State of the Mart

Ok I will buy your Triplex for 200 before it goes any lower

A keen overall observation Eliot - thanks for sharing and expressing your insight...

Count on Fiorello to make a decent offer.

Thanks, Ben.

 

Tell you what, I'm working on a new brand of beer.

Fiorello Beer.

I wanted to make it a surprise, but now the beer is out of the bag.

 

It was pointed out at a workshop with MTH that the O market here is flat and the European market is where the US market was 15 years ago and they are begging for what we have already seen in those 15 years. Another factor is the vendor issue in foreign countries producing quality products consistently for American companies at a reasonable retail price points, they are drying up! And we are at the bottom of the manufacturing chain. Now I love quilling whistles, moving bells etc and have them, but in my opinion and I know others too those micro switches that create that function are not long term heavy duty durable items and yes will have to be replaced. Now if as a manufacturer,  I have to jump from vendor to vendor in the short term to produce year in year out product, do I risk even worse quality control than I am subject too by adding a greater level of sophistication to my product or stay at a level where I feel I can produce a decent consistent product? If your the company what would you do?

I'll raise you $10 Ben... 

 

I wonder if Lionel is getting back to the play value

and the kid market. Get em hooked young. I just had my first

great grand child and I'm already looking at getting him a Thomas set.

( with remote of course )

As for my stuff, I run it all and the plan is to have all the wheels fall off

a month or so before I die.

The rest the wife can sell at a garage sale by the pound.

That's ok because I have had a lot of great times and made some

great friends along the way.

I could be wrong, I am so many times, but - I think that handwriting has been on the wall for the last couple of years.

 

Greg

What concerns me is that the momentum seems to be accelerating. I do not think we have a "Chicken Little" situation, but I do know I am overwhelmed with inventory and I have been sorting and thinning out for the past six months. The most interesting part of the process is that I do not seem to miss the locos and cars as I thought I would.

 

In addition, when the Munoz Lines is finished, I see the layout moving somewhere else.

 

Scrappy

Scrap Iron

I said essentially the same thing in another thread that simply put, the market is over saturated and price adjustments are inevitable ( I predict in about two years due to lead\lag markets) and more and more blow outs are fairly safe to predict. The same products in too many hands already, or the same product in umpteen variations. The high end \ software gambit has priced out a majority of new blood regardless of how they contribute to the bottom line and they cannot be all that lucrative as all of them are hedging their bets with diversification of their product lines. Yep..rarities and long gone manufacturer's will hold pretty steady..a slight chance of increase..sort of a weather prediction and I think you pretty much nailed it.

Bruce

Good article

Very good analysis....And in the next few months I will be doing the same thing that you are doing Eliot.  I have a several hundred locomotives that...when I purchased them, I was still in the collector mindset...  Now I realize I will never use them so there soon will be a fantastic sale going on for my fellow forum members.  I was fortunate at the time to get all of these locomotives at dealer discount so prices will be even lower than that!!  Time to be part of the future "price correction!!"

 

Alan

"All of these indicators say to me that the hobby is likely to go through some considerable changes in the next five years and I would like to position myself appropriately with fewer locomotives I do not use, both in boxes and on the shelf. I feel the longer I hold them for possible resale, the less I will realize. I know that some of these items no longer hold as much of a fascination and, coupled with the goal of being more realistic about what I want to operate, a paring down is a good idea."

 

Since I run conventional this is fine with me. A lot of bargains to be had at 30-50% MSRP. I already have more engines that I can possibly use and have no intention on upgrading my motive power to the latest and greatest. The electronic packages and quality of MTH or Lionel is substandard IMO,with MTH marketing their latest versions with Europe as a priority.

 

As far as what they produce now,I wish they would make fewer products and make them right with some quality. I will stick with Williams and 3RD Rail for my needs if I want new items,and the secondary used market if I want MTH or Lionel.

 

Not that I have big bucks to spend anyway,but I would feel the same way if I had money to burn.

