Atlas Factory Shut Down

Stu,

Has the "Made in USA" Lionel tooling been folded into the Lion Scale line?  As I understand it, the tooling for the 9700 series  boxcars and the ACF-3 bay hopper came from tooling that already existed in the US from the MPC days. 

Hot Water posted:

 

Please provide actual dollar amount, as I'm not familiar with any "China produced kits".

The cars are 1/25 scale or about the size of a O 40ft box car....lots more parts count. thx

I'm confused,,,,,,,,what does "1/25 scale" have to do with 1/48 O scale?

 Hobby products designed, tooled, MANUFACTURED and packaged in the USA. Many here say manufacturing in the USA is impossible....these guys say no....THAT"S what it has to do with trains. 

95% of hobby plastic kits today are tooled and manufactured in China and marketed here by AMT, MPC and until they shut down last month Revell. (much like MTH, Lionel and Atlas) They have a MSRP of $30-45 USD Salnino's USA kit has a MSRP of $40. 

Allan Miller posted:

Rusty Traque posted

I would also bet Lionel's U.S. made Lion Scale line won't be expanded beyond the original Weaver tooling.

Rusty

I wouldn't take that bet because I believe you are probably right. New tooling is a big investment, and it takes a good amount of time and a lot of sales to recover that amount.

Allan,

Up in Cleveland there is a plastics injection mold shop (I have used them) run by an old German tool maker (he is in his 80's) and his son.  I've been told that the Chinese can provide finished tooling cheaper than he can buy high quality tool steel.

Lou N

Lou N posted:

Allan Miller posted:

Rusty Traque posted

I would also bet Lionel's U.S. made Lion Scale line won't be expanded beyond the original Weaver tooling.

Rusty

I wouldn't take that bet because I believe you are probably right. New tooling is a big investment, and it takes a good amount of time and a lot of sales to recover that amount.

Allan,

Up in Cleveland there is a plastics injection mold shop (I have used them) run by an old German tool maker (he is in his 80's) and his son.  I've been told that the Chinese can provide finished tooling cheaper than he can buy high quality tool steel.

Lou N

And when you tool in China you own 47% of what you pay for.......so not as good of a deal as it seems....

I've dealt with Chinese and American injection molding companies at work. I've had molds made in the US and the parts made locally. Finding an American injection molding company is easy. They are just very expensive by comparison. I've had a mold made in China and then sent to a US company to produce the parts here. No, the Chinese government does not own part of it. You do pay a premium to take possession of it though. I've also had molds made in China and the parts manufactured there. There are huge cost differences in each approach and which is the best choice is product specific. Each one has merit and US manufacturing is not always a viable option. 

I will say that in regards to quality, that comes down to who you work with. I've had good products made in China and horrible ones made in the US at a higher cost. I've also experienced the reverse scenario. 

A few years ago I got a mold quote for a project at work. A US company quoted us $40k for the tooling alone. It would take 6-8 weeks before they could begin the tooling and another 6-8 before we would have samples. The parts would then be made here as well. 

I also quoted having the tooling made in China but sent here so the same molding place could make the parts. They wanted $25k and could have the tooling to the molding company in 6 weeks. 

The last option was having the tooling made in China and the parts manufactured there. They wanted $2000 for the tooling but we didn't take possession of it. These were small volume prototypes so we went with this option. I had the actual molded parts in hand in less than 30 days from ordering the tooling and that time included shipping the parts from China. 

Depending on the scenario, the only viable option to make a business model work is Chinese manufacturing. It's a risk of course but the price disparity may make that risk acceptable. 

fredswain posted:

I've dealt with Chinese and American injection molding companies at work. I've had molds made in the US and the parts made locally. Finding an American injection molding company is easy. They are just very expensive by comparison. I've had a mold made in China and then sent to a US company to produce the parts here. No, the Chinese government does not own part of it. You do pay a premium to take possession of it though.

I think we agree on the mold ownership issue. I do work for a company that tools and manufactures in China. I know for a fact if we told the current tooling holders we were picking up the tooling and sending it stateside there would be a large fee or the tooling would meet with a horrible accident making it scrap value only. Saw that last one happen to a competitor. 

But release our tooling with no strings....not happening.

