If Supplies Met Demands, What Difference Does It Make

If Lionel, MTH, Atlas, etc. produced their trains on the basis of our demand,  I would expect a great deal more variety of trains on the market.

Isn't that what Lionel's "Build to Order" program is all about?
I guess you would (will) see more variety, but at higher costs.
Those higher costs will inhibit sales, leading to less being made.

There are only so many dollars to be spent by train enthusiasts.

Bobby Ogage posted:

Eventually, I would like to see the variety of O-gauge trains equal that of HO trains.

 

If and when the numbers of O-gauge enthusiasts is equal those of HO gaugers it could happen.  But O-scale is far too space-hungry for that to happen.  Be happy with what we've got.

TP

BO: thou preachest to the choir.  BTO means you are only offered a few redundancies, take it or LEAVE it. I AM complaining. Three rail is only a subset of O scale, and l have no hope it will ever approach HO, which has run away from us since 1940's.

We often forget that the whole BTO model is based around what people actually are willing to commit to buy.  It makes perfect sense so that the manufacturers can stay in business and not get stuck with inventory to be sold later at a loss.  When we are talking small numbers that means most likely brass for some road names.  For 3rd Rail it takes 75 orders for a brass locomotive to go into design with the idea that hopefully about 100 sell.  Even at those low numbers many of the smaller roads will never see that many orders.  For BTO plastic runs we are talking about runs of less than 1000 units; typically between 500 and 750 these days.  25 years ago, 500 was considered a limited production run.

It's not rocket science, take all costs for production and design, add a minimal profit as it is a business and then divide it by the number of units sold.  The redundancies you see in the market is not based on the BTO model, it is a simply function of manufacturers being wary of producing new tooling without confidence that they can recoup their costs.  Existing tooling is much cheaper to update from time to time.  Contrary to popular belief, no manufacturer is getting rich off of O scale trains.

Jonathan, can a specific engine be made and then easily painted/decaled in several different road names? Or is that a pain to do and a certain amount of each would be required to profit there as well?  Just curious?

Also, I recently watched the video Mike Wolf did from China on the manufacturing process. When finished watching I was amazed they can sell the engines for what they do. That was a really complicated, detailed, long and drawn out process and much more than I ever imagined. And they didn't even cover the research, design and engineering part of the process or the command and sound files needed for command control. And I am sure I missed a few other vital processes and pieces to the puzzle here. Maybe it is more like rocket science! 

I can only speak for 3rd Rail as I consult part time for them.  We will do as little as 20 units in a specific road name on a diesel.  There is cost for that, but it is nothing like the cost for new tooling.  I can't say the same for the other manufacturers.  As you often see on the promotional literature we have done up to 30 road names for one project.  It is all what the factory is willing to do.  This is purely speculation, but the business model for the larger manufacturers I suspect is to release a few road names at a time to get the most out of the tooling.  Makes sense as tooling is the largest cost in any of these projects. 

Mike Wolf's video is very descriptive of the process.  It is a process and I have learned in my professional career that processes solve problems.  It's when the process gets out of sequence that problems happen.  Research isn't quite as difficult as you might think unless it is really something obscure.  The Chinese are very skilled at what they do if they have a few good photographs to go off of and a few dedicated people who know the prototype and can provide feedback from here in the US.  We don't give the factories enough credit on this forum as you mostly hear about QC issues.  While QC issues are real, that is just part of the story.  There is a lot of information for the larger roads if you know where to look.  Painting diagrams, color drift cards, or even just looking at old Model Railroader formulas for mixing Floquil paints can get very accurate color.  The biggest challenge is working in metric at 1:48  

The sound files are programming and they can often be amortized across several production runs. 

"If Lionel, MTH, Atlas, etc. produced their trains on the basis of our demand....For example, this is why there are so many locomotives of the Pennsy prototype."

