Blowouts, will they hinder future production

They will have to produce models people want, or do not already have in an earlier incarnation.

The best way to achieve both is possibly more "newly tooled" never before offerings like the MR s3.

Having said that, the tooling is the most expensive part of the manufacturing which makes one think it may increase loco pricing.

Having said THAT........the s3 three was the best of both worlds, a great newly tooled offering at a great price  Impossible to know really.

Only Lionel knows what ,why, or how much, regarding offerings.

As of late it seems no sort of standard, rhyme, or reason seems to apply. i.e. big articulateds going for almost half price, while smaller locos i.e. the "k line tooled" berks still hold at over $1000 

As I tried to inform the Lionel marketing folks at York, if you produce the right locomotives in  the right quantities, they will not have to deal with "Blow-outs." The specific issues I referenced were the lack of advanced features on the locos in the last catalogue. I explained that in the category of buyers in which I include myself, whistle steam, swinging bells, and the like are critical to my purchase.

The folks to whom I spoke were in their 30's. How familiar they are with irascible old curmudgeons like myself is unknown. I clearly explained that I would not purchase one of the new locos because none of them had whistle steam. I clearly explained that I bought many of their locos in the last two years because of those features. I predicted to them at the time (October York) that there would be blowouts on these new locos if they were produced in numbers similar to the numbers used for whistle steam locos. I stand by that prediction. I also stated that they were producing the new "Class J" with the same road number I already have. When I asked the "expert" why, he said that is what people want.

I said I was the "people" he was referring to. Most of the folks I know who wanted a scale J already had the one they were producing. Without whistle steam, only Legacy sound was different. Would people spend $1200 just for that? Not me, I said. He appeared to be listening intently. 

In Lionel's defense, the train markets have shifted radically over the course of the last year, in my opinion. Prices are sharply lower owing to a slack in demand. The economy is not the only reason for this. As a matter of fact, the economy is picking up. Returns in the stock market are high as the Dow hits 14,000 and home equity is beginning to turn around.

Though I could tap both, I will not. The reason is I am out of room. I will only buy an expensive loco now if:

a) it has the frills I want

b) it has lots of detail and not just cast in sand lines

c) it is my road

If the gurus at Lionel do a better job, we won't have so many blowouts.

Now, as to the question posed by this thread with all of the ideas I have posted above, my answer is a definite yes. Their decision will be largely impacted by the blowouts. They will be much more reluctant to do more locos and in numbers that would justify investments in tooling and the like. We are not likely to see new items, at least not newly tooled items. We might see some expensive steamers, but they better have whistle steam.

As I have explained to Mr. Calabrese, John Z and the cadre of "experts" at York. I will pay more money for highly detailed steamers with the frills. I will buy none of their steamers without frills. Period.

The pendulum always swings back and forth like this.  But this is the first time in awhile that we've seen this LEVEL of deep discounting.  Dealers have been battling it out since last Spring actually... Offering sales that they would otherwise not offer.  So I guess that's why this latest round of blowouts has been so dramatic.

I wouldn't be at all surprised to hear Lionel executives soon spouting this year's "party line" that production will be extremely limited... Don't expect blow-outs on the new stuff... Blah, blah, blah.

New steamers are due out in a month or two, so we'll see what happens.  But I'm sure some folks will continue to pre-order... And even more will trip over themselves on their way to grab the new stuff at premium prices.  Just the way it is.

David

I suspect MTH produces items in lower numbers, You can always find a sealed 10 year old Lionel steamer in a box..... somewhere.

In addition,Mth has produced/delivered few products over the last couple of years due to  a delay in manufacturing, no reason for a blowout when theres nothing on the shelves. 

On the contrary, Lionel has "ramped up" production as of late (probably too much so) as compared to the slump around 2008-2010.

As indicated by the steamers catalog'd in 2012 vol 2.  Almost an exact re-run of steamers that were last produced about 8-10 years ago.  And even back THEN, they were blown out a year or so later.  Without whistle-steam, it's almost a sure-fire guarantee that this new crop will need to be blown out as well in due time -- that is, of course, if enthusiasts can learn to control themselves for several months.  