Open Letter from InterMountain...........Looks like plant closings are affecting several companies!

palallin posted:

I don't buy the argument that production costs here would be 2 or 3 or 4 times the costs in China:  when the production moved FROM here TO China, prices rose; they didn't fall.

I don't know. I remember getting our dealer catalog and price sheets in the mid to late 90's and gasping at locomotives based on the post war 736 in the $800 range. It may have had Railsounds but no TMCC. F3 sets in the same ballpark or more. Trainmasters and GG-1's in the $600 range. There have been sets with these engines, often with brand new tooling offered with cars for hundreds less than those prices since. What has happened is Lionel has started tooling up tons of new and detailed product and those cos what they cost. 

Welcome to one of the joys when you outsource things to another company (and this applies across the board, not just a China thing), in reality you have very little control over the other company, Service level agreements only work when you have real power to enforce them, but when a manufacturer basically has all the power because shifting production is so difficult, in the end there isn't much you can do, you can try suing them,not paying them, but all that will happen then is they will retaliate knowing you can't go anywhere else. SLA's work where the one doing the outsourcing has some leverage, for example, if you site host  your software on a vendor's cloud or server farm and they screw up, it is a lot easier to find another place to run it (as long as you own your own code and the site place didn't write the code, too...). If you own the tooling and you have the backing of the law and the courts(as  you would in the US, Canada and Europe, unlike China) you can shift production, China even if you own the tooling it is next to impossible to move it, lot of places that do that end up creating new tooling from what i have been told by people who do such work.  It gets even more complicated with suppliers, one of the things that made lean production work is they shifted from low cost bidding to working with suppliers in a kind of partnership, to allow real control over the quality of the parts themselves (which in Chinese supply chain doesn't exist, supplier and vendor relationships are like GM in the 1950's).  

And sure, getting caught short like this happens here, people have been left high and dry when a vendor shuts down, but it happens a lot less frequently, in part because there are both contractual and legal requirements that require notification, to give the outsourcer the ability to find another vendor and shift production (doesn't stop fly by night vendors from the old midnight pull out of town dodge, happens with construction businesses all the time), but this happens quite frequently overseas from what I have seen. 

The companies and we the customers are caught in the same bind, because of the nature of this market the company can't/won't operate its own factory, and both of us get the shaft when the supplier goes under or otherwise doesn't do what expected, it is the nature of the beast. If this were a much larger market, for something like tv sets or the like, would be a different story, or Iphones for that matter, there is so much money they you aren't talking about small companies using small factories overseas, very different relationship. 

BRIAN WHITE posted:

palallin posted:

I don't buy the argument that production costs here would be 2 or 3 or 4 times the costs in China:  when the production moved FROM here TO China, prices rose; they didn't fall.

I don't know. I remember getting our dealer catalog and price sheets in the mid to late 90's and gasping at locomotives based on the post war 736 in the $800 range. It may have had Railsounds but no TMCC. F3 sets in the same ballpark or more. Trainmasters and GG-1's in the $600 range. There have been sets with these engines, often with brand new tooling offered with cars for hundreds less than those prices since. What has happened is Lionel has started tooling up tons of new and detailed product and those cos what they cost. 

Agreed, the only valid comparison might be comparing a comparable product going overseas, for example, a conventional engine, or something like a traditional boxcar or the same. You can't compare a conventional engine from 1999 with a legacy engine of today, two different beasts, and or compare a semi scale engine against a scale one.  It would be interesting to look at that transition period, what a conventional engine made in the US just before it went to China cost, against what it cost after the move (would be willing to bet same cost, but of course the profit/unit for lionel went up). I think a lot of the 'price bloat' after going to China reflects the evolution of the market, in the late 1990's TMCC was state of the art, after moving to China more and more engines were command control, detailed units, and then with Legacy went even more upscale, so it is really hard to compare. 

Given where China is these days  with manufacturing, with tight labor and the way costs rose there, I wonder if the factory that shut down did so because it was no longer profitable to make the units, and how much the cost is going to rise on the stuff when it moves to a new factory. With Atlas, we can have a direct comparison, we know what the engines and rolling stock cost right now, be interesting to see after Atlas moves its tooling how much more it costs, wouldn't be surprised if it costs them a lot more and we see it downstream, it may be likely the contract factor got squeezed by having a contract price that became less and less profitable. 

