Hornby plc 2021 Interim Results

[Markwj]

While we may never know would Hornby be in the black had their new releases arrived on time? There will be a substantial amount tied up in the apt project and the train packs haven’t yet arrived. A quick look at the kernow model centre website shows 196 Hornby products of various values awaited and these don’t include items such as the apt train packs.

 

The bringing manufacturing back to the uk will rumble on and on probably forever. The recent program showed a simple kit being made and packed but the model rail items are much more complex and labour intensive. Are the skills required available in the Uk? Would people want to work in the industry where there are potentially less fiddly jobs available for the same money elsewhere?

Hopefully the next results will show a healthier balance sheet.

 

[Legend]

It is very difficult making comparisons between labour costs China and rest of world because of the different conditions they have in China . Quite often , for instance living accomodation can be provided as part of job . However as a generality labour costs are about 1/5th of what they are here , just to give you some idea of the scale it would need to change to make it viable to produce here . The reality of it is that anything that involves manual labour is unlikely to return on cost grounds 

 

There are other factors , however .  Shipping costs that have seen Container shipments go from $2k to $19k is a big one .Depends whats in container but still unlikely to offset lower labour costs. But politically there are differences between us .  Hong Kong, Uyghur Muslims , Taiwan , ownership of South China Sea.  Is it wise to have all your manufacturing in the China basket  who could cut you off at a stroke . Look at relations between Australia and China as an example .  So I think if I was a manufacturer id be looking around . Vietnam, Thailand , India but also a little closer to home Turkey (also not without political risk) Slovakia.

 

 

[Mike Buckner]

1 hour ago, cbrooks122000 said:

their locos are beginning to go into the luxury category with their current pricing

 

 

Exactly

 

[Legend]

1 hour ago, cbrooks122000 said:

 Trouble is their locos are beginning to go into the luxury category with their current pricing which means that their customers will be expecting a lot more. 

 

I actually dont have anything on order from Hornby at moment . I have a Rails /Bachmann 812  and Precedent on order both around £200-£220.  Accurascale Deltic at £160 . I want them  but its not just the cost thats a factor but how often you use them . I have models I've bought that havent been on the layout for years . I find it hard to justify spending £200 on something that only sees occasional use . So I've really been scaling back as the cost increases , wheras I might be more tempted to buy at £100-£150

[JohnR]

3 minutes ago, Mike Buckner said:

 

 

Exactly

 

 

I think we forget that they always were in the "luxury" category. 

 

When I was a kid in the 70s, I wouldnt have described our family as poor, but my dad was in skilled manual labour, and I would be lucky if I got a new loco at Christmas, or for my birthday. Usually it would be something else, like a coach or such like. Pocket money was saved up for wagons. 

 

Now, I buy more locos in a single year than I got in total as a kid. My own son has his own model railway, and that gets regular purchases too - he also has more stock than I ever had. No. 2 son has just had a Hornby PlayTrains set for his birthday - he's eager to get "proper" Hornby models too. 

 

[37114]

1 hour ago, Legend said:

  So I think if I was a manufacturer id be looking around . Vietnam, Thailand , India but also a little closer to home Turkey (also not without political risk) Slovakia.

 

 

Agree, there are plenty of alternatives to China that you would look at before moving production to the UK. The shipping disruptions and costs from China are making many companies look at moving the supply chain to start west of China but there are plenty of attractive manufacturing locations you would explore before arriving at Thanet.

 

Automation will over time have an impact but historically has required an element of certainty and volume of work required to play back but things are changing. I went to visit a facility yesterday that is developing bespoke automation using 3d printed parts to enable much shorter payback and flexibility of machine use but there are limitations. If you could get to a point where you nearly fully automate the assembly of a model then you have a fighting chance of making it in the UK but I doubt that is anywhere near feasible in the short to medium term

[Mike Buckner]

53 minutes ago, JohnR said:

I think we forget that they always were in the "luxury" category. 

 

Not sure about that. I read in one of the Ramsay's books that the production run of Princess Elizabeth was over three-quarters of a million.

 

Some prices for comparison below.

