Hornby Loss

[adb968008]

7 hours ago, Mallard60022 said:

Agreed, but there have been no large set up costs for (say) Locomotives and Coaches/Stock, on an Annual basis and those really do cost.

Maybe tooling a new armoury every year isnt a successful business model ?

 

Only Hornby can turn out 50 year old wagon toolings, and 40 year old loco toolings.. as it feeds a market point no one else can reach… toys, kids and new hobbists.
 

But maybe moving up the quality tree of ever ending new toolings is something for the other players ? When it comes to rail road toolings I doubt theyve ever got it wrong.. Smokey Joe etc… they must have made hundreds of thousands.

Perhaps Hornby being more like Peco isnt such a bad thing ?

 

Edited December 6, 2022 by adb968008

[Dunsignalling]

6 hours ago, adb968008 said:

Maybe tooling a new armoury every year isnt a successful business model ?

 

Only Hornby can turn out 50 year old wagon toolings, and 40 year old loco toolings.. as it feeds a market point no one else can reach… toys, kids and new hobbists.
 

But maybe moving up the quality tree of ever ending new toolings is something for the other players ? When it comes to rail road toolings I doubt theyve ever got it wrong.. Smokey Joe etc… they must have made hundreds of thousands.

Perhaps Hornby being more like Peco isnt such a bad thing ?

 

I think that, where the more premium products are concerned, Hornby has a tendency to go somewhat overboard in one direction rather than producing a balanced set of releases with wide appeal.

 

Recent examples were the Thompson Pacifics and W1, rapidly followed by (yet another, but on this occasion, badly needed) retool of the A3. These all arrived in such quick succession that many LNER/ER fans must have struggled to keep up with the rate of expenditure needed and been faced with choosing between multiple models when they really wanted all or most of them!

 

OK, this leaves unfulfilled demand for re-runs to sell in future years but slows potential income from the first runs that pay for the development and tooling. It also means that non-LNER customers have been relatively neglected and may (as have I) been keeping their wallets largely shut where Hornby purchases are concerned. Over the last three years, my annual "Red Box" spend has been less than a quarter of its previous twenty-year average, with as much being directed at coaches as locos. 

 

We who follow other companies/regions have been provided with little real novelty. I had great hopes of the air-smoothed MNs, but so far, only two have been appropriate for me and one of those was marginal (and sold out before I managed to get one anyway). I'm more into Bulleid Light Pacifics, and have built up a fleet of that probably rivals Tony Wright's roster of Gresleys whilst not currently having a working layout! 😆

 

Recent offerings have been another re-run of Winston Churchill, which I already have from an earlier release, Braunton in chronologically incorrect condition for my theme, and the "souvenir" purple rebuilt appropriate to modern times. Over the years, Hornby has only ever produced quite a narrow selection of Bulleid variations, and I've decided to refrain from further (new) acquisitions until they offer more than different names and numbers on models that I already own in quantity.

 

OK, many of Hornby's customers will have rather more eclectic buying habits than I, but ever-rising prices and the current economic scene are likely to impel more into concentrating on their core interests. I'm guessing that other would-be Southern buyers, and at least some Midland and Western fans, are in similar positions. 

 

John

Edited December 6, 2022 by Dunsignalling

[JohnR]

14 hours ago, D9020 Nimbus said:

I was thinking of the other U.K. brands rather than the European ones as being in less active areas—Corgi for example, where the main competitor is probably Oxford…

 

 

Both of which are now part of the Hornby Group. 

[Mallard60022]

9 hours ago, adb968008 said:

Maybe tooling a new armoury every year isnt a successful business model ?

 

Only Hornby can turn out 50 year old wagon toolings, and 40 year old loco toolings.. as it feeds a market point no one else can reach… toys, kids and new hobbists.
 

But maybe moving up the quality tree of ever ending new toolings is something for the other players ? When it comes to rail road toolings I doubt theyve ever got it wrong.. Smokey Joe etc… they must have made hundreds of thousands.

