Hornby's Delivery Schedule

[The Stationmaster]

I was having a look at Eureka Models website earlier this evening and came across some very interesting comments about what has been going on at Kanda San and some changes which are taking place as a result of the Kader takeover.

 

Makes interesting reading now that Hornby seem to be getting a bit more on track with new model appearances but still contains some worrying comments.

 

http://eurekamodels.com.au/news20.html

[34theletterbetweenB&D]

The really interesting bit is that Sanda Kan lost - at least - one key team leader. However good a company's past product track record is, maintaining performance ultimately comes down to retaining the skilled people to accomplish whatever are the critical pieces of the job that make the end product good in the eyes of the customer. As is well known, Sanda Kan got into financial trouble some years ago when the founding owner sold up; that's a classic recipe for formerly loyal key employees to take their skills elsewhere, because the working environment has gone sour in some respect. (Been there, got the bloodstained T shirt.)

[7013]

Interesting times, the Eureka Garratt I rate as one of the best RTR locos I have ever seen hope their new supplier steps up to the mark.

[Guest dilbert]

Makes interesting reading now that Hornby seem to be getting a bit more on track with new model appearances but still contains some worrying comments.

 

 

Given that Eureka is based in Sans Souci, why should there be cause for alarm ?B) Sounds more like run-of-the-mill type operational clean-up since Kader took on Sanda Kan... and those can go in all sorts of direction. No doubt alternative options are being considered by more than one Sanda Kan customer moving forwards...dilbert

[Ozexpatriate]

This is very interesting reading. There is a lot of positive spin here from Eureka. Compared with the product volumes from the likes of Hornby and Walthers/Walthers(LifeLike), Eureka (despite their lovely models) is very small potatoes and I suspect Kader/Sanda Kan have essentially punted them as a customer.

 

It makes sense that Kader needs to put Sanda Kan's house in order.

 

We have seen the impact of the "chaos" at Sanda Kan from the short shrift in Hornby's monthly "new releases" missives (look at July and September), the tender frames on the T9 and the respin required to get details on Tintagel Castle right.

 

Coupled to the fact that container ships world-wide are on a "go-slow" to use less fuel in the wake of the financial meltdown, Hornby don't seem to be able to predict when product will appear. The fact that the NRM 28xx is already at retailers means the container must have been unloaded weeks ago, yet (from my recollecton) it has not appeared in a "new release". This means shipments are really unpredictable.

 

It will be interesting to see the spin Hornby executives place on supply chain issues in their next semi-annual 'interim' report. If I'm not mistaken, they might issue an press release for the financial community today or tomorrow - so look for Hornby in the financial funny pages.

 

Hornby's last interim report was dated 30/9/09 so they are due to report a financial statement for the analyst community today. It seems to take many weeks for the latest report to be posted on Hornby's website. You can find Hornby's financial reports here.

[Ozexpatriate]

It will be interesting to see the spin Hornby executives place on supply chain issues in their next semi-annual 'interim' report. If I'm not mistaken, they might issue an press release for the financial community today or tomorrow - so look for Hornby in the financial funny pages.

Frank Martin (Hornby's Chief Executive) made the following statement (dated 4/6/10) in the most recent Hornby PLC Annual Report.

Hornby produces the majority of its products in China and India, via third-party contract manufacturers. Some packing operations remain in the UK where this strategy provides greater flexibility in meeting market needs. The problems the Group has faced in respect of its largest supplier in China have been referred to previously. Over the course of the past year we have brought on stream two alternative suppliers of model railway products. This reduces our dependence on our largest supplier and provides more flexibility to increase production volumes if required. We continue to work closely with our largest supplier and expect that this relationship will continue to the benefit of both parties, for many years to come.

See the annual report.

[brushman47544]

Coupled to the fact that container ships world-wide are on a "go-slow" to use less fuel in the wake of the financial meltdown,

Ships are also under pressure to cut emissions on environmental grounds, so "slow steaming" may be here to stay if it proves to show wider environmental and cost benefits. The engine manufacturers have been running all sorts of trials/tests to advise on this and ensure there are no negative effects on the engines, most of which were not designed for slow steaming.

 

What I fail to understand, and already referred to in another thread, is how Hornby does not appear to know what will arrive in its next shipment(s). The New Release sheets are presumably compiled relatively close to publication and certainly after a container has been loaded on a ship in China, yet the new Hawksworths are not listed. Doesn't Hornby know, and if not why on earth not, what is in each shipment once the container is shipped. If it was me, I would want a detailed inventory to check when the container arrived.