David

I was thinking exactly the same thing.  And it may very well be this dynamic that has largely caused the need for such huge blowouts this year.

Seems nobody has a clear crystal ball though.  If it were "easy", it would have been discovered a LONG time ago.

David

I believe that Eliot's response to the thread's question is well thought out. Many of us who have been in this hobby for a long time have accumulated over the years all of the engines we really need. So why would we buy reruns of engines we already have with limited new features.

The Vision Line was exciting when it was first announced with new engines with great features. This is the track Lionel should take in terms of new releases. Otherwise blowouts will be a fact of life.

Paul,

You just may be right, Lionel has a history of blowouts from the 90's on. In this day and age and me being retired the blowouts give me a chance to buy some engines that otherwise I could not afford. But of course we will see what happens in the future  but in the mean time I'll enjoy the blowouts as they come. 

I may have to bring that EM1 to your new layout Paul for it to stretch its legs. 

Personally, I never understood Lionel's marketing strategy---far too many categories of products with different features not only to each repsectively, but within a specific category as well.  I think MTH is way ahead in this department--well defined product lines with a well defined set of features in each.   The buyer knows what their getting---with Lionel--you need to read the fine print to see which features a locomotive has.

Personally I think it's just laziness or overconfidence---even Jerry Calabrese in his famous OGR interview alluded to the fact price points are reflective of the value of the brand.  Perhaps the blowouts are an indication of the brand value slipping...or maybe folks are just tired of products within a product line being all over the place with what features they have or don't have.

--Greg

I think that the only impact that blowouts will have on future production is that you will not see more production runs any time soon of the models that were blown out, especially if the current runs resulted in a break-even or loss for the producer.  A blowout simply tells the producer that there wasn't a big enough market for that model, and that they will have to look at the market more carefully the next time they consider a run of that model.

Andy

I think that overproduction may hurt the prices of model trains in the next few years.

Not sure how other companies are doing, but it seems that Williams is not in a hurry to put out new models of diesel engines in a high numbers or in a lot of differant roadnames.

Another comment by Bachmann/Williams(3rd Rail, forum admin.) that I think is odd, is the unpowered or dummy engines may not be made anymore due to cost of circuit boards for lighting. When did Williams use a circuit board for lighting?

Another piece of news that I picked up was store closings on Yahoo news, close to 1500 stores may close nation wide because of low sales figuires. This may effect sales of model trains, only time will tell.

Lee F.

Maybe because they recognize that not everyone wants the same thing? I'm all for more choices, not less. Now if only they'd make an 0-4-0 without the Belpaire firebox...

I think it's great for the person who gets the blowout but really stinks for the guys who bought them before blowout and the dealers who still have them on their shelves. I think MTH and Atlas don't have blowouts because they for most part make what's ordered, I also think that both company's have one person running them not bean counters. I could see some money guy in a office at Lionel saying just make more and well double our profits. I think it's going to be  tough for Walter at RMT when he puts out new product, how many of you guys buying the RMT cars for 15.00 or 19.00 will pay 30.00 or so when he produces the next batch?

Make that $10 per car on sale for the ore cars!!!  

Importers don't like to acknowledge this, but blowouts are essentially "training" the consumer to behave a certain way.  I, for one, have been blessed to have more trains than I really need.  So I plan to watch on the sidelines as new 2013 product hits the streets and go from there.  The lessons in 2012 are there for the taking, folks!  

David

Hmmmmmm.  I do not see what you mean by a blow out.  Can you give me some specific examples?  Diesels are what I like the most and when i look at Ebay, I see most diesels at list price plus shipping.  Not what I would call a blow out.   I would define a blow out as as reduced price to the consumer.

Exactly... And in a HUGE way at that!  There are select examples all around.

RMT is currently having tremendous blowout on rolling stock.  Ore car pairs list for $120 and are now selling for $20/pair.  I know of a dealer who still has them on the shelf for $79/pair.  We can argue that $120 MSRP was never a realistic selling point from the get-go.  But who's even gonna buy those at $60-$80 now???