In the 1960 Tri-ang catalogue:
R52 Tri-ang Class 3F 0-6-0 tank:   £1.12.6d
R53 Tri-ang "Princess" 4-6-2 loco:   £2.14.0d

Source:
https://www.ebay.co.uk/itm/234307782155?hash=item368dd5060b%3Ag%3ATvAAAOSwYDRhaven&mkevt=1&mkcid=1&mkrid=710-53481-19255-0&campid=5338464579&customid=SI_triang%2Bcatalogue%2Blist&toolid=10049

In 1968 a Baird 701 colour television cost £279. A black and white set cost cost about £70.
Source:
https://www.retrowow.co.uk/social_history/60s/how_much_did_things_cost.html

 

Last month I bought a 32" Smart TV for £185. The majority of locos now cost more than £100, and a significant proportion are above £200.

 

While I do rejoice that many people's affluence permits them to consider £200 as fairly everyday expenditure, for me it's beyond "luxury", more "unaffordable".

 

[JohnR]

17 minutes ago, Mike Buckner said:

 

Some prices for comparison below.

In the 1960 Tri-ang catalogue:
R52 Tri-ang Class 3F 0-6-0 tank:   £1.12.6d
R53 Tri-ang "Princess" 4-6-2 loco:   £2.14.0d

 

 

 

The cost of the Princess Elizabeth was not far off what my Dad was earning in a week, several years later. 

[woodenhead]

5 hours ago, adb968008 said:

OOworks have made a successful business out of rtr high detail (indeed detail that surpasses China) using Brass etc.

Their price is not off the planet either, c£300… the Dublo Duchess was £300 and i’d say OOWorks product is the better detailed quality model.

 

https://ooworks.co.uk
 

 

What the heck @adb968008.  Don't be showing me lovely dinky LSWR locos when I am attempting to shed my other ex LSWR locos

[The Stationmaster]

12 hours ago, Steamport Southport said:

 

Okay.

 

I would really want to work in a factory making Hornby models. I've worked on production lines before so I'm skilled.

 

I want £15 an hour for a forty hour week*. Deal? That's the going rate I'm afraid. £30,000 before taxes is not a huge amount for a family man to earn in a year. Some get that much in benefits.

 

You only need about another 500 people to join me and you can make Hornby models in the UK again.

 

That's £300,000 a week in wages. 50 weeks a year. £15 million a year on wages alone.

 

Production is not coming back to the UK. It's gone for good. The days of being able to pay hundreds of middle aged women a pittance to make Hornby models are gone thankfully. That's what killed off the original Hornby, spiralling wage costs due to the fact you couldn't pay women less anymore bankrupted the company.

 

Some photos of the old Hornby here. Most of those factories are long gone and so are the jobs. They aren't coming back.

 

https://www.liverpoolecho.co.uk/news/nostalgia/gallery/pictures-liverpool-factories-through-years-8175975

 

 

*National Living Wage is getting on for £11 an hour for an unskilled worker. 

 

 

 

Jason

Also don't overlook the fact that the wages staff receive are only a part of the total cost of employing somebody.  Even for basic assembly process I wouldn't be surprised if the overall cost per UK employee in this type of business would be getting on for double their wage cost.    Equally of course additional costs per employee in China have gradually risen over the past decade or so - hence one reason why the UK retail price of Chinese manufactured model railway items has also increased.

[The Stationmaster]

3 hours ago, SamThomas said:

Bit sexist arn't we ? Please don't talk about my late mother like that (as it happens she actually worked at Triang Westwood).

 

There is an ample potential labour force in the Thanet area willing to work for far less than your quoted £15/hour.

 

I don't see the point you are trying to make quoting Hornby Liverpool - we are talking Hornby Margate here - the Hornby that has an empty factory behinf the offices.

An empty factory building which hasn't been used for years, doesn't belong to Hornby, and would probably cost a small fortune to bring up to modern standards and equip.  it would be cheaper for them to buy a piece of land and build a factory from scratch but it would still cost a lot of money that they haven't got.

[JohnR]

23 minutes ago, cbrooks122000 said:

In 1960 £20 a week wages was a fortune. I think you could buy a house for about £400.

 

My Dads first pay packet after he had finished his apprenticeship (in 1967, I think) was just under £3 a week. 

[AY Mod]

46 minutes ago, cbrooks122000 said:

The real criminal bit is that a lot of Hornby locos that they are charging nearly £200 are slightly modified locos that are over 10 years old, Sam in his videos regularly states it on certain locos. I bought a rebuilt Merchant Navy off Amazon a couple of months ago, as Amazon were doing them really cheap. I was horrified to find it was virtually the same loco as some of my  year 2000 ones.