[34theletterbetweenB&D]

Possibly because hard experience has taught them that the shipping manifest is not wholly reliable; and in the present economic environment draining this particular swamp first requires the building of an access road, to bring in the weapons to shoot the crocodiles? (Sorry for stretching the metaphor too far.) Better to say nothing until you have physical possession of the goods in the container, and are thereby not going to misinform your retailers and customers.

 

I could write a book on what goes wrong when people are placed under pressure by inadequate management systems; except that there is no need because a highly gifted man deeply experienced in these matters wrote a definitive text some years ago. 'Out of the Crisis' by W Edwards Deming.

[The Stationmaster]

Possibly because hard experience has taught them that the shipping manifest is not wholly reliable; and in the present economic environment draining this particular swamp first requires the building of an access road, to bring in the weapons to shoot the crocodiles? (Sorry for stretching the metaphor too far.) Better to say nothing until you have physical possession of the goods in the container, and are thereby not going to misinform your retailers and customers.

 

 

I get the impression at times that both Hornby and Bachmann suffer from this problem and it is obviously in some respects a result of being a long way from the source of manufacture (not that distance should be a hurdle to correct invoicing and inventory systems - they're hardly new ideas in the world of business). But whatever systems applies containers still have to be loaded and unloaded and delays and bottlenecks in that process occur at ports - so even if they know what's in it and where it is they might not know exactly when they will get it?

 

I also presume that Hornby exercise some distribution control in this country - the Hawksworths seemingly being a case in point with effectively a vehicle per week currently being released which would seem to have both sales and stock control advantages (and maybe they are being packed here so a production advantage as well?).

[coachmann]

As I see it, buyers are only at one end of the chain. Manufacturers have both ends to contend with and lots in between. Best plans go awry and it only takes one supplier to experience difficulties of their own, then new plans have to be brought forward pretty sharpish. When customers are champing at the bit, 'Hornby' are probably aware that making a promise and being forced to 'amend' it is not in their interest. The moment is lost and there is the risk that buyers will spend their hard earned cash on another manufacturers new product.

[Andy Y]

As I see it, buyers are only at one end of the chain. Manufacturers have both ends to contend with and lots in between. Best plans go awry and it only takes one supplier to experience difficulties of their own, then new plans have to be brought forward pretty sharpish. When customers are champing at the bit, 'Hornby' are probably aware that making a promise and being forced to 'amend' it is not in their interest.

 

It pleases me when I see such balanced posts that consider commercial pressures and not the unthinking "it's a disgrace, I want" immaturity that is sometimes seen.

 

 

 

[craigwelsh]

When the large shops like Hattons and Rails both offer pre-order and send out mailing lists of recent arrivals I personally don't see the need for Hornby to advise consumers on releases. For trade its obviously different and i'd hope they have more of an idea of what is on the way and don't just get mystery boxes!

[iak]

When the stuff is in the shops, its in the shops - thats my way of thinking.

Mind it means you can save your pennies and buy without fear of household issues

I'm waiting for the new issue Staniers in Blood & Custard but hey, its not exactly a beeeg deal if they are "late..."

Then again one must remember so much is involved in getting the "product" out - it is hardly pulling tatties frae the garden.

[brushman47544]

Since I seem to have started this...

 

As I see it, buyers are only at one end of the chain. Manufacturers have both ends to contend with and lots in between. Best plans go awry and it only takes one supplier to experience difficulties of their own, then new plans have to be brought forward pretty sharpish. When customers are champing at the bit, 'Hornby' are probably aware that making a promise and being forced to 'amend' it is not in their interest. The moment is lost and there is the risk that buyers will spend their hard earned cash on another manufacturers new product.

 

I agree entirely. What Hornby decides to include in the list of new releases is up to them and being included won't speed up a model appearing in the shops for us to buy. As iak said, it's there when its there, and it will get there eventually.

 

I always assumed, since Hornby has a separate website for its customers (the shops we buy from) advising expected release dates, the new releases listing was Hornby's way of showcasing to Joe Public what models were shortly to be available. Yes, they have been bitten recently by including models, e.g. Schools locos, that have then failed to appear in the shops, so I understand the circumspection, but it can work both ways. If I promise to buy something for my son and we see it in Hornby's new release sheet (or equally in Bachmann's next 60 days list), then a pre-purchase choice can be decided to that manufacturer's advantage. If its not in the list, then it may not get considered and a purchase is lost. It works both ways.

 

But my point was not about individual cases, rather that in this day and age surely Hornby, like other companies, would on commercial grounds want to know what was the status of its orders with its suppliers and therefore know what was in a sealed container already on the high seas. You can be sure that the manufacturer knows because he will expect to be paid for it - surely the customer should have that information as well. The exact arrival dates may change due to weather or customs issues, but container ships work on a schedule, with spaces booked for individual containers and connections in larger container ports (Felixstowe, Southampton, Liverpool, Rotterdam, Antwerp, Le Havre etc.) for trans-shipment where necessary. Any seaborne delays should under normal circumstances be days not weeks. So it should not be rocket science to predict what can be available in the shops and when.