 

Dale H

Lionel, MTH, Williams, Atlas, Weaver, 3rd Rail:

 

Differences in business models; differences in corporate governance, financing, manufacturing & distribution. Differences in commitments to their retailers and end users.  Differences in diversification & commitments to innovation. It is a mistake to talk of the hardware businesses of O gauge trains as some kind of a homogeneous industry. We do not have access to the above 6's balance sheets. We have no idea of how each's investment bankers have influence (or not) on annual business decisions. I take with a grain of salt now any forward looking press release or catalog by any company in the hobby

 

On the issue of customer demographics, far too much attention has been placed on the post WWll baby boom generation and our waning influence on the hobby. We read often here of differences in hobby interests & leisure time activities of later generations. Less attention here has been devoted to the mal distribution of disposable income on generations following. Then there's the matter of employment impairments & unwillingness to form domiciled families. That is relevant for a hobby that requires physical space for layouts & storage, if only for the holidays.

 

But wait ... is there a developing taste for O gauge trains in China? Did Kader only have the US/Euro market in mind when they purchased Sanda Kan? Unlike in the developed Western world, trains are very important in many developing countries, China included. I frankly would be more impressed if Mike announced a line of Chinese O gauge trains, rather than expanding his European lines.

I submit that the future of O gauge trains, say 10+ yrs out is largely unknowable, despite the fact that I have argued elsewhere that there is reason to believe that we here in the U.S. have entered the second great O gauge hardware contraction. It's clear that the software wars will not save the industry and I fully expect that we will see further mergers & consolidations of the U.S. toy train companies. That is the way things should proceed in free & open discretionary markets.

 

Wow.  Very interesting Scher, and right on about the overall trends.    Two points you bring up look very different from my perspective.

 

First, as I said I agree with you on the market trend of prices, etc.  Also that the industry will go through some pretty significant trends in the next few years.  But I bought my locos to run and display and I never intend to sell them, so if prices drop . . . doesn't matter.  On the other hand, if market demand and prices for new locos drops that does concern me, as it would mean fewer manufacturers and offerings might be available.  Time will tell.

 

Second, I will begin by saying I know I am going to get flamed by many of this forum for this, but . . .

 

I look at everything MTH is doing and really wonder about that company's future business viability.  Yes, everything they are doing is interesting, cool, even fantastic from a modeler railroader standpoint - the kid inside me loves what they are doing.  But the business guy inside me raises an eyebrow or two.  It looks like this company's strategy is go everywhere at once - stay in O, come out with Eeropean (1:43) line, move into HO, etc., all at a time when supplier chains and production problems are plaguing the industry.  Maybe they can pull it off, but I have watched for some time with growing doubt.  I see them trying too much and letting a love with or being seduced by the product itself set their strategy: two signs I've noticed are always there when a business overreaches.  Add to that that they are a small, rather "family" type business in how they are organized, as I understand it, which means they probably have limited managerial bandwidth (every company does in some sense, but I think they more than, say, Lionel or Bachmann) - so for the past year or two I have really wondered about them. 

I don't want to turn this into a Lionel vs. MTh posting, but look at the significant difference.  People get upset with Lionel for many reasons having to do with what they aren't doing (me because they dumped plans for a new 'Street-likes product line) including that they won't do this or that, but I see a rather cold-hearted business savvy running that company, limiting it to a simple but sure-fire strategy -- it should do what it can do well and then do that well (from a business standpoint) and forget the rest. They seem to have only the one new major initiative right now, the remote Thomas and entry-level controller, etc., which I think is brilliant, focused and moving fast in the right direction. I very much want both company's to survive and hoipe they do.  Lionel I have no worries about at all.  MTH, as I said, might be reaching for that bridge too far . . .

I'm no fan of Mike Wolf, but he has wisely expanded his product line into markets that are more robust and larger than O. HO is and always will be THE market to be in if you sell miniature trains. It has the largest percentage of hobbyists, and that's not going to change anytime soon. Build a quality product aimed at that scale, and you will be a success. Lionel is missing out on a huge opportunity by not being a quality player in HO.

