Keep the Faith

Gosh, someone got out on the wrong side of bed this morning. You quoted "a 4 figure sum" for each box and "Graphics designers from Central London agencies designing branded boxes get £10ks per week" and I have suggested that Hornby are spending a whole lot less than that by employing graphic designers who know the brand inside-out and produce artwork in the house style every day. You've also pointed out that packaging is irrelevant to you but you are just one consumer. Retailers, collectors and the brand owner themselves almost certainly have another opinion. As for some of your comments above, how many locomotives a year do you think get "5 perspective render(s)", "back ground effects and smoke etc" and three design options prepared? If I were you I'd give Simon Kohler a call, I am sure he would value your input.

£22k to £28k for a Product Designer for Scalextric. https://www.jobsinkent.com/job/1014173

But if Hornby are employing a graphic designer in East Kent they can probably pay less than £25k-£30k PA for a graduate. Less than £150 a day. They just need to be good and kept busy!

Four figures for a box design might be about right if using an outside agency. However, if Hornby are employing an in-house group of designers who are working repeatedly from a templated design for multiple sleeves then the costs per unit are likely to be considerably lower. The trick if you employ a designer full-time is ensuring that they are always creating content rather than waiting for work to be briefed. As they release fewer products it is reasonable to assume that they will need fewer designers. Also a lot of their products use a standard red box with a bespoke sleeve. The cost of a sleeve will be quite a bit lower than the cost of a fully designed box - something that Hornby seem to restrict to their limited edition runs. Don't forget that this market is split between collector and modellers. You might not want special packaging but for collectors the packaging is a big part of the appeal of a product. Hornby will have to weigh up the enhanced collector appeal of bespoke packaging with the additional cost. Having said that, making this decision assumes they even know the modeller:collector ratio in the market. There is probably a lot more gut-feel than science behind these decisions.

All true Mike but this is on top of an £8 million placing in July 2016 and another for £12 million in November 2017 both with the promise that it would put them on an even keel with the ability to invest for the future. Don’t forget the sale of the Margate site too. They are getting through money faster than Johnny Depp and Nicolas Cage. If they start utilising these facilities then you’d want to see a pretty convincing plan that things are going to be different this time.

Just how much more money can this company burn through? Do they have a dragon in the warehouse that needs daily feeding with gold? These loans move PNC and Phoenix above unsecured creditors should the company go under. I bet their suppliers are having fun securing credit insurance. The arrangement fee for the PNC deal is £120k and the combined non-utilisation fees come to £150k - that's a lot of cash gone before they even borrow a penny.

Wouldn't it make more sense to have a facility closer existing railway lines and in a more central location? Seems a very remote choice. Is there sufficient engineering expertise in East Kent or is this simply a moth-balling exercise? I assume that the route in by road will be via Channel Road, Margate - looks like being fun on Google Street View.

I am surprised they haven't revisited the Hogwarts Express set. Harry Potter remains a very visible license in apparel, publishing and toys. The Studio Tour is a hit as is the West End Show. Unlike Thomas, Harry Potter is a license that appeals to children (and adults) of a more "Hornby-appropriate" age. I expect that the royalties and minimum guarantees are high.

Thank you all for the advice. Been offline for a couple of weeks so sorry for the delay in replying. Will investigate Gaugemaster once we get going on the project.

Hosking owns both the former Margate factory site (and Hornby Visitor Centre site) as well as Bittern but is, as far as I can tell, no longer a major shareholder in Hornby PLC. His shareholding slipped below 3% in September 2014. Since the share price has dropped by over 60% since then seem that was a sensible divestment.

We are starting a family project to convert a baseboard 6x4 layout to a larger permanent set up. We will be running multiple locos mostly on closed loops with isolating points. We are more interested in landscaping with trains looping round mainly for extra visual interest. As there won’t be a lot of points activity I have ruled out digital control because of cost. I am expecting around 6 loops of track all running. Will a line of standard Hornby analogue controllers do the job or is it worth investing in something which can control everything from one unit. If so, any recommendations please? Thanks S.

