Well, since the first of the year, both Athearn and MDC Roundhouse, two of the old-time "giants" of the model railroad industry have been purchased by Horizon, a distributor. Mantua was purchased by Model Power, as well, but N scale was not involved there. It seems the "M&A" activity has reached our esoteric little industry dominated by family and individually owned firms. But, our hobby is of just such an age that virtually all of the founders are dead and their heirs are running the companies. Who's next.. I think we can safely rule out several. Kato is a Japanese company with only 15 percent of its business in North America, so of little domestic interest. Bachmann is already owned by Kader Industries, a Chinese, formerly Hong Kong. conglomerate that produces far more than North American model trains. I don't think Phil Walthers will be buying anybody either. After all, when it comes to manufacturing, Walthers has been there, done that. I've got some ideas as to who are the sharks and who are the minnows, but I'm curious as to what others think.
Me!!! I'm going to buy it all up!! When I'm done, I'll ship all the manufacturing jobs down to Argentina, double the price on everything, and only produce Hershey and Smoky the Bear road names. MAWHAHAHA. Seriously, there are times when I think people actually see that happening.
Gregg, you left one point out... Both Athearn and MDC were essentially owned and run by one person for decades. Then (no doubt) due to death or retirement, there was no obvious heir interested in running the business and thus - they sold out. I doubt if any companies in this industry are owned by more than 1 or a small handful of people (except Bachmann). So if you want to predict the next to fall, look for a retirement coming. BTW, are you folks not being blindl to the fact that the Atlas's owners seem to be withdrawing from the day to day business, by creating a CEO position (and of course the COO position). I would suspect that Atlas is a sell-out candidate. The family is clearly separating itself from the day to day business. Another possibility is that they are positioning themselves to acquire something and are cleaning the structure of the company in preparation. Something is up though... It may very well be that to effectively compete with Horizon, you need to be bigger and have more access to capital than Atlas is now. I have no idea of the economics of model RR companies, but that is the clear trend everywhere else - to build a small number of 500 pound guerrillas...... [ 15. June 2004, 22:49: Message edited by: ljudice ]
Atlas, Bachmann, And Lifelike are all equally at odds here. Just remember how easily Mantua fell, which tells me that both Model Power and potentially Atlas are closest to the burner here. Actually, I feel Bowser will be next...old company, same style of construction as these otehr company of MDC and Athearn. The Golden Age is over... [ 15. June 2004, 23:47: Message edited by: Benny ]
OMG, I hope Atlas doesn't fold.. where would I get my track.. [ 16. June 2004, 02:09: Message edited by: ilovetrains ]
Lou Judice, I get exactly the opposite reading than you on the recent activity at Atlas, rather than becoming less involved, the family is becoming more involved by creating a Board of Directors. The CEO answers to the Board of Directors in most firms, he acts at their direction. I alluded to "sharks" and "minnows". Well, IMHO, Atlas is far more likely to be a shark than a minnow. Maybe they'll buy Walthers.
I have been involved the merger/acquisition field for 30 years, on and off (off for the past 7 years), both as an observer and a particpant. It's my opinion that it's nearly impossible to speculate. For an M/A to occur, you need a willing buyer and a willing seller, and perhaps a broker to hammer out the price and terms. On the buying side, you also need a champion of the cause, determined to bring it about. I was a very young PR person in the very early 70s when Damon Corp., a medical services and equipment company, had a VP who decided that model rockets and kites would be would be the growth areas for the "Education" division. So, with cash in hand, he went out and bought every model rocket company (Estes, Centuri, Vashon) and all but one kite company. He made the founder of Estes a fairly rich man overnight. Now, Damon did fairly well with model rockets, but destroyed the kite companies, and the craft companies (anyone remember Arrow Handicrafts?) that he bought on the second day. I guess a few years ago Cox finally took model rockets off Damon's hands. I watched for a decade as the model rocket segment blossomed, then withered, while the remaining kite company skyrocketed. Who could guess? Many years later, I was involved in the consolidation of the computer industry. I watched great little companies die from purposeful neglect (VersaCad); others get swallowed up by giants and then discarded as dead fish (Calma); and others plundered, then plundered again by corporate raiders (Computervision), until they were a shell collapsing on themselves and being swallowed by their progeny (Paradigm), which later self-imploded. Who could guess? It's my opinion that there were men and women of vision who built this model railroading hobby. As others have said, these are the leaders who have died or aged into retirement. No clear leaders have emerged to replace them. Who can guess the next leaders to emerge? Not me, for sure. So, why speculate, except it's good fun? I think we'll elect the next leaders with our wallets. Like many others, mine's gotten perilously thin, but I'll always find some excuse to buy the great products out there today. OK, off the soapbox, Pete [ 16. June 2004, 00:42: Message edited by: Pete Nolan ]
