raise the extra bunce until they had a believable forward plan. They appear to have that plan, as they have raised the cash, and secured the bank's backing for the interim. We don't yet know the detail of that plan, hence my post.

 

I would suggest their range of products (as opposed to its age, with some notable exceptions) is rather larger than any of the new boys. I do not see a Hattons or similar replacing Hornby all the time they can cherry-pick. Their very major problem will arise if Hornby (and/or Bachmann) do fail, as will ours.

 

My only worry is that there is so little of Hornby's range that suits what I model these days, and many of the further things I would buy from Bachmann are a year or more away. I cannot therefore help their cash flow problem, personally, but I hope there are enough who can.

Edited May 8, 2018 by Mike Storey

[Clearwater]

I do find it vaguely ironic that a number of posts contrast Hornby’s business model with those of the nimble retail commissioners. Arguably, and I forget which prior management team, had a similar strategy as the big retailers with the online shop, the discount sales etc. I doubt we’ll see Hattons models, for example, being sold from anywhere other than Widnes.

[Legend]

While it's true that the Bachmann 66 is showing its age against more recent D&E offerings done to higher standards, it should be pointed out that it's light years ahead of Hornby's cheaper, re-hashed ex-Lima 66, despite achieving much better paint jobs than on the Lima original.

 

as someone said on the Hattonss 66 thread, an open goal missed by the "big 2" and a licence to print money for Hattons.

 

 

 

 

 

 

 

 

It's not only the LE commissions.

They churn out lots of standard livery variants every year, with new ones added almost every year.

The standard release 66's have been a steady earner for Bachmann for more than a decade.

Bachmann are now faced with having a less well detailed model, with fewer operating features, than a new competitor is offering for around the same price.

 

Hornby's inferior and cheaper model becomes more dated and even less appealing in the process.

 

 

.

Actually @ £150 the new Hattons model is around £19 less expensive. A new top spec model delivered at a reasonable price (admittedly no retailer profit) and in 10 months . It’s the way model Railways should be .

[Dunsignalling]

I do find it vaguely ironic that a number of posts contrast Hornby’s business model with those of the nimble retail commissioners. Arguably, and I forget which prior management team, had a similar strategy as the big retailers with the online shop, the discount sales etc. I doubt we’ll see Hattons models, for example, being sold from anywhere other than Widnes.

We certainly won't, and I doubt the significance will be lost on Hornby that by being the sole direct producer/supplier, Hatton's (etc.) can take greater control over pricing than they themselves are able to exert. 

 

IMHO, this is the way the industry seems to be going and, I fear, that will have unfortunate repercussions for smaller, more traditional model shops.

 

John   

Edited May 8, 2018 by Dunsignalling

[Legend]

Yes:

 

- Class 66 is the "standard" Type 5 of today - everything else (67, 68, 70) is pretty niche. EWS replaced a lot of Modernisation Plan diesel locos with these : there's a reason why enthusiasts nick-named them "red death". Hundreds of 'em

 

- Bachmann already make a current generation 66 in OO - generally reckoned pretty good. Can't recall any significant complaints about it.

 

- Hornby have the elderly Lima effort.

 

- Class 59 was the "first draft" of the type , a dozen locos for the West Country quarries. Class 66 is the developed production version

 

It's a slightly curious announcement, in that Bachmann already have a well-regarded model in production. Unless Hattons really up the spec - in which case the price will be much higher - I don't quite see what extra Hattons have to sell.

 

Many modern generation models of diesel locomotives in OO have been sharply criticised and retools demanded - but I just don't recall any demands for retooled 66s

 

They have upped the spec and delivering at a cheaper price. They deserve credit for that .

[Scottish-Exile]

I doubt we’ll see Hattons models, for example, being sold from anywhere other than Widnes.

 

Would agree with you in the short term, but once Hattons have had their initial 'bounce', I can see them making them available to others to sell. A bit like you can get Sky TV on the competing BT Sports network. 