[Western Dave]

Could be 2 more reason for delays here

 

1) The shipment may not be a complete container load and is therefore a part load and is subject to being unloaded at a transport compnay and then pallatised for onward shipment. It's not unusual for this to take 2 weeks.

 

2) AND I'M NOT SUGGESTING ANY FINANCIAL DIFFICULTIES HERE AT ALL, but if you are paying for the goods on collection from port which is quite normal when importing from the far east (even if you are a major PLC and importing from one of your own group company factories) with the ups and downs of the currency markets it can be benificial to leave the goods at the port of shipment. We do this all the time, a good example is the Euro exchange rate, in the last 2 weeks it has dropped 6% so we hold off if we can until it improves. I have no idea on the values of shipments from Hornby and or Bachmann it can make a big difference to the bottom line.

 

Since I seem to have started this...

 

 

 

I agree entirely. What Hornby decides to include in the list of new releases is up to them and being included won't speed up a model appearing in the shops for us to buy. As iak said, it's there when its there, and it will get there eventually.

 

I always assumed, since Hornby has a separate website for its customers (the shops we buy from) advising expected release dates, the new releases listing was Hornby's way of showcasing to Joe Public what models were shortly to be available. Yes, they have been bitten recently by including models, e.g. Schools locos, that have then failed to appear in the shops, so I understand the circumspection, but it can work both ways. If I promise to buy something for my son and we see it in Hornby's new release sheet (or equally in Bachmann's next 60 days list), then a pre-purchase choice can be decided to that manufacturer's advantage. If its not in the list, then it may not get considered and a purchase is lost. It works both ways.

 

But my point was not about individual cases, rather that in this day and age surely Hornby, like other companies, would on commercial grounds want to know what was the status of its orders with its suppliers and therefore know what was in a sealed container already on the high seas. You can be sure that the manufacturer knows because he will expect to be paid for it - surely the customer should have that information as well. The exact arrival dates may change due to weather or customs issues, but container ships work on a schedule, with spaces booked for individual containers and connections in larger container ports (Felixstowe, Southampton, Liverpool, Rotterdam, Antwerp, Le Havre etc.) for trans-shipment where necessary. Any seaborne delays should under normal circumstances be days not weeks. So it should not be rocket science to predict what can be available in the shops and when.

[Sailsbury Hall]

If I were a manufacturer I would be wary of publishing a delivery schedule until I had the goods in my warehouse and had inspected the consignment.

 

I know of several lines that have been returned to China over the past few years for various quality control issues, which has had a 'knock on' effect on the release for sale date.

[Ozexpatriate]

As reported on MREmag, there's more infomation on Chinese manufacturing from small Australian producers.

 

In their latest newsletter, Austrains indicates that prices quoted by the factory are increasing by 20%, due to increased costs of raw materials and wages in China. It's an interesting read. Austrains predicts locomotives prices will reach AU$300.00. (Note that this is also a function of their volume so 'your mileage will vary' with UK models.)

 

Austrains in an earlier announcement from June 25, 2010, said that they made the grade as one of Sanda Kan Industrial Ltd's "Key Customers" after the shake-up there. Earlier, Eureka Models (another small Australian producer) indicated that they failed to meet Sanda Kan's "Key Customer" list.

 

In Hornby's 2010 interim summary report they highlight their distribution arrangement with the Royal Mint for 2012 commemorative coins and their Disney/Pixar agreements for 'Toy Story 3'-themed toys. Despite the apparent distraction these lines represent, they are probably very good for the financial health of the company.

 

They also say: "We have brought on stream a significant additional source of model railway manufacturing, thus further reducing our dependency on our largest supplier."

 

This supplier is apparently manufacturing the new 28xx which Simon Kohler is reported to have either said (or at least implied) is someone other than Sanda Kan*. This last datapoint is encouraging news because the 28xx does look nice and lends some tangible credibility to the statements made by Hornby executives.

 

* See the Hornby Castle thread, post #377.

[Graham_Muz]

They also say: "We have brought on stream a significant additional source of model railway manufacturing, thus further reducing our dependency on our largest supplier."

 

This supplier is apparently manufacturing the new 28xx which Simon Kohler is reported to have either said (or at least implied) is someone other than Sanda Kan*. This last datapoint is encouraging news because the 28xx does look nice and lends some tangible credibility to the statements made by Hornby executives.

 

* See the Hornby Castle thread, post #377.

