Bachmann - why price increases are necessary

[Dunsignalling]

The Q6... limited georgraphy? I travelled everywhere from Scotland to Hull and then over across to Leeds, Sheffield and Doncaster...

 

Forgive for thinking that the E4, J11, D11/2 and C-class all have similar areas of georgraphical coverage (if not smaller) and have been given favour by Bachmann. Some have not been as high in wishlists as the Q6 either.

 

The core of the demand for the Q6 is for Bachmann to be the ones to make such a freight workhorse as they have the record, means and ability to do it best. I certainly want Bachmann to be the ones to do this and would buy many.

 

This does read and feel like everything ex-NER is being written off. If thats the case... I may as well give it all up now...

I don't think that the Q6 is being frozen out on geographical grounds. Bachmann already make quite a lot of heavy freight locomotives and that may also have influenced Hornby to pay more attention to that sector than they might otherwise. 

 

One can always find prototypical justification for over-powered trains but the problem with big freight locos for the space starved majority of modellers is that they generally look rather daft pulling trains shorter than about 20 wagons in the same way that 8P passenger locos do hauling fewer than 8 coaches.

 

Both of our main manufacturers seem to have adopted a "small engine policy" of late, but it's probably just another phase they are going through.

 

Announcements/introductions of models based on GC, GE, LBSCR, and SECR prototypes indicate that both Bachmann and Hornby base their decisions around themes. When they do get round to the NER, that means you'll probably see more than just a Q6.......

 

John

[dibber25]

Sprung buffers are around £4 or less trade price, bulk buy is probably £2.

 

Bachmann says it costs £15 to make and fit sprung buffers

 

So if it costs £11 in labour I have a solution for them... The mould is obviously pre drilled and there is no "old" buffer to remove.

All that's needed is push fit and crimp the bar.

 

Send them to me, I can buy them and fit them in 10 minutes or less per loco. That means I can make 6 locos per hour...£66 ph to me..

 

I'll do 6 an hour for £50, above that rate I'm in bonus territory and I fancy my chances pretty good..

 

That DMU price can come down £5 right there..

No, Bachmann did not say it cost £15 to fit sprung buffers. What they actually said was that sprung buffers add £15 to the retail price. That is not the same thing. Read between the lines of that comment and you realise that Hornby's 'design clever' was actually spot-on. What both manufacturers were saying is, "dispense with the separately fitted details wherever possible because it is the fitting of these which pushes the price up." Yes, the labour costs are an issue but it is the labour itself which is the heart of the problem. Due to the way the Chinese labour market works (it's a rural agricultural system grafted onto industry) labour simply disappears (fewer than 50% of staff returned to Kader's factory after Chinese New Year, on one occasion). New staff have to be found and trained, so there's a cost of delay coming in to play, too. I've never been able to see the logic in providing sprung buffers on RTR stock with couplers that prevent the buffers making contact, anyway, but what I believe this comment was intended to do, was to point out that sprung buffers are on their way out.

CHRIS LEIGH

[2ManySpams]

Looks like even electronic items such as iPhones etc are unlikely to escape wage related price rises: http://www.telegraph.co.uk/finance/china-business/7807903/Foxconn-suicide-factory-raises-pay-70pc.html

 

For a little perspective I found this statement interesting:

 

"Following the latest rise, which will take full effect from October 1, the basic salary for production-line workers at Foxconn’s will have risen from 900 renminbi (£91.30) per month two weeks ago to 2,000 renminbi (£203)."

 

So a worker making iPhones all day will have to work 4-6 weeks before they would be able to buy a luxury item such as a train set loco - and that's if they had no other outgoings. A graphic example of the disparity in world-wide economics. 

 

Also interesting that:

“The [Foxconn] pay raise will put pressure on other companies that are currently cashing in on the cheap labour of China. The era of cheap Chinese labour is over,” said Mars Hsu, a Taipei-based analyst with Grand Cathay Securities.

 

On this basis I suspect that the Bachmann announced price rises are just the tip of the iceberg on other china-produced commodities. 

[ThaneofFife]

No, Bachmann did not say it cost £15 to fit sprung buffers. What they actually said was that sprung buffers add £15 to the retail price. That is not the same thing. Read between the lines of that comment and you realise that Hornby's 'design clever' was actually spot-on. What both manufacturers were saying is, "dispense with the separately fitted details wherever possible because it is the fitting of these which pushes the price up." Yes, the labour costs are an issue but it is the labour itself which is the heart of the problem. Due to the way the Chinese labour market works (it's a rural agricultural system grafted onto industry) labour simply disappears (fewer than 50% of staff returned to Kader's factory after Chinese New Year, on one occasion). New staff have to be found and trained, so there's a cost of delay coming in to play, too. I've never been able to see the logic in providing sprung buffers on RTR stock with couplers that prevent the buffers making contact, anyway, but what I believe this comment was intended to do, was to point out that sprung buffers are on their way out.

