A question to Athearn

Probably a lesson in the realities of model train economics.   Another way to look at it: if they made a locomotive that sold for $1,000, they would have to sell at least a thousand of them to reach a million dollars in sales.

The history of Athearn is an interesting read:  http://www.tcawestern.org/athearn.htm

I'll bet ol' Irvin did not sit at his Mom's kitchen table and say to himself that he needed to make a million bucks selling the first car he planned on making for it to be worthwhile.  But times, they do change, and ol' Irv did not have meet a targeted return on investment.

In todays Business world, and soon to be 2023 dollars, A million  dollars isnt out of line for a locomotive. ( and Im sure a very simple one) think about it!  And my guess that's based on making it in Communist China !

A bit of Athearn history, yes the first products were O scale box car kits but Irv quickly saw the market potential for the HO Globe plastic F unit diesels at 99 cents retail unpowered and as they say the rest is history.

Lee Gustafson

This very interesting. I am not a businessman by any stretch but I can clearly understand why one would throw all or most of their eggs in the HO basket. However the companies we O Scalers have come to enjoy and rely on took a chance with O Scale and stayed with it in some form or fashion. I'm assuming because they are still in business they are doing well. Not to mention a business such as Sunset who is not nearly as big as Lionel and MTH but they continue to support O Scale. And Atlas though they have more offerings in HO scale still supports O Scale as well and I would imagine do pretty good. Additionally, if the said companies would start small and offer 3-rail equipment with 2-rail modification options they could see if it's worth the air they breath to continue. That combination would obviously maximize their efforts. I guess I'm saying you never know until you try. Scaletrains, a relatively new company, took a chance by buying S Scale equipment and we know that there are more O Scalers than S Scalers. I'm sure I'm missing something but welcome enlightenment.

Dave

FYI, RAPIDO is entering the O Scale market in the UK

J2M

Scale Trains purchased the HO line, skipped the O scale line, and I suspect (with no credible evidence for it) and purchasing the S Scale line was a requirement to close the deal on the HO line.  The fact that just like the folks they purchased the S Scale line from never really bothered to put out anything new, just reruns of existing models, is a policy currently being mirrored by Scale Trains sort of says it all to me.

I would be curious to know if the S Scalers are actually purchasing the existing models from Scale Trains. If they are then there should be some motivation or leverage to start creating new models. If not, well there you have it.

Dave

I am glad you posted here.  I read your post on the other forum.  IMO, which doesn't mean a whole lot, I think if Athearn made a good quality engine with DCC or at least DCC ready in a GP35 or something popular to start.  I think if they made them convertible from 3 rail to 2 rail, they could sell a good bit...similar to MTH 3 rail scale PS3 models.  The flip of a switch and the removal of the rollers and voila, an instant seller.

I think if they made rolling stock that had KD mounting pads and sold the wheelsets separately, they could have a hit as well.  Then you buy the rolling stock and appropriate wheelsets and you're good to go.  I think it would be a win win, but it would also have to be marketed.  A million dollars would be easy to obtain...

I also think the key is availability.  We line up for items from manufacturers that take years to come to market and sometimes never do.  If someone was to jump in, they need to jump in with both feet.  Again just my opinion...but it is fun to think about.

@luvindemtrains posted:

This very interesting. I am not a businessman by any stretch but I can clearly understand why one would throw all or most of their eggs in the HO basket. However the companies we O Scalers have come to enjoy and rely on took a chance with O Scale and stayed with it in some form or fashion. I'm assuming because they are still in business they are doing well. Not to mention a business such as Sunset who is not nearly as big as Lionel and MTH but they continue to support O Scale. And Atlas though they have more offerings in HO scale still supports O Scale as well and I would imagine do pretty good. Additionally, if the said companies would start small and offer 3-rail equipment with 2-rail modification options they could see if it's worth the air they breath to continue. That combination would obviously maximize their efforts. I guess I'm saying you never know until you try. Scaletrains, a relatively new company, took a chance by buying S Scale equipment and we know that there are more O Scalers than S Scalers. I'm sure I'm missing something but welcome enlightenment.