 

I think you need to look at a bigger picture. This topic is about a business's P&L.

 

The same model produced in 2020 will cost more to make than the one in 2000. Fact.

Are they overpriced? Seeing as the manufacturer barely makes a profit then the answer is no considering their current supply chain and structure.

Are they too dear for you? That's a different question which only you can answer.

Will they be any cheaper when they next get made in China? No.

Would they be any cheaper made on the doorstep? Absolutely not.

 

So, apart from paying less (because that suits your pocket) what do you want? Manufacturers to make a loss, make people redundant and eventually disappear?

 

Just because you don't want to pay the price doesn't mean it's too dear.

 

I am so, so bored with the rubbish that gets spouted on this subject.

[Simon Lee]

39 minutes ago, The Stationmaster said:

Also don't overlook the fact that the wages staff receive are only a part of the total cost of employing somebody.  Even for basic assembly process I wouldn't be surprised if the overall cost per UK employee in this type of business would be getting on for double their wage cost.    Equally of course additional costs per employee in China have gradually risen over the past decade or so - hence one reason why the UK retail price of Chinese manufactured model railway items has also increased.

 

When I was a TU rep on on the railway, I had an interesting conversation with an HR Manager about the real costs of employing someone. He stated that over and above the headline salary on the payslip, the additional costs to the employer were in the region of 30%.

 

My other half here in Germany is an HRBP for a multi national, she works on the same margin when assessing offers to candidates she interviews.

 

I was reading on Facebook earlier today the usual suspects demanding that we should boycott Hornby until they return manafacturing to the UK. Out of interest I Googled minimum wage China, it appears each province sets its minimum, Shanghai being the highest at approx 400 USD per month. The UK minimum wage is 1300GBP equates to roughly 1700 USD both China and UK figures based on a 40 hour week.

 

Whilst the figures are not an exact numbers, it illustrates I think, exactly why manafacturing will not be returning to the UK anytime soon.

 

Anyone with more accurate figures feel free to post corrections.

 

 

 

 

[Miss Prism]

13 hours ago, Steamport Southport said:

https://www.liverpoolecho.co.uk/news/nostalgia/gallery/pictures-liverpool-factories-through-years-8175975

 

Some interesting images there, Jason:

 

 

[mdvle]

 

3 minutes ago, Simon Lee said:

Whilst the figures are not an exact numbers, it illustrates I think, exactly why manafacturing will not be returning to the UK anytime soon.

 

Anyone with more accurate figures feel free to post corrections.

 

Jason (Rapido Trains) covered this during the Rapido Trains UK Live event held last month and gave some figures - anyone interested can watch it on the Rapido Trains UK YouTube page.

 

While I can't remember the figures, they are still dramatically lower than the western world.

[adb968008]

6 minutes ago, Miss Prism said:

 

Some interesting images there, Jason:

 

 

Staged photograph, that or someones in trouble for sending that bottom right most chassis on its way with no armature in it, and as a 4-6-0.

 

 

Edited December 3, 2021 by adb968008

[mdvle]

5 hours ago, JohnR said:

 

Dont they sell the Rivarossi stuff in the US? Didnt the Big Boy come out recently?

 

Not anymore - Hornby (aka Rivarossi) left/abandoned the US market several years ago.

 

They did bring out the old Big Boy tooling to do a run recently given that there was a special event of some sort with the real thing - but then again so did several other manufacturers (Athearn, Trix, Broadway Limited) so how much profit they made is questionable.

[mdvle]

4 hours ago, SamThomas said:

There is an ample potential labour force in the Thanet area willing to work for far less than your quoted £15/hour.

 

Perhaps.

 

What many tend to forget is that assembly of model trains is skilled labour (and thus pays higher wages), and also is a very tedious repetitious job that not everyone can do.

 

4 hours ago, cbrooks122000 said:

As we are beginning to notice, previously Shipping didn't cost anything, now it is becoming a significant item.

 

Perhaps.

 

Shipping costs went up because demand exceeded supply - but a lot of that demand was transitory in nature as people stuck at home and unable to travel switched their spending.  As things open up again and people return to traveling that consumer spending will balance out again, thus dropping demand and bringing shipping costs back down.

