Hornby secure £18 million loan

[PatB]

Outsourced production will always tend to follow the cheapest labour. 10-20 Years ago that was China. With rising wages and a growing middle class, China is no longer so cheap, so more companies are moving to the Subcontinental countries. In a decade or two it'll be somewhere else, like Indonesia or maybe southern Africa or Latin America. Maybe one day the wheel will have turned full circle and it'll be the UK and USA again, though I'm not sure if I'd want to live in either under circumstances where it might happen.

 

As for management, I think jjb made the point a few pages ago that Hornby need good managers at the helm rather than enthusiasts for their specific product. I'd concur with this. I'm old enough to remember the final death throes of the British motorcycle industry, with Triumph disappearing in a welter of obsolete unreliability and a succession of frankly hopelessly eccentric designs from small, enthusiast run outfits. Each was hailed as "The next British world-beater". Rather predictably, by anyone without rose-tinted eyewear, they all proved to be financially disastrous and functionally questionable. Things only picked up when John Bloor bought Triumph. Significantly, Mr Bloor wasn't interested in making motorcycles but he was very interested indeed in making money. Which he did. The production of a range of largely excellent motorcycles was an agreeable side effect. Of course Triumph have now gone and offshored their production but, AFAIK, they're still a successful British company thanks to competent management.

[rockershovel]

Very funny but I think 163 million Bangladeshi would be very upset if you called them Indian.

 

If production there gets delayed it can always be blamed on a typhoon or flood, that poor country seems to get far more that it's share of misfortunes.

Amended.... more than its fair share? Good question. The population of Pakistan has approximately trebled since 1960, which in a country which consists largely of mountains and active flood plains, prone to regular and severe flooding https://link.springer.com/chapter/10.1007%2F978-4-431-55369-4_4 is a major determinant. Large populations are now living in areas which within living memory, were regarded as uninhabitable, only suitable for seasonal agriculture or unsuitable for development. Edited June 16, 2018 by rockershovel

[rockershovel]

Re #251 above, Britain and the USA were never “cheapest labour” countries.

 

British became the first developed industrial nation because it had coal, iron and water in abundant quantities in a small island location where the distances to ports were short. It had financial strength from a long chain of historic sources (medieval Britain was a wealthy nation due to the wool trade, for one thing). It had a strong financial system and was at the cutting-edge of technical development. It had chronic labour shortages from the outset, mobilising its surplus agricultural population very early and importing labour, particularly from Ireland.

 

The USA was a vast area containing huge resources and very little population, resulting in labour shortages and skills shortages. American industry developed batch production, automation and assembly-line techniques for that reason. It attracted huge immigration by offering high wages and good conditions, at least compared to the available options.

 

This isn’t to say that the industrial populations of the 1750-1939 period lived well by our standards, but they did earn well by the standards of their times. Orwell makes exactly this point in “Road to Wigan Pier”, comparing the standards of living of the British unemployed with India and Asia.

[rockershovel]

Also re #251 above, Triumph DID introduce a world-beater in the 1930s, pioneering the 500cc parallel twin engine. They also developed the US market very effectively post-1945. The problem was that they retained a key figure (Edward Turner) whose actual, detailed engineering skills were well known to be the least of his qualities.

 

Turner was a major contributor as long as Triumph maintained a design team which could “sort out” his wilder ideas and general lack of detail, before they reached production.

 

BSA designed and introduced a highly successful design in the late 1940s - the Gold Flash - in a matter of months, from scratch. Kawasaki would later show that it had further potential, with the Commander (a revamped A10, basically).

 

However, Turner’s contribution was very largely history by the mid-1950s at the latest. The Japanese adopted technology from Germany in particular, combined it with American production techniques, added some genuinely original (although mostly, fairly conventional) thinking of their own and changed the game entirely. I owned a couple of early Japanese machines, and the idea that they were cheap copies made by workers earning a bowl of rice a day, was quite unfounded.

 

Triumph and BSA had no real concept of what was required.

[PatB]

I didn't mean to suggest that the UK and USA's previous position as major manufacturing nations was due to the availability of cheap labour. Poor wording on my part. However, in a globalised world, any future aspirations in that direction might have to be. I suspect that Chinese and Indian factory workers also earn well by local standards. However, again in a globalised labour market, they were and/or are cheap in comparison to workers in the OECD.