Recent Lionel steamers that MSRP'd at $1200-$1300 and were selling at $1050-$1150 are now blowing out at $700-$800.

One diesel example is the Lionel Genset at $800 MSRP.  The CN model was blown out around $450-$500 a few months ago.

Just a few prime examples.

David

Harsh reality... generally speaking, blowouts do NOT generate customer loyalty whatsoever for any particular brand or dealer.  Think of them more as a pressure-relief valve designed to bring market conditions (in this case, SPENDING) back to near normal levels -- thereby generating cash flow where it had tapered off.   Healthy in one sense... yet admittedly destructive in another.

David

I also wonder how keen dealers will be to purchase new RMT cars when RMT is blowing out cars for less than they paid?

Jim

It seems many members agree with your statement about Lionel blowouts, however, where are these occurring at? Which dealers? What part of the country?  I sure do not see any reductions in price on Lionel engines or other stock cars.

David56

At least for MTH from what I have noticed is that the higher price items are in short demand.  You don't find a lot of excess engines laying around like you do for the other manufacturers.  I think lately that they make a small percentage more than their preorders and that is it.  If you don't get it on preorder or right when they are released, you missed buying it.  I look at some of the sites and many times there is significantly more Lionels than MTH and Atlas.  Atlas also seem to limit their higher prices items.

For the freight cars, it is much easier to find the ones from MTH long after the initial release.  Similar for the other manufacturers.

Beings Charlie is the largest Lionel dealer I would imagine he gets first choice of any blowouts they have.

In the past couple of months Charlie Ro has had blowout prices on Mikados, SF Northerns, 2-6-6-2's and now the EM1's and a few diesels. There may have been others but these are the ones I remember.

You can only survive on "old money" for so long and then the well goes dry. Model trains are items that you want, not need, and since we are in the greatest economic downturn since the great depression, most all retail businesses are hurting. Blowouts have no effect on future production. Supply and demand dictates everything. In this failing economy, I'd be surprised, if in their current form, Lionel and MTH are still in business in three years.   

None. Overproduction & corporate mismanagement is endemic to the production side of the hobby. It shows what a mockery list price/nominal discount retailing is in the hobby. Old school Yorkies on the buy side are well familiar with this situation and routinely take advantage it, particularly at the Spring meet.

I have never gotten blowouts at small hobby shops, unless it is a store closing sale.

Andrew

Overproduction!??! The distributors for the Local Hobby Shops only have had half in stock of what I have ordered. Somebody else gets the rest of the supply and I have to wait a few years for something else.

Andrew

The biggest reason to me is the aging population of 3 railers. As each catalog comes out their is a few less people to buy. The trend continues with each passing day. The big purchasers of these items are in their 60's. I am in my early 50's and don't see the group in their 40's making much of an impact on sales. I don't think people in my age group even account for a lot of sales. I would be surprised if we still have the same choices 5years from now. John

When Lionel came out with TMCC the engines they produced ranged from affordable to expensive. Legacy engines however only come as high cost scale models that are not for the general public.

   I myself would like to see PWC type engines ie GG1, 2055/56 locomotives, FMs and GPs with Legacy, but without all the scale detail that drives the cost up.

I believe the market for the large steamers is small compared to the O gauge market as a whole.

Art

Right now, don't worry about later. I suggest, if you have the money, take advantage of the deals you are being offered by RMT, Williams and Lionel.

And you never will. Only the largest of the retailers will get the blowout items when they become available. Very few of the retailers have a in like Charlie Ro does. He is Lionel's largest retailer so guess who gets the call first from Lionel when the product becomes available. 

>>>And you never will. Only the largest of the retailers will get the blowout items when they become available<<

Not true.. Distributers do get some and most pass the savings along to dealers who depending on which one, use it to leverage inventory cost, or pass it along to their customers.

Joe 

Whistle steam?  Oh, please.  If that is the deciding criterion, the buyer has too many engines already.

