News posted by Rapido's Jason Shron...and it's not good

[squirrelhunter]

Saying folks can just start modeling again is great for the folks on this forum, but is probably a no go for a lot of other folks in the hobby, especially ones just starting out. I support having the tools available to do real modeling, and I think many folks progress in that direction the longer they are in the hobby, but there is a need for good RTR products.

Plus, in N who makes details for diesels any more that get the distinctive stuff like exhaust stacks and air filters and air reservoirs like sunrise used to do? Brass etching is great, and the folks who do it maker great products, but you cant make an air filter box like Sunrise used to make that doesn't require some fiddly bending of brass flats.

If model railroading has to become sratchbulidng or kitbashing centric just to have a decent layout that isnt ATSF/BNSF or UP, its future probably looks like TT scale.

The financial crisis is by no means over. Europe and China has massive debt overhangs that they will have to deal with and we just kicked the can on our own debt rather than dealing with it. If I was a MRR company I would be looking for ways to retrench my supply chin to where it is as domestically based as possible, because outside events could crush my company. I would also be looking for ways to reduce costs and prices (fewer options, less factory applied details, cheaper packaging) to make sure if the economy continues to struggle people can still find the money for my product.

My bigger concern is that as the supply of new product dwindles, and old stock sells out, what are local hobby stores or even the  big internet guys going to do when there is no new rolling stock to be had? How long can a train centric LHS hold out when there aren't any new trains?

[Sokramiketes]

Well, it looks like Jason instigated a riot.  Yes a factory closed down, yes it had most of the Genesis tooling in it, but Athearn doesn't seem to be panicking yet and they have people on the ground looking after their interests.  Now, some can argue that Athearn was headed downhill before this... 

I like the rest of the panicked rumor mongering going on.  Like, no this isn't Atlas's new factory.  And it's funny to hear people talk about 2 Chinese firms going under with no mention of the 3 that have started up in the last couple years...

What a trip.   

[rtroop]

From Athearn's Facebook Page:

"As one of the oldest brands in the model railroad industry, Athearn has close ties with most major railroad model manufacturers. Unfortunately, from time to time a supplier may be unable meet their obligations, and despite their best efforts be required to discontinue business. We are saddened by the recent loss of one of our close manufacturing partners, and their several hundred workers that h...ave now received their pay but lost their jobs. We believe our remaining manufacturing partners, our relationships with them, and our combined capacity will certainly allow us to meet all future market requirements. However, during the short term we do expect some product delivery dates to slip, so please stay tuned to our Facebook site while we do our best to keep everyone up to date on this very fluid situation. We do expect to deliver our Genesis DDA40X, Genesis Bay-Window Caboose, our next run of SD70ACe/SD70M-2s, and several other products in the first half of 2012, in addition to making some VERY exciting new product announcements in the coming weeks ahead."

[jnevis]

While we are primarily discussing a MRR manufacturer, there are bigger implications than just a delay in some models being built.  The Chinese labor force is starting to "wake up"to the fact that they are being taken advantage of and are getting pissed off.  More companies are going to China for product due to the lax regulation and "cheap" labor, but at the same time requiring the complanies they  are contracting with treat worker fairly.  The Chinese workers are seeing the "other side" and are demanding better working conditions across the board, plus better pay.  There was an article laying out who Apple has as a supplier and the labor requirements that are auditted, repeated failures result in a loss of the contract.  There are reports of workers jumping from buildings due to the conditions there, so often the company installed nets.  This won't just effect MRRers but everybody, and it will take a LONG time to turn around. 

Bringing back the manufacuring here sounds like a great idea but it will A) take a long tiime to get going and B) require a HUGE mark up in price.  One of the reasons Chinese labor is so "cheap" is the lack of regulation.  IIRC for every dollar spent on production like .20 is spent on oversight (OSHA, EPA, legal etc) while here its closer to .50-.60 plus some regulations contradict eachother so OSHA can say you're OK but the EPA fines you for non-compliance.  All that regulation costs money to the company and teh consumer.  Becoming "modellers" won't save you from that.

[sirenwerks]

Bringing back the manufacuring here sounds like a great idea but it will A) take a long tiime to get going and B) require a HUGE mark up in price.  One of the reasons Chinese labor is so "cheap" is the lack of regulation.  IIRC for every dollar spent on production like .20 is spent on oversight (OSHA, EPA, legal etc) while here its closer to .50-.60 plus some regulations contradict eachother so OSHA can say you're OK but the EPA fines you for non-compliance.  All that regulation costs money to the company and teh consumer.  Becoming "modellers" won't save you from that.

As a Dept. of Labor employee, I think I can speak to the fact that if you're spending that much on meeting regulations, you have considerable ineptitude in your organization and should consider staffing change or training. OSHA regs are smart business; they minimize risk and injury. EPA regs (not state environmental agencies - which are NOT the EPA, mind you) are limited to businesses above a certain size often, and generally geared towards materials, which can be adapted to meet regs. These regs, as well, protect people, including employees, which minimizes risk and future liabilities. All of that's actually good business, so don't go mocking smart government for protecting the communities we live in.