 

We have already seen that with wood prices, where in the US they went up to crazy levels as everyone tried to renovate their homes but prices have dropped back down as demand has dropped to more normal levels.

 

4 hours ago, cbrooks122000 said:

Then it appears China is swamped with work, so the labour costs are rising and it is getting difficult to get production slots.

 

The biggest problem in China was power reliability followed by (as above) temporary increased demand.  China will sort out the power issues, demand will likely drop to more normal levels, things will return to pre-Covid.

 

(to be clear though many companies in many sectors are looking into leaving China for a variety of reasons, but they aren't returning to the west).

 

2 hours ago, Mike Buckner said:

In 1968 a Baird 701 colour television cost £279. A black and white set cost cost about £70.

Source:
https://www.retrowow.co.uk/social_history/60s/how_much_did_things_cost.html

 

Last month I bought a 32" Smart TV for £185. The majority of locos now cost more than £100, and a significant proportion are above £200.

 

Price comparison from the past, particularly when using different products, has many issues.

 

The TV of the past was full of many physical items.

 

The TV of today is all electronics and has seriously benefited from the price reductions with time the electronics industry has achieved - but that price reduction doesn't apply to all sectors of consumer spending.

 

While TV  prices have fallen in the last 10 years most other items (cars, food, etc.) have increased in price.

[AY Mod]

8 minutes ago, cbrooks122000 said:

As I read it Shipping costs have increased because the Shipping companies have decided to band together to set prices,

 

  

8 minutes ago, cbrooks122000 said:

they make more on other products than model railways. 

 

 

Lizard people, a bus on the moon and Freddie Starr ate my hamster.

 

Prices rose because a shortage of containers (as they were in places where they wouldn't normally be) and ships spending longer on the water, falling behind their schedules and the whole industry running round in circles trying to make it all work. 

[younGGuns7]

9 minutes ago, AY Mod said:

 

  

 

 

Lizard people, a bus on the moon and Freddie Starr ate my hamster.

 

Prices rose because a shortage of containers (as they were in places where they wouldn't normally be) and ships spending longer on the water, falling behind their schedules and the whole industry running round in circles trying to make it all work. 

Correct Andy, the whole process of getting goods into the country and not just China, my main dealing is India, is horrendous and when it arrives it is still a task. Raw materials are constantly jumping up and such things as plastic has spiraled out of control

[mdvle]

7 hours ago, adb968008 said:

OOworks have made a successful business out of rtr high detail (indeed detail that surpasses China) using Brass etc.

Their price is not off the planet either, c£300… the Dublo Duchess was £300 and i’d say OOWorks product is the better detailed quality model.

 

The Dublo Duchess was also a limited edition collectors item aimed at nostalgia and not accuracy and its higher price reflected that.

 

But a general caution - picking an example without knowing all the details can often result in misleading interpretation.

 

I don't know how OOworks operates, but over in the US a constant issue brought up is how Kadee or Accurail can make stuff in the US so why not X.

 

But this omits the realities of those products - that Kadee has carefully chosen easy to assemble products that can use up spare capacity in their coupler making business (and thus they actually produce very little rolling stock each year - or how Accurail is simple generic models with molded on details produced in kit form.

 

Neither of those business methods translates into the type of models that most people want today

 

7 hours ago, adb968008 said:

Unless I wasnt paying attention fully, the recent Hornby episode showed them making Airfix kits in the UK, though it seemed as if they were giving the manufacturer a tough ride, i’m sure that’d fly in China.

 

Conveniently Airfix kits also don't have all that annoying labour intensive requirements that model trains have - painting, assembly, etc.

 

This makes kits something that can potentially be made in a western country.

 

7 hours ago, adb968008 said:

I think the future will see more activities like Rails, and Silverfox… 3D rtr, it can deal with bespoke smaller runs of niche items,

 

Also worth though noting the complaints with Rails 2nd 3D printed offering, with the compromises that 3D requires more apparent on the GWR Iron Mink than the first offering.

 

3D printing has improved a lot over the last 10 years but it still has a long way to go to get up to the level of injection made products.

[adb968008]

There is no evidence of collusion.

A test case was brought by MCS Industries in the US with the Federal Maritime Comission against MSC and Cosco alleging collusion.