Okay let me put some thought to this juicy topic. Kato... NO... Not likely to be shark or minnow due to the strange way the Japanese do business... they seem to be more cooperative with each other and not likely t raid each others companies... but things do change. BTW... a merger with a foreign entity would be a dishonorable corporate deed in Japan. Atlas... If anything... a shark rather than a minnow. Atlas has too much going for it to be swallowed by a competitor. They are more apt to swallow smaller manufacturers or divisions of smaller manufacturers (like Intermountain O scale). Bachmann... NO... but maybe certain areas or scales of their model railroad business could end up in another company's fold. Intermountain... This one is the most likely minnow to be swallowed by a Horizon, Wathers or Atlas or even a European concern like Hornby. LifeLike... Another model railroading minnow that could be swallowed by Horizon, Wathers or Atlas or even a European concern like Hornby. LifeLike's main business is styrofoam coolers and similar products... that's where they really make their money... this little sideline business is probably not long to last when money gets tight in the future. Model Power... probably an acquisition minnow as well, but not as desireable as the two mentioned above.... maybe a pick-up by Hornby wouldn't be out of the question. Their recent manufacturing faux-pas may make them less attractive to others that would like a company with a good reputation to go with good products. ConCor .... Almost certainly will be the next Horizon acquisition. Red Caboose, DeLuxe Innovations and other niche model railroad companies that deal mainly with rolling stock are also minnows that may be acquired by Horizon or Walthers, but not likely the other manufacturers which already have rolling stock divisions. Micro-Trains... Hmmmmm I wonder... they would be a nice feather in the cap of Horizon... but you can forget about their product being made in America if a Horizon, Walthers or any other concern acquires them. Well enough hypothetical prognostication... let's see what happens over the next few years. [ 16. June 2004, 01:54: Message edited by: Calzephyr ]
Sales of companies in the Model Railroad Industry have been going on since the 1920s...Some items we have on the shelves today have been through 4 or more owners since they were introduced to the market. While MDC/Roundhouse was somewhat of a surprise it probably won't be the last sale this year..... the bankrupcy sale of Rivarossi is still pending and the loss of Rivarossi, Athearn and now Model Die Casting will certainly precipitate some changes at Walthers.... The Real Question is what will Athearn do with MDC? With a few exceptions, the lines are complementary to each other and the MDC items certainly could benefit from the Athearn prototype R&D and painting and decorating.... The N Scale line gives some balance to the all-modern N Scale Athearn line..... we'll have to see what happens!!! Charlie Vlk
Hardly a minnow with Proto 1000 an Proto 2000 product lines they are a major player in HO. They are a conglomerate, beside Lifoam mentioned above they have other divisions for industrial foam packing, slot cars and Darda toys. Given the investment they have made in model trains lately I did not believe they will sell off the division near term.
Charlie Vlk made an excellent point. Bowser, as currently constituted is a perfect example. Its antecedent was the John A. English Co, which made a diecast Mikado and Pacific in HO around 1950. The Pacific was the same prototype as the Bowser NYC K11, but far less detailed. The Bowser line now consists of items in HO produced by Penn Line (PRR steam), Pennsylvania Scale Models (trolleys), Varney (steam), and Bowser (originally a Californaia co.) (steam). Its N scale line includes the former Delaware Valley cars. Lee English is definitely a survivor and a buyer of others' lines. Might he sell out? Who knows? That there will be further changes is certain, and Charlie ain't the only place I've heard of pending sales. I just hope Athearn will use the expertise of MDC in steam to bring more to the N scale market.
Hardly a minnow with Proto 1000 an Proto 2000 product lines they are a major player in HO. They are a conglomerate, beside Lifoam mentioned above they have other divisions for industrial foam packing, slot cars and Darda toys. Given the investment they have made in model trains lately I did not believe they will sell off the division near term. </font>[/QUOTE]Hi Lenny, My thoughts are in the potential retrenchment if a decision is made to focus on their core industry which is foam products should the economy falter. If things continue as they have for the past 3-4 years with the cost of money being relatively cheap (low interest rates) then they probably would not exit the market.