We sont see any Atlas O locos or rolling stock for a long time. They've got an HO and an N scale line that are the bread and butter and sell significantly more than the O line. They'll get those product lines up then get to the O scale line. It wouldn't surprise me if Atlas decided the O scale line wasn't worth the effort and sold it off or just walked away

This factory produced for a number of other Importers also, see Intermountain letter in a previous post so not just Atlas is affected, obviously since HO and N gauge are their mainstays they will make every effort to get another factory the O gauge line could be a casualty or a later to market line. The time frame is anybodys guess. JMO

Did Affatech make the new Lionel 21" passenger cars?  One of my dealers told me it would be a long wait for the UP Challenger cars and the Theater Cars I ordered.  Way beyond Christmas of 2018.

The Chinese 2025 Plan wants their manufacturers to move to more expensive products in 2025, like solar panels, etc. China does not want the reputation for cheap goods. They want items that have larger profits. This new 2025 government policy could move small piece-work out of China factories.

I skimmed through this, but I did not see any solid confirmation that Lionel, in any scale, is hung up in this.  I have a few S gauge items on order, like the new run of Baldwin’s.  

Also, I am curious what HO outfit Lionel bought up, if it has been identified on the forum I missed it, further more I wonder if their production plans in HO got jammed up with this factory closing.  

Ben

Make no mistake about this. Atlas will be badly hurt by the closing of its main production facility because it affects the company’s N, HO and O scale line simultaneously. The cash flow problem alone might require some short-term financing, adding to Atlas’ burden.

Worse yet, Atlas recently purchased, or agreed to purchase, Walthers’ N scale locomotive line. The plant closing neutralizes Atlas’ ability to earn revenue from that investment.

It won’t be easy finding a production facility to fill all of its needs. And fast!

As for some of those comments about a lack of sympathy due to Atlas’ decision to manufacturer its trains elsewhere, think before you type. Atlas never made any locomotives domestically. It established that part of its business on the idea of working with credible, even exceptional, model makers (particularly Roco and Kato) internationally as far back as the 1970s and had a good Chinese partner in Sanda Kan before it all began to unravel in 2010.

I sympathize greatly with Atlas and hope it can weather this storm.

bigkid posted:

BRIAN WHITE posted:

palallin posted:

I don't buy the argument that production costs here would be 2 or 3 or 4 times the costs in China:  when the production moved FROM here TO China, prices rose; they didn't fall.

I don't know. I remember getting our dealer catalog and price sheets in the mid to late 90's and gasping at locomotives based on the post war 736 in the $800 range. It may have had Railsounds but no TMCC. F3 sets in the same ballpark or more. Trainmasters and GG-1's in the $600 range. There have been sets with these engines, often with brand new tooling offered with cars for hundreds less than those prices since. What has happened is Lionel has started tooling up tons of new and detailed product and those cos what they cost. 

Agreed, the only valid comparison might be comparing a comparable product going overseas, for example, a conventional engine, or something like a traditional boxcar or the same. You can't compare a conventional engine from 1999 with a legacy engine of today, two different beasts, and or compare a semi scale engine against a scale one.  It would be interesting to look at that transition period, what a conventional engine made in the US just before it went to China cost, against what it cost after the move (would be willing to bet same cost, but of course the profit/unit for lionel went up). I think a lot of the 'price bloat' after going to China reflects the evolution of the market, in the late 1990's TMCC was state of the art, after moving to China more and more engines were command control, detailed units, and then with Legacy went even more upscale, so it is really hard to compare. 

Given where China is these days  with manufacturing, with tight labor and the way costs rose there, I wonder if the factory that shut down did so because it was no longer profitable to make the units, and how much the cost is going to rise on the stuff when it moves to a new factory. With Atlas, we can have a direct comparison, we know what the engines and rolling stock cost right now, be interesting to see after Atlas moves its tooling how much more it costs, wouldn't be surprised if it costs them a lot more and we see it downstream, it may be likely the contract factor got squeezed by having a contract price that became less and less profitable. 

 

So found something comparable. Last years in Michigan vs China. Basic starter set with 4-4-2 with smoke, headlight, whistle, few cars, 0-27 track and the worst 40 watt transformer ever sold were $199.99. 2004 a similar set that now had FasTrack and a CW-80 had a retail of $189.99.