 

The European market is another segment Lionel should be active in. MTH has been making excellent strides there, and is quickly becoming one of the top brands. Again, Lionel doesn't even bother. Instead, they cater to the miniscule American Flyer segment.

 

As for second-hand markets, I don't care how much anyone's trains decrease in value. They aren't supposed to be investments. Now O scalers are realizing the same pennies on the dollar return that other hobbyists have always been accustomed to.

I would love to see a study of the "S" market. I'm amazed at the huge selection of fine condition American Flyer trains offered at many shows in PA...yet very few "S" buildings and figures are available. Recently, nice 1950s cars have become available, but not sure about trucks. I have a small "S" layout, and Plasticville is too large next to the cars and Arttista figures.

I'm looking forward to the time when even more people stop focusing on the "things" of the hobby and devote more time to being creative with these "things" in perpetuating the study and practice of railroading in miniature.  Many are doing that now, and I commend them for their reasoned, prudent, and insightful approach.

 

This hobby is what we make it to be, and the responsibility is not on the shoulders of the manufacturers and dealers.  As I've often stated, we are our own worst enemy.  Put another way:  We reap what we sow. 

I like what Hudson J1e and Allan have to say. I imagine I am the type of person who is difficult to figure out. I have not planned it that way, but it seems to be true. As for trains as investment, I have not done that for quite some time. With regard to positioning myself with fewer locomotives and rolling stock, that would be mystifying to most. Here are some of my reasons and, perhaps, they may resonate with some of you.

 

Now that I have come about 80% along the way with the construction of the Munoz Lines, I find that operating the trains is not as satisfying as building scenes and structures that represent, as Allan said, "railroading in miniature." Locomotives that I thought I "had to have," are now less so. I am enchanted with other aspects of railroading that have impacted me in a way I feel is unexpected. I purchased a large collection of On3 trains and I have come to love them. Realizing that the Munoz Lines, as built, is not capable of sustaining another line, let alone narrow gauge, I have come to the conclusion that the Munoz is going to leave our home at some point in the next several years. I want to make it as detailed as possible and then we have a plan for it.

 

I also find myself evolving. I am captivated by music, art, stamp collecting, photography and I do not have time for all of those endeavors. I do know, however, that I must immerse myself 100% into something to have it turn out as well as I expect. That is so with the Munoz Lines. I am throwing myself into it as full capacity to make it everything I can. When I am "finished," as I indicated, the railroad is going to travel somewhere.

 

As an economist I can tell you that one who plans to sell locomotives and rolling stock must think carefully about timing. Now that I have decided to do a paring down, I know it is better done now than in six months or later. So far, I have recouped almost all of what I have spent for the trains. In today's market, that is pretty darn good. I will take a severe hit on some locomotives and do well on others.

 

Where is all of this going? I know that as I evolve, my interests will refocus. Trains will always be as much a part of me as my "head" is. It's just that my head is never in the same place from day to day. Ask me again in a year or two. I may tell you that fellow was a little bit crazy. I like that though.

"It seems to me Lionel is cutting back on some key features to keep their premium locomotives at a certain price point."

 

Or maybe the O gauge premium loco market simply is not large enough.  There's a very good reason MTH got into HO.

 

Pete

O gauge trains in the U.S. has always been a niche market.

 

With manufacturers chasing a limited amount of hobby dollars in the U.S., Wolf's attempt to grow his company outside the U.S. makes sense, especially given that many Europeans have a much more personal interaction with real trains.

 

There are also many other areas in the world with very large emerging middle classes.  Now if only they could sell trains (and make a profit) in Russia, Brazil, India, and China - talk about growing the market!

 

Jim

 

 

 

 

Good to hear from other readers of Model Railroad News. With its all ecompassing approach to the hobby, it's an excellent publication.

Bob

I disagree, I think Lionel is wise to "keep everything in one basket". I would guess Lionel sells far more units here in the States than MTH does in Europe and the States combined.