CHRIS LEIGH

anybody else spot the contradiction in here?

ok i see what Chris meant but even so......

 

that said i think factory fitted sprung buffers are crimped on after fitting to the model so having them in the accessory bag might not work unless they tweak the buffers for customer fitment. i can imagine though problems with some sausage fingered modellers and newbies breaking the valances off their beautiful new model trying to push a buffer into a hole.

[Keith George]

I doubt that you would be starting at £3:00 per hour though.

My pay on leaving school was £3.00 per WEEK and that was on British Railways.

 

Keith

[Igor]

I don't agree with all this reasoning. As has been pointed out, the pound has been getting stronger for a while now, meaning Bachmann UK having been getting considerably more bucks for their bang... It's currently at a four year high! What happens when this falls? Wheres all that money gone?

 

I think it really is more to do with bring up the price (not specification) to a 'European' level and quietly following Hornby's lead in seeing what the punters will stand.

 

As for new products, it sounds like they were deliberately described as 'items'? If so, then there might not be any locos at all. Not worried. Just eagerly awaiting the new Warship!

[Coombe Barton]

If you compare the price of some food items a year/two years ago and now you may be unpleasantly surprised. Models are not a necessary purchase to survive. The reality and honesty behind the re pricing of a non-essential toy ( yes, word used advisedly) is refreshing.

 

As others have said, this is the real world, get used to it.

 

And as for kits - just look at other threads about non-supply. If you want them you've got to pay for them. Or the supplier goes bust as they can't afford to make them for the price the market demands.

[DJM Dave]

The clever people in Hong Kong and China, expect the bubble to burst ( model railway manufacturing wise) within 5 years and are already looking farther afield to try to mitigate these year on year price rises.

 

In 5 years the wages in China will not be far off the UK minimum wage, making the gap much narrower.

 

Unless we are willing to pay higher prices, and there is a general reticence to do so) then relocation to a country that has lower wages so that margins are kept or increased is the only way..........for now!

 

After all the Chinese people want what the west take for granted, consumer goods wise, and who's to blame them, hence the rises.

Cheers

Dave

[Jol Wilkinson]

I don't agree with all this reasoning. As has been pointed out, the pound has been getting stronger for a while now, meaning Bachmann UK having been getting considerably more bucks for their bang... It's currently at a four year high! What happens when this falls? Wheres all that money gone?

 

May I suggest that this site shows what the Pound/Yuan relationship has been over the last five years.

 

http://www.xe.com/currencycharts/?from=GBP&to=CNY&view=5Y

 

IIRC didn't the OP contain the statement that Bachmann inter buy at the US dollar exchange rate. This shows that rerlationship:

 

http://www.xe.com/currencycharts/?from=USD&to=CNY

 

If you then look at Pound/USD;

 

http://www.xe.com/currencycharts/?from=GBP&to=USD&view=5Y

 

I'll let you work it all out, but I don't think it as simple as you think.

[JSpencer]

The DMU derby light weight does not have sprung buffers so no money would be saved there.

 

I can fit a sprung buffer in less than a minute, so £15 does seem a little high considering a loco only has 4. Buffer beam detail does of course take a lot longer. But agree that avoiding fitted detail to reduce costs is the way forwards.

[Dunsignalling]

On re-reading the examples of old/new prices, one reason for smaller, simpler locos coming into vogue becomes clear.

 

The increase (about 11%) quoted on the E4 is a good deal less than those on established models that require more complex assembly work.

 

John

[Dunsignalling]

The DMU derby light weight does not have sprung buffers so no money would be saved there.

 

I can fit a sprung buffer in less than a minute, so £15 does seem a little high considering a loco only has 4. Buffer beam detail does of course take a lot longer.

 

In which case, why do you need someone to do it for you?

 

Sounds like you could make a good living even on Chinese rates, so long as you were on piece-work!

 

One minute to fit a sprung buffer obviously doesn't Include safely removing a non-sprung one, enlarging the hole to the right size or touching up the paint afterwards.

 

Adding the pipework is a piece of cake by comparison, just drill a few holes and stick them in! 

 

I just wish Heljan would stop doing it for me as I wreck half their work when fitting my preferred couplings!

 

John

[Coombe Barton]

The DMU derby light weight does not have sprung buffers so no money would be saved there.

 

I can fit a sprung buffer in less than a minute, so £15 does seem a little high considering a loco only has 4. Buffer beam detail does of course take a lot longer.