NotInWI posted:

I skimmed through this, but I did not see any solid confirmation that Lionel, in any scale, is hung up in this.  I have a few S gauge items on order, like the new run of Baldwin’s.  

Also, I am curious what HO outfit Lionel bought up, if it has been identified on the forum I missed it, further more I wonder if their production plans in HO got jammed up with this factory closing.  

Ben

Lionel 21" scale cars were made by AFFA as was the F40PH. 

Jim R. posted:

Worse yet, Atlas recently purchased, or agreed to purchase, Walthers’ N scale locomotive line. The plant closing neutralizes Atlas’ ability to earn revenue from that investment.

Interestingly enough, Walthers was not produced by AFFA so the N scale tooling bought from Walthers likely won't be affected.  However, the scale of this in HO and N is certainly enormous. 

Thanks for the information Jonathan. 

Ben 

In additional to Atlas, the following companies have made some sort of announcement that they are also affected adversely by the closure of Affatech (some of which have already been mentioned here): Bowser, Bluford Shops,  ExactRail, Fox Valley Models, Intermountain, Spring Mills Depot, Trainworx Inc., and Wheels of Time. Two more firms, Tangent Scale Models and Moloco Models are also thought to be affected but have made no official announcement either way.

And as Jonathan pointed out above, Affatech was also doing specific products for Lionel, and who knows how many others.

Athearn, Pacific Western Rail Systems, Rapido, Scale Trains and Walthers have all said they are NOT affected, but Walthers has said that their vendor for Code 83 track, Shinohara is also ceasing production.

These companies will be seeking new production facilities, which may or may not put more pressure on the existing facilities. And with one fewer company manufacturing trains, this also potentially lends itself to price increases. And not only do they need to find a new facility, but then they need to go the difficulty of moving their dies and tooling from a closed facility to one that is operating.

And more possible closures are not out of scope. There are have been some news stories about factory closures in China due to their new environmental laws.

https://www.smartchinasourcing...procurement-program/

https://www.forbes.com/sites/t...ckdown/#2c1ef5274666

EDIT: I should note that Walthers was notified that after filling the current order, Shinohara would cease track production. Whether that means more than just simply track for one company, I cannot say. But obviously, there's another company that will be seeking a new manufacturer for a least one product line.

brianel_k-lineguy posted:

Shinohara is also ceasing production.

This particular bit is perhaps more disturbing than the peek-a-boo factory shell-game the O manufacturers are dealing with.  Shinohara has a long, solid history and was/is a staple in the smaller scale communities.

brianel_k-lineguy posted:

In additional to Atlas, the following companies have made some sort of announcement that they are also affected adversely by the closure of Affatech (some of which have already been mentioned here): Bowser, Bluford Shops,  ExactRail, Fox Valley Models, Intermountain, Spring Mills Depot, Trainworx Inc., and Wheels of Time. Two more firms, Tangent Scale Models and Moloco Models are also thought to be affected but have made no official announcement either way.

Although not involved in O scale/gauge, another manufacturer directly and adversely impacted by the closure is American Z Lines (AZL), a leading manufacturer in the world of Z scale that produces high-end Z locomotives and rolling stock based largely on U.S. prototypes. I believe all of their production came from Affatech. An aannouncement on their member forum strongly reinforced their commitment to the Z market and to finding a new supplier, but they also cautioned that consumers should avail themselves of product currently available and be prepared for significant delays in new product until a new supplier can be found and production resumed. That may take a considerable time.

My perspective on this whole unfortunate matter:

O gauge/scale consumers should also be prepared for a rather dramatic slow-down of new product coming in from overseas. This applies to ALL O gauge train manufacturers, including some not directly named or impacted by the Affatech closure. In short, if there's something you would like to have that is currently available or (especially) already in the pipeline on a container ship or in a warehouse, you may want to satiate your consuming desires now if you can possibly do so rather than pin your hopes on something that has already been cataloged or announced, but is still possibly going to be a year or even several years away.

Allan Miller posted:

brianel_k-lineguy posted:

In additional to Atlas, the following companies have made some sort of announcement that they are also affected adversely by the closure of Affatech (some of which have already been mentioned here): Bowser, Bluford Shops,  ExactRail, Fox Valley Models, Intermountain, Spring Mills Depot, Trainworx Inc., and Wheels of Time. Two more firms, Tangent Scale Models and Moloco Models are also thought to be affected but have made no official announcement either way.