 

Equally, someone posted earlier that this could be the moment that Hattons become a manufacturer first, and retailer second. Therefore they may see a lucrative income stream in taking on Limited Editions from other retailers in much the same way that Bachmann have been doing.

[Mike Storey]

Actually @ £150 the new Hattons model is around £19 less expensive. A new top spec model delivered at a reasonable price (admittedly no retailer profit) and in 10 months . It’s the way model Railways should be .

 

We shall see if it really is 10 months.

 

Their other commissions have all (perhaps just most?) taken rather longer than their original prediction, as have those for Rapido and others. I have been challenged on that for the evidence in a previous post. Rather difficult to prove, without major trawling through many past threads, as the original timescale projections are deleted on their sites (with the very brave exception of Rapido, and the accidental exception of DJM).

 

If they can hold that price, given the fluctuations of the pound (it has dropped 10 cents against the US dollar in just the last four days, in which currency these are usually negotiated), and the vagaries of Chinese output costs, they will have been very brave.

[Andy Hayter]

A reveal,in woodwork is part of the frame of a door or window. So it definitely is a noun 

 

 

So it seems it is something very wooden covered in gloss. 

 

Looks like Paul may have used the right word after all.

[leavesontheline]

Were people expecting 29 'new-tool' models or something?!

 

I see some new liveries on 'high-end' models that have so far proved very popular (and some folk missed out on) = good news.

 

I see re-introduction of some older models (LMS coaches and platform/other infrastructure items) that are aimed more at the grass-roots/train-set end of the market and to be honest should be/have been permanently available in shops, but haven't been = good news.

 

On top of all the 2018 announcements at the start of the year, I think this is pretty good! There may well be other isolated announcements as the year goes on, as Hornby have already done more recently (i.e. last 24 months?). With the dropping of the Thomas range, which to be honest is expensive for a toy that appeals to children for such a short time-frame before they grow out of it, perhaps they are putting a bit more time and effort into the train-set/Railroad end of the market so in 10, 15, 20 etc etc years time they have the next batches of customers for their main range products coming through who by that time will have their own expendable income.

 

I just don't see any major negatives! In hyping the announcement up, obviously that has created significant froth levels on here, but it has also created 36 pages of people talking about Hornby products, and what product(s) they would like the announcement to be and 'no publicity is bad publicity' as the saying goes! It will undoubtedly have led to a number of pre-orders being placed today which could give them an up-front indication of the levels of interest in each model. Someone mentioned flooding the market with Pecketts - well Hattons seem to be doing quite well with their P Class and Andrew Barclay models recently released which arrived in multiple variations from day 1!

 

In the time we (I include myself in this) have spent looking at this thread and had fun speculating as to the nature of the announcement, how much time and attention has been spent on new announcements from Hornby's main competitors I wonder? I can't remember the last time I purchased or pre-ordered a 'new' Bachmann model - probably not* so far in 2018. Over the past year my red box purchases have probably outnumbered blue box by at least 10:1 so Hornby must be doing something right? In fact I think I have spent more on Hattons and KMRC special commissions than Bachmann in recent times. Hattons Class 66 announcement today was timed to perfection!

 

Interesting and exciting times for us modellers/collectors(insert chosen title here!) with such a fantastic choice in RTR. I hope all manufacturers are successful in what they do, big or small, so we continue to enjoy this choice.

 

*Edited to note I just remembered two! - Colas and Europhoenix livery Class 37's due later this year? Maybe? ......

Edited May 8, 2018 by leavesontheline

[Legend]

This is the Hornby thread but you can see the fruits of Hattons plan . I’ll bet this is response to being starved of product 5 years ago. When Frank Martin and co failed to secure adaquate manufacturing capacity for Hornby. Hattons, and possibly others obviously decided they had to do something to protect and grow their business. Initial models with DJM but now going it alone. Because they also realised that all Hornby did was buy models from manufacturers , why couldn’t they?

