Cost of living crisis - impact on our hobby

[GWR8700]

I often see criticism of rising prices shut down on here on the basis that, "People have always moaned about rising prices."

 

While true, this ignores the economic reality that wages have stagnated over the last decade.  Price rises, compounded with stagnating wages and now a cost of living crisis will inevitably lead to less money spent on the hobby as disposable incomes are squeezed.

 

I am sure I am not alone in spending less money than I used to on this hobby and unfortunately I believe the market is reaching saturation point.  Less suitable prototypes are available to model, more manufacturers are entering the market and people have less money to spend which makes me think the current boom is sadly coming to an end.

[Nearholmer]

Remember the 1970s?

 

Well, things are progressively feeling more and more like that, and for those who don’t remember that time: people had less money for optional stuff than they do now, and there was a great deal less optional stuff to choose from upon which to spend the spare money you did have.

 

Compared with now, everything was “turned down a few notches”, fewer mags, fewer exhibitions, fewer new releases, fewer things ‘ready to plant’ on a layout. The one thing that was ‘turned up’ was the supply of bits with which, given patience and skill, it was possible to build your own models.

 

In this hobby, things did actually progress quite a bit in the late-70s, so in that respect it was a strangely optimistic time; what I expect to happen now is the reverse, which could be a tad deflating to experience.

 

So, that’s how I see the coming few years at least: not a sudden cessation of anything, but a gradual turning down of the wick, and not just in our hobby, in everything. How severely that affects each individual will depend how much the wick can be turned down in their life without the light going out with a fizzle. Some people have the wick turned up very high at present, others have the lamp just flickering already.

 

In some senses, and only provided that the least well off are protected, it’s no bad thing, because, to continue the tortured illumination analogy, we’ve been burning the candle at both ends in terms of consumption of natural resources, accumulating piles of unnecessary stuff never dreamed of by our predecessors.

 

 

 

 

 

Edited June 27, 2022 by Nearholmer

[mdvle]

21 hours ago, Andy Hayter said:

Covid and traders

Also as noted above, the  inability to discuss needs face to face will undoubtedly stop some potential customers from even starting a project (as in perhaps to install signals or whatever).

 

As noted by someone else in this thread the face-to-face aspect of shows is a bit over rated in importance.  The limited number of hours means they simply aren't dealing with many customers in a discussion basis.

 

What they likely do need to do though is start/continue to participate online - whether using RMweb or Facebook or some other online forum - where not only do they get the equivalent in terms of info of a face to face discussion by the added benefit of the multiplier - all those other people who read the exchange even if they don't participate.

 

21 hours ago, Andy Hayter said:

Cost of living influences

 

 This is of course what the OP was asking about.  More and more I read of people who have all of their big ticket items so the increase in cost of living will not impact their hobby very much.  Very much an "I'm alright Jack attitude."  But what about the rest of us and, importantly, new comers and collectors?   By October this year, I guestimate that the increase in gas and electricity for the average household will have gone up in 18 months by the equivalent of 1 large loco per month!  The cut in disposable income will hit modellers pockets and many will have to cut back on their purchases. 

 

There is truth to this, but for some fraction of the hobby it will also be more about cutting elsewhere - like the long awaited holiday abroad - that allows the hobby to continue.

 

I think the ones who should be more concerned are the places - usually warm and sunny - whose economies have evolved to rely on tourism and have been hit hard by Covid, now have a boom, but could quickly be back to Covid like conditions as travel becomes the large cost item to be cut.

 

21 hours ago, Andy Hayter said:

The question then is how that impacts the manufacturers.  Lower sales will impact profits  and some companies already struggle in this respect.   New models will have to be cheaper in real terms. 

 

Unlikely to happen for the simple reason that the manufacturers are under the same influences that we customers are under - increasing costs meaning making anything is getting more expensive.

 

21 hours ago, Andy Hayter said:

This means perhaps smaller locos, some degradation on detail (but we have already seen the market reaction to lack of sprung buffers and design clever).  The already in place move to industrial locos may see an increased impetus.  TBH it would not surprise me if we see one or two manufacturers in problems in the next 5 years - not necessarily just in the UK.

 

Moving to industrial locos doesn't really help.