Although not involved in O scale/gauge, another manufacturer directly and adversely impacted by the closure is American Z Lines (AZL), a leading manufacturer in the world of Z scale that produces high-end Z locomotives and rolling stock based largely on U.S. prototypes. I believe all of their production came from Affatech. An aannouncement on their member forum strongly reinforced their commitment to the Z market and to finding a new supplier, but they also cautioned that consumers should avail themselves of product currently available and be prepared for significant delays in new product until a new supplier can be found and production resumed. That may take a considerable time.

My perspective on this whole unfortunate matter:

O gauge/scale consumers should also be prepared for a rather dramatic slow-down of new product coming in from overseas. This applies to ALL O gauge train manufacturers, including some not directly named or impacted by the Affatech closure. In short, if there's something you would like to have that is currently available or (especially) already in the pipeline on a container ship or in a warehouse, you may want to satiate your consuming desires now if you can possibly do so rather than pin your hopes on something that has already been cataloged or announced, but is still possibly going to be a year or even several years away.

I agree with Allan, this may only be the tip of the iceberg with issues with China production, and it isn't just finished trains, it also affects components manufacturers elsewhere use (not talking Affatech here).  With all the trade stuff swirling around (and it looks like it is getting ugly), there could be all kinds of things that happen, you could see ports refusing to handle goods from China, you could see China retaliating by not allowing or slowing down component sales/shipment. Hopefully it will all be noise and rattling swords, but the global supply chain is really complex, and as Mr. Scott said in one of the Star Trek movies, the more you complicate the plumbing, the easier it is to stop up the drain......

Hang on to all those old Lionels because when the current China supply dries up those buggers will be after our old stuff.

Having done business over there for many years now, usually things happen for straight forward reasons and not conspirical, government blaa blaa (is that a real word?) reasons. 

I met with KK on two separate occasions over the last 8 years.  Once in Hong Kong to see if we could use them as a new builder and recently a social visit when he was here in California. 

He's a straight forward guy, in his 60s now. We discussed the in's and out's of manufacturing in China. KK is Canadian and speaks english fluently. I think his family lives here in CA too.

From my other contacts in China I know that local governments are making sweeps of small businesses that support these factories (Etching, Plating, Painting) to make sure they are not violating new EPA style rules. In some cases they shut down these small business permanently. This was causing the remaining subcontractors to raise their prices, making all these models more expensive to make anywhere in China. 

AFFA tech was not immune to this. I think i remember KK telling me me that they had a forced shut down for 3 months due to these kind of issues. But you never know the real reason. It could have been cash flow, or owing subs who won't cooperate until you pay them in full.  I doubt it is a government conspiracy over trade issues. 

So I read KK decided to throw in the towel or retire.  I think there is a good chance that an internal manager or several employees will open their own factory and continue to support those left in the lurch. Why wouldn't they? There's money to be made.  If I were any of these importers affected I would run over there and camp out of a few weeks. Get a translator and meet with as many employees / managers as they can to secure their tooling / parts / drawings, what ever they can.  You can have it moved, stored nearby, people there are generally honest, kind and helpful. 

I wish them the best.

Scott Mann

jim pastorius posted:

Hang on to all those old Lionels because when the current China supply dries up those buggers will be after our old stuff.

If it comes down to that, I will likely get out of the hobby before I go back to the old lionels......

Makes me glad I chose Gargraves track and Ross switches. Don

Bowser e-mail says they have a manufacture for their freight cars....but no word on locos....very different.

jim pastorius posted:

Hang on to all those old Lionels because when the current China supply dries up those buggers will be after our old stuff.

LOL.  You wish.

AMCDave posted:

Bowser e-mail says they have a manufacture for their freight cars....but no word on locos....very different.

Dave, maybe they've already lined up another facility. There's an announcement today on their FB page, that they are proceeding with an HO 70 ton 2-bay hopper.

But from July 30, the following was posted on their FB page:

"We have been informed that our foreign factory is closed. This will delay HO and N Ready To Run cars, trolleys, Cal Scale and our locomotives. We are looking for a new factory. All delivery dates are now TBA (To Be Announced). Thanks for all support you have given Bowser."

Hopefully all these affected companies can get at least some production going. It'll be hard for these companies to operate if there's no money coming in the door.

