Update on 3rd Rail SD40-2

I just confirmed my order for a Chessie SD40-2. Can't wait. I bought it because the Chessie System ran by the house I grew up in, but it's no slouch in the colors department either.

I'm so excited that these have finally made it this far through the process.  It has been a long wait for all of us, but it is looking to be a wonderful project.  I just changed up my order recently because all of the fun variations that are available on this 1st run.  Going for the full North American Consist

As great as the paint schemes look I was able to hold myself to only one. But then I realized I just had to add that awesome CN unit as well.

I believe the confirmation note firms up reservation numbers needed to order supplies and assures Scott won’t be building models for buyers that no longer want the model.  
This model has taken a Long Time to reach this point and I’m getting excited to Finally see it launch !!!!!!  I expect reservations to Close Very Soon !!! Last Chance to Step     up !!!!  
Cheers 😉

@seank941 posted:

As great as the paint schemes look I was able to hold myself to only one. But then I realized I just had to add that awesome CN unit as well.

Same!

Jonathan,

Would it be possible for these units to be produced without the 9V batteries inside?

@GG1 4877 posted:

I'm so excited that these have finally made it this far through the process.  It has been a long wait for all of us, but it is looking to be a wonderful project.  I just changed up my order recently because all of the fun variations that are available on this 1st run.  Going for the full North American Consist

Jonathan,    
If you have ordered a Canadian road and Ferromex, what did you order to connect them ?  Best bet is MP that went from Laredo to St. Louis and eventually Chicago. Just a Q? For inquiring minds. 🫢

Cheers 😉

Unfortunately for me current limits on train storage precludes me from getting a pair of Conrail units.  I guess I'll just have to live vicariously through all of you.

Thanks for the reminder. I confirmed my order.

Just out of curiosity, what is the separately listed "Container Surcharge"? I haven't bought anything from Sunset models in a few years and I am unfamiliar with it.

Naveen Rajan

The surcharge is the current cost of doing business.  It was either the surcharge or raise the price to cover their costs to get these units across the ocean. Do a quick search online to see what the cost of a container is now vs two years ago.

Paul

Hi folks,

I've emailed everyone with reservations twice now. If you haven't received your emails, and your a customer for the SD40-2, please go to this link to confirm your reservations. We are closing reservations July 15th. If your on the fence, know you will miss out if you don't enter a reservation before the 15th.

To Confirm an Existing Reservation for SD40-2:

SD40-2 Reservation Confirmation

To enter a new reservation for SD40-2s:

3rd Rail Reservation Page

Anyone that hasn't confirmed, we will call them for 1 last chance to get confirmed.

Happy 4th of July

Regards,

Scott Mann

Regarding the Container Surcharge: The cost of shipping is not only the container cost. Also included in these costs are Trucking Fees, from the factory, to the Port. Trucking fees from Oakland to us. Insurance 110% on-board. Our door to door costs are still double pre-COVID. So we have to pass this on. We're sorry about the added costs. We do everything we can to avoid raising prices, but the fact remains that inflation here, translates to inflation everywhere, materials, electronics, paint, plastic, metal, vendors prices, the list goes on. We're sorry our costs are higher than other manufactures, but we have new tooling, new designs, new paint schemes and very accurate reviews of each road name model type, paint colors. The SD40-2 has 25 different paint schemes, 3 truck designs, 3 body styles with 20 or so different road specific configurations of details, with twice as much tooling costs as previous hood units, such as the SD79 and GP79s.

We believe you are getting your money's worth.

As an avid R/C plane modeler, I very much appreciate the detail and accuracy of the current market place for R/C Planes, thus I understand what it takes to keep customers interested. Make it right and they will sell.

Happy 4th of July,

Onward....