 

It is a new market. I do wonder if this is the tipping point . Hattons and the commissioners taking the initiative, the legacy manufacturers in decline and I’m afraid taking the smaller model Railway retailers with them.

 

It’s also a warning shot to Bachmann with their high prices and long gestation periods. Here is a company delivering higher spec for less and in a relatively short timeframe

[Legend]

We shall see if it really is 10 months.

 

Their other commissions have all (perhaps just most?) taken rather longer than their original prediction, as have those for Rapido and others. I have been challenged on that for the evidence in a previous post. Rather difficult to prove, without major trawling through many past threads, as the original timescale projections are deleted on their sites (with the very brave exception of Rapido, and the accidental exception of DJM).

 

If they can hold that price, given the fluctuations of the pound (it has dropped 10 cents against the US dollar in just the last four days, in which currency these are usually negotiated), and the vagaries of Chinese output costs, they will have been very brave.

True we need to wait and see. But Hattons has delivered their latest models more or less on time and at the proposed price. They obviously have some keen businessmen or women at the head, so I have some confidence in them. Meanwhile you don’t think Bachmann will increase prices?

[jjb1970]

This isn't just a UK OO issue, if you look at European HO many of the more established "large" suppliers (a relative term as in the greater scheme of things none of these companies is a corporate giant) have been struggling and being outmanoeuvred by newer, leaner new entrants. At one time needing an in-house manufacturing capability was a big barrier to entry for anybody wanting to start "manufacturing" models, but in an era of commissioning production from actual manufacturers in China that barrier has largely gone.

[Hroth]

We shall see if it really is 10 months.

 

Their other commissions have all (perhaps just most?) taken rather longer than their original prediction, as have those for Rapido and others. I have been challenged on that for the evidence in a previous post. Rather difficult to prove, without major trawling through many past threads, as the original timescale projections are deleted on their sites (with the very brave exception of Rapido, and the accidental exception of DJM).

 

If they can hold that price, given the fluctuations of the pound (it has dropped 10 cents against the US dollar in just the last four days, in which currency these are usually negotiated), and the vagaries of Chinese output costs, they will have been very brave.

The Class P and Andrew Barclay locos which Hattons are now familiar with producing, were announced in September 2017 and arrived late March and early April, a month or so later than the initial delivery estimate. Given the vagaries of dealing with China, its probable that Hattons estimate will be fairly close.

 

As for price, all manufacturers need to be brave nowadays but if they can work quickly to get the model to the shops, then there will be less exposure to risk.

 

The case of the Bachmann breakdown crane springs to mind, where the initial price estimate ballooned due to the delay in production.

[jjb1970]

Maybe Hattons have a good relationship with their factory. I've never dealt with model factories in China but I have done quite a lot with their engine builders and shipyards and although there are certain risks to catch the unwary in China it isn't the wild west den of scam artists sometimes presented.

[Andy Y]

We shall see if it really is 10 months.

 

Their other commissions have all (perhaps just most?) taken rather longer than their original prediction, as have those for Rapido and others. I have been challenged on that for the evidence in a previous post. Rather difficult to prove, without major trawling through many past threads, as the original timescale projections are deleted on their sites (with the very brave exception of Rapido, and the accidental exception of DJM).

Where Hatton's have had direct management with the factory they seem to have done quite well with forecasting a date. The P and ABs were around 3 months from the initial projection, the Beilhacks within 2 months and the Warwells were ahead of forecast. Granted the announcements were made well into the process where there can be more accuracy in dates.

[FJ1701]

Personally I think this year is an opportunity for Bachmann to become the "British brand leader of 00 model railways", a title only associated with the well known "house hold" name Hornby. But with Hornby in financial and supposedly manufacturing difficulties along with pressure from smaller retailers such as Hattons, Dapol and Rails, Bachmann should broaden their market, lower their prices and at least try solve the drought of models if you will that we are currently experiencing. The market is changing and we're in a new era of highly detailed commissioned models that threaten the big players.