 

There isn't that much in the way of tooling cost savings - if as claimed tooling an N scale model is about 80% of the cost of an HO/OO model then there isn't that much savings in going from a full size steam loco to an industrial.

 

And if everyone in 2023 only announced industrial locos how many would we all really buy?

 

21 hours ago, Andy Hayter said:

Manufacturers will have to become a bit more targeted in their marketing with perhaps smaller runs of items aimed at a segment of the market rather than most of the market. 

 

There is a limit to how small of a run that can be done and still remain profitable, but that limit doesn't just apply to niche items.  The larger steam locos can probably still remain viable with smaller productions runs - but at the expense of the extra profits that help cover for products that don't sell as hoped and additional cash flow issues.

 

But a key point to remember in all of this is that any new project in this hobby has a 3 to 5 (or more) year development cycle and thus there will be a lot of stuff that has already had serious money spent that essentially has to come to market regardless of the current circumstances to attempt to recoup the money spent.  The most open about this has been Accurascale who had indicated they have already spent serious money on their planned items for announcement this year - they really can't suddenly decide to postpone much of that product plan given that amount of money already spent - but this applies to all the others in the hobby as well.

[mdvle]

On 25/06/2022 at 16:14, James Harrison said:

At the same time I wouldn't be surprised to see increases in sales of home 3D printers and silhouette cutters- why spend £70 or £80 per carriage/ resin building/ whatever when you can spend a little more on a tool that will let you churn them out like sausages?  Also of course increased sales of the raw model making materials like plastic sheet.  Maybe even modelling with cereal box card and similar materials will see a resurgence.   

 

3D printers and items like them are interesting.

 

Despite the claims/hopes of a small group I don't see them having a major impact on the RTR manufacturers - most of us don't have the necessary skills to draw/design and then assemble/paint/detail the resulting output.  Or the patience to deal with the trial and error nature of say attempting to get an acceptable 3D print from a drawing.

 

What they do offer though is an easy somewhat affordable way for a small percentage of the people in this hobby to become a manufacturer to attempt to supplement or replace an existing income

[McC]

28 minutes ago, mdvle said:

 

3D printers and items like them are interesting.

 

Despite the claims/hopes of a small group I don't see them having a major impact on the RTR manufacturers - most of us don't have the necessary skills to draw/design and then assemble/paint/detail the resulting output.  Or the patience to deal with the trial and error nature of say attempting to get an acceptable 3D print from a drawing.

 

What they do offer though is an easy somewhat affordable way for a small percentage of the people in this hobby to become a manufacturer to attempt to supplement or replace an existing income

 

 I see 3D printing and similar technology allowing the 'next generation' of cottage industry to grow and develop. When even something like a 'simple' wagon requires 75-100 parts, in plastic, etches, metal, and painting and tempo printing, then no manufacturing tech will replace the skills needed for assembly and finishing.

[Pandora]

In addition to reduced discretionary spending caused by the squeeze of rising energy and fuel prices, the manufacturers are raising prices too, in big increments! A retailer told me recently,  Peco have warned retailers to expect significant increases for Peco products, retailers are telling me of consumer  resistance to  purchases of new stock, i have resisted the W1, the Heljan 25 and the new Bachmann 20 and 24 diesel  locos,  not because of lack of funds, I am unconvinced of the "pleasure vs price"  balance of the model, I have several Bachman 20s from when they were £39 each, do I gain anything for the latest £155 class 20  over my £39 example, ...... yes but not much!

 

Edited June 27, 2022 by Pandora

[McC]

2 minutes ago, Pandora said:

In addition to reduced discretionary spending caused by the squeeze of rising energy and fuel prices, the manufacturers are raising prices too, a retailer told me recently Peco have warned retailers to expect significant increases for Peco products, retailers are telling me of consumer  resistance to  purchases of new stock, i have resisted the W1, the Heljan 25 and the new Bachmann 20 and 24 diesel  locos,  not because of lack of funds, I am unconvinced of the "pleasure vs price"  balance of the model, I have several Bachman 20s from when they were £39 each, do I gain anything for the latest £155 class 20, ...... not much!

 

 

And yet the Accurascale class 55 is still £160 with free post, and the Class 37 only £169.99 !