 

As for my motorcycle analogy, I'm not quite that old. I'm more thinking of the likes of Hesketh (cough), Silk (ahem), Oasis (who?), Norton's Wankels (not as good as they should have been and a technological dead end anyway) and overpriced, mediocre oddballs like the Harris Matchless G50. And how many equally hopeless stillborn projects? I can think of at least one proposal to build a parallel twin using VW air-cooled top ends, and another for a road bike built around a grass track V-twin (Godden?) lump. All fuelled by enthusiasts determined to do something the Japanese weren't doing whilst conveniently ignoring the uncomfortable fact that the Japanese were making money by making motorcycles and hardly anyone else was at the time.

 

Sorry for the partial thread derail, but I'd reiterate that, when a business is in a position when it needs to make money, management ability to make money is probably a higher priority than management ability to make toy trains. Management who can make money can hire (or in Hornby's case keep) people with the ability and experience to do the technical stuff.

[jjb1970]

The thing I find interesting about the move of Hobby Master to Bangladesh and other model producers to India is that it demonstrates the old truism that if business (or indeed, governments and individuals) doesn't want to do something then there are always reasons why it can't/shouldn't happen, once they change their mind then it just happens. We were told for years that model production was in China because of the model manufacturing clusters in parts of China and how it wouldn't be feasible to make models anywhere else etc. Now, once the figures stack up they up sticks and open up factories in other countries with no history of model production in the same way that the figures added up to outsource complex manufacturing processes from the developed economies to China in the 90's and invest in developing the local capabilities. When people say country X couldn't do something, it generally means that they couldn't do something without the requisite investment and people development, which of course is a universal truism (people forget that developed countries made those investments a long time ago). And if you really want to, you can build those capabilities very quickly with sufficient investment and good management, as evidenced by Japan, South Korea, China, Singapore, Malaysia, Turkey etc etc.

[34theletterbetweenB&D]

'Three years' was the accepted guide for manufacturing outsourcing from zero previous experience, when I was about it. That was starting with a population where about half the kids got educated to 'high school' standard, and there was transport infrastructure, power and water. Any established technology could be competently produced starting from a green field site over that time period, provided sufficient investment and expertise was put in. (Personally, I found India very good. India is a federal state and far from uniform. Go to the right locations and everything is possible.)

[Legend]

I think a lot of people are being misled , perhaps by increases in the prices of model Railway products blamed on increasing labour costs in China. they perhaps believe labour costs are reaching parity with U.K. after all 15%/20% increases over three years would tend to make people believe that. Despite the increases in costs in China it is still substantially less expensive to make something in China than the U.K. or Western Europe .And I mean dramatically less , the labour costs are still fractions of rates over here. It is difficult to make direct comparisons because it really depends on the amount of manual content in a model, so something that can be produced with a high degree of automation may well be competitively made here, whereas something with a high degree of manual assembly can’t possibly be.

 

The trouble is securing stable manufacturing facilities and reliable partners in China , added to which a long supply chain means that you are less able to react to demand. I haven’t as yet got any experience of Indian or Bangladeshi costs , I expect them to be cheap , but maybe only on a par with China , and you still have all the complexity of the supply chain.

Edited June 16, 2018 by Legend

[DJM Dave]

That doesn’t give me hope... the Mk3’s are coming slower than animals on Noah’s ark.

The dean goods weren’t much faster.

If the entire Hornby range moved to Oxfords plant, based on current performance the real Class 800’s will be obsolete before the next lot is delivered.

just as a thought here..... if the entire production moved to Oxfords current factory, could the factory cope?

bear in mind we know there are many many factories currently being used by Hornby, add to it Oxfords output, them maybe a new 'super factory' which does both manufacturers, and given its would all be in house rather than spread, you could do away with staff that go from factory to factory in China all the time, and have more flexibility.

 

The idea that you control a factory, and can therefore 'call the shots' is how things should be, so rather than wait for a production slot of, for example peckets, that take 12 months to come through, you drop a slower selling model and bash out a second run of peckets either in the same livery, or new ones, and ride the crest of that waive for a couple of releases.

 

a new livery comes along? straight on it, no messing about. out in the shops within 4 months. Almost a perfect scenario if you have quick thinking and forward looking staff and your own factory.

[Allegheny1600]

The trouble is securing stable manufacturing facilities and reliable partners in China , added to which a long supply chain means that you are less able to react to demand. I haven’t as yet got any experience of Indian or Bangladeshi costs , I expect them to be cheap , but maybe only on a par with China , and you still have all the complexity of the supply chain.

Don't forget about all the palms to be greased, from government officials to folk who make things happen.

Corruption?

Why, yes - of course - it's how things work.

It's not something that is generally considered "over here" but in cultures like these, its par for the course and really, the only way to get things done.