Why can we not just accept that the sprung buffer issue was an example of a complex issue? No one in the arguments above that I can see has factored in the cost of the spring buffer assembly (retail about £7-8 at the moment) in their spurious arguments? What about quality, testing and returns when  the spring does not spring quite as expected? As others have said, and I repeat, reality is what is happening.

 

Bachmann are trying to stay in business and are being open about the whole process.

 

You don;t HAVE to buy their products in order for you to survive, but someone HAS to buy their products for them to survive as a company. And if they close down their operation what's left?

[coniston branch]

Dear Bachmann, please, please, please don't compromise on quality, I would rather pay 20% more for a quality model, than have to make do with the compromises of the Hornby DoG.

 

Phil

[Dave47549]

Am I seriously the only one that saw this coming a mile off? The 'red' box is typically more expensive than the nearest equivalent 'blue' box. Team Red then commits PR suicide by ramping up their prices further, allowing team blue a comfortable margin to raise their prices, who can then cite whatever they like for the increase - & win hands down in the PR stakes to boot.

 

Anyone who thinks this is a one-off hefty increase is living in cloud cuckoo land, a recent browse through the shelves of a stockist showed three different prices for basically the same model, the difference is purely down to which release it is (letter suffix etc). A raise of approximately 50% was noticed between the 'A' suffix & the 'C' suffix.

 

The only thing which does throw me is the intonation that a cheaper manufacturing country is on the cards, yet UKplc is overlooked. Figures of £1-3 have been bandied about on here for comparative labour costs as an excuse as to why we can't make it here when the minimum (note, minimum NOT living) wage is £6.31. Well, thanks to the Orwellian authorities in charge, a workforce here potentially running into seven figures can be legally sourced for just £2.33 per hour. You'll have to train new staff every 6 months though....

 

>EDIT< first line for syntax

[Stevelewis]

We  appear  to  be  drifting   away from  the  topic a little,  but  I will make  a  comment  regarding  sprung  buffers on 00 stock.........What  is  the  point of  fitting  them?

 

They  serve  no  purpose, unless  of  course  the  user  is not  using  automatic  couplings and and using  3  link or  screw  couplings, but  I am  sure  that is  a smallish minority.

 

When we  receive  a new 00  model,  what  do  we  do?  Well  in my  case  I give  the   sprung  buffers a couple  of depressions  to  see if  they  work  and  invariabley  that  is  it, they  probaly never  get  depressed  again!!

 

I actually  do  have  sprung  buffers on some  of  my  stock  which  actually do work when  running  but  they  are   0 Gauge!

[GordonC]

This issue was discussed at huge length on another thread, when the Hornby Chairman revealed that the labour component in model railways was about 50% of the production cost.

 

See here for the full skinny.

 

Paul

 

So if that figure is correct and 50% of the production cost is labour costs and we know wages will rise 20% every year for the next 5 years in China, does that not raise the question of whether production can afford to stay there long-term?

 

If the first year has an example 2 car DMU rising to £144 and we can expect 10% rises in the next 4 years (50% of 20%) then that very same 2 car DMU would be looking closer to an eye-watering £210 in 5 years time. Is there not a danger of completely killing off the market with prices like that? The difference in costs between Chinese and UK (or even European) production must narrow with consistent rises like that year on year.

 

For me, as a BR Blue and sectorisation modeller, there are getting less and less items that would be 'must-buy' and I cant think of too many new, unproduced DMU types that I'd be happy handing over £210 for (or whatever the equivalent would be 3 cars etc). At least Bachmann are maintaining the quality of their products with rising prices, but there are still limits to what the market can take.

[The Stationmaster]

So we get, via Andy, a very detailed report from Bachmann, outlining their business strategy with explanations for the resoning behind it. There are plenty of pertinent business FACTS in there, showing a company with positive plans for the future.

And then we get the doubters.

 

So, what would YOU do in Bachmann's shoes, realistically? And more importantly, will you still be around to give us next year's Annual Report.......?

 

Get real, people.

 

Stewart

Well said Stewart - it's always far easier to tell someone else how to run their business than it is to actually go and do it, we suffered years of that on the railway but strangely none of them ever showed up at 04.00 in pouring rain to sort a derailment that would otherwise hold up all their commuter trains.

 

Just the same here - Andy has given us an excellent and detailed report about how Bachmann see their way forward in the immediate future and considering the losses their parent company Kader has been making on its model railway business I see a very positive message in that report, it's called planning to stay in the business.  Bachmann has a big backlog of promised models so new tooling announcements this year are bound to be limited if we are to get all that has already been promised; paying a realistic price 'at the factory gate' for more intricate 'work performed' is also an obvious component in ensuring a future for the business and for the fidelity and finish Bachmann has been delivering to us.  