 

However the parties settled out of court in a confidential agreement, less than a month later.

 

https://www.porttechnology.org/news/settlement-in-cosco-and-mcs-industries-shipping-dispute/

You can bet if there was a real claim, US corporations, much larger than model railways, would be all over it, big style. 

Its free market forces, if you've got enough dosh, buying a container ship probably isn't the worst investment right now. 

Hapag Lloyd are paying $130,000 a day to hire a ship for 90 days, that its owner paid just $10m for in November 2019

 

https://theloadstar.com/hapag-lloyd-stumps-up-eye-watering-130000-a-day-for-panamax-charter/

 

do the math… $130k x 90 days…$11.7mn

The ship carries 4253 TEU (20’ containers).

 

Assuming its one out and back 90 day voyage (6 weeks either way), So each container is looking at $2751 each, just as rental of the ship portion, plus other costs, and yes profit.

 

Someone really wants there product delivered, desperately, if HL can afford to spend that in order to deliver.

 

Its not just containers in short supply, its everything, every product from raw material to us the customers waiting for it… its all about how much were prepared to pay for it, that defines the priority…

 

Charles Darwin is at work, its not the strongest, or the fittest that will survive, but the companies most able to adapt to change.

 

This problem is going to last until new transportation / containers / suppliers etc enter and flood the market over the next few years, or until consumer demand fails and orders are canceled/not placed… either way it’ll lead to on going inflation for sometime yet.

Edited December 3, 2021 by adb968008

[mdvle]

21 minutes ago, cbrooks122000 said:

As to the cost of cars rising, well you are not telling the whole story. Probably if you made a 1980s car, you probably could make it quite cheap, but a modern car has so much in emission controls and the need to meet current legislation.

 

This applies to our models as well.

 

A 1980s model, with no added on details made to 1980s standards (no environmental regulations) would be much cheaper to make as well.

 

One of the hidden reasons for the move to China was to avoid some of the growing regulations that happened.

 

21 minutes ago, cbrooks122000 said:

TVs are cheap because there is a constant price war going on, it happens with most electronic components. They would charge you a couple of thousand pounds for a TV if they could get away with it.

 

There isn't as much competition in electronics as people think - as you work your way up the production chain you end up with a handful or less of companies making things.

 

And many of those electronics companies are often being found guilty of price fixing - and given how poor the investigation of this anti-competitive behaviour is that problem is likely far worse.

[Bernard Lamb]

15 hours ago, cbrooks122000 said:

A lot of people go on about the UK is too expensive to make anything, if you say it enough to yourself then you will believe it. Yes the manual operations will be more expensive, but it is not that they are making millions of the things. Communicating with a remote manufacturing operation can easily eat lots of money. The bodies are probably make by a machine as will be the chassis, probably that machine would be the same if it was in China or the UK. In my last job we bought a load of PCBs from China because they were cheap, then I went to an exhibition in this country and found that as they all use the same machinery a UK company could match them for price. A big issue with Hornby is that with their locomotives there is no standard, go look at the number of wheel sets you can get for say a Duchess, generally they are the same set of wheels just with a different part number, so that duplication will cost money. Just look at the number of motors they use, if they standardised on set types they could save money and probably get them cheaper. I think you will find a set of A4 conrods will fit a Duchess and vice versa but they have different part numbers.  I noticed on the Tornado locos they even use different size conrod screws, you could say that the smaller diameter screws will save them money, but again I doubt they make enough of them to save any money, if they do it is probably lost in the added complication of specifying different parts. Trouble is, on the model railway side it is becoming a specialised market where they seem to think increasing the price, the market will always pay. Eventually, they will reach a price where people won't pay it anymore, then they will really be in trouble.

In theory you make out a good case.

However in the real world that most of us inhabit things are not like that.

It might have escaped your notice but Hornby have their models made in different factories.

They go to the supplier and ask for so many of locomotive X.

They do not purchase the components as individual parts.

They might have more control over production than they did some years ago. However if you do not own the factory you ultimately have no say in how they work, that applies to any country let alone China.

Despite what you claim it is actually cheaper to do it this way than to make 2000 parts for 4 batches of 500 for different locomotives. 

I suggest you stick to working with software and leave the production side of things to those who know a bit about it.

As for reaching a price limit. How many recent models have sold out?

Bernard