Edited June 27, 2022 by McC

[mdvle]

3 minutes ago, Pandora said:

  not because of lack of funds, I am unconvinced of the "pleasure vs price"  balance of the model, I have several Bachman 20s from when they were £39 each, do I gain anything for the latest £155 class 20, ...... not much!

 

Current inflation may be exacerbating the issue, but this isn't unique to this hobby.

 

I have to frequent remind myself as I pass judgement on items, whether it be at the grocery store or elsewhere, that the prices that I expect and judge the cost on from 20+  years ago are exactly that - 20+ year old prices that ignore inflation and other pressures.

 

I spent $15 to see a movie a couple of weeks ago and questioned the cost - but that is only because my reference of $4 (or $2 on Tuesdays) was from 1990 or 32 years ago.  If I want to judge the value based on 32 year old prices then I will find myself leading a very boring and depressing life...

 

 

[Pandora]

Just now, McC said:

 

And yet the Accurascale class 55 is still £160 with free post, and the Class 37 only £169.99 !

Yes,  Accurascale are undercutting the big players,  I have a decent rake of their Hopper and Mineral wagons, purchased in boxed sets of three, I think they were £23 / wagon,  contrast Accurascale with the Bachmann Presflo  wagon, £49.95 RRP each, probably £42 after typical shop discount

[Ravenser]

A word of caution. Energy prices  and food prices have spiked because of the war in Ukraine. That is most unlikely to be a permanent situation.

 

Those with long memories will remember that the "energy shock" of 1973 and the second shock of 1979-80 were absorbed . The labour market is tight, so I would be quite surprised if average nominal wages do not rise . I can see the Government's logic in resisting wage increases if they expect the energy/food price rises to be transitory (that implies in 18-24 months food and energy prices will be falling.... Perhaps sharply). But if prices go up and stay up, wages will move to some degree as well.

 

Inflation has winners . Those with debts should see them erode in real terms. Mortgages and government debt are obvious examples

 

There is no direct threat to exhibitions. Exhibitions are currently on a very much reduced scale as a result of Covid. This doesn't seem to have sparked a wave of clubs collapsing. The total number of exhivbition visits is sharply down because of Covid and the reduced number of shows. Higher petrol prices may hinder a rebound rather than cause a reduction

 

Big ticket items are vulnerable in the short term. But things involving a lot of energy - like holidays by air or long-distance travel are most vulnerable.

 

People seem to be anticipating a large permanent reduction in living standards , rather than a couple of difficult years. My money is on the latter option

[Michael Hodgson]

51 minutes ago, Ravenser said:

A word of caution. Energy prices  and food prices have spiked because of the war in Ukraine. That is most unlikely to be a permanent situation.

 

They said of WW1 that it would be over by Xmas.

 

Mr Zelensky says he wants this to be over before the winter.  Whilst I hope he's right, it's going to be dependent on how much ammo and artillery that other countries are able and willing to supply.

[Nearholmer]

29 minutes ago, Michael Hodgson said:

Mr Zelensky says he wants this to be over before the winter.

A lot hangs on what “over” means.

At the moment there is voluntary non-purchase of Russian energy supplies, and some degree of Russian strangulation of the flow of what agricultural output Ukraine can produce during a war.

 

It feels rather unlikely to me that, even if Russia was militarily defeated, ejected from Ukraine, those things would normalise rapidly, so the 18-24 months to normalise, which presumably assumes the decisive defeat of Russia, precipitating a new regime that people latch onto to legitimise the restart of energy purchase, must be a sort of “best case”. All other cases would surely involve a long drag out of this.

The world bank, which surely ought to know better than I do, is forecasting widespread stagflation and recession “out to the end of the decade” because of the combination of covid shock and war shock. And that is without factoring in the likelihood of increasing numbers of “oh sh1t!” moments as climate change bites further, or the change in balance of power west to east, which I can’t see benefitting the U.K. Oh, and we still haven’t properly remapped our trading relationships post the B thing.

 

To me it feels as if we are in for “a period of readjustment”, from which we might emerge in a decade’s time with a very different view of which way is up, similarly to the way the first industrial revolution, or WW2 had long tails in terms of their affects.

