Any Rumors Re: An S Gauge Group Buying the MTH S Gauge Line?

@Ed Kelly posted:

Hi All, 

The title says it all.

Ed

Is there something you know that the rest of us are not aware of?

Haven't heard anything. If anyone here would know, Bob Bubeck might.  He's about as well connected in S gauge as anyone.  Why not message him?

I heard it's a done deal

@aussteve posted:

I heard it's a done deal

If it is a done deal any chance of sharing this news with the rest of us?

If true, buying the Showcase Line is one thing.

Getting it up and running is another.

I'm not gonna hold my breath, I like breathing too much.

Rusty

@aussteve posted:

I heard it's a done deal

Jerking our chain?

@Landsteiner posted:

Haven't heard anything. If anyone here would know, Bob Bubeck might.  He's about as well connected in S gauge as anyone.  Why not message him?

Well, the logical place for the Showcase Line tooling to go is Lionel, which is currently the largest importer of S gauge equipment under the American Flyer banner and has a significant contract manufacturing presence in China. For the good of the S hobby, that might be the most hoped for resolution/solution. However, as to whether or not the logical path is being taken and for what sum of money, I have no hard knowledge at all.  American Models is a theoretical possibility, but I do not perceive Ron B. as having the capital or (having gone through a considerable effort to disengage from China) the desire. 

My second (distant) candidate is Atlas, who brings to the table a very similar sensibility to that of the Showcase Line and model railroading. In fact, a number of the modeled prototypes are directly mirrored in the Atlas O and Showcase S lines.  Atlas imports scale detailed 0 and H0, so they are already in the 'scale' model railroading business with trains made in China. Controlling the existing SHS/MTH locomotives with DCC is no-brainer. The questions would be of commercial attention (they appear to have their hands full with O) and the desirability of acquiring another line of trains in another gauge/scale with a limited market size.

Take this for the speculation it truly is. 

Bob

I'd be very surprised if Atlas got involved. My feeling is that the current team at Atlas is not even that comfortable being in O scale.

Jeff C

@leikec posted:

I'd be very surprised if Atlas got involved. My feeling is that the current team at Atlas is not even that comfortable being in O scale.

Jeff C

Agreed.  Atlas is involved with HO, O and N.  Given the delays they're experiencing, I would seriously doubt they would be interested in acquiring an S Scale product line with such a vast customer base.

@Bob Bubeck posted:

Well, the logical place for the Showcase Line tooling to go is Lionel, which is currently the largest importer of S gauge equipment under the American Flyer banner and has a significant contract manufacturing presence in China. For the good of the S hobby, that might be the most hoped for resolution/solution. However, as to whether or not the logical path is being taken and for what sum of money, I have no hard knowledge at all.  American Models is a theoretical possibility, but I do not perceive Ron B. as having the capital or (having gone through a considerable effort to disengage from China) the desire.

Take this for the speculation it truly is. 

Bob

Logic and S Scale/Gauge many times are contradictory terms.  Lionel, while putting out some pretty good scale detailed A.F. product in the past, has not really pursued it with gusto (and over several management changes.)  They seem to be content with their current direction.

Regarding American Models I doubt Ron B. is interested in dealing with overseas manufacturing again except for complicated decorating jobs.

Rusty

@leikec posted:

I'd be very surprised if Atlas got involved. My feeling is that the current team at Atlas is not even that comfortable being in O scale.

Jeff C

I tend to agree.

Bob

Can someone explain how intellectual property works with regards to the Chinese and manufacturing.

i seemed to have read in the past that companies like MTH and Lionel will place orders for products and the Chinese stump up all the tooling and production costs and ship to the the customer(s) (MTH/Lionel) the finished items and they are then distributed in the US when they arrive in the container, is this close or miles away? The only liability MTH and Lionel have is to purchase the finished products.

So, if a deal is made what exactly are you entering yourself into and buying if such a sale of the line is done?

"So, if a deal is made what exactly are you entering yourself into and buying if such a sale of the line is done?"

The factories demand and get up front payment for tooling costs before the product is shipped, according to some who should know.  That's true of domestic manufacture too, of course, except you own the tooling if you paid for it. That's less clear with China.  You don't see profits until you amortize the cost of the capital investment in tooling, not to mention operating expenses.

@Landsteiner posted:

"So, if a deal is made what exactly are you entering yourself into and buying if such a sale of the line is done?"

The factories demand and get up front payment for tooling costs before the product is shipped, according to some who should know.  That's true of domestic manufacture too, of course, except you own the tooling if you paid for it. That's less clear with China.  You don't see profits until you amortize the cost of the capital investment in tooling, not to mention operating expenses.

 

So a possibility could be that the Chinese ask for an up front deposit without specifying what it will be used for and the balance to be paid on completion. 

The Chinese then use the up front deposit to cover a lot of the costs of development and production etc  and then make a profit on final completion.

This way they would still own/control the tooling and intellectual property of an item I suspect?