Perhaps Hornby being more like Peco isnt such a bad thing ?

 

Can't disagree with that, other than Hornby are huge and Peco is niche and that's how it has been for ever really.

Also Peco have very few competitors for their products in comparison to Hornby. I liken the two to:

Hornby is like a decent, National Newspaper struggling in the modern, communications world but still revered by many and managing to survive, except the 'market' and customer base is dwindling rapidly;

Peco is like a local paper ('For local people...'), that is well run and well liked and keeps its' coverage to a recognised market, however it had been stagnating in a rather comfortable way for many years, until quite recently when someone 'old' retired/died and someone 'new' joined the team with some gentle ideas for some changes.  

Personally I think the words in a famous song are relevant here and, sadly, in life generally;

"You don't know what you've got till it's gone..."

P

[ruggedpeak]

17 hours ago, D9020 Nimbus said:

When we talk about "Hornby" making a loss, is it the group making a loss? And if so, to what extent do the various parts of the group, including Hornby model railways, contribute? At least at one time, some of the European brands in the group were the biggest loss-makers. It could be, for example, that Hornby model railways are profitable — there certainly don't seem to be the same number of competing firms in other areas of the group's business, which might suggest a lack of demand in those areas.

So what if Hornby make a loss, it doesn't actually matter if they business remains solvent and can pay its finance costs. Lots of businesses lose money year after year, if the funders/financiers are still getting their cut then it will keep going.

 

[ruggedpeak]

12 hours ago, adb968008 said:

Maybe tooling a new armoury every year isnt a successful business model ?

 

Only Hornby can turn out 50 year old wagon toolings, and 40 year old loco toolings.. as it feeds a market point no one else can reach… toys, kids and new hobbists.
 

But maybe moving up the quality tree of ever ending new toolings is something for the other players ? When it comes to rail road toolings I doubt theyve ever got it wrong.. Smokey Joe etc… they must have made hundreds of thousands.

Perhaps Hornby being more like Peco isnt such a bad thing ?

 

This is presumably what TT is about, the spec of TT locos is nowhere near that for the latest OO gauge offerings in the market. It creates a new market sector where they assume the likes of Accura, Cavalex etc will not venture to compete with them, as it appears Hornby are struggling in OO at the moment.

 

That said gravity will catch up with the new entrants eventually. They will have to grapple with difficult choices if costs etc rise as they get bigger, or they have to limit their ranges to avoid that step up from new start/SME to large scale business. Not easy to do, equally not impossible but it is normal in business for service and performance to drop in that phase of transition. Hornby can continue in OO without the pressure of trying to stay ahead, focusing on TT as a competition free sector, and if the newbies stumble they can move back in.

 

Going all management stratetgy textbook, TT is playing to Hornby's strengths:

• high brand recognition
• mainstream marketing capability
• producing mid-range quality models and a complete family/range of products for the scale
• if successful should generate cashflow/profits
   

It also nullifies some of its key weaknesses e.g. struggling to consistently compete on quality and price in the OO space.

 

It also relies upon the effectiveness of their direct sales and logistics model, which remains unproven as a strategic capability. If that doesn't perform then it becomes a weakness.

Edited December 6, 2022 by ruggedpeak
update

[JSpencer]

15 hours ago, Dunsignalling said:

I think that, where the more premium products are concerned, Hornby has a tendency to go somewhat overboard in one direction rather than producing a balanced set of releases with wide appeal.

 

Recent examples were the Thompson Pacifics and W1, rapidly followed by (yet another, but on this occasion, badly needed) retool of the A3. These all arrived in such quick succession that many LNER/ER fans must have struggled to keep up with the rate of expenditure needed and been faced with choosing between multiple models when they really wanted all or most of them!

 

OK, this leaves unfulfilled demand for re-runs to sell in future years but slows potential income from the first runs that pay for the development and tooling. It also means that non-LNER customers have been relatively neglected and may (as have I) been keeping their wallets largely shut where Hornby purchases are concerned. Over the last three years, my annual "Red Box" spend has been less than a quarter of its previous twenty-year average, with as much being directed at coaches as locos. 