 

Rory

Edited May 8, 2018 by FJ1701

[Mike Storey]

Where Hatton's have had direct management with the factory they seem to have done quite well with forecasting a date. The P and ABs were around 3 months from the initial projection, the Beilhacks within 2 months and the Warwells were ahead of forecast. Granted the announcements were made well into the process where there can be more accuracy in dates.

 

That may well be the trick Hornby have missed, although they seemed to learn that lesson with the Class 71.

[Mike Storey]

This isn't just a UK OO issue, if you look at European HO many of the more established "large" suppliers (a relative term as in the greater scheme of things none of these companies is a corporate giant) have been struggling and being outmanoeuvred by newer, leaner new entrants. At one time needing an in-house manufacturing capability was a big barrier to entry for anybody wanting to start "manufacturing" models, but in an era of commissioning production from actual manufacturers in China that barrier has largely gone.

 

True, except for the glaring exception of Piko, who seem to have worked a miracle with their costs, despite apparently using the same production outsourcing methodology.

[adb968008]

We shall see if it really is 10 months.

 

Their other commissions have all (perhaps just most?) taken rather longer than their original prediction, as have those for Rapido and others. I have been challenged on that for the evidence in a previous post. Rather difficult to prove, without major trawling through many past threads, as the original timescale projections are deleted on their sites (with the very brave exception of Rapido, and the accidental exception of DJM).

 

If they can hold that price, given the fluctuations of the pound (it has dropped 10 cents against the US dollar in just the last four days, in which currency these are usually negotiated), and the vagaries of Chinese output costs, they will have been very brave.

In the last few years, there’s really only Hornby and Hattons, whom have announced and delivered in a year time frame or abouts.

Hornby Oct 2015 announced the Peckett that arrived by Christmas 2016, At Warley 2016 they announced the SECR H, class 800 and Duchess, all of which were running on the test track at Warley in 2017..

Hattons announced the Barclay and P in September 2017, and we had them in March 2018.

Edited May 8, 2018 by adb968008

[HillsideDepot]

The Class P and Andrew Barclay locos which Hattons are now familiar with producing, were announced in September 2017 and arrived late March and early April, a month or so later than the initial delivery estimate. Given the vagaries of dealing with China, its probable that Hattons estimate will be fairly close.

 

 

Which, one could say, gave Hornby 6 months to capture the "small/pretty tank engine" market. Surely the time for the extra Peckett announcement was about a month before the Hattons models arrived, not a month after several of the first batch have sold out?

 

I'm a diesel modeller, and have a few industrial locos for a possible future project, but I would have quite liked a H&P Peckett. Coming from a Bristol builder and working for a Reading operator it has a relevance me living in Chippenham. But I was too slow. Oh well, never mind, it was always going to be pushing things a bit far to justify it. Then, along comes the Andrew Barclay, one of which is in a very similar shade of blue to two of my diesel industrials and that's what I bought.

 

A Peckett? No, not interested now.

 

Well, not unless they end up in the bargain bin, and I can't help feeling that they might just do that. And that's the last thing Hornby wants, but they've been there too often before with follow-on releases.

[jjb1970]

True, except for the glaring exception of Piko, who seem to have worked a miracle with their costs, despite apparently using the same production outsourcing methodology.

Indeed, I see Piko as perhaps the principal architects of the difficulties faced by some of the more established suppliers (in terms of market position, Piko aren't a new company but they re-invented themselves after the fall of the GDR). Piko have done two things that some seem to think can't be done in the world of models:

 

• They've managed to produce excellent models combining good detail and superb running at prices which defy the usual inflationary pressures of the hobby
• They've successfully developed a three tier range in HO to appeal to different parts of the hobby

Not to mention their efforts in G.....