Model Power Is Closing Its Doors

My brothers and I used to go to their store in Farmingdale. We always found something we could use, especially among the parts and transformers. Sad to say goodbye to a childhood friend.

All the best,

Miketg

 This is another sad day for model railroading. Model Power products got me started in HO and N. I still have several N scale locos that were great runners even though they were inexpensive. I had several of their structures on my HO & N layouts,too. I wish them the best.

I recently purchased some of their buildings at a swap meet[ one of those under the table boxes. It sure looks like MTH did copy them [on looks-but better construction] with their railking buildings.

http://www.modelpower.com/SearchResults.asp?Cat=174

Yup, Closed effective immediately. Got this email from a supplier,

"Dear Model Power Customers,

After nearly 50 years serving the hobby industry, our 3rd generation family business will closing effective immediately.

In 2007, our banks began an aggressive deleveraging process. They no longer approved of a profitable and paying client such as ours, which had been reliant on inventory. This is why one of the industry's most extensive lines, had begun to see much of its products unavailable on the market. Now it will no longer be seen at all.

During these past 7 years, we had made changes to the business in order to accommodate and adjust to the changing nature of the business relationship with our lenders. We had offered multiple solutions to our lenders in order to "fix" our situation, all were rejected, came with different restrictions, or offered to little too late. In all our efforts, no arrangements by our lenders would allow for Model Power to arrive at a position in which we could get back to fill our customer needs.

We would like to take the time to thank all of those whom we have worked with the past 50 years. To our customers and competitors within the industry, we thank you.

Sincerely,
The Model Power Family"

Sad to see, aside from a model train company, another business gone forever. And I'm afraid we will see much more of this over the next few years.

I just received my first figures from Model Power this week (O scale Winter Action Figures). I had my eye on a couple of other sets from them, this is too bad.

So sad.  I have dealt with the Tagers for years, all 3 generations.   They are were such nice,  accommodating people, who bent over backwards to help with anything.  I will miss them. 

I've got some of their N stuff, I liked it.  So sad that they got killed due to lenders wanting to change their working business model.  More evidence that if it ain't broke, don't fix it.

Shame.

I think I still have some Model Power "O" gauge fire trucks and carded light bulbs from years ago.

Such a shame, read the last two lines again. I'm sure Allan Miller can remember when they were just starting in the industry. It was a happy era when HO was king. I was the odd one trying to keep my TT Scale operating. I enjoyed my Std Gauge on top of my layout. My TT had the run under the table.

I wish them the best. Their efforts and hard work made many happy in our "make believe worlds".

While I had switched to O.....a few years back my LHS got a bunch of Model Power HO scale reefers in PFE paint. They had Kadee like couplers and nice metal wheels. It looks like the reefers were old Marx molds that had been upgraded some. They were $4 each so I had to buy a few....they were pretty nice.

And the Mantua line had some older design locos but still solid runners...I bought a 2-6-6-2 with tender at Hobby Lobby when they were dumping most trains.....paid around $50 for it.

Sad to see them go......someone will pick up much of the line...I hope.

Very sad to hear, I have several N scale models made by them, great runners but inexpensive. If there's anything I can say that hinted this, I sorta felt they didn't have the same visibility as Bachmann, Atlas, or Athearn, but that's just me, maybe that's all. Then again, they're saying this had more to do with their lenders, if that's really the case, it's more infuriating, on the other hand, not surprising these days. Unfortunately, I don't see any company taking over their molds, but maybe I will be proved wrong.

Have alot of their people on my layout

Sad

There line of "Metaltrains" had to be the most solid thing I ever saw in HO.

The quality of each piece was/is amazing and the locos run like tops !!!

Very Sad !

But something seems odd here.  Why have we not seen this with other companies?  Lionel when under court protection?  Sounds as if there is more to this than what is being presented.  Maybe a good thing we do not know.

Dominic,

The way I understand the second paragraph, they were put (forced) out of business by their bank. This practice has caused the failure of a great many business' which include most of our LHS. It takes a lot of capital to buy(or make) and maintain an inventory. The American economy isn't out of the woods yet. Many business who depended on a line of credit to function are closing, still. It's a sad thing that  Model Power fell victim to the same monster that's still eating our LHS. Our LHS were one of their largest customers, no doubt. Of course this IMHO

More than likely it's a combo of things. I'll bet part of it is a rising cost of having things manufactured in China. With the manufacture shake up that has been going on in China, changes in the method of finance and the cost of product it's a perfect storm that the owners of Model Power could not work out or just tired of fighting a constant battle. MP was among the smaller players too....unable to weather the storm.

They did make some great product over the years. Their 1980's era HO scale Sharks were state of the art at the time. 

Sad news.  It seems Model Power helped get and keep many in various scales of the model railroad hobby.  This is another bad sign for the model railroad hobby.  These continued losses of a local hobby shop retailer here and supplier/mfr there, combined with the hobby's aging demographic is a troubling and demoralizing trend of a once powerful hobby and business.  There is no positive takeaway from the Model Power news or this continuing trend.  Consider for a moment how much the model train hobby (O gauge specifically) has changed in the last 5/10/20/30 years.

The rule of thumb for us hobbyists might be to make the most of the hobby and enjoy what it has to offer us now.