Does anyone here have a lot of experience dealing with Horizon, either now or before? Before the acquisition of Athearn, more than one shopowner or employee has complained of low order fill rate and a smaller discount than other wholesalers. Currently, I get reports of Horizon not taking orders for certain things since the prices are not in their database yet. Perhaps part of the wait-and-see regarding Horizon is finding out who will be running things and whether MDC gets entirely absorbed or remains a more or less separate entity.
Thirdrail.... The Bowser example goes back even further than you state..... The Bowser Mountain (which started the Bowser name in manufacturering) was owned by Knapp.... which was a continuation of the Dorfan Company, which was the US arm of the Fandor GmBH from Germany....which dates back to the early 1900s. The Mountain most likely doesn't have any orginal tooling in it at this point (the loco was introduced as a 1/8" scale item and has in recent times (last couple of decades!) had a new Cary boiler added) but it dates back to the very late 1930's! Bowser has kept alive some other former companies.... Penn Line, Pennsylvania Scale Models (PCC, Indiana lightweights), Selly (castings), Cary (loco boilers and brass details), Varney (stamped car kits, Old Lady and Casey Jones, 'Lil Joe, Aerotrain...), John English (PRR 0-4-0). So far the same has not happened in N.... we have seen a few older items reimported by different companies but there have been few revitalizations of older companies... Arnold was taken over by the Lima Group and Marklin got MiniTrix but so far not too much for the North American market has come out of those changes... Roco tooling has in the large part languished for 30 years. Rivarossi tooling has been WAY underutilized. Most of the ConCor tooling has not been on the market for 20 years. The Mehano tooling, while somewhat rough, could have been the basis for upgrading but has been dormant for 20 years. Bachmann has not sold their excellent freight car line to the serious hobbyist.... the "Silver Series" did not impact the freight car market. Model Power and LifeLike both have good basic cars but their marketing and roadname / roadnumber selection limits the appeal of their rolling stock. So far the only tooling that has been truly lost is the Rowa / MRC passenger car dies, but they might still surface in the breakup of Rivarossi... For your safety, keep your seatbelts tightly secured in case we encounter turbulence! Charlie Vlk
My two cents: Red Caboose -- A minnow. Probably the most ripe for dinner! InterMountain -- Not a minnow or a shark, but a potential friendly merger candidate. Atlas would be a nice fit. Atlas -- Not a minnow, but maybe a shark. See above. Life Like -- Minnow. Releases are too few and far between to remain competitive, especially with Broadway Limited coming out with so much. Bowser -- Safe for now. One of the two principals in the company recently retired and Lee has taken over the entire company. He seems to be enjoying it. Remember, they are also a distributor themselves, so they are bigger than just the Bowser line. Kato -- I agree with previous comments. Model Power -- Minnow.
So, they seem to be having about 1/87th the problems UP had in absorbing SP...... seems about right.....
The P1K and P2K do have one notable block to them and that is the shelf price. With this company, there seems to be a choice between a $10.00 locomotive being sold for 30 dollars, and a lot of $100-150 locomotives being sold for $300. I am surw I am not the only person in this world who will not pay those prices, as I have gotten smater and more demanding in what I get for my dollar. 300 dollars is a WHOLE lot of stuff at a model train show, including a pretty sweet little brass 0-4-4-0 I might actually pick up this next time through. At this rate, Bachmann is easily their number one competition, so much so that I could see Bachmann absorbing the P2K/P1k lines simply to reduce their own competion; at that point, there would be one player left in annually produced quality Plastic steam, Spectrum! Lifelike has a good product, but I don't know where they are on the S&D curve; from my feeling, they are way above the happy point. And it doesn't help when a big player like Model Expo Blows out their P2K stock at $3.20 A CAR!!!!!!
Yeah, but Model Expo was bailing out of MRR completely, so it's not a representative example. It's an anomoly, not a trend.
The Market Crash of '29 was an anomoly too...[ ] The question is, what effects will such oversaturation have on the market? I know that for myself, every since I saw 3.00 Assembled Athearn/Accurail (HO, yes), some with sprung trucks and kadee couplers, I really cut back on my rolling stock purchases to be more specific. I now only purchase cars at list price that are singles such as MOW cars. Anything else is not really a deal any more. n some ways, perhaps there was too much competition in the marke,t so this horizon roundup might be a good thing. For starters, it is now two less companies the others have to check productions before starting their own productions. At the same time, the two companies that have been swallowed were the decent high value low price vendors, who both sold their parts separate from the RTR stock. If this trend ends, then the kitbashing community has taken a fairly big hit, although there are more advanced detail parts available these days.
