China syndrome

[MichaelWinicki]

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. 

But most are going to know that over time prices increase.  It's just how this stuff works.  My brother-in-law laments every day (or it just seems like every day  ) the "lost" days of .29 gas and .15 cheeseburgers. 

It doesn't stop him from buying either today.

[sirenwerks]

We're also basing our assumptions on an idea that manufacturers want product to be low cost, and forgetting how pricing becomes a marketing tool. The idea that MRRing is a luxury hobby may be the future in the eyes of trend setting manufacturers and they MAY price their product accordingly.

(I'm going to use an auto industry example, not intending it as direct correlation, but to show the point.) High end autos aren't all that. While some of the polished geegaws cost more, the basic costs of development and production run, or could, close enough to the average Chevy or Ford. While high end manufacturers could ramp up production and drive their prices down to close to the affordability level of Chevy and Fords, they choose not to driving the per unit price up and psychologically making the product seem worth the extra cost via marketing. It is a conscious decision on the manufacturers part to place their product in the high end price bracket.

Who says Atlas can't make a conscious decision to do so? It already has in the sense that it has several product lines, with varying degrees of detail. But perhaps Atlas, and I use Atlas as the example because it seems to have the greatest price increases in the shortest amount of time, would like to capitalize on the quality of its product and push its brand or the whole hobby altogether into a new market. it makes sense from the manufacturer's angle to want to sell 10 at $100 rather than 100 @ $10.

[TiVoPrince]

Atlas 
already looks like an automaker.  Product lines mimic GM (or Ford or Toyota, only the names change) Gold Line=Cadillac, Silver= Buick, Trainman Plus (Saturn/Pontiac/Oldsmobile take your pick) Trainman=Chevrolet this allows marketing to a price point that consumers understand.  Basic transportation 'everymans cars' may not appeal to all, with cheap plastic interiors, mature to outdated technologies and generally uninspired design. 

Realistically it still amazes me that the local Chevy store has flagship Corvettes among the tired herds of Impala, Malibu, and Aveos...

[victor miranda]

this thread is an entertaining read.

I chime in to point out that  something sirenwerks said,
"We're also basing our assumptions on an idea that manufacturers want product to be low cost, and forgetting how pricing becomes a marketing tool."

I agree that is an assumption.
here are a couple of more...
That price of product is driven by cost of manufacture of product.
Expected return on investment is the major motive ( call it profit)

the funny part of these two assumptions is that I think they are true
The market of N-scale is so small
that floating a luxury price will not net more money.
along with the fact that there is nothing like brand loyalty
to be found.

back to China....

We are going to pay more for  our toys soon.
It matters little where they get made, China will be paid more.
so will any one else.

The only question left is; can we get a U.S. based toy company going ?

v

[Dave Ferrari]

Boy, oh boy is this thread loaded!

We (DeLuxe) are surely a victim of the "China Syndrome" as described here. I also had no idea that tooling shipments to China were one-way. If that is indeed true it will cause some problems in the future but there are big ones now to contend with. We are trying desperately to get our tooling moved from Sanda-Kader to a new factory. They are throwing up roadblocks and responding very slowly. Fortunately, we have another factory that is working on projects for us and we retain possession of almost half of our tooling. Plastic is being molded for shipment to China as I type this.

What amazes me is that people think molds were moved so manufacturers could reap higher profits. I can only speak for myself but when DeLuxe sent tooling to China it was for one reason only, to help maintain our prices at reasonable levels. The 2 runs of containers we recently had made in the U.S.A. are the highest priced 2-packs we've ever offered and the margin is slimmer than usual to help keep the price from being even higher. There was and is no greed involved. IF we could get our more complicated products made here, and it isn't certain we could, the price would be much higher. I have estimated that our boxcars would sell in the $42 to $45 PER CAR range. There are 2 scenarios and they both point to this level. I think that is just too high and sales would fall dramatically, which would mean the price would have to be even higher to cover the fixed costs. It is a no win situation at present.

Model trains and other similar hobbies are more like luxury items. But you can't really compare them to other things that have price dependencies such as RVs or boats and the price of gas. There are 2 key factors in how we make out in the battle for discretionary spending. First, when it comes to putting food on the table or buying model trains, most people will go for food. Second, when it comes to operating that boat or RV, many will skip the larger expense and instead sink money into their less expensive hobbies, such as model trains. There are surely other factors but these are big and can pull in opposite directions.

The kit versus RTR situation is another interesting battle. We can offer most of our cars and many of our containers in kit form but there hasn't been much interest. The Armco building kit has been the best performer in this regard. People are more interested in pulling an item out of the package and using it right away. I think the skills are not being developed by as many new modelers but there is also the busy lifestyle many of us live that doesn't leave enough time to build kits. We as manufacturers have to give the customers what they want or we will not last very long. 'Nuf said.

[John]

Dave - would it be cost effective for a couple of you guys to buy your own injection machines and split the time?

[TrainCat2]

Dave - would it be cost effective for a couple of you guys to buy your own injection machines and split the time?

The shots are not really the high $$ process John. The real costs come from turning all of those newly injected pieces into a RTR product. Based on quotes I have received, cutting molds in-country are about 40% higher too.

[John]

How are the molds made - using a CNC machine fed with CAD drawings?

[John]

This is pretty informative

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[unittrain]

Most of the CNC equipment is programmed from CAD or similar software I work for a steel company and we program the burning machines, water jets ect using DWG or DXF files generated in CAD or Sigma Nest software.

[SkipGear]

Just thought I would pass this along. I found it interesting....

We received some of the Atlas NE-6 cabooses today. The nest and packaging insert is very different from previous releases. The text and font on the insert is unlike any other Atlas packaging. I'm wondering if this may be the first of new products from a different supplier.

[Dave Ferrari]

This is pretty informative

John,
They were very interesting videos. My favorite part of the train car video was when the narrator said "She then glues a steel weight to the bottom of the train car to make it 1/48th the weight of the real thing."  -- that would make the O scale model car about 2,000 POUNDS!!! I don't think so but I got a good laugh!
Dave

[Dave Ferrari]

Dave - would it be cost effective for a couple of you guys to buy your own injection machines and split the time?

John,
Bob is correct, molding shot costs are only a small part of it. As I mentioned in my original reply, the assembly work is what really make the difference. It's more cost effective for us to use outside molders than it would be to own our own machines. Only the biggest companies could justify owning their own machines. Then they still have to face the assembly issue.
Dave

[daniel_leavitt2000]

Doesn't Rix/Pikestuff have injection mold machines? I think their primary function is injection molding and their side business is the hobby stuff.

[sirenwerks]

John,
Bob is correct, molding shot costs are only a small part of it. As I mentioned in my original reply, the assembly work is what really make the difference. It's more cost effective for us to use outside molders than it would be to own our own machines. Only the biggest companies could justify owning their own machines. Then they still have to face the assembly issue.
Dave

Shame too, since a lot of us would prefer assembly ourselves. RTR spoiled too many people and took away a lot of the fun of the hobby, the DIY factor, and now it comes back to the RTR issue ruining it for us.