 

We who follow other companies/regions have been provided with little real novelty. I had great hopes of the air-smoothed MNs, but so far, only two have been appropriate for me and one of those was marginal (and sold out before I managed to get one anyway). I'm more into Bulleid Light Pacifics, and have built up a fleet of that probably rivals Tony Wright's roster of Gresleys whilst not currently having a working layout! 😆

 

Recent offerings have been another re-run of Winston Churchill, which I already have from an earlier release, Braunton in chronologically incorrect condition for my theme, and the "souvenir" purple rebuilt appropriate to modern times. Over the years, Hornby has only ever produced quite a narrow selection of Bulleid variations, and I've decided to refrain from further (new) acquisitions until they offer more than different names and numbers on models that I already own in quantity.

 

OK, many of Hornby's customers will have rather more eclectic buying habits than I, but ever-rising prices and the current economic scene are likely to impel more into concentrating on their core interests. I'm guessing that other would-be Southern buyers, and at least some Midland and Western fans, are in similar positions. 

 

John

 

All good points.

From my 16 loco purchases this year, 2 were for Hornby (APT + APT NDM) and both are delayed items

From the 67 pieces of rolling stock this year, only 1 was for Hornby. An SR dining coach again delayed.

 

Compare to 2017.

Locos, 18 brought, 11 were for Hornby

Rolling stock 25 brought, 13 for Hornby (pretty low year on rolling stock though....)

[Les1952]

12 hours ago, JSpencer said:

 

All good points.

From my 16 loco purchases this year, 2 were for Hornby (APT + APT NDM) and both are delayed items

From the 67 pieces of rolling stock this year, only 1 was for Hornby. An SR dining coach again delayed.

 

Compare to 2017.

Locos, 18 brought, 11 were for Hornby

Rolling stock 25 brought, 13 for Hornby (pretty low year on rolling stock though....)

 

Whereas I have bought NO Hornby for 5 years or so and am investing in a TT:120 project.

 

Hornby's success will depend on the ratio of purchasers like me to purchasers like you.....

 

Les

 

[Dunsignalling]

1 hour ago, Les1952 said:

 

Whereas I have bought NO Hornby for 5 years or so and am investing in a TT:120 project.

 

Hornby's success will depend on the ratio of purchasers like me to purchasers like you.....

 

Les

 

When Hornby make something I want, I buy it, just as I always have. Lately they haven’t been doing so,  while others have.

 

Quite frankly, Hornby need to attract custom from ALL of us if they are to thrive. I very much doubt that either scale on its own will ensure their survival.

 

John

 

Edited December 7, 2022 by Dunsignalling

[D9020 Nimbus]

The only Hornby item I’ve purchased recently is a mark 1 BCK. The last was the J36. Apart from some TT:120 items—blue 08, some wagons and track—the only Hornby item I'm waiting for is the long-delayed 2MT.

[spamcan61]

On 03/12/2022 at 18:06, Dunsignalling said:

If TT:120 doesn't pay off for Hornby, we might be more likely to see them being taken over by Hatton's. 

At least folks are getting notifications that their Flying Scotsman train sets are being shipped, so by some miracle they've docked early and reached Hornby's distribution chain. So that's a plus!

[wairoa]

I want as Hornby to stay in the game. In saying that I think the last Hornby product I bought new was the APT. That was when they were first released a year or more ago.

There are others I would like such as the new Class 91 however hearing about its problems have kept me from buying it. I have high hopes for the Black 5 and Evening Star. 
 

Other items such as the Class 37, 55 and 92 I have turned to Accurascale. For my  47s I went  to Bachmann. 
 

There are just so many manufacturers out there producing great stuff that I can understand how Hornby are having a rough go of it at the moment.