 

By keeping the US as its sole "bread and butter" of primarily O-guage trains with a "splash" of S has allowed them to establish the best customer service and parts in the hobby, just a point and click away.

 

The "thinner" they spread themselves the harder it is to find "Mike Reagan's" across the world, not to mention trying H.O. again or any other small scale is likely to erupt it far more QC issues that can't be rectified at all.

 

H.O./N already has Athearn and Atlas who have been making quality smaller scale trains for decades. Heck, it was their slow speed operation characteristics that kept me out of O years ago.

 

Lionel is sticking to what they do best.

 

 

On a side note, as far as the whole "saturation" thing goes, while there are a number of folks with a wall of a hundred locos or more I'm sure, there are many of us who do not.

 

Some of us have only a handful of locomotives or so, even still we are waiting for the next offering that fits the bill even while not having and endless budget. A lurchy, 2 chuff, poor smoker might not cut it so we hope for/ anticipate a legacy rerelease.

In line with what Allan said, for many, many people in 3-rail O gauge, the hobby is not centered around acquiring expensive motive power and rolling stock, and then wondering about their future value. It may seem sometimes that this is what the hobby is all about by reading the forum, but that is just another case of the forum not speaking for the majority, despite what some here think.

 

There is much discussion here about these expensive products, but there are many hobbyists whose focus is more on creative modeling and making do within a tight budget rather than the acquisition of the newest and latest.

 

Many here would be surprised at the number of people who are perfectly happy with tubular track, inexpensive (less than $150) conventional motive power (much of it purchased on the used market), relatively small layouts, and having lots of fun building neat scenes with common materials without throwing loads of money at their layout.

 

Of course, it's the big spenders that drive the new product lines, but that isn't the only way to enjoy the hobby. Those who find themselves dissatisfied or troubled with market trends might give this other aspect of the hobby a try. It's a lot of fun. 

 

Jim

Everyone is different.  I do not want a lot of engines, the newest, best is not what I look for.  I have 5 engines and that suits me well. (unless someone comes out with a scale Nippon CSS & SB set).  I purchased my railroad items with the idea of having fun with my family and not worrying how much they will be worth.  The fastest way to make a small fortune in model railroading is to start out with a large one.  

 

Focusing on one particular model, perhaps the reason the EM-1 was "blown out" recently was due to the fact it is an unmistakably B&O locomotive and many hobbyists to whom the higher end, scale detailed models are aimed don't find it an acceptable stand in for locomotives of other roads with a similar wheel arrangement. Not being stated as fact...just a theory.

 

Bob   

Beanie Baby Trains?  A big rush of investment into the latest fad hobby, and when the

economy goes south taking disposable income, the market deflates?  Some of these

statements about "product" I heard before, when K-Line was blowing out Heavyweights.  What I complained about then and now is the quantity and repetition

of the same few prototypes, and investment targeted toward innovation aimed at

planned obsolescence and defeating compatibility, rather than a real variety of choices, which HO once long seemed to enjoy.

Latest gizmo is more important than utilitarian durability and reliability of the item, and none of those compatible with competitors' offerings? Those marketing philosophies, to me, make for a smaller, not larger, market.  HO, in its era of infamous "NMRA" couplers, at least provided for compatibility across all brands.

True, so does the knuckle coupler, but other policies seem to discourage that.

A boom through the 1950's when kids related to trains, vs. the latest, preplanned

obsolescent electronic toy, and then a boom into the nineties when those now

grown kids set out, as I, to get what I wanted then.  But, whose kids today, as I,

hung out at a railroad station?  Whose parents and grandparents today work for railroads?  I watched stations vanish, catching a few on film, but not nearly enough, and worse, did not preserve that one I hung out at...watched branch lines disappear, that I was not out documenting.  From where is the next boom coming? To whom are trains relevant in the present time?