[Legend]

Don't forget about all the palms to be greased, from government officials to folk who make things happen.

Corruption?

Why, yes - of course - it's how things work.

It's not something that is generally considered "over here" but in cultures like these, its par for the course and really, the only way to get things done.

Agreed , also China has a very liberal view on Intellectual Property . It really is still a different culture .

[jjb1970]

When I first visited China 25 years ago it was basically a third world country. Even Shanghai was very basic once you left the Bund. When I visit China now in the cities at least and seeing some of the big civil engineering and infrastructure projects I really can't help asking myself which side of the world is less developed these days. Similarly the first time I visited Korea it was nothing to get excited about, now it makes Europe feel a bit backwards.

I used to do a lot of work with Chinese ship yards and equipment designers and they were developing some seriously impressive designs and technology which were worrying the South Korean's and Japanese.

[adb968008]

When I first visited China 25 years ago it was basically a third world country. Even Shanghai was very basic once you left the Bund. When I visit China now in the cities at least and seeing some of the big civil engineering and infrastructure projects I really can't help asking myself which side of the world is less developed these days. Similarly the first time I visited Korea it was nothing to get excited about, now it makes Europe feel a bit backwards.

I used to do a lot of work with Chinese ship yards and equipment designers and they were developing some seriously impressive designs and technology which were worrying the South Korean's and Japanese.

Completely agree 100%.

The point you missed there was the “just do it” culture. Once a decision is made, it starts and it’s concluded in very short timescales.

When it comes to infrastructure projects, like Heathrow, the runway would have been operational a decade ago., as would HS2, which would have a terminal under Heathrow and under Euston, rather than half way between two major points that have no connecting road infrastructure and a long way from its two largest passenger sets.

 

I first went to Shanghai 20 years ago, people bicycling with 12ft stacks of boxes along a motorway from the airport. Beijing wasn’t much different. Whilst everyone has cars now, and somewhat decent ones, they also have a crazy smog problem in many cities. I frequent HK regularly too.. that city 20 years ago bears no resemblance to HK today.

Edited June 16, 2018 by adb968008

[phil gollin]

Agreed , also China has a very liberal view on Intellectual Property . It really is still a different culture .

.

 

Much like the United States' "liberal view" when it was industrialising  -  the reason copyright laws were strengthened in the first place

Edited June 16, 2018 by phil gollin

[Mike Storey]

Completely agree 100%.

The point you missed there was the “just do it” culture. Once a decision is made, it starts and it’s concluded in very short timescales.

When it comes to infrastructure projects, like Heathrow, the runway would have been operational a decade ago., as would HS2, which would have a terminal under Heathrow and under Euston, rather than half way between two major points that have no connecting road infrastructure and a long way from its two largest passenger sets.

 

I first went to Shanghai 20 years ago, people bicycling with 12ft stacks of boxes along a motorway from the airport. Beijing wasn’t much different. Whilst everyone has cars now, and somewhat decent ones, they also have a crazy smog problem in many cities. I frequent HK regularly too.. that city 20 years ago bears no resemblance to HK today.

Quite so. If you completely politicise the legal system, avoid all concept of human rights, don't even bother with planning controls, evade all issues regarding equitable compensation for individual loss, and play footsie with environmental problems, you can definitely make things happen and very quickly.

 

Wow, I can't possibly imagine how that would get voted in by a democratic process. You would obviously seek to avoid the determination of supranational institutions so that sovereignty became the only determinant, but only if that did not interfere. Brilliant.

 

Bring it on. Just let me ensure I can get around your democratic decision first, of course, by relocating my business, and applying for resident status in somewhere that does want to enforce these matters.

[jjb1970]

.

 

Much like the United States' "liberal view" when it was industrialising  -  the reason copyright laws were strengthened in the first place

 

It's a pretty standard route followed by many industrialising and developing countries to some extent, and always has been.

[adb968008]

Quite so. If you completely politicise the legal system, avoid all concept of human rights, don't even bother with planning controls, evade all issues regarding equitable compensation for individual loss, and play footsie with environmental problems, you can definitely make things happen and very quickly.

 

Wow, I can't possibly imagine how that would get voted in by a democratic process. You would obviously seek to avoid the determination of supranational institutions so that sovereignty became the only determinant, but only if that did not interfere. Brilliant.

 

Bring it on. Just let me ensure I can get around your democratic decision first, of course, by relocating my business, and applying for resident status in somewhere that does want to enforce these matters.

Wow that’s terrible.

I suppose you don’t buy anything made in China then as otherwise you’d be supporting it, including our great hobby.