[adb968008]

5 hours ago, spamcan61 said:

At least folks are getting notifications that their Flying Scotsman train sets are being shipped, so by some miracle they've docked early and reached Hornby's distribution chain. So that's a plus!

I think the logistics pains of earlier this year have eased.

 

Shipping container prices has plummeted.

Shipping companies are seeing the bottom fall out of the market.. sailings being canceled.

https://theloadstar.com/liners-are-turning-into-tramp-operators-as-they-blank-more-sailings/

 

Whats happened is the crash of the peak…

everyone paid through the nose to have everything “now”… last year.

They are now sitting on warehouses of stockpiled goods bought at inflated costs, that consumers are not willing to pay such inflated prices for.

 

The result is cancelations of forward orders, compounded by Chinas own covid issues meaning theres far less to send from China.

I would expect a crisis in China next year, as without orders, a recession in europe and warehouses to clear… theres going to be a lot of people in China with a lot of spare time. What they wont understand, is how to be competitively cheaper.. as they are cheap already.. the inflation of costs is a Western thing, not an Eastern production thing… 

 

The effect on our little hobby will probably be a glut to excess of stuff coming through the system in the next 6 months as backorders start catching up from China.., Factories reopen, and higher value stuff ramps back, the window opens for our hobby niche.

The problem will be… will the consumer have enough cash to buy it all.

 

 

 

Edited December 9, 2022 by adb968008

[wairoa]

1 hour ago, adb968008 said:

I think the logistics pains of earlier this year have eased.

 

Shipping container prices has plummeted.

Shipping companies are seeing the bottom fall out of the market.. sailings being canceled.

https://theloadstar.com/liners-are-turning-into-tramp-operators-as-they-blank-more-sailings/

 

Whats happened is the crash of the peak…

everyone paid through the nose to have everything “now”… last year.

They are now sitting on warehouses of stockpiled goods bought at inflated costs, that consumers are not willing to pay such inflated prices for.

 

The result is cancelations of forward orders, compounded by Chinas own covid issues meaning theres far less to send from China.

I would expect a crisis in China next year, as without orders, a recession in europe and warehouses to clear… theres going to be a lot of people in China with a lot of spare time. What they wont understand, is how to be competitively cheaper.. as they are cheap already.. the inflation of costs is a Western thing, not an Eastern production thing… 

 

The effect on our little hobby will probably be a glut to excess of stuff coming through the system in the next 6 months as backorders start catching up from China.

The problem will be… will the consumer have enough cash to buy it all.

 

 

 

Sadly this consumer won’t have enough cash to buy very much. Seems to be a perennial problem in my little world.

[Ravenser]

On 03/12/2022 at 16:35, D9020 Nimbus said:

There seems to me a big difference in the character of Bachmann and Hornby. David Haarhaus comes across as essentially a rather cautious individual, albeit one who has a very clear grasp of the risks the business faces. Simon Kohler comes across as more of a gambler—and TT-120 clearly represents such a gamble. Though it's worth noting that Arnold within the Hornby group has experience of TT, while no companies in the group have any experience of narrow gauge. Conversely, Liliput have narrow gauge experience, but no Bachmann company has any experience of TT.

 

Curiously enough, in other countries where Hornby has a presence, they seem to be expanding their presence in N gauge, particularly in France, Spain and Italy, to the extent they've become the major supplier of N gauge in France (displacing Minitrix).

 

 

We can, I think , join the dots and see a wider strategy here. Hornby have decided to "go small". 

 

They have seen the state of Continental HO play out over 25 years. Everything sensible got covered , then the race went to higher and higher specs duplicating others models at higher prices/higher detail/shorter runs, culminating in the "museum standard" model - a short run of ultra high detail models at eyewatering prices. Not to mention models of exotic one offs

 

Then the unit volumes collapsed, shortly followed by the sales revenue. The second-hand market was awash with high-spec models: people switched to buying second-hand not new.  Almost everyone went into heavy loss, with multiple bankruptcies, and the RTR sector shrank sharply. The only players making any headway were those offering budget ranges with restricted detailing at affordable prices - think  Piko

 

Most of their moves over the last 20 years make sense as reactions against this scenario. The move to China gave them a super-detail product at a moderate price. A powerful tool in Britain , for higher spec models - but also enabling them to produce and sell the models from the old Group Riva brands at a more affordable price, against high-cost Continental producers. Railroad is clearly a stab at a Continental style Budget range . Design Clever was an attempt to break out of the higher spec/higher price/reduced unit volume  arms-race spiral , a spiral which they knew would end in disaster.