 

I have also been advised from a reliable source that the 28xx has been the first model to come from a new supplier in China not Sanda Kan.

[Ozexpatriate]

Hornby have released the full text of their 2010 Interim Report for the six month period ending September 30, 2010.

 

Instead of a business overview from both the Chairman and Chief Executive, this one only includes a report by the Chairman, which (as one would expect) is pretty high level.

 

The emphasis on the diversification of their product portfolio was unremarkable. Scalextric was given first mention, and there was a lot of emphasis on the 2012 Olympics range. Railways are important to Hornby Group, but they deliberately don't indicate how much of their business comes from which brand, segmenting instead by region.

 

It was very interesting to see commentary to the effect that their largest supplier (Sanda Kan??) implemented a new ERP system this year and that this, combined with the global shortage of electronics components hurt manufacuturing. This explains a lot. The late summer saw huge component shortages in the global semiconductor industry, having depleted their inventories in the aftermath of the credit crunch they had to restart their pipelines to fill new orders and emerge from the recent financial recession.

[Ozexpatriate]

Hornby struggled through the Christmas period.

 

Knowing that their year is heavily dependent on Christmas trainset sales, and seeing relatively weak seasonal sales, they pre-announced that their full-year pre-tax profits will be lower than market expectations.

 

There is a short analysis here with more detailed financial impact here. Google is not showing me the source press release.

 

Based on this information, shares dropped 14.5p (10.55%) to 123p. Despite the relative volatility of Hornby's share price (including a similar drop over a couple of days in early December) this is a significant single day dip. The close price of 123p is still higher than their 52 weeek low of 110p last March.

 

Curiously they attributed the low seasonal sales to inclement weather. I guess the implication is that everyone was too snow-bound to shop for trainsets, when compared with a 'normal' year.

 

(I didn't think this warranted a new thread, so I put it here where we discussed other aspects of Hornby's business.)

[Stevelewis]

Ref the Bad weather affecting sales:

 

I have spoken to 3 or 4 retailers in the Hobby. All stated that the weather definately, depressed sales in the normally busy pre Christmas period, there was a slight improvement in the few days before Christmas but this did not recoup the previous few weeks sales downturn.

[The Stationmaster]

Same sort of information as Steve Lewis from a couple of dealers I know although I did 'help' one of them post Christmas when I collected my two final Hawksworths plus my 2884 2-8-0 But he had experienced a very poor pre-Christmas period on all fronts model wise (although model railways are the backbone of his business) as the snow arrived at exactly the wrong moment. The other one said he saw a noticeable failure to pick up in the month leading up to Christmas - again on all fronts, not just model railways - but the snow left him with a customer free shop for a week.

 

And it looks like the wider economy has suffered a similar fate with the heavy reliance on retail sales clearly impacting and I have been told that the restaurant trade also suffered quite badly at a time when they would usually be turning away customers - I even had an email on 30 December from one well known chain offering reductions on New Year's Eve

[Stevelewis]

Interesting re the phone canvassing........................

 

I have been into garden railways for over 30 years.... and as most will know there are not many retail outlets for this sector in the UK........One such retailer with whom I have dealt with over the years has never contacted me to try to sell anything..................except for a couple of weeks before Christmas when I received a telephone call to give me details of some offers in G scale items they had........ so another sign perhaps of how bad trade was.

 

Unfortunately I had to tell them them that I had decided to greatly reduce my outdoor activities.... Mainly due to the WEATHER.

[Guest dilbert]

Based on this information, shares dropped 14.5p (10.55%) to 123p. Despite the relative volatility of Hornby's share price (including a similar drop over a couple of days in early December) this is a significant single day dip. The close price of 123p is still higher than their 52 weeek low of 117p last April.

 

You will have more fun losing money in Las Vegas with the 'beautiful people' than gambling on the stock markets... the share price is only relevant when you intend to sell - it's rather like buying a house - a longer term investment rather than shorting and making a quick quid / buck / euro or two.

 

But with interest rates near to zero for savers, then the stock market seems to be the only solution for "saving" money and assuming that this doesn't lose value over time... all very perverse in reality... dilbert

[Ceptic]

Not only did the foul weather prevent the customers reaching their favourite shops, but also, prevented the lorry-loaded supplies from reaching their favourite shops.

I'm left thinking, How many wholesalers / retailers have their stock deliveries replenished directly from, say, Hornby etc., using road transport ?.

Would it not be better to have a local distribution centre, connected to a railhead ? (at both ends of the chain)...with the local authority making sure that access to these (and the local roads / pavements) were the priority to keep clear. rather than the Motorway system ?. Especially, when the rail-borne freight network is still in operation.

.

This, somehow, reminds me of what has been lost.

 

Regards.