Basic human nature is to shop for a good deal. Its tough not to go to a train show and walk with a deal that you found. Thus I have the bad habit of acquiring items I don't need. Most of us are patient and resourceful, so running out and paying top dollar for a new release is a emotional response,  coupled with" well Bob got one and they are going to sell out fast, so I better get mine now"!
Manufacturers like the later, keep up demand, by limiting the supply. Keep the collectabilty high.
Recently however, this has changed with many a re-issue. I am enjoying a buyers market. I'm an operator,  not a collector so I am enjoying they hobby at a very affordable time. So I will keep buying while the market is saturated.

I enjoy reading these interesting comments. On one side you have essentially a question of where O gauge is trending which effects how healthy our segment of the hobby is and I think the analysis was a reasonable and well thought out essay. 

On the other side, the reaction falls into the area of one views how these trends will impact us  personally whether it's worth of investment, cost\value, variety of product, etc, and while I agree with Allan in terms of focusing more on creative play value, however ...we have moved far beyond the origins of scale O in terms of less scratch building and more off the shelf ready to run product, and so unless we have what we want, these trends do have a place in the affordability of the hobby, for if we cannot afford the product, there is not anything to be creative with as few have the skills, the time, or equipment to build a layout piece by piece, engine by engine, tie by tie.

I think that's at the heart of this sort of reaction to the essay. We always say, a layout is never finished, we are prone to impulse purchases, the "I gotta have it"

moment. Before the economic collapse, we could discount some of our own common sense as the surge of new product after a drought had us drinking a whole cooler full of water.

I often wondered that many of us as kids could not indulge our full interest in the hobby and so when we could afford this indulgence as adults, we sort of went hog wild to where other scales in the hobby sat up and took notice. That big bang is over. I sense there is a nagging feeling that for many, that we might return to either the bad old days when Lionel, AF and Marx literally collapsed as enterprises or back to the real old days when we looked wistfully at new products in a permanent state of being denied them.

Whether that happens is almost beside the point...You can only sell so many of the same products over and over again. In the real world, those who can afford the limited production of high end product does not a large industry make with more choices. You cannot make product where if the product works its a matter of luck. There are only so many of us in O, in a saturated market with no standards whatsoever. While I respect Allan's opinion, I do not think we are our own enemy. We could chose not to buy product and what is the net result? Another retraction of O?

I think most of us realize we are stuck and a lot of us find that position to be not so swell if we prefer O. If you want to see where O is, buy HO based Model Railroader, look at the ads. Do you see more variety of product, more choices? Compare this to O. Its just the way it is. What I see is comparable to a sales pitch for an automobile.."Heres our new improved 1955 automobile. "

The real innovations from the play it safe, very conservative O industry, should be better design leading to less production costs, modular features, new materials, industry based standards, more user friendly software..if you put this into a new prototype rather than those from overdone all the way back to WW2..the industry would be healthier.

Black or white:

 

sales(ongoing, new product purchases) = O gauge suppliers

 

insufficient sales = loss of production...

 

Recently, I heard the term "saturation" used, by a major O gauge retailer, in a telephone conversation. The store owner said the people that once purchased the majority of the new products were now saturated with O gauge products; that, they weren't buying up enough of the new merchandise, anymore; that sales were hard to come by, nowadays. He was justifiably, concerned.

 

Not enough new "paying" customers entering into the hobby, to offset the diminishing, aging, regular "paying" customer base.

 

One day, if and when I'm done with them, I might just dig a big trench; and dump them in...

 

BTW, I lost my spark(my initial infatuation/enthusiasm with/for O gauge trains) a few years, ago. For some naive reason, I thought I was going to be passionately into O, for many years to come; apparently, that's not the case.

 

I still enjoy my stuff, but not to the extent I once did. For a few years, I was very active, re: new purchases; but, not anymore.

 

Eliot,

 

I never thought of you as being financially strapped... that your O gauge expenses significantly mattered...

 

BTW, our heads, especially, for us guys/girls middle aged plus, probably, will see some major changes; including, in our interests...

 

At times, it can be an unsettling and confusing time; as we move through...

 

 

Rick

 

Why should we worry about this stuff   Just go run your trains and enjoy them 

I think too many of you guys are over thinking this. Yes the market is over saturated with too many trains, yes there have been blowouts which BTW I have taken advantage of.

