All Lionel Legacy Locomotives will be Made to Order

Yep.  This has been known for quite a while.  Actually announced last York and reaffirmed in the November VL Big Boy Video.

Clarification please!  Is this ALL "legacy locomotives" that is both steam and diesel, or all legacy steam locomotives, or more realistically all Vision Line locomotives?

Seems pretty straight forward to me.  "All LEGACY locomotives" means all Legacy locomotives.  The emphasis was Lionel's BTW.  Here's the link ==>  Lionel Blog

I assume that the train stores order a quantity of the products in the catalog even though they don't have preorders for them. In that way, the "all Legacy locomotives will be made to order" takes on a different result.

When you're talking about a large-ticket item like the VL Big Boy, or most any VL locomotive going forward, you're probably not going to see many shops ordering "a quantity" in for store stock.

That's a lot of money to have tied up in something that may or may not sell. In this business climate, it's not a good move in the short term.

I'm sure there will be a few ordered for store stock, and those shops may make out like bandits in the long term when someone absolutely has to have one at any cost, and few can be found on the secondary market. It may take years before they "cash in" though.

Cash sitting in the bank only makes what? 1% or so? Dealers that have the cash can let these engines sit on the shelf for quite awhile. 

Heck, I have a hard enough time finding run of the mill stuff in stock at most LHS.  Not even the RailKing level stuff.   I had the conversation with a couple of LHS owners and the consensus was that it was just too much money to be tied up in inventory sitting on the shelf.  They seem to willing to stock the starter sets (a "right now" purchase) and rolling stock (considerably cheaper).   To stock anything else is risky;  you have to know your market.   Here is Western PA, I would guess that most people who want a Vision Line Big Boy will order them - the average joe off the street either has no interest in UP, or isn't going to drop that kind of cash on an item.   They might get away with stocking a few PRR/B&O/Reading items;  thats what a lot of people tend to model around here.  Even then, you still don't see much on the shelves.  I was shocked to find a RK Santa Fe Northern at Pat's Trains - I bought it on the spot.   I assumed that I would have to wait for the next release.   I understand the mentality;  one shop has a number of Premier Diesels that have been sitting on his shelf for over 3 years (and his prices are pretty good).   He won't make that mistake again.  I'm not saying he puts that money in the bank - he probably stocks more things that sell easier/faster.   He can probably move 50 RC trucks in the time it might take to shift one high end engine.       

I think it's easier if you have a large internet presence and your customers come from all over.  MB Klein could probably stock a couple dozen of a particular high end item and sell everyone if they wanted to.  Their customers are everywhere.  Actually, I don't think MBK does pre-orders as a policy.  They (and shops like them) would be the exception.   

Well, I would think that would only put Lionel on par with 3rd Rail. Waiting for blow-out deals may become a thing of the past. I've been very fortunate to be able to acquire the bulk of my desired N&W steam roster. If Lionel (or others) step up to the plate and build a Z1 or S1a, I'd have no problem with a preorder secured by a deposit. If getting 250 preorders means a manufacturer will committ to making 250, great.

As the market stands right now, stock at a LHS would have little to no influence on my purchasing decision. If I'm your customer, having thousands tied up in inventory of high end engines is probably not a good use of resources.

Gilly

Smart move by Lionel. This puts the burden of carrying inventory (if they choose to do so) squarely on the shoulders of the distributor or dealer. 

Just saw the video!  WOW!  WOW!  WOW!  No I won't be buying one.

If they are saying all legacy, that would seem to put the kibosh on any new products that require new tooling.  Tooling is very expensive, they must have some sort of amortization rate to pay for new tooling.  So they would need those numbers and/or add the cost to new locos.

My LHS will not be ordering any for stock, already asked, too much to tie up for who knows how long. Owner sometimes orders items like these to keep for himself, he said he's not getting one either.

Wouldn't surprise me if you see the day when you have to prepay for all these big ticket items like this. A small (or even large) shop with many orders could be left with a huge bill if a few people cancelled or backed out of the purchases due to financial or other misfortunes. They could possibly be left with an invoice they can't pay, or would cause them financial hardship.