 

Hornby have clearly flagged that space is a big issue for many , and that they need to be offering a small scale, not just OO/HO . Furthermore Continental N is not so saturated as HO has been for 20 years. Their Rivarossi acquisition bought them some N gauge presence. In Germany they've had a nibble at the TT market. Now they are putting money behind N in France, Spain , Italy , where there are still gaps and opportunities.

 

And in Britain, where they had no small-scale product, they've clearly decided that N is already too crowded for Hornby to carve out a meaningful niche (Dapol and Revolution duplicating the 59 shows how things are going). But N has a low market share in Britain - so why not build on their German developments and launch TT as a unique scale with features that tackle the difficulties with N? 

 

There is a precedent for this . 1977 was "The Year of the Three Royal Scots" . At the end of 1976 , Airfix and Paiitoy appeared at the Toy Show each announcing an entire new OO model railway range with a flagship Rebuilt Royal Scot . Lima announced a British outline range too, and Rivarrosi appeared announcing they would do an unrebuilt Royal Scot and coaches in HO

 

According to legend, Old Man Farish came back from the Toy Fair that year shaking his head. "They've all gone mad," he told the assembled management when he got back to Poole. "It'll end in tears. We're getting out of OO."

 

And they did. Graham Farish had been a long standing bit player in OO and something rather more in N. Over the next couple of years their modest OO range was phased out, and everything went into N. When Hornby Minitrix folded a few years later (Hornby's last small-scale British play) , Farish WAS British N , for a full 20 years.

 

And while Poole-era Farish may have been a bit basic and mechanically rough , Farish the business did ok for some 20 years

 

Hornby are seeing the same writing on the wall. Either they follow the likes of Accurascale down the rabbit hole of tooling the same subjects repeatedly at higher and higher specs and lower and lower unit volumes - or they move in a different market, one that isn't saturated. Accurascale and Revolution are built for low unit volumes : they use the "Australian model" which evolved as a way to serve a fragmented small market where potential sales were too low to support a traditional "full-fat" RTR manufacture. That's not Hornby's game - and they will be well aware that that route ultimately ends in an implosion with volumes collapsing as the price becomes prohibitive. Hornby sell more 66s than Hattons produce. They choose to rerun the ex Lima Railroad 31 much more often than their own high-spec model, which says something about the realities of the market

 

Like Continental HO, OO is now running out of sensible subjects. Very little that made it past 1955 hasn't been done . Hornby clearly reckon that putting money behind the smaller scales for restricted housing spaces makes better sense across Europe than chasing high cost "museum standard" models of things like Big Bertha. Bachmann's "plays" here are OO9 and Farish N . Hornby are using N and TT on the continent - they need something in their biggest market

 

TT:120 is a gamble, no doubt - but a rational and reasoned gamble. "We have to break out of the closing trap - we have to make a major move that changes the terms of the game"

[McC]

15 minutes ago, Ravenser said:

Accurascale … are built for low unit volumes

Assumptions are dangerous things :)

 

Everything we’ve made to date are ‘substantial’ runs. In excess of or the equal to any of the larger manufacturers. 
 

Even something innocuous like a wagon we make 30k units typically. 

The market for quality, accurate, fairly priced OO isn’t going anywhere anytime soon. :)

Edited December 9, 2022 by McC

[adb968008]

1 hour ago, Ravenser said:

 

 

We can, I think , join the dots and see a wider strategy here. Hornby have decided to "go small". 

