Hornby announce RRP reductions on some forthcoming rolling stock items

[stewartingram]

I wonder - possibly more importantly - if this means a return to bigger production runs. IE, sell more at a lower profit margin to make the same profit, but then needing to make bigger batches? In which case, more chance of getting hold of the things when they are released?

 

Stewart

 

ps noted on on of the box shifter emails, the red liveried Gresley non-corridor stock is back (or nearly so), though the rarer brake 3rd is not due until Q1.

[darren01]

Hi

Well a few Hornby wagon's will be rolling my way at these price's,a lot less eye watering  ,I think this is a good move on there part.

Darren01

[Gwiwer]

Kernow are quoting pre-order prices about 50p-95p below the Hornby reduction.

 

 

Kernow (and others) typically pass on any manufacturer's leeway for store discounting thereby offering prices below the list price.  Even when that list price has just been slashed.

 

Quote from latest Kernow newsletter -

 

Hornby have reduced their prices on unreleased 2013 coaches and wagons! They have been looking at various alternative manufacturers and during the process they have been able to reassess the costs of certain models, which has resulted in an overall price decrease on certain items. The following items have therefore had their prices decreased! If you have made a pre-order for any of these models the price will automatically be amended to the new lower price.

 

 

From this it appears that Hornby have found someone to make them cheaper.

 

Or simply renegotiated with the exiting supply plant at a different price for the current catalogue?  

[Xerces Fobe2]

As pleased as most of us are to read this positive development from Hornby let us not forget that price is only part of their current problems with quality being the other. The new head of Hornby appears have a good business head so hopefully he will be on the quality case too and will deliver in this area too.

 

I wish Hornby well as despite many of our the many justified gripes on this forum they derserve our support as the very name Hornby, epitomises the the world of model raiilways.

 

XF

[stewartingram]

I think we are all taking this statement too easily at face value, accepting the PR statement which, rightly so I guess, is actually "spin"

 

Any manufacturer has to set his prices above his total production costs to remain solvent. But the price that would principally interest Hornby is the wholesale price they charge to the retailer, not the RRP which is only aguide price for them to sell at.. (Of course the RRP does have an influence through to Hornby ultimately, as many retailers sell at that, and too high will affect their sales, in turn affecting their order levels from Hornby).

 

A manufacturer will choose his price to be a level at that which the market can support, not the [production cost + a % profit]. In recent times, Hornby prices seem to have risen more than the opposition, so they have a level of margin to reduce (wholesale remember) prices quickly via a board meeting (new management).

I don't know Hornby's margins (nor want to) or their wholesale prices, but I've seen plenty of examples in the retail field where prices are doubled at each stage, so I suspect they will have some margins to play with immediately. The 'spin' statement puts the gloss on it by saying they have found ways to cut production costs I suspect.

Also in Hornby's case, there are high R&D costs involved in new items (If you were growing carrots to sell, the R&D would be nil). Hornby choose to spread the cost of that R&D over say the 1st year's sales. If they now decide to spread it over 2 years sales, more margin to reduce the price.

In addition, to reach the same profit level they will have to sell more if the price is lower. (Hopefully they will actually sell more). With the supply chain problems they have had, they have a problem here, I can see 2 ways of resolving it. The first way is one often mentioned - a new supplier(s),but there is another way. With small production runs, Hornby becomes a 'bit player' in the hands of the factory - pushed to the back of the queue in preference to other customers with bigger more profitable orders. So if they increase their batch sizes - which I'm sure they have to do - they suddenly become more interesting to the factory, with a consequent increase in supply chain quality. And talking of quality (of build), that could also have a positive effect too. If a factory produces lots of small batches of differing items, they have to set up a production line each time, and it becomes an 'all hands on deck' rush job to complete, with a loss of quality in the build (been there myself many times). Get a large order in, which can be phased, and you set up a constant production line, with stable staffing and the quality improves.

 

Maybe this is the sort of strategy that Hornby is hoping to follow. I wait with anticipation.

 

Stewart

[Oldddudders]

Also in Hornby's case, there are high R&D costs involved in new items (If you were growing carrots to sell, the R&D would be nil). Hornby choose to spread the cost of that R&D over say the 1st year's sales. If they now decide to spread it over 2 years sales, more margin to reduce the price.