This may be an experiment that doesn't go the way they plan.

The concept of smaller production numbers for Legacy engines based upon market demand may prove to be a good thing for our hobby. What has been going on for the past few years is customers who pre-ordered or made a purchase decision shortly after the engine was released paid a certain amount. When market demand did not meet the supply at the manufacturer or distributor/dealer, the price of the engine dropped significantly in order to eliminate over stocking. How would you feel as a customer that paid a significantly higher price than those who were bargain hunters.

It seems to me that Lionel would rather be in a position of manufacturing quantities closer to reality and I think there is more good in this position than not.

And the reduced production numbers exposes fewer new hobbyists since they may not be aware or even see the units in shops or even online....  Smaller production brings about higher prices ( in general ) and fewer folks that can afford to make the purchase.  This may be good for some in the hobby, but it certainly does not provide exposure of the best products to the masses.  The concept of limited production based on orders sounds very much like the old days when Limited Edition was applied to many of the MPC items.  I remember the S.P. Daylight and the subsequent remakes that eventually determined the real market value of that first edition.  In any case, there are lots of reasons why this production to order concept can be good for a manufacturer but for the hobby in general, I am not so sure....  Hey, I am not an expert, just my opinion....

Alan

I think I have to agree with you on this one Alan, I don't see this as a positive step.  I don't believe they should produce prodigious quantities of an item without orders, but not having extra units sounds like a bad idea.  In addition, what about spare parts?  If they make exactly the number ordered, are they going to stock sufficient spares, or does my $2000 locomotive turn to junk if a unique part is damaged or fails?

Anyone that does not believe that there will be enough spare parts is fooling themselves. 

So what's better for the hobby?  Continuing blowouts?

Marty, there are plenty of relatively new products that have "not available" listed for unique parts, so the question is, who's fooling who? 

It's happened before, where people bought a new locomotive but ended up having to get a refund due to lack of parts.

As to blowouts... Well, I'm aware of the entire debate regarding how those happen, but frankly, I've always believed that blowout prices tend to be around what the original asking price should have been in the first place.

There are many classic examples of manufacturing firms that flooded the market with product that it could not absorb. They placed dealers that appeared to be on every street corner. The dealers wound up eventually dumping the product at cost or at near cost. Sure, there were a lot of very happy buyers who just waited it out. The inevitable result was the dealers bailed out, dropped the line, and eventually the manufacturers went under.

You have to ask yourself can a dealer or manufacturer continuously dump product and expect to survive. Artificially low pricing will eventually catch up with you.

Mike himself has stated that they have X amount of engines made just for parts.  I would assume this would apply to the limited run Legacy engines as well.  So there would be no more of a parts shortage than what you would encounter now.

So limited runs does not necessarily mean limited parts.

Maybe saying "enough" was incorrect.  Maybe "any less" would apply.

My understanding regarding parts on high end locos is Lionel orders a certain amount of excess locomotives, and the locomotives get dis-assembled for spare parts. So the question is, what happens for a part which has a design flaw or is prone to breakage ? If only x percentage of spares are ordered, when they are gone then what ?

Make that three of us.  

My gut reaction is that this step represents an over-reaction from Lionel.  Right now, it is pretty clear that the firm does not have good control over the production line process, in terms of delivery or quality.  The evidence of this can be seen in the large number of items that appeared in the catalogs over the last several years but are still not shipped, as well as the relatively high number of failures you see with new products.  Then, with respect to product that is delivered, some of the relatively high end Legacy product has been made in runs that outstrip demand, depressing prices and to some extent making the firm's most loyal customers, who pre-order, look foolish for paying prices that are soon heavily discounted.

The first step to getting control over any out-of-control process is to revert to the most conservative state, and then go from there.  Right now, it strikes me as intuitive that Lionel is protecting itself and the dealers from its prior inability to properly calibrate supply.  I understand the business case for such an approach, but I think there is significant risk of irritating customers with excessively high prices, reducing the availability of replacement parts, and reducing the exposure of the product overall.  We will see wha happens.  Luckily there is no shortage of competition with MTH, Williams, 

atlas, Weaver, 3rd Rail and some others I am probably forgetting.

