China syndrome

[inkaneer]

Gentlemen, the pendulum swings both ways.  When the market decides that the price is too much then product will sit on shelves until the price drops.  If I were a manufacturer today I would be doing a lot of planning to decide on how I will survive because invariably when markets get out of kilter with supply and demand and need correction that correction involves the loss of suppliers and only those whose operating model is the most economical will survive.  

[sirenwerks]

It's not just about getting people to work assembling small parts for $10 bucks an hour. It's keeping trained, motivated people and replacing the majority of those same people when they move on. In todays labor market, that might be a little easier than it was before 2007. Then it was darn near impossible. Constantly training new people adds alot to the cost because you spend alot of resources to hire and train them and productivity suffers until they are up too speed, thereby driving up costs further. MTL seems to have figured it out somewhat and I commend them for it.

I think in a certain manner you answered the question posed. There's plenty of ideas on how to retain employees in the HR books, but I rarely see businesses using them. It cost more to recruit and train new employees than it does to give existing employees a raise, and yet it often seems that businesses are, in principal, against wage increases or benefits. Perhaps they're short sighted, they can't see that the issue will continue to occur and that they could at least spend the money required to recruit and train a few employee cycles on their existing employees in order to keep them, and end up saving in the long run simultaneously developing that employee asset back into the business in ways, such as employee ownership of their job and process knowledge that could help develop efficiencies and improve processes. Let's face it, today's hourly wage earners aren't just the problem (but an excellent scapegoat), today's management isn't any more improved than previous generations. They are perhaps worse, as they likely did not come up through the ranks and don't have intimate knowledge of the nuances of the business and, while they may have papers from university, they lack the skills with which to apply their theoretical learning and are often stymied by corporate vision, or lack thereof.

[SkipGear]

Gentlemen, the pendulum swings both ways.  When the market decides that the price is too much then product will sit on shelves until the price drops.  If I were a manufacturer today I would be doing a lot of planning to decide on how I will survive because invariably when markets get out of kilter with supply and demand and need correction that correction involves the loss of suppliers and only those whose operating model is the most economical will survive.   

The law of supply and demand is not really applicable here. The market is too small. They are better off to increase the profit margin on smaller production batches than take a chance of loosing their shorts on extremely slim margins on product that still may not sell. It's a heck of a lot less work to garuntee a sell out on 1000 items at $20 profit a piece than to hope to sell 10000 items at $2 each profit.

Many manufactures are at the point of no return. They went to China to keep the pricing down. The price can not go any lower without a huge increase in sales volume to make up for it. Lowering the price is not going increase the market share enough to make a difference. The market is a fairly fixed size. It's not going to grow just because prices are dropped. You don't get into model railroading because of a price point, you do it because you are interested in trains. Lower prices may trigger some added casual purchases but higher prices won't keep you from buying that "I have to have it for my road" product. If the product sets on the shelves, then so be it, they just won't have the money to make any more to replace it.

Nobody is putting a gun to your head to buy trains. If it is something you really want, you will find a way to afford it. If it is not that important, then you probably didn't need it to begin with. (Do we really need any of this?)

We are talking about toy trains, not the auto industry, TV's or appliances. Quit trying to apply global economics to model trains, it just doesn't work.

[MichaelWinicki]

We are talking about toy trains, not the auto industry, TV's or appliances. Quit trying to apply global economics to model trains, it just doesn't work.

Point well made.

The model railroad market is not a commodity market.

It's more like a "luxury" market, where a different set of rules apply.

[Kisatchie]

Point well made.

The model railroad market is not a commodity market.

It's more like a "luxury" market, where a different set of rules apply.

For those of you who don't know, I was flooded out of model railroading by hurricane Katrina. If I had the space and resources, I'd get back into it. But right now, ready-to-run prices are beyond my comfort level.

If you put a gun to my head, forcing me back into railroading, I'd buy mostly Micro-Trains undecorated cars and paint/decal 'em myself. You can't beat the price of MTL undecs, and they're made in the US. The last time I looked, Intermountain still had car kits available. I think they are made in the USA too.

[JoeD]

Daniel,   Understanding the frustration, but withou president cars, we wouldn't have the cash to develope new product.  Those fantasy cars are a huge seller for us, and in many cases out sells the proto stuff.  Go figure...cauze I can't.  We have sort of a unique niche and to survive we have to play towards the strengths.  I think folks think that we are leaving some proto on the table when we do a President or Wizzitt car.  Not the case really.  We are still trying to navagate this new economy and things are changing fast.  I liken any manufacturing company like ours to a speed boat that responds like an ocean liner.  We see a trend and it's almost too late to respond.  We have to try and stay ahead as best we can.  Not always successful in the pursuit, but we try.  Generally you can count a year from the time we decide on a proto, to the time it goes out the back door. China can respond in half that time (if they aren't trying to stiff you) because of the unlimited work force they can throw at it.  We have limited staffing and are not able to add at a moment's notice.  Line workers we can get, but the ramp up time for a tool maker is years regardless of their background. 

Have a great holiday!!

Joe

Joe, if anything good has come from all of this its that MTL is in a much better position than any other n scale company. I have been buying more MTL products lately because the price is about the same as everyone else and they ae available when everyone else has delays. The CSX 50 box from last year is a perfect example.

I think some of the frustration you see from modelers towards MTL is that is not only represents n scale, but what's left of American industry. We see serious prototypes from China and president cars from our only American supplier.

I really like the new hopper and I can't wait for the CR OCS observation when it eventually comes. i think MTL is finally going the right direction. now how about them 19k corn tanks or pd5k hoppers?

Eh, I have to stop using my phone to type.