I’ve never run a business but am fascinated by what it takes to build a company and keep it healthy. Starting and growing a company in the O gauge train world seems particularly challenging. From time to time, I am reminded of how tiny the O gauge railroading market is compared to the consumer business world in general. Scott’s Sunset/3^rd Rail Models serves O gauge enthusiasts towards the scale model end of the O gauge spectrum. This does not seem like a market that someone graduating from business school would naturally gravitate towards. From my layman’s perspective I don’t see opportunities for achieving economies of scale from huge production volumes and investing in automation. I don’t see where there is a big profit source in one part of the business that can make up for losses in another part of the business. This seems like a business for people with a passion for O scale modelling and serving customers rather people who want to become billionaires. I appreciate it when Scott shares insights into market forces and manufacturing that can drive costs for building quality, authentic scale models in volumes that are tiny compared to industrial production standards.

I love 3rd Rail locomotives, but i wish they would offer non powered too.

@harley rider posted:

I love 3rd Rail locomotives, but i wish they would offer non powered too.

Early on, I think Scott was doing non-powered B units with some of the cab unit offerings. Not sure why they died off but I bet a big part is there really isn’t enough cost savings on manufacturing dummies vs. powered units to justify making them. Most hobbyists think a dummy should be half the price of a powered unit. In the case of these 3rd rail models, the only parts being eliminated would be motors, gearboxes, and electronics. This probably only takes out about $100 of real cost. From the hobbyist standpoint, would you buy a powered unit at $750 and a dummy at $600-650 or just pay a little more and buy 2 powered? I think most would choose the latter.

With such a low current draw, I have run 5 powered 3rd Rail diesels with over 15 passenger cars and never gone above 8 amps on the transformer.  I personally like having the extra horsepower as a non-powered unit is just dead weight.  It is especially nice to have three powered units for those 50 plus car freight trains on a bit of a grade to put less wear on the locomotives.

Non-powered units were once offered in some models, but the vast majority of interest is in powered units.  As mentioned above the cost saving isn't very significant as there aren't a lot of parts that come out for a non-powered unit.

I'm extremely excited to see the SD40-2s finally get that much closer to the finish line!

I’d really love to get some of the tunnel motors but the timing on this project is bad for me. My geeps were my big expenditure for the year and the SD7/9 run is a much bigger priority for my locomotive fleet than SD40’s. Can’t swing two more diesels at the end of this year and then 3 SD7/9’s next year.
I’m hoping there will be another run of these at some point down the road when my finances will allow it.

@GG1 4877 posted:

With such a low current draw, I have run 5 powered 3rd Rail diesels with over 15 passenger cars and never gone above 8 amps on the transformer.  I personally like having the extra horsepower as a non-powered unit is just dead weight.  It is especially nice to have three powered units for those 50 plus car freight trains on a bit of a grade to put less wear on the locomotives.

Non-powered units were once offered in some models, but the vast majority of interest is in powered units.  As mentioned above the cost saving isn't very significant as there aren't a lot of parts that come out for a non-powered unit.

I'm extremely excited to see the SD40-2s finally get that much closer to the finish line!

Any chance a future modern diesel -9 or  ES 44 series could be offered in a 2 rail version without the electronics like the Atlas Trainman -8s which I have several, I would not expect them to be that much lower priced , the convenience of buying them for operators of O scale 2 rail Diesels would be worth it. JMO

Question about the 3rd Rail 2-rail SD40-2s with ESU Loksound 5 L decoders:  Will the decoders come loaded with an EMD 16-645E3 sound file? 

Scott confirmed that the SD40-2s will be preprogrammed with a sound file and be ready to run.  I'm really looking forward to these.

@hibar posted:

Any chance a future modern diesel -9 or  ES 44 series could be offered in a 2 rail version without the electronics like the Atlas Trainman -8s which I have several, I would not expect them to be that much lower priced , the convenience of buying them for operators of O scale 2 rail Diesels would be worth it. JMO

The Dash 9s were so far below the minimum they were cancelled.  The people who remembered the original Sunset Dash 9s said there as too bad a taste left in their mouth to reserve these.  That's bizarre, it was over 20 years ago and todays diesels are nothing like those of that time frame.  

But, if you are interested in AC4400s, ES44s, or ET44s let Scott know.  I have already expressed my interest.  Electronics will come but you can remove them and sell them.  The reduction in cost would not change the price because of all the other SKU details adding to the cost.