 

The best thing for us to do is enjoy the trains you have and if you see a engine or cars that catches your eye, buy it. I really don't worry about the train market, I have enough to worry about in my real life and I will not let the problems in the train industry creep into my fun.

 

Weather prices go up or down will not stop me from having fun. I have more then enough  trains to keep things going for a long time. I will trim some in the coming days, months to finance another must have. But the bottom line is for me to have fun.  

Good advice Ben.

Evolving became a key - unexpected and unplanned - aspect of this hobby for me, too. In retrospect, acquiring the beautiful locomotives and the rolling stock to complete them as trains was probably a personally satisfying adventure, and not much more.

 

However, no visitor, friend or relative, in or outside of the hobby, to my train collection which was "configured" atop my first very rudimentary layout, was as interested or as impressed with the trains as I was.

 

In contrast, once I focused on sharing those trains with folks via a more interesting layout, giving the trains somewhere to be, somewhere to go, and somewhere from which to return, folks paid attention more and derived their own personal satisfaction from experiencing the trains with me. The scenery - whole environments - gave them something to which they could relate from their own experiences. Seeing a favorite vehicle, a familiar vista, figures interacting in a vignette that narrated a memory, or signs and details that evoked memories of cherished times, places, and things, gave guests to our trainroom much more to enjoy than my personal treasure of trains. I still loved my trains, but sharing personal experiences through them with others became the new hobby for me.

 

This personal hobby changed (esp. when my wife got involved and interested)
from smiles to myself quietly in my basement, cradling a locomotive, alone, to frequent and numerous parties of people coming into our home for a playtime of personal sharing.

 

It all evolved, for me, and there has been no going backward. The trains themselves are, indeed, not enough. I need others to play with them with me. 

FrankM.

This next comment is not meant as an insult:

 

Human beings vary in all aspects; including, intellectual capacity and related fulfillment. Some of us need way more than others, to find fulfillment; go run some trains just doesn't cut it, for some of us.

 

 

Rick

Its like you say potato I say patato!  I enjoy trains too much to worry about little things.  If all O gauge manufacturers go out of business there is HO.  If all HO manufacturers go out of business there is N etc etc etc   If everybody goes out of business and all my trains blow up I think I might find some working ones on Ebay 

YES, YES, YES !!!   Very well stated, and that speaks for me !

Frank has pretty well articulated the best comment here - SHARING our trains with others...

Do you beong to a local club?

No?  Well then, consider STARTING one to share this hobby with the people in your locale. Nursing homes are terrific places to start. Even if your layout isn't 'perferct' these folks can't always see really well, nor can they hear well, but many still have MEMORIES! Even the Alzheimer patients often retain vivid memories from their earlier days and can relate to trains. Real ones as well as toy trains...

We had a lady at the first place we setup point out a Santa Fe F3 to my wife and said "See that one? That's the 'Super Chief' that I rode from Kansas City when I was very young".  My wife was amazed and impressed.

 

Seriously - pick up  6 - 8 'picnic' tables from Lowes/Home Depot and screw down some Fastrack and you can be running trains this week. 2 or 3 guys can do this easily and reach out to some very appreciative seniors.

Ben,

 

I don't see this thread's opening post as being worry themed; I see it as a man talking out loud; which can be kind-of therapeutic, for the person expressing themselves.

 

I don't think too many people's world would come to an end, if O gauge went under.

 

 

BTW, I think the social aspect re: your particular involvement with this hobby, must be very rewarding and enjoyable; probably, the best part of the hobby for you. Way more than just running trains...

 

 

Rick

 

Your right Rick  The social part of the hobby is very rewarding but that doesn't mean I will sell my trains because I might have less friends next year.  I just enjoy this stuff too much to worry or think out loud

I'm personally satisfied; don't need any more... Probably, the same goes for quite a few people, in this hobby.

 

I do feel bad for the good-guy, longtime, retailers, though, like the store owner I mentioned; he's got legitimate concerns.

 

 

Rick