Thanks Jeff - not a “MAN with no name” but I take your point. I’ve been called worse.Project’s going to have a lot of input from boys of various ages though! So long as they remember that I am in charge. S. (Will that do?)

Except all of these brands are still successful and highly visible in every supermarket or in the case of LEGO, in every toy shop, supermarket, cinema, online streaming service, entertainment shop, video game shop, book shop... Hornby, on the contrary, is a brand without a mainstream presence for most of the year. Possibly, but that number will be dropping every year as more kids grow up without encountering the Hornby brand. Brand recognition may be high with the over 40s but how many 20-somethings know it? And that is the challenge for Hornby. How are they going to reach those potentially receptive customers who don't know the brand or hobby in quite the same way as previous generations? The hobby is becoming more specialist and the current Hornby set up is distinctly sub-optimal - management heavy, publicly listed, internal competition for tooling capital expenditure and marketing spend, large staff overhead.

And that is their problem. Hornby do not have the set up of a niche manufacturer. I certainly wasn't suggesting Hornby was mainstream - that ship sailed a couple of decades ago. My point is that none of the "train set" sub-brands listed above - LEGO, Playmobil or Tomica are mainstream either. Wooden train sets are widely sold but are now mainly as standalone sets rather than the Brio system. The toy train play-pattern is simply far less common that it was. Thomas becoming primarily a pre-school brand hasn't helped. Hornby was once a desirable toy for children - possibly as late as the Bernard Cribbins years. Boys (mainly) from the 1940s through to the 1980s grew up owning or wanting a Hornby set. So in addition to a declining market for kids' train sets, parents now in their 20s and 30s are far less likely to have grown up owning or desiring a train set so are less likely to buy one for their kids. Can the hobby survive? Of course. Will the Hornby brand survive? Probably. Can Hornby PLC with its large overhead and lack of adaptability survive? Now that is the big question.

Playmobil and LEGO railway range are very niche and not listed in many mainstream retailers in the UK. Tomy as a brand is nothing like as strong as they were in the 1980s and 1990s and Tomica is not listed in any major retailers either. Brio still has some support in the independents but few carry the "system" and most major retailers now source a generic set direct from China. So even though some of these brands are expandable (none to the level of 00 gauge), none are mainstream. Like Hornby Junior these are mostly toys and not the start of a lifetime's hobby. If youngsters don't know Hornby now why will they revert to the brand as parents?

While the R3691 Paddington liveried Hitachi is a nice enough choice, it is probably not going to help attract anyone new to the hobby. With a £400 price point for a stand-alone train pack this is a serious model for enthusiasts with a lot of cash to splash and an existing layout. The door tampo prints are cute but probably no more than 1cm high. Very few, if any, young Paddington fans are going to be pestering Mum and Dad for this pack. I am sure it will sell well but it won't grow the user-base. If a parent wants to buy a Hornby train set for a kid there is nothing modern-era at a mass market price. R1155 Pendolino is well over £200 and out of stock. Does Hornby need a RailRoad version of the Hitachi IEP like it had with the Javelin and Eurostar? Hornby Junior seems to be pretty bad looking at the reviews on Amazon. It is a toy train set that cannot be expanded and seems to be giving parents and kids a pretty dreadful first experience with the Hornby brand. There are signs that Hornby has given up on this being a hobby for children. Most sets seem to be aimed at the empty-nester or retiree returning to the hobby. But they are only returning to the hobby because they either had a train set as a child or longed for one. If they are not recruiting kids it is not a good long term sign for the brand if it lasts beyond the next year in its current form. The Argos, Asda and Tesco etc promotional starter sets will be reaching shelves from July. It will be telling to see how many there are and what they include.