 

So with very limited knowledge of their business beyond Kader's accounts and what we see in the shops I'm certainly not going to suggest anything different, after all what are they actually doing wrong?  And above all they have made very clear their commitment to the UK model railway scene and the retailers who service it, which - dare I say it - is considerably more than their main competitor appears to have done.

[TheSignalEngineer]

May I suggest that this site shows what the Pound/Yuan relationship has been over the last five years.

 

http://www.xe.com/currencycharts/?from=GBP&to=CNY&view=5Y

 

IIRC didn't the OP contain the statement that Bachmann inter buy at the US dollar exchange rate. This shows that rerlationship:

 

http://www.xe.com/currencycharts/?from=USD&to=CNY

 

If you then look at Pound/USD;

 

http://www.xe.com/currencycharts/?from=GBP&to=USD&view=5Y

 

I'll let you work it all out, but I don't think it as simple as you think.

Looking back to about 2007 there was a time when  £1 bought $2 which in turn bought 15 Yuan. At the worst point in 2013, £1 bought $1.50 which then bought 9 Yuan.

[dibber25]

anybody else spot the contradiction in here?

ok i see what Chris meant but even so......

 

No. What contradiction?

 

Interesting to see the mention of Foxconn above. Apparently they recruit by standing outside Kader offering more money. Staff can walk out of Kader at lunch time and straight into Foxconn that afternoon.

CHRIS LEIGH

[Neil]

Dear Bachmann, please, please, please don't compromise on quality, I would rather pay 20% more for a quality model, than have to make do with the compromises of the Hornby DoG.

 

Phil

 

With respect Phil, you're only one person, expressing one view, one one particular thread on one forum, in one country where Bachmann products are sold. Before you say it, I'd agree that the same could be said of my comments too.

 

It's self evident that Bachmann will be best placed to take a global view of their price and detail strategy. It's perhaps significant that their direction seems to parallel Hornby's recent announcements. I think we need to accept that this will be  how things will be and channel any disappointment into motivation to improve on what will no doubt be a basically sound model. 

[The Stationmaster]

The DMU derby light weight does not have sprung buffers so no money would be saved there.

 

I can fit a sprung buffer in less than a minute, so £15 does seem a little high considering a loco only has 4. Buffer beam detail does of course take a lot longer. But agree that avoiding fitted detail to reduce costs is the way forwards.

Maybe you can, maybe a Chinese factory worker can fit one even more quickly but in many respects that is irrelevant.

 

The price we pay is a combination of - the extra time something spends in assembly to fit separate parts, the labour cost of fitting the parts, the manufacturing cost of making the separate parts, the ability to actually recruit additional labour to design, make the tools and fit those parts.  Then you have an assembled model which cost x to manufacture, then you add the factory overheads as a percentage of x, then you add profit as a percentage of x+overheads, then you add packaging which can be more complex to avoid damage to separately fitted parts.  Which gives you a price at the factory gate - which has increased by whatever percentage purely as a result of using separately fitted buffers.

 

To that increase, or rather from that increase you add the profit margin charged by Bachmann and the profit margin charged by the retailer and the effect of those increases on the VAT paid at the end of the chain by us.  So very quickly a set of sprung buffers can turn into an added £15 or whatever at the shop.

 

So look on the bright side - if sprung buffers as a factory item are on the way out just think of the future that could be there for British cottage industry making sprung replacement buffers and those selling replacement blades for modelling knives etc.

[shortliner]

Interesting - and "Thank you, Andy" for publishing that - This morning I recieved the Bachmann USA May Newsletter, and though this will undoubtedly affect their policies on model pricing patterns also, there is no mention of it at all

[coniston branch]

With respect Phil, you're only one person, expressing one view, one one particular thread on one forum, in one country where Bachmann products are sold. Before you say it, I'd agree that the same could be said of my comments too.

 

It's self evident that Bachmann will be best placed to take a global view of their price and detail strategy. It's perhaps significant that their direction seems to parallel Hornby's recent announcements. I think we need to accept that this will be  how things will be and channel any disappointment into motivation to improve on what will no doubt be a basically sound model. 

 

??? I thought it was obvious that it was just a personal comment !!!

 

Phil

[trisonic]

They have some molded handrails on their otherwise excellent S4 - a new release.....

 

Interesting - and "Thank you, Andy" for publishing that - This morning I recieved the Bachmann USA May Newsletter, and though this will undoubtedly affect their policies on model pricing patterns also, there is no mention of it at all

Still not taken very seriously over here though, unfortunately.

 

Best, Pete.