 

They have seen the state of Continental HO play out over 25 years. Everything sensible got covered , then the race went to higher and higher specs duplicating others models at higher prices/higher detail/shorter runs, culminating in the "museum standard" model - a short run of ultra high detail models at eyewatering prices. Not to mention models of exotic one offs

 

Then the unit volumes collapsed, shortly followed by the sales revenue. The second-hand market was awash with high-spec models: people switched to buying second-hand not new.  Almost everyone went into heavy loss, with multiple bankruptcies, and the RTR sector shrank sharply. The only players making any headway were those offering budget ranges with restricted detailing at affordable prices - think  Piko

 

Most of their moves over the last 20 years make sense as reactions against this scenario. The move to China gave them a super-detail product at a moderate price. A powerful tool in Britain , for higher spec models - but also enabling them to produce and sell the models from the old Group Riva brands at a more affordable price, against high-cost Continental producers. Railroad is clearly a stab at a Continental style Budget range . Design Clever was an attempt to break out of the higher spec/higher price/reduced unit volume  arms-race spiral , a spiral which they knew would end in disaster.

 

Hornby have clearly flagged that space is a big issue for many , and that they need to be offering a small scale, not just OO/HO . Furthermore Continental N is not so saturated as HO has been for 20 years. Their Rivarossi acquisition bought them some N gauge presence. In Germany they've had a nibble at the TT market. Now they are putting money behind N in France, Spain , Italy , where there are still gaps and opportunities.

 

And in Britain, where they had no small-scale product, they've clearly decided that N is already too crowded for Hornby to carve out a meaningful niche (Dapol and Revolution duplicating the 59 shows how things are going). But N has a low market share in Britain - so why not build on their German developments and launch TT as a unique scale with features that tackle the difficulties with N? 

 

There is a precedent for this . 1977 was "The Year of the Three Royal Scots" . At the end of 1976 , Airfix and Paiitoy appeared at the Toy Show each announcing an entire new OO model railway range with a flagship Rebuilt Royal Scot . Lima announced a British outline range too, and Rivarrosi appeared announcing they would do an unrebuilt Royal Scot and coaches in HO

 

According to legend, Old Man Farish came back from the Toy Fair that year shaking his head. "They've all gone mad," he told the assembled management when he got back to Poole. "It'll end in tears. We're getting out of OO."

 

And they did. Graham Farish had been a long standing bit player in OO and something rather more in N. Over the next couple of years their modest OO range was phased out, and everything went into N. When Hornby Minitrix folded a few years later (Hornby's last small-scale British play) , Farish WAS British N , for a full 20 years.

 

And while Poole-era Farish may have been a bit basic and mechanically rough , Farish the business did ok for some 20 years

 

Hornby are seeing the same writing on the wall. Either they follow the likes of Accurascale down the rabbit hole of tooling the same subjects repeatedly at higher and higher specs and lower and lower unit volumes - or they move in a different market, one that isn't saturated. Accurascale and Revolution are built for low unit volumes : they use the "Australian model" which evolved as a way to serve a fragmented small market where potential sales were too low to support a traditional "full-fat" RTR manufacture. That's not Hornby's game - and they will be well aware that that route ultimately ends in an implosion with volumes collapsing as the price becomes prohibitive. Hornby sell more 66s than Hattons produce. They choose to rerun the ex Lima Railroad 31 much more often than their own high-spec model, which says something about the realities of the market

 

Like Continental HO, OO is now running out of sensible subjects. Very little that made it past 1955 hasn't been done . Hornby clearly reckon that putting money behind the smaller scales for restricted housing spaces makes better sense across Europe than chasing high cost "museum standard" models of things like Big Bertha. Bachmann's "plays" here are OO9 and Farish N . Hornby are using N and TT on the continent - they need something in their biggest market

 

TT:120 is a gamble, no doubt - but a rational and reasoned gamble. "We have to break out of the closing trap - we have to make a major move that changes the terms of the game"

Interesting and somewhat agree.