Well, sure - and this is exactly why "there are so many...of the Pennsy..." That is the "demand". I would love to see - and I would buy it, for certain - a model of the NC&StL 4-8-4 J-3-class "Dixies". So would some other people. But - enough to spend the thousands on the tooling? Or even brass hand work? I think so, but Lionel, etc., do not. (They have been offered in HO brass.)

We have PRR, NYC (yea!), ATSF, ad infinitum because the demand is there and it is safe. Not as safe as it was, though. Maybe even I have enough Hudsons....blasphemy!

L&N M-1 Berk - most modern Berk ever built - where is it in 3RO? It's around and has sold in 2RO and HO, but not Hi-Rail.

See - capitalism isn't what it's cracked up to be.

"See -- capitalism isn't what it's cracked up to be." Gosh, I don't think I agree with that: If making model trains were entirely controlled by the State, it's hard to believe we'd be better off.

Thanks Johnathan, good information there. Actually I think the train manufacturing people do pretty well for all that goes into these things. But, I happen to be one of the few that hasn't really had many QC problems and I can't complain. Of the few small problems that I have had, I was able to fix all but one myself. That was my Legacy base which had to go back for repair. I am quite pleased with the offerings available today and the details and quality. I sometimes wish they could be reduced in price (who doesn't, right?), but I now think we are really getting a pretty good value for what we pay, all things considered. Thanks again for explaining in more detail.

rtr12 posted:

Thanks Johnathan, good information there. Actually I think the train manufacturing people do pretty well for all that goes into these things. But, I happen to be one of the few that hasn't really had many QC problems and I can't complain. Of the few small problems that I have had, I was able to fix all but one myself. That was my Legacy base which had to go back for repair. I am quite pleased with the offerings available today and the details and quality. I sometimes wish they could be reduced in price (who doesn't, right?), but I now think we are really getting a pretty good value for what we pay, all things considered. Thanks again for explaining in more detail.

 

It is interesting being on both sides of the equation these days as a modeler, operator, collector and looking at the business side.  I am by no means the expert on the business model, hence my title of "consultant" .  However, I think overall there is good selection in the market, just not always at a price point that some are willing to pay.  I find it to be a good value.  I get endless enjoyment out of the trains I have and enjoy being able to help out where I can on the research and design side.  It's a great hobby, always has been and always will be. 

B Smith posted:

"See -- capitalism isn't what it's cracked up to be." Gosh, I don't think I agree with that: If making model trains were entirely controlled by the State, it's hard to believe we'd be better off.

What scares me more is the hobbyists who say, "You need to make X.  You will make lots of money" not having a clue as to what goes into production of a scale model.

The standard response (learned from a good friend on this forum) is, "That's a great idea.  Why don't you make that?  You can use the factory, the staff, and develop whatever tooling you need.  All you have to do is pay for it."  Sadly that usually ends a conversation.  Believe me, there are a few pet projects I'd like to see done but won't happen likely in my lifetime.

I have no complaint about what offerings we have seen in "O" I would like to have the option to paint and decal some engines myself so long as I can get the decals. I have no idea of how that would work on the business end of things or if it would even be feasible to do but the option would be nice. 

Chris Lonero posted:

I have no complaint about what offerings we have seen in "O" I would like to have the option to paint and decal some engines myself so long as I can get the decals. I have no idea of how that would work on the business end of things or if it would even be feasible to do but the option would be nice. 

I agree that more undecorated options would be nice.  It is quite common in HO.  O scale decals are harder to find these days, but not impossible.  If enough people requested that, I am sure the manufacturers would make that an option.  From time to time I see some undecorated models in O that are not high end brass.  Just ordered a 3rd Rail RDC for a friend that I will be decaling for CNJ.

Well if it's safe to produce the PRR, then why hasn't any mfg announced the following PRR locos:

Hc1

Usra 2-10-2

D16sb

E2

E1-camelback 4-4-2 also good for Rdg, & LIRR, etc.