Dave

This conversation comes up every so often and continues to be interesting to me.  Atlas will probably continue to produce what they believe to be profitable O scale products.  They have their other scales to support the business / make some profit.  The new MTH appears to have "right sized" themselves relative to O product demand.  Small guys are relatively low overhead and can probably adjust as the market continues to evolve.  The big question is what's the future for Lionel.  In spite of having some sort of financial backstop, will they be able to cover their large overhead??? Probably not just selling the products we dedicated O gauge and O scalers want.  I have no idea of the volume they move in total dollars per catalogue for just O?  They too have expanded they market and gauge offering to have some sort of diversification but I suspect they will have to probably scale back the part of the corporation that is dedicated to just O scale and pursue an O approach closer to the new MTH.  I'm not sure if we are not already seeing that; the last catalogue or two has felt a little anemic to me.  One positive is what appears to be a new level of interest in O by under 40s.  Not entirely sure if it's new interest or just that the under 40s are more inclined to post on Instagram and youtube?  A concern to me is what appears to be the on-going dramatic decline of O retailers.  I try to spread my buying around, several great-one's in Detroit have gone off the air in the last few years - Wild Bills and P&D, the one in Pinkney (Skip) a few years before that.

To make an 2 rail O scale item, the manufacturer is immediately faced with the gauge dilemma.

Aim it at the 5' gauge market?

Aim it at the P87 (4' 8.5") market?

To sell to the 5' market, you must intentionally make a model that is not accurate in regards to gauge.

To sell to the P87 gauge market, you immediately limit yourself to niche sales.

Andre

@Derailed10o posted:

Is it feasibly possible to take, for example, the latest Lionel SD40-2 or AC4400. Change the wheels, wire the unit to work correctly, fix both pilots, assuring the steps line up properly are correct in number of steps, and bend some wire. Some say there's some machining needed to be done. I've never done this but have looked a few time what it entails. I've 2railed Lionel non powered F7, that's not to back. Getting Atlas front pilot was the only challenge.

If I were going to 2-rail a Lionel locomotive, I sure wouldn't start with their SD40-2.

Tunnel motors were a Southern Pacific workhorse in the day. Got to have a few for the rooster.

@Derailed10o posted:

Tunnel motors were a Southern Pacific workhorse in the day. Got to have a few for the rooster.

I first saw one (SD40T-2 snoot?) NB when I was heading SB on 99 (or I-5) to LA, I immediately wanted one. Luckily, Athearn was making an HO one at that time and I got one. I did a few minor detailing upgrades such as the upside-down L-shaped engineer's front window. I still have it and managed much later to get a matching blue-box era SD45 to go with it. Oddly, the only one that I found that was reasonably priced came from the UK! I would not mind having an O scale one even though I do not model SP.

@laming posted:

To make an 2 rail O scale item, the manufacturer is immediately faced with the gauge dilemma.

Aim it at the 5' gauge market?

Aim it at the P87 (4' 8.5") market?

To sell to the 5' market, you must intentionally make a model that is not accurate in regards to gauge.

To sell to the P87 gauge market, you immediately limit yourself to niche sales.

Andre

I think you meant Proto48, but your point still stands.

@j2morris posted:

FYI, RAPIDO is entering the O Scale market in the UK

Well, it might be better to say they are considering it IF they get enough written Expressions of Interest -- they even have a form for that;  if they get that far, then it appears an Order Form would follow.  Interestingly, the loco chosen is one they have done in HO, er, 00.

Regarding the original post, I must say I was disappointed and surprised at the tone of Mr Stackpole's response;  however, had I read his Linked profile first, I at least would not have been surprised.  But take cheer:  Read the list of Job Openings at Horizon.......

Best, SZ