These engines aren't selling because they cost too durn much.  They are over-produced at that price point.  Too many people are yelling for the latest bells and whistles, but not enough people can pay for them.

The Legacy/conventioanl pairs of steamers in the last coupla years are a good start.  Make a VERY FEW with legacy and all the doodads; make quite a few more at a mid-range (not so many electronics, for example), and then make a medium amount at the lower end of the range.

Since personal desire is the driving force, I'll share mine:  scale-sized engines w/out Legacy--TMCC still works, ya know?--and without such things as whistle steam and cylinder steam and many of the attached doodads in the $300 - $400 range.  I'm in.  Otherwise:  keep 'em.

You say it can't be done?  Well, I say they can't keep on they way they are.

Jim,

This is wise advice.

Jim

Dejà Vû all over again

During the 1953-1959 PW era retail inventory clearance started the day after Christmas; the opportunity was often accompanied with returns because all knew that by New Years Eve, the general merchandise venues were picked clean. My family turned it into a family outing. And you didn't have to be a Christmas celebrant to participate. Late into the 1990's a dentist friend of mine told me how this post Christmas opportunity was how his Lionel trains were sourced.

But wait, this thread is supposed to be about the production side of the toy train business. It wasn't apparent that the Lionel Corporation itself was involved with overproduction problems ... until the vast inventory of Madison Hardware was liquidated by Richard Kughan. To those who were there at the auction, the accumulated boxes of PW classics was said to be breathtaking. Did M.H. acquire this cache on an annual basis or did they acquire it as a mega lot when the showroom/factory closed its doors?

Frankly it doesn't matter. My statement on the issue rests as articulated in my first response in this thread. As usual Farmer Bill sums it up in 5 words.

Don, I think a lot of folks may have overlooked that not-so-small fact.  Only now is MTH starting to deliver its premier line steam locomotives that were catalog'd in their 2011 catalogs.  In those 18 months, Lionel delivered a ton of stuff into the market... very likely by design to take advantage of the situation.

But this is a very fickle market... and with all the business that Lionel may have garnered in 2012 from MTH, there's absolutely no guarantee that folks are gonna blindly line up and purchase Lionel's 2013 steamers that have LESS features for MORE $$$.  Just ain't gonna happen.

Should be another interesting year!

David

Dave, I'd like to see that EM1 on my layout.

Lionel's recent catalogs remind me of MTH's catalogs after DCS was released; a massive "Attach of the clones" surge of high-dollar models using previously done molds and castings equipped with latest electronics and features. I believe that strategy is how importers historically have made their desired profit margins. The wildcard today is the trepid consumer, i.e., how many of us spend our money today is thought about much more carefully than we ever did.

 Exactly, Paul.

And on the heels of spending $699 for an EM-1 and $799 for Northerns and Mallets (all with Legacy Railsounds and whistle-steam), I can't see those same folks dashing out to purchase a "J" or SP GS-2 or WP GS-64 without whistle-steam for $1200.    It makes no sense what-so-ever for consumers in general -- not to mention those who have seriously resolved to get the best bang for their buck.

The production quantities for these new locomotives have already been set, and I suspect they're already off the assembly line being packaged as we speak for shipment and arrival into the States by late Feb 2013.  So at this point, consumers are in the driver seat if they just wouldn't trip over themselves in their zeal to be the first kid on the block with something brand new.

As I said earlier, it should be a VERY interesting year!

David

Paul is right. No need for me to buy the new ones on their way. I already have a J 6-38095 with a whistle that is dead on, have a GS64 from 2004 with a great whistle that i bought for more then half of what the others will be selling for. Both by the way have engine specific announcements, the new will not.

I will not tell anybody not to buy the new ones because I know there are some of you that have to the latest and greatest. Now if they do come out with whistle steam and the same whistle as the 6-38095 and some other improvements, I just may upgrade to them, next year when the price will be much lower.

Right now I am as happy as a pig in $%&%, I have some great engines with great sound and I got them for half the price. It gets no better.