And, OBTW, I reserved 12 various SD40-2s mostly undecorated because I want the chassis for multiple projects.  I will have two green/red Ferromex one with the HTC trucks and one with the Flexicoil trucks (chassis swap from Conrail variant) and one undecorated will be painted in the gray with red stripe Ferromex (I already have the decals for that).  I have seen former Conrail units in NS and CSX and others.  There were just too many variations, the builder said no!  And that is only the beginning.  Been waiting a long time for these.  An MTH FP45 body over a Conrail SD40-2 might be an interesting project. And an SDP40F over an SD40-2 chassis kit bash.  

P.S.  Yes the older brass Dash 9s were really, really bad. Even Scott agrees with that.

I got some time this morning to answer Norman R's questions: How Dad Started this Business? And how do I know how to run it?

When I was about 11, my Dad came home, all stressed out. It was 1974 and he just lost his job at Fairchild Electronics in Sunnyvale, CA, as a Sales Manager. They figured, 2-3 young guys, making much less could fill his position and save them money.

Dad looked down at me, he was 6'4" and said quietly in his deep voice, "Scotty, now your going to know what it's like to be poor." That was a tough thing to hear when your 11. But I think he just wanted me to quietly go away and not run around like the wild, noisy kid I was. And I responded, "I have $40 in my piggy bank, you can have it if it helps." He smiled and said, "That's OK, we'll figure something out."

BTW: I got an allowance of $1 / week, + I got $1 a day for picking up the dog poop on the lawn in the back yard. I also washed cars for $.25 and mowed lawns for $.25. Anything I could do to get the COX Dragster Cars and Control Line Planes I wanted. That's how I saved the $40. One time when I was even younger, I found my mom's Jam Jars and decided I would put some rocks and ants in them and sell them to the neighbors for $1 each. After selling a few, Mom got a knock on the door from one of the neighbors, saying how cute it was, but that she probably wanted her Jam Jars back, since they cost more than $1 at the time. How would I have  known?

Over the next few months Mom and Dad were busy checking out small businesses to start and he was looking for work as well. One small business venture that I remember was "Rug Crafters", where you sell the pattern printed on a base weave and yarn, glue, and that hand loom contraption, where customers can make their own designer rugs. They actually started that business, but it didn't seem to go anywhere fast. Behind the scenes, Dad's friend Dick Truesdale, who ran Westside Models in Abtos, near Santa Cruz was offering franchises to others to import HO Brass models. My Dad, Dan McKey (Key Imports) and the Tony Wenzel from Oriental Limited stepped up and bought into the franchises. Basically you were given the dealer list, the builder's name and contact info, the casting source (Dave Brown in Sacramento) and later, Precision Scale also in CA at the time) as the builder in Japan Kumata (KMT) didn't make their own castings yet. In return, you promise to pay Westside Models 3% of total sales.

Dad's first project was the HO GN O1, unpainted. He cultivated 1000 reservations with magazine ads, trade shows and endless phone calls, and he produced these 1000 models costing $25 each, selling to the dealers for $79.95. These were ready-to-run models no paint, no lights, just a motor, gearbox and detailed castings, brass boiler, tender chassis and steel wheels with coined brass centers. He made more money with that first project than 2 years at Fairchild. Sunset Models was Born.

Dad did land a job in the next year. He took it. Then he had to go to Japan to work on the next project with Kumata.  As I remember the story, Dad offered to do some business for his new Employer while in Japan, and they said, if you go to Japan, don't come back here. So he walked away from the Job to focus on Sunset Models.

I still remember the TELEX machine in the garage. You type your message and it pokes holes in a yellow paper ribbon about 2/3" wide. Then you dial up the phone number of the TELEX machine at the builder's office in Japan, a modem connects you, then you feed the tape in with holes punched and press SEND. The builder's TELEX Machine would then type the letter you sent. That was 90% of the communication until the Fax Machines became affordable and compatible with what the Builder had.

I remember my Mom and Dad, boxing up all the orders. They had to hand write all the UPS shipping labels. My Grandmother kept the books. The UPS driver would back up to our Garage and I would help throw the little boxes to him, or hand them to him, not sure which. I was a young teen at the time.