[Phil Mason]

Just an observation, I 'won' in two EBay auctions recently. I NEVER win EBay auctions because, being a Yorkshireman, I always bid too low. 
 

Does this mean second hand prices are falling? I had just put it down to nice weather and people doing other things at this time of year. 
 

I think I must be very untypical. I consider myself reasonably well off but I hardly ever buy magazines, most of my stuff is secondhand and my main enjoyment is building stuff that is different from the norm or in altering a commercial product in some way. 
 

My hero remains Peter Denny who built almost everything himself, starting in post-war austerity. 
 

His book 'Buckingham Great Central' is the best investment I ever made, as it explains many of his methods. 
 

I don't think I'm 'elitist', rather I'm 'have a go ist' because the layouts I find most interesting at shows are the ones that show the greatest amount of hand building or ingenuity regardless of what people might call 'quality'. Detail is bothering me less nowadays as I need stronger glasses to see it. 
 

Just one comment regarding trade attendance at shows - a thought is in that word 'show'. It'll always be difficult to gauge the value of people who walk past but then make an on-line order some days later (though I'm aware of surveys and questionnaires etc).
 

 

[Michael Hodgson]

3 hours ago, Phil Mason said:

I think I must be very untypical. I consider myself reasonably well off
 

Yep,  it's very untypical for a Yorkshireman to consider himself well off.  😮

 

And the reason you are reasonably well off is not  frittering away your brass by buying magazines or overpriced models on ebay! 

[Nova Scotian]

6 hours ago, mdvle said:

 

Current inflation may be exacerbating the issue, but this isn't unique to this hobby.

 

I have to frequent remind myself as I pass judgement on items, whether it be at the grocery store or elsewhere, that the prices that I expect and judge the cost on from 20+  years ago are exactly that - 20+ year old prices that ignore inflation and other pressures.

 

I spent $15 to see a movie a couple of weeks ago and questioned the cost - but that is only because my reference of $4 (or $2 on Tuesdays) was from 1990 or 32 years ago.  If I want to judge the value based on 32 year old prices then I will find myself leading a very boring and depressing life...

 

 

I can not get out of my head that a new Honda Civic should cost 12,000 pounds (under $20k Canadian). Despite that being the price twenty years ago - and so I'm always shocked when I check out the prices of new cars. And yet I shouldn't be - that cars have still not risen as quickly as inflation (particularly in the 2000s) is quite incredible. The recent price increases are catch up. My parents bought a new car in 2010, with 20% off because of the recession at the time, a Skoda Octavia Scout that I think rang in at 16k. They're looking at over 30k if they want to replace with similar now.

 

Another contributor mentioned the potential for growth in detailing parts, custom runs etc. I'm not sure I see that? From the comments (I typed complaints, then changed it!) on the forums, the art of scratch building, detailing, bodging etc is declining as the hobbyists age. I don't know if that's totally true (Corbs et al.), but I have a hard time wrapping my head around my generation sifting through bags of identical looking tidbits of white metal or printed plastic - not unless the way production, stocking and searching is done is improved significantly. 

[PMP]

7 hours ago, Nova Scotian said:

 

Another contributor mentioned the potential for growth in detailing parts, custom runs etc. I'm not sure I see that? From the comments (I typed complaints, then changed it!) on the forums, the art of scratch building, detailing, bodging etc is declining as the hobbyists age. I don't know if that's totally true (Corbs et al.), but I have a hard time wrapping my head around my generation sifting through bags of identical looking tidbits of white metal or printed plastic - not unless the way production, stocking and searching is done is improved significantly. 

In the Uk the car market has shifted massively. First half of the noughties a company car was a significant ‘bonus’ with a job. Tax changes etc changed that and now leasing has taken over from that for mass sales. Nowadays many ‘expensive’ new cars are in effect rented for a few years by purchasers, particularly the public, ensuring the flow of new cars into the market. When returned those cars trickle down the used car market via various trading routes.

 

The cottage industry has done very well over the past few years for those that have embraced the change using the Internet, and that forced by rising costs and C19. I can’t think of a retail shop of old that would have peg boards full of detailing items from  any number of manufacturers these days. Those types of retailers have gone.