Actually, I'm amazed at the variety of product in O.  Who remembers HO in the 70s and 80s?  If you wanted plastic steam your only option was AHM/Rivarossi.  Not exactly a huge selection.  No Pennsy!  Of course there was brass, but that was out of my price range back then.  The variety of steam in O today across scale and semiscale options is incredible by comparison.  No way the manufacturers can keep up with every one off wish for each of us.  But they seem to be doing a pretty good job in my book

GG1 4877 posted:

What scares me more is the hobbyists who say, "You need to make X.  You will make lots of money" not having a clue as to what goes into production of a scale model.

The standard response (learned from a good friend on this forum) is, "That's a great idea.  Why don't you make that?  You can use the factory, the staff, and develop whatever tooling you need.  All you have to do is pay for it."  Sadly that usually ends a conversation.  Believe me, there are a few pet projects I'd like to see done but won't happen likely in my lifetime.

 

The other thing that scares me is the threads that start with "Who would buy this engine if manufacturer XYZ made it?"  200 people respond they would absolutely buy it.  A year later it's made and goes on blow out or gets cancelled because of lack of interest.

We need a hybrid BTO system.  Manufacturer announces they want to offer a particular engine but do not specify roadnames.  Interested buyers commit money upfront for that engine, but the buyer specifies the roadname they want (or possibly a list of 3 they would accept).  If a roadname get "requested" enough times, then it's made.  If the requests are all over the map, the manufacturer informs all the upfront buyers, collates the requests and offers a narrowed down list of most requested roadnames.  Buyers then have the option to drop out (and get their money back).  If too many drop out, the model doesn't get made and all that's wasted is churn time.  The manufacturers don't get stuck with stock they presumed the market wanted but didn't.   But this allows an unusual roadname to get made if enough people ask for it and are willing commit to it upfront.  

This is much like the system used when a group wants to offer a club car.  The difference is that in the club case, the tooling presumably exists.  In this new system, the manufacturer is offering to create tooling if enough interest is shown and upfront money is committed.

Many people equate selling price with profit when they look at a business.    They think that whatever price they pay goes into the personal income of the business owners.    They never seem to understand all the costs that go into making a product, and getting it packaged and shipped to customers.     They need to go  out and buy a few Numerical Controlled lathes and pay or learn to program them.    Then buy a diecasting machine, or injection molding machine.     Then just look at the packaging that goes into the new projects to keep them from damage.    It has to be a significant portion of the cost.

Supply and Demand are hardly ever equal.   If supply exceeds demand, some businesses decide they are loosing money and close up shop.    If demand exceeds supply, some entrepenauers see it as an opportunity and decide to enter the business.     These are the extremes, in between there are price fluctutions as product inventories do not move, or price increases if they drop away.   

The mfg make a best guess as to what will sell based on the information and feed back they get.    If your favorite model has not bubbled  up yet, it is probably because there are not enough people willing to commit dollars to buy it for lack of interest.

BwanaBob posted:

We need a hybrid BTO system.  Manufacturer announces they want to offer a particular engine but do not specify roadnames.  Interested buyers commit money upfront for that engine, but the buyer specifies the roadname they want (or possibly a list of 3 they would accept).  If a roadname get "requested" enough times, then it's made.  If the requests are all over the map, the manufacturer informs all the upfront buyers, collates the requests and offers a narrowed down list of most requested roadnames.  Buyers then have the option to drop out (and get their money back).  If too many drop out, the model doesn't get made and all that's wasted is churn time.  The manufacturers don't get stuck with stock they presumed the market wanted but didn't.   But this allows an unusual roadname to get made if enough people ask for it and are willing commit to it upfront.  

This is much like the system used when a group wants to offer a club car.  The difference is that in the club case, the tooling presumably exists.  In this new system, the manufacturer is offering to create tooling if enough interest is shown and upfront money is committed.