One thing that China does in some respects that the US doesn't is not necessarily tied to a lack of regulation, but that the Chinese work smarter than we do. As an example, look at US MRR manufacturer marketing, the fact that many manufacturers do NOT use free resources such as Railwire to field product development. That's just, well, dumb. That's changing with the intro of younger entrepreneurial manufacturers into the market, but stalwarts like Atlas, Bachmann, and Athearn just miss the point and trundle along with business as usual. Companies like Intermountain spend more on product development than they need to in the customer service aspect of their screw-ups, these costs add up. Stock that doesn't sell adds up in cost of storage and finance. All bad business. Manufacturing is not all the problem. And if MRR manufacturers were to swing it right, a considerable opportunity to gain new market could be had if they went American production in a meaningful way and had an org like the NMRA organize a PR campaign advertising that fact. Attention could boost interest in the hobby, and market. There's possibility at every turn as much as there is self-defeat.

Many companies sink because they can't adapt and right now is a time to adapt. Adaption includes retrending staff structure and training employees for new processes and skills, the sort of things involved with taking production in-house. Yes, training and hiring costs money, but if done properly it is a step that ends up making money in the future.

[jmlaboda]

"I shed no tear for the workers though... they didn't care about us when they cost jobs in the west."

That's probably true... they likely were more like, "Hey, I can finally feed my family."  No different than here and elsewhere.

[JoeD]

Yea, we are working with one of those new companies that started up after SDK gave us the boot.  Forgot the joys of working with a firm who just opened their doors.   

Joe

[Specter3]

I have a lot of feelings on this. One, being a less popular roadname modeler(Southern) I am really unhappy with the prospect of less product in the future. Two, it was only a matter of time before this happened with China, everyplace we(the US) have moved manufacturing to has seen a rise in their own living standards that has gradually increased the product cost until there was a new "cheap labor" place found. Three, We keep pushing production to places that have sketchier and sketchier governments. The obvious result of this is less control over the operation there. At some point the lower personnel costs are outweighed by the higher costs of dealing with the other junk. And that junk includes blown schedules, counterfeiting by your own factory, poor quality control, toxic materials, and the poor PR resulting from all the preceding. I will parrot some others here in that I remember my days in HO and the blue boxes were the industry standard. If you modeled in HO beyond the toy stage you assembled your own cars. Now I know that for some folks in N scale that would be a deal killer but I do think it needs to be explored.

Ultimately I think you are going to see some of the niche manufacturers bring some production back to the US. But I think sheer corporate momentum will keep the large manufacturers overseas. That and no one with any cojones is high enough up in the larger manufacturers to make a real effort at returning to the US.

[ljudice]

There is a series on NBC this week about this subject (manufacturing in the USA) and experts contend that it's only about 10% more expensive to work here.  Regulations may be more expensive (who really cares if a worker gets their leg crushed from time to time, or if a factory dumps toxic sludge into my drinking water????)  - but US workers are 4x more productive than Chinese counterparts. 

So now a new generation of business leaders can look like geniuses for "discovering" that you can manufacture things here and make a profit...

Of course where were the Harvard and Stanford MBA's who are currently spouting this advice when their kin were telling companies to move production to China???  The fact is that a lot of this was known 20 years ago, but no one was ever fired or slammed by Wall Street for cutting US jobs and sending them offshore.  Too bad much of our country was wrecked for nothing, eh???

[BN1970]

This just came in on my email from Intermountain, thought you might find it of interest. --Brian

-----------------
What a great year 2011 was for the model railroad hobby! There were lots of new product, lots of great shows and a lot of fun operating sessions across the United States. We at InterMountain had the best year in our 22 year history and expect more of the same for 2012. While there has been somewhat of a slowdown in the product flow from offshore during the past three years due to significant changes in the major Chinese model train manufacturer, other companies have taken up the slack and 2012 should see a big improvement in the timing and volume of new product for the hobby. As always, our hobby is driven by new product and InterMountain intends to lead the way with new and exciting projects in the coming year.

[Nato]

        I just ordered two High Ticket Bachmann Items at BLW and learned there that there is going to be a substantial price increase for Bachmann items coming to a dealer near you soon,and Bacchmann uses KADER who is not going under. Price increases have to be accepted,also shortages,and we do need to get back to modeling to get what we want.Also a return to American Production by some companies. Nate Goodman (Nato).

[Kiasutha]

        I just ordered two High Ticket Bachmann Items at BLW and learned there that there is going to be a substantial price increase for Bachmann items coming to a dealer near you soon,and Bacchmann uses KADER who is not going under. Price increases have to be accepted,also shortages,and we do need to get back to modeling to get what we want.Also a return to American Production by some companies. Nate Goodman (Nato).

Nate:
Bachmann doesn't simply "use" Kader.
Kader essentially "uses" Bachmann.
For many years,Kader has owned Bachmann "lock,stock,and barrel".
So in essence, "Kader/Bachmann" controls the supply, manufacturing costs and release schedules of all their competitors that use the Kader (and former Sanda Kan) factories for products.
With that kind of set-up, it's hardly surprising that new product rolls out of Bachmann while others have shortages,lack of new releases,and escalating prices for what they can get.
Meantime, Bachmann can pretty much charge whatever they want with a higher profit margin to boot.
I just wonder how many more factories they intend to absorb...

[sizemore]

Maybe it's time we started modeling again, and putting the details on our own cars ..

+1

The S.

[daniel_leavitt2000]

I still don't understand why we can't tool and cast here in the US and send the unfinished parts for painting and assembily in China. This would greatly reduce risk and rising chinese costs.

[Specter3]

Wow that would be great, you make the parts here, sell the parts to hobbyists as undecorated kits for half what they charge now, and send the rest to china to be painted and assembled to be returned as RTR models. Provides for a lot of wishes from very different people.