 

Whilst not disagreeing with your view point, China is still developing, in much the same way the US and Europe was 100-150 years ago. Do you suppose there was much consideration for UK people’s rights when WW2 started, or when many of our great architectural merits of the Victorian times were built ?

 

Democracy is good, but all it’s done is slowed the inevitable.. Heathrow was always going to get a new runway and terminal, someday it will cover the reservoirs too. Meanwhile Sipsons residents were stuck in limbo unable to sell their homes for 20 years waiting for what they always knew was going to happen eventually. Sure they’ll get compensation but prices are well below average, that is those left which Heathrow Airport haven’t already bought cheaply the last few decades.

 

Similarly when 1 person is able to hold up major beneficial projects for the country as a whole, for years and at mass costs, then arguably democracy is also being abused... democracy is meant to be about majority..

 

I travel a lot to Africa too, and China is modernising the whole continent, sure it’s for their own ends, in the same way of colonial times it was for our ends. But where there’s China in Africa there’s stability, whereas with Western democracy in Africa If we don’t like who’s democratically elected we isolate them, let civil war kick off until they democratically re-elect someone we do like.

 

Swings and roundabouts, we rile against it, get out our flat pack made in China moral high grounds and pontificate, but yet we have no qualms of reaping the benefits of it, in China or closer to home.

 

Anyways we’re way off topic.

Edited June 16, 2018 by adb968008

[sandwich station]

I didn't mean to suggest that the UK and USA's previous position as major manufacturing nations was due to the availability of cheap labour. Poor wording on my part. However, in a globalised world, any future aspirations in that direction might have to be. I suspect that Chinese and Indian factory workers also earn well by local standards. However, again in a globalised labour market, they were and/or are cheap in comparison to workers in the OECD.

 

As for my motorcycle analogy, I'm not quite that old. I'm more thinking of the likes of Hesketh (cough), Silk (ahem), Oasis (who?), Norton's Wankels (not as good as they should have been and a technological dead end anyway) and overpriced, mediocre oddballs like the Harris Matchless G50. And how many equally hopeless stillborn projects? I can think of at least one proposal to build a parallel twin using VW air-cooled top ends, and another for a road bike built around a grass track V-twin (Godden?) lump. All fuelled by enthusiasts determined to do something the Japanese weren't doing whilst conveniently ignoring the uncomfortable fact that the Japanese were making money by making motorcycles and hardly anyone else was at the time.

 

Sorry for the partial thread derail, but I'd reiterate that, when a business is in a position when it needs to make money, management ability to make money is probably a higher priority than management ability to make toy trains. Management who can make money can hire (or in Hornby's case keep) people with the ability and experience to do the technical stuff.

The British bike industry sat back on it's laurels and didn't modernise with the times. That was there downfall.

Edited June 17, 2018 by sandwich station

[LBRJ]

I didn't mean to suggest that the UK and USA's previous position as major manufacturing nations was due to the availability of cheap labour. Poor wording on my part. However, in a globalised world, any future aspirations in that direction might have to be. I suspect that Chinese and Indian factory workers also earn well by local standards. However, again in a globalised labour market, they were and/or are cheap in comparison to workers in the OECD.

 

As for my motorcycle analogy, I'm not quite that old. I'm more thinking of the likes of Hesketh (cough), Silk (ahem), Oasis (who?), Norton's Wankels (not as good as they should have been and a technological dead end anyway) and overpriced, mediocre oddballs like the Harris Matchless G50. And how many equally hopeless stillborn projects? I can think of at least one proposal to build a parallel twin using VW air-cooled top ends, and another for a road bike built around a grass track V-twin (Godden?) lump. All fuelled by enthusiasts determined to do something the Japanese weren't doing whilst conveniently ignoring the uncomfortable fact that the Japanese were making money by making motorcycles and hardly anyone else was at the time.

 

Sorry for the partial thread derail, but I'd reiterate that, when a business is in a position when it needs to make money, management ability to make money is probably a higher priority than management ability to make toy trains. Management who can make money can hire (or in Hornby's case keep) people with the ability and experience to do the technical stuff.

 

I would go the opposite way.

 

If you know what you are doing (in a field that can be profitable) its easy to make money....The management bit can be learned or bought in.

 

I am sure that many of the problems of "British Industry" are, and long have been, down to a weird belief that there is a "manager class" who can run anything they turn their hand too; a belief mainly propogated by the talk and back scratching merry-go-round actions of that supposed manager class itself

[PatB]

I would go the opposite way.

 

If you know what you are doing (in a field that can be profitable) its easy to make money....The management bit can be learned or bought in.