[inkaneer]

Point well made.

The model railroad market is not a commodity market.

It's more like a "luxury" market, where a different set of rules apply.

So the rules of supply and demand do not apply to "luxury" markets??????  Wow!  And here I just read where RV sales were down due to the price of fuel.  RV's, now there's a commodity for ya.  Folks, the old union adage that management will always mismanage is proven true again.  Manufacturers went to China seeking the goose that lays golden eggs and now they find their tooling held captive and they come away with egg on their face. 

But make no mistake this is not about those of us that are in the hobby.  Its about those who aren't in the hobby and quite probably won't be unless this hobby becomes more affordable.   I fully expect to see some shrinkage in the coming years in the market and that does not bode well for a scale like N Scale.   You see while you can still fit about four times as much into a given area in N scale than HO it will cost more to do it.  And HO stuff is not priced four times higher than N. 

[MichaelWinicki]

So the rules of supply and demand do not apply to "luxury" markets??????  Wow!  And here I just read where RV sales were down due to the price of fuel.  RV's, now there's a commodity for ya. 

But now your introducing another variable into the equation, i.e. the pricing of gas.

[MichaelWinicki]

But make no mistake this is not about those of us that are in the hobby.  Its about those who aren't in the hobby and quite probably won't be unless this hobby becomes more affordable.   

Sure affordability has some affect.  But, it has more to do with overall marketing of the hobby itself.  If the hobby means enough to them (i.e. interests them) then they'll pursue it, if it doesn't then they won't– no matter how affordable it is.

[SkipGear]

You see while you can still fit about four times as much into a given area in N scale than HO it will cost more to do it.  And HO stuff is not priced four times higher than N.  

I disagree with this premiss again. Yes you may be able to put four times the N scale in the same HO space but the issue is, people don't have that HO space to begin with. Houses are smaller, rooms are getting smaller again and there is less space for that empire. N scale doesn't cost any more when you scale down you layout accordingly. Even building an N layout the same size as an HO, you are going to end up with a similar number of structures and you don't have to buy all those tiny details that you can see in HO but are not important with N. N just allows you to model distance between point instead of cramming them one on top of another on an HO 4x8.

Our shop stocks N and HO equally so there is no visual advantage of one over the other. Being a HobbyTown, we got more than our fair share of fresh starters and just as a rough estimate, N covers HO 3:1 with new layouts being started. Even with people that have been coming in that started their research on the internet are choosing N. I just took a track order for over $500 worth of Peco track for a middle aged gentleman starting his first layout. In this past week I have helped with 3 new layout plans, all of them N. The recent MTL circus releases lasted less than 24 hours on the shelf as one of our younger customers (12) saw them and walked home with 2 runner packs and some assorted singles. The customers are still plentiful and they are buying, whether you want to believe it or not.


The sky is not falling, it's just a little gray and cloudy.

[asarge]

China can respond in half that time (if they aren't trying to stiff you) because of the unlimited work force they can throw at it.

That is changing rather quickly. TRhe Chinese work force is becoming more mobile and more wealthy(by their standards) and with a tight labor market they can move to a better job rather quickly. I read somewhere last winter that the chines have a burgeoning illegal immigration issue in the southeastern part of the country.

Ink, you are correct that it's about the future modellers as much as the old guard. Price is important to them but they don;t necessarily look at a $20 car as to expensive. Below $20 the generally don't car. $20-30 they might think about it, but if they really want it or it's just a cool scheme, they buy it. Over $30 and it get's alot tougher....to a non-purchase. Who's to know in 10 more years, but I'll bet that will cheat up a bit.

Joe, I have made fun of some of the fantasy cars, but will never begrudge MTL's attempts to bring in new collectors who might become modellers and if those fantasy schemes bring us more and better proto models, go for it.

P.S. I get so tired of the sky is falling attitudes. Times change and businesses adapt and model railroading is a business. If you wanna be all doom and gloom, go ahead, but the rest of us charge ahead.

[SkipGear]

Ink, you are correct that it's about the future modellers as much as the old guard. Price is important to them but they don;t necessarily look at a $20 car as to expensive. Below $20 the generally don't car. $20-30 they might think about it, but if they really want it or it's just a cool scheme, they buy it. Over $30 and it get's alot tougher....to a non-purchase. Who's to know in 10 more years, but I'll bet that will cheat up a bit.

This is something that most people haven't addressed. The old gaurd may remember $3 Atlas cars and $20 loco's but the new customer has no expectations of a price range. When they come in, they are a blank slate. They see that the average price range for a train car is between $10-20 and they accept that. A good loco runs a little under $100, that is their experience. They were not around for the $25 blowout LifeLikes so they have no expectations of bargin basement pricing. This is their base line. When the stuff climbs up another $20 in the future, then they will start crying like some of you on here are now, until then, the pricing they see is their normal.

[MichaelWinicki]

This is something that most people haven't addressed. The old gaurd may remember $3 Atlas cars and $20 loco's but the new customer has no expectations of a price range.

Tony hit the nail on the head.

New people do not have anywhere near the pricing expectations that we old-timers do.

[learmoia]

Comment Removed.

[TiVoPrince]

Tony hit the nail on the head.

New people do not have anywhere near the pricing expectations that we old-timers do.

UNLESS 
they aquire older magazine issues, prowl eBay, or browse forum archives.  History is out there if you seek it out.  Noting that the product you bought yesterday was once 25% the price you paid is a hurt many won't recover from. 

The hurt can be soothed by the 2011 version having higher quality lo-pro wheels and couplers that are not Rapidos.  Many will eventually understand, but it is up to us to not claim the sky is falling at every turn...