Hi RMWeb Returning to a hobby my brother and father introduced me to 20 odd years ago. They remain the real enthusiasts but I always enjoyed landscaping and making model buildings. I have been a "long-term listener" here but want to start posting as a move to a new home means we have space for a small permanent model railway. Planning a family project to dismantle and re-purpose the kids' 6'x4' mini-layout onto a permanent layout of around 12'x4'. No deadlines, no eras, no regions. We will run what we fancy and can afford. Looking forward to lots of expert advice over the next couple of years. Keep the Faith

This is off-topic, but since you brought it up... Debunked? What is your source?

I would love to be a fly on the wall in the Hornby office today. Their own announcement is largely received with a combination of indifference and disappointment. Yet here we have one of their biggest customers teaching them how to really create some excitement. A very impressive line up and a bullish stance from Hattons - good luck to them. After all the hype of the last week it's all a bit embarrassing for Simon Kohler and the team in Sandwich. I guess this is what happens when you overplay your hand.

My personal highlights that confirm that Hornby has lost the plot (again). - £290 for an HST - £290! - £143 for a Peckett and and three wagons. - £80 for three Railroad coaches. - The re-release of ten plastic accessories from tooling as old as Methuselah being pitched as exciting news.

"...no fewer than..." perhaps?

As Hornby PLC has not published an RNS to the AIM it is reasonable to assume that the ending of the Thomas license is not expected to have a material effect on the PLC's performance - this indicates that the range is not a major part of their sales. On the surface it does seem very odd to be making such public statements about the expiration of a licensing agreement. As part of the license Hornby will have a "selling off" period once the agreement ends. This will give them a short period of time to sell all remaining stock after the license expires. Once the sell-off period is over they are obliged to scrap the stock. I suspect one of the bean-counters has spotted that the license is about to expire but they have a few year's worth of stock. Most items are in-stock on the website and I bet that they are sitting on a lot of inventory and are using these announcements to create an artificial sense of urgency to drive sales out of the warehouse at full cost before it has to be binned or massively discounted in a fire-sale. This doesn't look like a company in control of its own destiny. If I am right then retailers should sit tight and wait for the panic. There could be some bargains on the way.

This is far from surprising but probably pretty bad news for Hornby. Thomas is no longer the strong license it was. A few years ago it was the number one pre-school license but has been usurped by more modern content – particularly the current behemoths of pre-school licensing – PAW Patrol and PJ Masks. Retail buyers will have less space for Thomas on their shelves. In addition with “kids getting older younger”, the core demographic of Thomas has reduced. A few years ago you would see boy’s t-shirts up to age 7 or 8 with Thomas artwork. Few boys of that age would now be happy to be seen in Thomas clothing. As a result of this, there is a big mismatch between the core Thomas demographic and the complexity of even the most basic Thomas set – mains power, metal track and delicate models. For most mums, Thomas toys mean bright robust plastic. Mattel paid over $600 million for HIT Entertainment. They want to get their money back. Other properties in that deal are not as strong as they were – Angelina Ballerina, Fireman Sam, Bob the Builder so they are having to get as much out of Thomas as they can. As a result Mattel have made dozens of plastic Thomas sets in both Fisher Price and Mega Bloks (another Mattel purchase) which are more pre-school friendly. So, does this matter to Hornby – probably. First, the Thomas sets will have been a major recruitment tool for getting kids into model railways. Some of these kids would go on to buy a Flying Scotman set and some would then go on to be life-time enthusiasts for the hobby. Second, as the most toy-shop friendly part of the Hornby range it is likely that this range was important in getting initial listings in toy shops. With Thomas gone and the plastic Hornby Junior being a dud (based on Amazon reviews), what has Hornby got to offer the toy retailer now? Scalextric has been superseded by Anki or more significantly games console racing games, Airfix remains obsessed with a war that ended seventy years ago and Corgi is dead in the water with all four hairy paws in the air.