As of today...

Affected are:

Athearn (Official Announcement)
Bachmann/Kader - Kader owns their factories
Rapido (Official Announcement)
Scale Trains (Official Announcement)
Walthers (Official Announcement)

Not dependent on China:

Accurail (Illinois based with in house production)
MTL (Oregon based with in house production)
Kadee (Oregon based with in house production)
Kato (Japanese company with production based in Japan)
Shinohara (Japanese based, but shutting down due to retirement)

From what is being published, the impact is going to be most felt in HO and N scale, however there is also collateral damage to the O and Z scale sectors.

Andre

What really bugs me is that they shut down without any notice at all and left a lot of people in the lurch. I don't wish K.K. well at all.

It's business and not personal. I love my trains and I am miffed that these things happen but the reality is the world did not stop spinning, hopefully your are all healthy, have a good family base to carry the rock. It a hobby, we are all passionate but after working in manufacturing for a extremely large Japan based company these things happen and if you don't have a back up plan your dead. The primary reason manufacturing leaves the US is burdensome regulations and costs. If these guys have all their tools a shift to another place and factory is painful but can be done. Personally, I am glad as quality of MTH, Lionel and a few other has gotten worse over time. How many times under warranty have you sent a unit back to MTH or Lionel and have it sit in their repair shop for months.

I can tell you this is a fact, I have a brand spanking new 4014 that I got at Christmas and I am still waiting for a board. the unit was DOA out of the box and three boards later its in the "shop" again.

I would love to see manufacturing back in Korea, Japan or the USA. Prices have significantly increased and quality down when manufactures move to China. 

Anyone know if the Atlas O wood sided reefers due later this month, made the cut so to speak, and were produced before the factory shut-down ? 

jim pastorius posted:

What really bugs me is that they shut down without any notice at all and left a lot of people in the lurch. I don't wish K.K. well at all.

Welcome to the real world...  99% of the time layoffs and shutdowns aren't telegraphed in advance.

Rusty

Just to add a small note here. I personally hope locomotive kits make a come back, in HO. 

At one point it was the majority of what we had, in any scale. There is only one HO manufacturer still in business from the old timers, hobbytown of Boston. They have been making quality die cast locomotive kits since 1946. Everything is made in the USA, with die casting & plastic injection molding all done in the same factories for over 50 years, and all the machined & turned parts being made locally to the factory.

That being said, they were looking to have a die made to make a die cast, 4-wheel diesel side frame for the FM C-Liner. Only one company in the USA wanted to cut the die, and the price was $11,000! (This is a piece no more than 2" long, 1/2" high and less that 1/4" thick.) This did not include the 3-D drawings.

A Chinese company quoted the tooling, including all 3-D drawings for $1,100. 

It wasn't done, thankfully, since they know all too well how those guys operate.

So to date the only part made overseas is the can motor, and only because the prices here are in the $40 range per motor, as opposed to the $2.00 range there.

And before it's said, the company that offered the motors here stressed the motors were "assembled in China".

Nick

For years I have berated myself for "buying too much stuff that I never use and that, in reality, hardly ever see and I need to sell most of it..."; huh. Now my stash is looking better to me as getting more is going to get harder, more expensive - or both. When it is made. If it is made. 

I'll also raise my prices....

Joking aside, we may be seeing the perfect storm (sorry for that worn-out cliche) in our 3RO hobby. I am not concerned about the future health of the other scales; they will survive better - younger, cheaper, less grumpy.

Fewer and fewer of us around to buy items, many of those of us left have everything, "been there, done that", and now the Supply part of Supply and Demand (cliche, again) has caught a cold to go along with the one that the Demand side has been fighting for a few years. The interaction may prove to be interesting. Or not.

You know the old, supposedly Chinese (fitting) curse: "May you live in interesting times".  

For the CZ owners waiting on the Atlas F3s its not too late to reserve with Sunset for a guaranteed  reservation on a better version [opinion], "albeit" at a higher price. just saying !

I have a pair of Sunset CB&Q E8s for my Atlas CZ cars. Beautiful!

Dick

Placing an order for the 3rd Rail E5s as a result. Not used frequently with the CZ, but I've got so many F3s and none of the original set of E units at the moment. I may still pick up the Atlas units, but I'm not expecting them until 2020 at this point.