 

However Eastern Europe is a very open market. It has modern modellers, with rapidly increasing disposable income. Poland is becoming saturated already, nearly every modern prototype is done within 6 years, steam only has 1 outline thus far. Now attention is moving to Hungary. Czech Slovakia are also not unnoticed.

 

But it is hugely popular.

Romania,Bulgaria, Greece, balkans prototypes will inevitably follow.

 

Also, in Western Europe Nordics and Iberian models are becoming more common.

 

HO has several markets to grow, what holds it back is Germans being German (Piko excepted), and typically over risk averse, so newer entrants are slowly doing it.

 

 

[wairoa]

Wrong thread

Edited December 9, 2022 by wairoa

[Dunsignalling]

It seems clear that the big danger area in British OO is the diesel loco segment. A relatively small number of classes, most of which have already been produced to "current" standards, or soon will be.

 

More detail (perhaps going beyond its logical conclusion for the scale) and increased "electrickery" will keep things moving for a while but, even without impending recession, there are limits to how many people will pay ever higher premium prices for a decreasing rate of advancement. The point at which even the keener diesel devotees decide that the latest iteration will be judged to be "good enough" compared to the next is (IMHO) perilously close.

 

So, a slower market and a "glass ceiling" for standards and features seems likely, though that may well be offset by copious detail and livery variations. 

 

What seems inexplicable is the way the range of multiple units and electric locos has been comparatively ignored.

 

Steam outline is a different can of worms, though, as there are quite substantial variations of existing popular models that would reinvigorate sales, either for the incumbent provider or a competitor.

 

The emphasis of my own spending has been shifting from locos towards coaches and wagons for some time, largely as a result of dearer loco prices meaning I nowadays buy one or two rather than three or four!

 

John

[blueeighties]

4 hours ago, Ravenser said:

 

 

We can, I think , join the dots and see a wider strategy here. Hornby have decided to "go small". 

 

They have seen the state of Continental HO play out over 25 years. Everything sensible got covered , then the race went to higher and higher specs duplicating others models at higher prices/higher detail/shorter runs, culminating in the "museum standard" model - a short run of ultra high detail models at eyewatering prices. Not to mention models of exotic one offs

 

Then the unit volumes collapsed, shortly followed by the sales revenue. The second-hand market was awash with high-spec models: people switched to buying second-hand not new.  Almost everyone went into heavy loss, with multiple bankruptcies, and the RTR sector shrank sharply. The only players making any headway were those offering budget ranges with restricted detailing at affordable prices - think  Piko

 

Most of their moves over the last 20 years make sense as reactions against this scenario. The move to China gave them a super-detail product at a moderate price. A powerful tool in Britain , for higher spec models - but also enabling them to produce and sell the models from the old Group Riva brands at a more affordable price, against high-cost Continental producers. Railroad is clearly a stab at a Continental style Budget range . Design Clever was an attempt to break out of the higher spec/higher price/reduced unit volume  arms-race spiral , a spiral which they knew would end in disaster.

 

Hornby have clearly flagged that space is a big issue for many , and that they need to be offering a small scale, not just OO/HO . Furthermore Continental N is not so saturated as HO has been for 20 years. Their Rivarossi acquisition bought them some N gauge presence. In Germany they've had a nibble at the TT market. Now they are putting money behind N in France, Spain , Italy , where there are still gaps and opportunities.

 

And in Britain, where they had no small-scale product, they've clearly decided that N is already too crowded for Hornby to carve out a meaningful niche (Dapol and Revolution duplicating the 59 shows how things are going). But N has a low market share in Britain - so why not build on their German developments and launch TT as a unique scale with features that tackle the difficulties with N? 

 

There is a precedent for this . 1977 was "The Year of the Three Royal Scots" . At the end of 1976 , Airfix and Paiitoy appeared at the Toy Show each announcing an entire new OO model railway range with a flagship Rebuilt Royal Scot . Lima announced a British outline range too, and Rivarrosi appeared announcing they would do an unrebuilt Royal Scot and coaches in HO

 

According to legend, Old Man Farish came back from the Toy Fair that year shaking his head. "They've all gone mad," he told the assembled management when he got back to Poole. "It'll end in tears. We're getting out of OO."