The cottage guys I know have largely chosen to stay at home and work from there or attend specialized trade and society shows. Most general exhibitions aren’t worth it commercially. Attend those specialist shows and you’ll find a pretty healthy marketplace. 

There’s plenty of us out there ‘making’ stuff. I want my ‘heritage’ models or cheaper second hand stuff to sit alongside contemporary releases and not look out of place.

I don’t recognise the retailers you describe for detailing components, I use the Internet to search the good ones out, and buy mail order, or visit a specific show. 

[Allegheny1600]

1 hour ago, PMP said:

I don’t recognise the retailers you describe for detailing components,

I believe he was referring to the North American market, slightly different to the UK detailing scene but completely relevant.

[Phil Mason]

 

10 hours ago, Michael Hodgson said:

ot  frittering away your brass by buying magazines or overpriced models

He he! Leave your money in the bank where it belongs!

 

However, I do recall a time in the '70s when if you didn't buy something when you could you'd not be able to afford it next time you went to the shops. 
 

Regarding magazines, I find it better value to join organisations - I get the 'N Gauge Journal' from the society  and 'Mixed Traffic' from the 3mm Soc. and our club newsletter available on here somewhere: 

 

https://www.macclesfieldmrg.org.uk

 

As an antidote to the beautifully modelled diesels above here is my rather rougher experiment in the 'art of the possible' in 3mm. Scratch built on salvaged bogies, decals drawn on PowerPoint and printed on decal paper. It almost looks acceptable at normal viewing distance and it's provided hours of fun for £4. 
 

Yes, there are lots of ways to enjoy this hobby and it will survive. But the comments are all interesting and the possible effects on exhibitions and clubs worrying. 

Edited June 28, 2022 by Phil Mason
Spelling

[D9020 Nimbus]

I suspect the aspect that may be most at risk is new models which repeat something already on the market which is generally considered "good enough". Back when the current Bachmann "03" shunters came out the proprietor of a local model shop (Rolling Stock, North Shields — now closed) told me they had sold badly, because people reckoned the previous ones were "good enough". By contrast the 2-EPBs had sold really well. Now, 03s were far more common here in the north-east than 2-EPBs. (There were a few, they were different from the modelled version, and didn't stay long.)

 

This view may have been unique to the north-east, but the cost-of-living crisis will likely cause it to spread. This will be significant as the business models of more than one manufacturer are based on improved versions of models that have already been done. And the models they are "improving" are generally much more recent tooling than the previous Bachmann 03s, which used Mainline-era tooling…

[Mike Storey]

On 27/06/2022 at 16:02, GWR8700 said:

I often see criticism of rising prices shut down on here on the basis that, "People have always moaned about rising prices."

 

While true, this ignores the economic reality that wages have stagnated over the last decade.  Price rises, compounded with stagnating wages and now a cost of living crisis will inevitably lead to less money spent on the hobby as disposable incomes are squeezed.

 

I am sure I am not alone in spending less money than I used to on this hobby and unfortunately I believe the market is reaching saturation point.  Less suitable prototypes are available to model, more manufacturers are entering the market and people have less money to spend which makes me think the current boom is sadly coming to an end.

 

People have always moaned about rising prices - that much is true.

 

But have wages stagnated? The private sector does not seem to agree - 8% rises in the last annual review, and rising. It is the public sector where wages have fallen far short of any reasonable comparison, and over the past ten years,  which explains a lot of the more recent industrial dispute territory. On the other hand, pensioners should be quite well compensated by next Spring. I wonder why?

 

As for saturation, I doubt it. That allegation was also made many years ago, but standards have risen, as has the ability of manufacturers to produce for more "niche" markets. If the "temporary blip" proposers are correct, then the market will survive pretty intact. If they are wrong, however, it will turn out very differently. Even Hornby are mid-recovery, with little to fall back on now if their plan does not succeed.

 

[whart57]

18 hours ago, Mike Storey said:

But have wages stagnated? The private sector does not seem to agree - 8% rises in the last annual review, and rising.

 

 

That 8% is inflated by massive increases - 25% or more - among the very highest paid, FTSE 100 CEOs, bankers and City high flyers, and by big increases among a relatively small number of workers, like IT specialists, who have a high demand for their skills. Wages in manufacturing, the hospitality sector and logistics are not going up by anything like 8%.