Later Dad was able to buy a Dentist style office building in Campbell CA, where he could rent out many of the small offices and basically occupied the garage and upstairs office for Sunset models for free. Both my parents were good with money and figuring out how to get by with what they had. They shared with me and my Brother and Sister all their money making and saving techniques. These lessons were invaluable for all of us later in life.

I never really saw myself running this business, but I did have the desire to start my own. I toyed with a model train exchange mailer. Dad would find some left overs at the builders in Korea and I sold them to buy a Car once, a blue Ford Torus. So I was familiar with the basic process. I even did my own taxes for Golden Gate Depot, which I still run today as a sole proprietorship.

I went to College to study Physics and after graduating got a great job at Lockheed's Skunk Works. It was a great learning experience, as I was not only doing engineering work, I was involved in the manufacturing process of the "Product". I later moved up to Northern Ca to work at Lockheed Missiles and Space, but nothing was like my experience at the Skunk Works.

I went from Lockheed to Start Ups, searching for my place in the Business world. Nothing quite fit. In the process of leaving one place for another I approached my Dad about working with him at Sunset Models. It was 1997 and he started "3rd Rail" in 1994 and things were really taking off. He was 65 and wasn't able to travel as much to keep track of the builders. You had to go over there to inspect what they are going to ship you as they just didn't have any idea how you, the customer uses these models. I offered to help and take as little compensation until we grew the business to afford more.

When I started we had 4 builders in Korea and 1 in China. I went over there every 2 - 3 months to start, design, inspect the projects that were were working on. I was a fantastic experience at a fantastic time in this hobby. Everyone's business was doing very well, MTH, Lionel, Weaver, Williams, K-Line, Atlas, you name it, they were selling millions and making millions. We had only a tiny piece of the pie, but it was enough for 2 families to make a good living, and save money. That was 2000.

As time went on, the market got smaller and we branched out to Europe and the UK to get some market share there. Each project's quantities got smaller and costs went higher, which caused orders to decrease. It was a slowly shrinking business. Exit K-Line, Weaver, now 1/2 exit MTH. It's a small pond that those of us left share.

Dad passed away in 2007 and I moved the business close to my home in the East Bay, San Ramon, a nice bedroom community. I've saved and invested well to ensure I have a retirement if the business collapses. I'm 60 now and I feel that my GOOD years are limited, so I am enjoying life to the fullest with what we can do given some health limitations of my wife.

COVID taught us (The Builders, The Production Manager, The Design Team) that we could work remotely and I stopped traveling to see them every 2 months. That gave me some much needed time to enjoy my hobby of model R/C planes. I joined the local club here, "Livermore Flying Electrons" and have a new bunch of friends that have given me some life lessons about retiring too early or how wonderful retirement can be when you have something to do. So I will be ready when that time comes. I'll let the business decide that.

I've arranged the business so that not any one part becomes so big that it can't be replaced. Meaning, the Production Manager knows how to make our models and can direct any builder, any designer, any subcontractor to make our models correctly and accurately. The Production Manager works for me directly, directly for Sunset Models.  We've been working together with these small family owned factories and subcontractors for 20 years or more, we know each other well and are all dedicated to making the best models they possibly can for YOU. That is the secret of our success.

So before I run off to fly my planes today, Let me say, Happy Thanksgiving to you and yours. Enjoy your hobby and thank you for your continued support. This business would be nothing but a memory if it wasn't for you.

Scott Mann - Sunset Models, ERR, Golden Gate Depot.

When people lash out at you, it's because they know you are something more. It's easy to lash out a few words and make themself more important than they are, when in the presence of someone more important. It's much more difficult, to survive actually building stuff and being successful.

I wish you continued success and appreciate your taking the time to explain your history to all of us here. I don't think it was necessary, but maybe very helpful to those critics lying in wait.

What a Very Nice Note Scott.
THANKS FOR SHARING !!!!!!!  🙂🙂🙂🙂🙂

Scott,  Great story! Thanks for posting

Thanks for sharing this story. Happy Thanksgiving, and thanks for making such fantastic models.

A great story Scott. This would make a great business school case.

Thank you.

Jerry