In addition, to reach the same profit level they will have to sell more if the price is lower. (Hopefully they will actually sell more). With the supply chain problems they have had, they have a problem here, I can see 2 ways of resolving it. The first way is one often mentioned - a new supplier(s),but there is another way. With small production runs, Hornby becomes a 'bit player' in the hands of the factory - pushed to the back of the queue in preference to other customers with bigger more profitable orders. So if they increase their batch sizes - which I'm sure they have to do - they suddenly become more interesting to the factory, with a consequent increase in supply chain quality. And talking of quality (of build), that could also have a positive effect too. If a factory produces lots of small batches of differing items, they have to set up a production line each time, and it becomes an 'all hands on deck' rush job to complete, with a loss of quality in the build (been there myself many times). Get a large order in, which can be phased, and you set up a constant production line, with stable staffing and the quality improves.

 

 

Lots of sense here, TVM. I particularly enjoyed your ref to carrots - when I lived in the UK, my carrots (for the horses, you understand!) often seemed to come from Chatteris!

[7013]

Judging by some of the comments some people are never satisfied, If Hornby gave the stuff away for free someone would moan about it. I believe Hornby should be applauded for this move, no-one is forced to buy the stock.

It has always been the case that some wagons/coaches will not have everything we want in it so we change bits here and there to suit our needs.

I personally don't mind chopping off those old big couplings because most of my NEMS come from a source in France which I like and are quite flexible.

[stewartingram]

Lots of sense here, TVM. I particularly enjoyed your ref to carrots - when I lived in the UK, my carrots (for the horses, you understand!) often seemed to come from Chatteris!

I believe 85% of the carrots consumed(?) in the UK are processed here!

 

We're not known as carrot-crunchers for nowt you know.

 

Stewart

[bike2steam]

I knew they were looking into the possibility, but have Hornby now transferred some production (or sub-contracted !) from China to India ????? :-)

[darren01]

Hi

Moving it to India  make a lot os sense for them,they have been making model kits out there for somthime now,so do not see why not.

Darren01

[darren01]

Hi

Thinking a bit more about this,will the prices on there other models come down in line with this,or is this just a bit of good PR?.

Darren01

[Coldgunner]

Any price reduction must be a good thing for us.

[Ozexpatriate]

I knew they were looking into the possibility, but have Hornby now transferred some production (or sub-contracted !) from China to India ????? :-)

It's not clear that they have moved model railway production to India according to their annual report. References to India in the report are:

 

Production for our new Airfix Quickbuild product range will be UK-based and we are moving some manufacturing from China to India

 

I am pleased to report that our plans to protect our margins and reduce our dependence on one or two key suppliers are well under way. Hornby's procurement team is also helping to develop manufacturing expertise in India and this year brought some of our Humbrol paint production back to the UK.

 

Hornby sources the majority of its products in China and India, via third-party contract manufacturers.

 

Sales of Airfix showed a small increase on the previous year with some growth in both our classic kits, new ranges and gift sets from a reliable supply source in India.

 

The Group is continuing to develop and diversify its supplier portfolio, which includes a supplier in India and more recently in the UK, and closely monitors production through an increased number of locally based employees (who also ensure the maintenance of quality standards).

Airfix products were all made in India. Some Humbrol production has moved back to the UK and the "Lego-like" quickbuild Airfix products will be made in the UK.

[Ozexpatriate]

(If you were growing carrots to sell, the R&D would be nil).

Not if you are someone like Monsanto - the scary GMO monster. Coming soon to a farm near you - though hopefully those of you in the "nanny" EU will be spared. They do carrot seeds.

 

/rant

This week thousands of bees (estimates range from 25,000 - 50,000) died in the car park of a local box mart (a Target). They sprayed Linden trees with insecticides while the trees were in flower. Stupid, stupid, stupid.

/rant

 

But I digress.  

[Legend]

I think its well done to the new management.

 

Like Stewart says theres a degree of spin  , which frankly the old management was full of, but nevertheless there is welcome news here.  You've got to wonder who originally thought they could sell lots of fish vans @£16.49, when its now been drastically reduced to £10.95. For me it means I will seriously have a look at them now and maybe buy 2 or 3  whereas before I just dismissed them as too expensive.  And hopefully thats what the new management realise. Bring down the prices to reasonable levels and you just might catch the discretionary spend.