Old, old news.  Good news.  Where is our catalogs?

Steve, Lady and Tex

I would think sometime after 3/22. The Lionel website says there is a sneak peek of the 2014 items at the LCCA event on 3/22.

rat

This makes sense for Vision Line locomotives but not for anything else.  I feel comfortable about ordering the Big Boy because they have shown us a prototype.  Legacy engines require that I see them first, before ordering, or have a fact-finding conversation with a Lionel representative like I did at York for the Legacy PRR K4.  After seeing the mistakes they made on the SP GS4 I'm glad I didn't preorder that.

I am curious, because I don't know, what are the mistakes they made?

The Daylight logo on the left side skirting is backwards and the side rods are too lightweight.

What "new hobbyist" is going to be dropping $2000 on a locomotive right out of the gate?

"Exposure" is one thing, but sales are what keep the doors open and the lights on. Unsold locomotives are just inventory sitting on shelves tying up capital, which is in extremely short supply. The bill collectors won't accept new hobbyist drool as payment.

Ultimately, by producing only what is ordered, Lionel keeps a tighter rein on inventory, has less money tied up inventory, and is more profitable as a result. The alternative is that they fall on their own sword in the name of "exposure to new hobbyists."

Frankly I don't think exposure is an issue. New hobbyists that are serious about the hobby will find out about these locomotives by hook or by crook. There will be new locomotives out each year. Odds are Lionel will come back around and do another run of Big Boys. By then the new hobbyist will know to get his order in.

That's assuming that susceptibility to failure is equal relative to the other production run.  When you make a product that is more unique and complex in features, there is a greater probability that failures could be higher within that lower-production run in proportion to the other, higher run with less complexity and features designed in. 

Just for comparison, this approach is one MTH has been using routinely for some high end products for over a decade.  They produce what is ordered by dealers and distributors,  and that's it, according to their previous public statements.  They do not warehouse or inventory high end locos.  Mike Wolf was quoted quite often in the 1990s that he doesn't want an oversupply of his products, and that rationale still seems to be holding true.  So this model has been tested and works for at least one manufacturer/importer.

As far as parts are concerned, if there is a major demand for any particular part due to design or manufacturing problems, those can be made after the fact.  If they run out, they run out. That's the way of the world these days.  If your 10 year old automobile needs parts, it's usually gotten from a junk yard, not from the manufacturer in many cases.  If it's a new TV set or washing machine, anything much beyond 5-6 years and you're probably replacing not repairing. 

Bingo.  When (or if) the 4014 goes into operation, you'll see another run from Lionel.  Probably a bunch of other manufacturers will also be jumping on the band wagon.

Rusty

Correct. Plus then Lionel will have to make an oil burning version of the 4014, including all the various modifications required for operation in 2018, and beyond.

Please don't forget that many parts used in a locomotive are common items used in others too. The only parts likely to be in restricted supply would be those which are unique to a specific locomotive.

I can understand why Lionel would want to use made to order on Vision Line engines and on higher cost Legacy engines.   However, too many times I have seen and heard from others about missing features off of engines that were listed in the catalog.  If the feature is listed in the catalog, it should be manufactured with that feature.  For example, the NS ES44ac's were suppose to have oscillating marker lights on the back of engine which was a feature listed in the catalog; however, when the engine was delivered, it did not come with that feature.  I pre-ordered one of these engines and was disappointed to find out the feature was left off.  The real NS ES44ac's engine do have oscillating marker lights on the back of them.  I choose to pre-order Lionel's version of this engine over MTH's version because of the new tooling Lionel created which was described in the catalog to match the features of the real NS ES44ac's.  Now that Lionel is using Made to Order on all Legacy engines, I can only hope they will do a better job in not leaving off features. 

Charles or already has the water level Mohawk set down to 1250 .. I see why there doing this ..

We've been in a "disposable" world for some time now.  TV repairmen and other skilled repair services are a thing of the past.  It is cheaper to replace than repair.  I believe it all started with the Bic disposable pen and razor.

Steve, Lady and Tex