Speaking in general terms, because we do not have the all the details, but it has been more prevalent for banks or financial firms who would lend against a company's inventory to no longer offer this collateral based finance option because of the typically higher risk to the bank.  Now this change in lending practice by the bank may be not as a result of this specific borrower's ability to pay, but due rather to the performance of the bank's overall existing loan portfolio.  In other words, a lender who was has a number of bad apple borrowers will also negatively impact those good apple (paying) customers.  Furthermore, as AMCDave points out, the cost to manufacture in China has grown significantly in the past few years.  Even though there still is "profit" to be made, sometimes that amount of profit is not enough for some lenders.

If some of the bank's other customer loans are not performing well, then the bank will likely (either self imposed or by bank regulators) reduce its exposure and overall risk by changing their lending practices to be more conservative (i.e. tight).  Banks will "cut off" a longtime customer by and not limited to: calling for full payment of the customer's loans, upon end of the scheduled loan not renewing the borrower's line of credit, greatly increasing the pricing to the borrower or making the borrower's loan covenants (performance ratios) unattainable - in effect forcing the borrower to find financing elsewhere to pay off the bank or liquidate the business.

Judging by the tone of the letter, I agree.

when I was in HO, 80% of my buildings were model power. we lost another good one.

In this day and age.....you've got to have substantial COLLATERAL to qualify for loans.  The old saying that banks only loan money to people who don't need it has never been truer.

The real shame is that after 50 years in business....Model Power hasn't piled RETAINED EARNINGS back into its Balance Sheet to provide the kind of COLLATERAL banks need when financial strain hits the market place.

I'm afraid to say "don't worry....things will get worse before they get better."  That's what $17 Trillion in debt will do for you.

That will be a loss. They had a good product and were reasonably priced. Its sad to see another manufacture close. The family were good people also. I am sure you will continue to see consolidation in the train market.. The consumer is still struggling..

I have quite a few of their products on the layout. All were reasonably priced. That's really too bad that they won't be around anymore.

My just turned 12 yr old son will be very disappointed when he gets home from school.   He is an avid collector of their Postage Stamp planes series with over 60 models in his collection proudly displayed in a 6' tall glass display case in our family room.  

I guess it's time for another life lesson to be learned.

--Greg

Well, there IS a takeaway lesson here; you can't keep cranking out the same entry-level products over generations while not paying attention to changes within the hobby, and keep expecting nothing to change.

Sorry to hear of any business closing but the impact of them closing will have little effect on the O gauge hobby. There is nothing that they offered that you couldn't buy elsewhere.

If the banks would not give them the money to continue to operate, it was because they could not provide enough proof of income to be able to service the debt. Value of collateral has very little to do with lending decisions these days - ability to service the debt is the primary determining factor. It is not unlikely they needed to borrow more than their debt service budget could justify. 

To be quite honest and blunt I won't miss them much.  I didn't buy many of their products - none of them were bad or anything like that, but I nearly always found someone selling O gauge figures, fencing that were higher quality as to detail, etc., for little if any more money.  In particular Model Power's figures tended to be a bit less detailed and well-rendered for close ups - one step closer to toy than model -  than Bachmann's or MTH's or Woodland Scenics or particularly Preisser's, and for the most part their other products were the same.  I have very few of their things on my layout, probably only some of the fences they made.

As to the reasons they went under, don't blame the banks.  Perhaps none of us like the rules the banks apply (or do) but all businesses are treated the same.  Model Power probably just got in over their head - it happens.  

Now if Woodland Scenics goes under, I will be sorely depressed, but Model Power - I'm sorry for them, I know it hurts -  but it won't affect my world much.

Another example of how great our economy is and how our banks manipulate and discard long and trusted clients.  It is a shame indeed.  I have quite a few N scale Alaska items made by Model Power. 

Steve, Lady and Tex

One line of products which Model Power supplied for the O gauge market was replacement light bulbs.  Screw base and bayonet base, clear and colored, and, of course, different voltages, which are used in various O gauge trains and accessories.

Stuart

OUCH! That hurt, Lee!

Can't you have a little sympathy? When a multigenerational business goes out it hurts everybody! Think of the kids that will look sadly under the tree, sure it may be replaced but think of the orders and back orders and think of the friendly customer service that is lost. All for the want of money.... Craftmanship AND service cannot be exported....

What can you say in  such circumstances???   More settling for less than for us, they had a quality product! So sad to see them go!

Goodbye Model Power you were great!!!! Thanks for staying and giving great service!

Mike Maurice

Mike Maurice,

 Please, might I add.............HERE! HERE!  You Betcha 100%

Everybody has a right to their opinion. And I have to agree with Lee on this one.

Of course I'm mostly familiar with their HO stuff, it was bottom of the barrel. Being cheap isn't always good.

Though I do hate to see them gone, for whatever reason.

I missed this thread because I had left for the York area the day it was posted.

Yes, I definitely do remember Model Power, and I certainly purchased a good number of their products over the years, especially in the smaller scales.

Very sorry to see them go.  We live in difficult times for smaller enterprises in this hobby and beyond, but it sure is sad to see a familiar name disappear so abruptly.

I wish all who were associated with the firm the very best.

When I was in HO, Model Power had some adequate modeling items, however I notice that there product became stagnant. Its hard to survive in the industry without a cutting edge product. It sounds like they maybe had plans to do something new but could not get a loan to refinance their existing debt.

Well so be it. When a door closes... another one opens up. Maybe they will invest in another part of the business? Only will time will tell.

However, if you are the Federal or <fill in your state> govt...debt and the ability to service said debt is not a concern.  BTW the way....good luck to those affected...this is a bad situation for all involved.

Picking up Mantua wasn't a good move, partly because it probably didn't produce a large enough profit, but also because it perpetuated the idea that Model Power was behind the curve in cutting edge product.

Jeff C