 

If this is Mr Canhams new broom , then more power to it!

[stewartingram]

I too wanted the fish vans when they were announced, but frankly totally dismissed the idea when the price was known Having a fish train with the old Hornby-Dublo/Wrenn vans, partly replaced with Parksides, I thought I would stick with the Parkside option to replace the older ones in time. Now the new Hornby version is back on the radr.

 

Stewart

[Obi-Jiff Kenobi]

I was always going to buy the Hornby fish vans, as I have not enough time to build kits when RTR stock is available, but the price reduction now means I can either buy more fish vans for the already-planned outlay, or put the saving towards something else useful. Either way, Hornby have made me quite happy.

[Ron Ron Ron]

..... If a factory produces lots of small batches of differing items, they have to set up a production line each time, and it becomes an 'all hands on deck' rush job to complete, with a loss of quality in the build (been there myself many times).

Get a large order in, which can be phased, and you set up a constant production line, with stable staffing and the quality improves.

 

Stewart, the production volumes involved, even for the most numerous selling models, are nowhere near a level that would result in a continuous production line.

You would only get that with very high production volumes, or conversely with cottage industry low volume production.

 

I'm not sure why some people (I don't know if you're in that camp?) think that batch production is somehow bad and that continuous product is some sort of preferred method? There's certainly no inherent guarantee of quality from the latter either.

 

 

.

[durham light infantry]

Stewart, the production volumes involved, even for the most numerous selling models, are nowhere near a level that would result in a continuous production line.

You would only get that with very high production volumes, or conversely with cottage industry low volume production.

 

I'm not sure why some people (I don't know if you're in that camp?) think that batch production is somehow bad and that continuous product is some sort of preferred method? There's certainly no inherent guarantee of quality from the latter either.

 

 

.

 

Batch production is the way the factories in China produce because of the work involved. No manufacturer owns a factory (Kader might, but Bachmann Europe are but a small part of that Global enterprise), they simply own the tools and dies.

 

The production line is there, but simply involves plugging in the customers tools and dies and then running the correct program for the injection moulders. The slots in the production schedule are decided months if not years in advance by the injection moulding factories, and Hornby, Bachmann, Dapol etc all have to queue up and take their place. When another run of models is required, such as with the Gresley coaches and 2-Bils despite Hornby's wishes it cannot be done to their schedule but that of the injection moulding factories. If any manufacturers product is lost in transit, (such as whichever unfortunate manufactures product is probably under 4000m of Indian Ocean) the insurance will pay out, but again the replacements will have to go to the back of the queue.

The days of a manufacturer producing 10, 15 or 20 thousand of anything is firmly over, and unless they get it horribly wrong, supply will always have to be short of demand to remain economic.

 

Mike

[DLPG]

I wonder if there is more to follow in terms of RRP cuts. There are not many people willing to pay £130 for a locomotive and nearly £50 for Gresley etc!! Glad to see some more sensible pricing around some of the rolling stock. I might well consider some fish vans now instead of building further kits.

[coachmann]

It looks to me like Hornby has simply returned to planet Earth with a less cavalier attitude.

[Oldddudders]

It looks to me like Hornby has simply returned to planet Earth with a less cavalier attitude.

Does that mean we can look forward to an early release of 70013 Oliver Cromwell?

[The Stationmaster]

Does that mean we can look forward to an early release of 70013 Oliver Cromwell?

With printed nameplates

[The Stationmaster]

I wonder if there is more to follow in terms of RRP cuts. There are not many people willing to pay £130 for a locomotive and nearly £50 for Gresley etc!! Glad to see some more sensible pricing around some of the rolling stock. I might well consider some fish vans now instead of building further kits.

Somehow I don't think we'll see Hornby reducing the prices of niche items - such as Gresley suburbans etc - for which there has been strong demand and which involve a complex manufacturing procedure.  Very sensible of them to reduce prices at the low end of the markets - including modern wagons to good detail standardsas well as the new Mk1s - because that's where they need to up their stake in the market and face up to the competition.  

 

But when you're already selling a better mousetrap to the more discerning moustetrap buyers surely the best bet is to cash in on that market?

[Multiple identity account 2]

Yes the manufacturing of the LNER coaches is complex due to the teak finish and that's where most of it becomes costle.