[GWR8700]

22 hours ago, Mike Storey said:

 

People have always moaned about rising prices - that much is true.

 

But have wages stagnated? The private sector does not seem to agree - 8% rises in the last annual review, and rising. It is the public sector where wages have fallen far short of any reasonable comparison, and over the past ten years,  which explains a lot of the more recent industrial dispute territory. On the other hand, pensioners should be quite well compensated by next Spring. I wonder why?

 

As for saturation, I doubt it. That allegation was also made many years ago, but standards have risen, as has the ability of manufacturers to produce for more "niche" markets. If the "temporary blip" proposers are correct, then the market will survive pretty intact. If they are wrong, however, it will turn out very differently. Even Hornby are mid-recovery, with little to fall back on now if their plan does not succeed.

 

 

I'm sorry but that is simply not true.  Real wages in the private sector only returned to 2008 levels q1 of 2020.  That took 12 long years!

An 8% rise but inflation now stands at 11% and as whart57 rightly points out, this is exaggerated by the further increase for high flyers.

 

Standards have risen but another problem is they were already quite high.  To give an example, the new Bachmann Class 47 looks and sounds absolutely fantastic.  However, if I already had quite a few 47s from the previous range I'm not sure I'd be rushing out to spend £200 or whatever on one at the moment given the way the economy is right now and the fact that the previous models are already 'good enough' for most people.

 

As markets become more niche, the consumer base is reduced.  There are untapped areas (I think there is a lot of scope for pre-grouping) but those areas are becoming few and far between.

[Railpassion]

It's not just inflation and the cost of living that is hitting the hobby, covid and the supply problem has hammered the shop windows of the box shifters. Few other model shops have the range they once had and this is a real problem. 

 

I think the second-hand market is healthy and will dominate in the future. 

[Mike Storey]

5 hours ago, whart57 said:

 

That 8% is inflated by massive increases - 25% or more - among the very highest paid, FTSE 100 CEOs, bankers and City high flyers, and by big increases among a relatively small number of workers, like IT specialists, who have a high demand for their skills. Wages in manufacturing, the hospitality sector and logistics are not going up by anything like 8%.

 

Hmm. It would seem the ONS does not agree with you.

 

See section on Sector Specific, especially on the hospitality and warehousing industry, to see what I mean. 

https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/averageweeklyearningsingreatbritain/may2022#:~:text=In real terms (adjusted for inflation)%2C in January to,real total pay growth positive.

 

My main point however, whatever slant one can draw on private sector pay differentials, is that it has far outstripped public sector pay rises, on average, despite the blip during the pandemic. That same link provides those differences. It does not mention pensions, for who some relief is apparently to be provided next spring.

 

So, the issue remaining is on what group does the primary income for the hobby rely.

[Mike Storey]

1 hour ago, GWR8700 said:

 

I'm sorry but that is simply not true.  Real wages in the private sector only returned to 2008 levels q1 of 2020.  That took 12 long years!

An 8% rise but inflation now stands at 11% and as whart57 rightly points out, this is exaggerated by the further increase for high flyers.

 

Standards have risen but another problem is they were already quite high.  To give an example, the new Bachmann Class 47 looks and sounds absolutely fantastic.  However, if I already had quite a few 47s from the previous range I'm not sure I'd be rushing out to spend £200 or whatever on one at the moment given the way the economy is right now and the fact that the previous models are already 'good enough' for most people.

 

As markets become more niche, the consumer base is reduced.  There are untapped areas (I think there is a lot of scope for pre-grouping) but those areas are becoming few and far between.

 

Well, for simply not true, please re-visit your own comment, and tell me exactly how public sector wages have returned to 2008 levels?? To be brief, they have not, and not anywhere close, so the fact that private wages have done so, says it all.

 

I agree to some extent with the rest of your comment, but the fact that "new, improved" kit, from the likes of Accucraft/IMR, Rapido and Revolution, at top sovs, keep flying off the shelves, before they have even got to a shelf, somewhat disproves the more general point you are making. Whether the market will sustain that, given what is ahead, remains an open question.