This is very similar to the way 3rd Rail operates today, without the committed money upfront.  New projects are announced on their website and reservations can be made there.  If after a period of months there are enough orders, the project proceeds.  If not, the project is cancelled.  What's interesting is that some of the locomotives requested on this forum, with assurances that "a ton" would be sold, generated only a small handful of actual reservations once 3rd Rail floated the project.  The NYC H10b 2-8-2 and PRR K5 4-6-2 fall into this category.

I think the upfront money would be key.  This way the manufacturer doesn't get stuck holding the bag because people bailed after "promising" to buy.

If supplies met demands.............

There would be no collectables and the overwhelming vast majority of this forum mercifully would be reduced to a wasteland.

The ranks of modelers would be reduced to those that can finance custom building since that would be the end result required to meet the demands of everyone. 3D printing might address much of that, but that's still evolving. 

BwanaBob posted:

We need a hybrid BTO system.  Manufacturer announces they want to offer a particular engine but do not specify roadnames.  Interested buyers commit money upfront for that engine, but the buyer specifies the roadname they want (or possibly a list of 3 they would accept). 

That wouldn't work very well for steam locomotives.  There's a lot of differences between say, an NYC Mikado and a Northern Pacific Mikado.  

Even within a railroad.  If 3rd Rail had said "Burlington Mikado," which one?  O1, O2, O3, O4?  There's differences between all four classes, particularly between the O4 (which is the only USRA out of the group) and the other three.

With the exception of USRA locomotives, steamers are pretty individualistic to the railroad.

Rusty

If you'd like to get some insight into how Lionel is dealing with the decreasing number of consumers who want three rail high end equipment, and trying to deal with the inevitable decline of  current purchasing patterns, I recommend listening to the Notch 6 podcast Derek has made with Howard Hitchcock. 

The president of Lionel is quite clear that the marketplace for high end products has started to decline seriously, and that they are continuing to meet that demand from the shrinking numbers of serious modelers in three rail by innovating in manufacturing and design processes. 

He also deals frankly with the need to appeal to new generations of consumers who may have different interests and tastes than the existing purchasers.  One approach has been to design Bluetooth as a common control method throughout the line, from Thomas LionChief sets to the future $2,000 Vision line locos.  That way, both the high end Legacy user and the initial set purchasers all can use one method of locomotive control if that is their preference.  Without having to buy anything not in the box if they do not wish to.

Partnering with other "toy" companies such as Mattel, Disney, etc. is another approach to appeal to those under some arbitrary older curmudgeon age.  Most of what he describes will not appeal to the serious modelers here but has the potential to keep Lionel going for another decade or three, when most of us are gone from the marketplace, one way or the other .  By then various methods of providing custom models will have matured.  As it is, a "short run" is now considerably less than the 500 it was some years ago.

There is always a few who are simply outraged when a manufacturer will not drop everything and produce that very special item they are sure everybody wants.  One of our participants routinely threatens to go back to HO if the proper parts are not produced.

It is fair for the rest of us to just be amused.  There is so much stuff now available in 1/4" scale, however many rails, that few of us can afford the bucks or space to purchase all the existing items we want, let alone something obscure.

If the main problem is converting 1/4" to metrics, why not go to a metric number that makes our track gauge 4'8 1/2"?  I promise not to be outraged if they never do that.

bob2 posted:

.... There is so much stuff now available in 1/4" scale, however many rails, that few of us can afford the bucks or space to purchase all the existing items we want, let alone something obscure.

I certainly fall into this category, of not being able to order all I would like from even one single catalog in a year!! Then there are multiple catalogs and multiple manufacturers and that really leaves me behind in the dust. Also after getting back in the hobby in 2011 after a LONG hiatus, I am still overwhelmed by the selection, detail, quality, features, command control, etc. of the items available in O gauge, just incredible. Being in my mid 60s, I won't live long enough to catch up with what is available already. And then, as you also say, there is the space and layout size, cost, etc. to deal with. That leaves me even further behind! I am very happy with what is available and also with what I have and have the space for. Absolutely no complaints from me!