 

I am sure that many of the problems of "British Industry" are, and long have been, down to a weird belief that there is a "manager class" who can run anything they turn their hand too; a belief mainly propogated by the talk and back scratching merry-go-round actions of that supposed manager class itself

I don't think it's necessarily possible to manage effectively without at least a basic understanding of the end product. However enthusiasts will often tend to make business decisions based on sentiment rather than solid data, and historically that has probably led to ruin more often than to success.

 

In a Hornby context, I'd see the (gas? ) axing of the Thomas range as a victory of pragmatism over sentiment, for example.

[Clearwater]

You don’t think Rockershovel that you can’t find the David Cameron quote because it never happened? That’s the very definition of fake news to “quote” someThing you would like someone to have said because it supports your argument.

 

Your post on the “hereditary” principle of management doesn’t bear any serious scrutiny. I doubt you can name a single Chief Executive of a major, UK public company who has inherited the position. Chief Execs I’ve come across, ditto other board directors, Chaimrnen, NEDs I’ve come across tend to be extremely smart, switched on and shrewd individuals. They are highly taleneted and, I’d wager, probably succeed in many fields.

[Andy Y]

You don’t think Rockershovel that you can’t find the David Cameron quote because it never happened? That’s the very definition of fake news to “quote” someThing you would like someone to have said because it supports your argument.

Your post on the “hereditary” principle of management doesn’t bear any serious scrutiny. I doubt you can name a single Chief Executive of a major, UK public company who has inherited the position. Chief Execs I’ve come across, ditto other board directors, Chaimrnen, NEDs I’ve come across tend to be extremely smart, switched on and shrewd individuals. They are highly taleneted and, I’d wager, probably succeed in many fields.

I do agree with all of the above but I have removed Rockershovel's political post - he has been warned several times about derailing topics with politics.

[rockershovel]

You don’t think Rockershovel that you can’t find the David Cameron quote because it never happened? That’s the very definition of fake news to “quote” someThing you would like someone to have said because it supports your argument.

Your post on the “hereditary” principle of management doesn’t bear any serious scrutiny. I doubt you can name a single Chief Executive of a major, UK public company who has inherited the position. Chief Execs I’ve come across, ditto other board directors, Chaimrnen, NEDs I’ve come across tend to be extremely smart, switched on and shrewd individuals. They are highly taleneted and, I’d wager, probably succeed in many fields.

You appear to have overlooked, or misunderstood my whole post, I’m afraid.

 

I described the David Cameron quote as “apocryphal” https://en.oxforddictionaries.com/definition/apocryphal because that seems a good description. There are certainly numerous, easily attributable sources describing him as a man of unbounded self-confidence, and the quote is widely repeated by reporters and others who knew him to varying extents and degrees. Having been a “scholarship boy” at a minor public school, long ago, I find it a very recognisable image.

 

You also appear to have completely misunderstood my third paragraph, regarding the nature and origins of the “management class” and their function as the appointed executive arm of the hereditary wealth-holders.

[adb968008]

Wow, in one page we’ve gone from Hornbys £18mn, to China is terrible, as is UK management and landed back on David Cameron...

 

All without once blaming Europe.

 

That’s a feat in itself.

 

So, what do we think Hornby will do with £18mn ?

Edited June 17, 2018 by adb968008

[The Stationmaster]

I don't think it's necessarily possible to manage effectively without at least a basic understanding of the end product. However enthusiasts will often tend to make business decisions based on sentiment rather than solid data, and historically that has probably led to ruin more often than to success.

 

In a Hornby context, I'd see the (gas? ) axing of the Thomas range as a victory of pragmatism over sentiment, for example.

 

The latter takes us to an interesting (and worrying?) example of Hornby's current marketing malaise - an area where they have definitely gone backwards since the new regime arrived.  So the Thomas range is axed but what do we find in the July issue of 'the Modeller'  - a full page multi-colur ad for the three trainsets in the Thomas range  .  This ad tells us to visit Hornby or our local model shop to purchase one of the three advertised sets and 'start our Thomas adventure today'; just as well the 'local model shop' is mentioned as Hornby themselves only have two of the sets in stock, the third one is 'out of stock'.

 

So what is the ad about?  Is it a bid to try to clear stocks of the Thomas range or is it a matter of Hornby's left and right hands not communicating with each other?  And why, on their website, are some items shown as 'sold out' while others are shown as 'out of stock' - does the latter imply they will be restocked?  It could all of course be a simple error but equally it really does give an impression of either a lack of connection between marketing and company policy,or maybe an act of desperation to clear stock?