 

And they did. Graham Farish had been a long standing bit player in OO and something rather more in N. Over the next couple of years their modest OO range was phased out, and everything went into N. When Hornby Minitrix folded a few years later (Hornby's last small-scale British play) , Farish WAS British N , for a full 20 years.

 

And while Poole-era Farish may have been a bit basic and mechanically rough , Farish the business did ok for some 20 years

 

Hornby are seeing the same writing on the wall. Either they follow the likes of Accurascale down the rabbit hole of tooling the same subjects repeatedly at higher and higher specs and lower and lower unit volumes - or they move in a different market, one that isn't saturated. Accurascale and Revolution are built for low unit volumes : they use the "Australian model" which evolved as a way to serve a fragmented small market where potential sales were too low to support a traditional "full-fat" RTR manufacture. That's not Hornby's game - and they will be well aware that that route ultimately ends in an implosion with volumes collapsing as the price becomes prohibitive. Hornby sell more 66s than Hattons produce. They choose to rerun the ex Lima Railroad 31 much more often than their own high-spec model, which says something about the realities of the market

 

Like Continental HO, OO is now running out of sensible subjects. Very little that made it past 1955 hasn't been done . Hornby clearly reckon that putting money behind the smaller scales for restricted housing spaces makes better sense across Europe than chasing high cost "museum standard" models of things like Big Bertha. Bachmann's "plays" here are OO9 and Farish N . Hornby are using N and TT on the continent - they need something in their biggest market

 

TT:120 is a gamble, no doubt - but a rational and reasoned gamble. "We have to break out of the closing trap - we have to make a major move that changes the terms of the game"

So why has the popularity of O gauge exploded the last couple of years?

[Mark Saunders]

23 minutes ago, blueeighties said:

So why has the popularity of O gauge exploded the last couple of years?

Too many of us getting older with disposable income and increasingly dodgy near vision; pass the reading glasses!

[Farang]

16 hours ago, McC said:

Assumptions are dangerous things :)

 

Everything we’ve made to date are ‘substantial’ runs. In excess of or the equal to any of the larger manufacturers. 
 

Even something innocuous like a wagon we make 30k units typically. 

The market for quality, accurate, fairly priced OO isn’t going anywhere anytime soon. :)

A run of 30K is impressive but with multiple numbers/liveries would that come down to perhaps 400, or less, of each?  Hornby could have done multiple number/liveries if they had any imagination, which is what I think Simon Davies-Kohler lacks. Hornby is a hostage to its heritage, a prisoner of its past and eventually that is what will cause its demise. Sad if it does but all conditioned things are impermanent, so says the Buddha.

[Dunsignalling]

2 minutes ago, Farang said:

A run of 30K is impressive but with multiple numbers/liveries would that come down to perhaps 400, or less, of each?  Hornby could have done multiple number/liveries if they had any imagination, which is what I think Simon Davies-Kohler lacks. Hornby is a hostage to its heritage, a prisoner of its past and eventually that is what will cause its demise. Sad if it does but all conditioned things are impermanent, so says the Buddha.

Most of Rapido's wagons seem to come in about 10 variants, so roughly 3,000 of each.

[Farang]

2 minutes ago, Dunsignalling said:

Most of Rapido's wagons seem to come in about 10 variants, so roughly 3,000 of each.

You are assuming Rapido have a run of 30K. My motto, from experience, never assume anything.

[1andrew1]

17 hours ago, adb968008 said:

HO has several markets to grow, what holds it back is Germans being German (Piko excepted), and typically over risk averse, so newer entrants are slowly doing it.

Hornby and Bachmann could enter these markets too. I suspect it's more about the incumbents, British, German or Hong Kong, trying to get their existing businesses in order before entering new geographies.