Is there room for the old MDC/Roundhouse business model anymore?

urodoji Feb 4, 2018

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  1. Charlie Vlk

    Charlie Vlk February 5, 2023 In Memoriam

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    I got into N Scale in 1964 because I wanted to model the CB&Q. I was in HO at the time and had a guy custom detail a brass LMB O1a Mikado to the configuration of #4978 (now on display at Mendota) and I had modified a Trains Inc. waycar to be correct. I realized that every CB&Q car to go between the tender and waycar would have to be scratchbuilt....this was before the age of road-specific resin kits and (now!!) RTR production models that make prototype modeling easier.

    So I decided I'd get into N Scale and whatever the manufacturers offered was coincidently what my fictional Galesburg & Savanna Railway just happened to "have". I developed a history, route plan (Minneapolis to Indianapolis), roster numbering, passenger car names, and even had a fully drawn up layout plan. Unfortunately, somewhere along the way I found I was better at R&D than production, and even with the help of a every Wednesday Night spin-off group from NorthWest NTRAK the railroad barely got into the benchwork phase in a full basement....but it was fully developed inside my head.

    As if acquiring N Scale as a sometime employee of All-Nation Hobby Shop and hitting shops all across the Midwest (The N Shop. End of Track Trains, Lombard Hobbies, Wisconsin N Scale) wasn't enough, I ended up having a second career in the Model Railroad Industry when I got "rightsized" out the door from my first career with the Bell System.

    I didn't find work as a facility manager and didn't want to go into private practice as an architect at the time and instead fell back on my hobby, working for three years at JMC, the wholesale distributing division of Con-Cor, then moving over to Kato where I was for eleven years. When I left Kato I established Railroad Model Resources supplying consulting services to the importers and manufacturers. I've done work for Atlas, Life-Like, Rapido Trains, Deluxe Innovations, Fox Valley Models, Des Plaines Hobbies, Lionel, MDK, Hornby USA, Intermountain, and others. My main client has been Broadway Limited.

    Being in the industry has not helped my inventory control which was bad enough to begin with. We've since moved from the Chicago area to Nashville and I've finally come to the realization that the Galesburg & Savanna that would have required upwards of 20 people to operate each session ain't going to happen (and I had three times too much equipment for that layout anyway!) Besides, being in the industry somehow CB&Q prototype projects have just happened to be made so now prototype modeling is possible even in N! So it is time to pare down the collection.

    I haven't got a full inventory of what I'm going to sell off. I will probably start with FS notices on the N Scale List for interested people to send me their email so I can send them Excel files of what I have. None of my inventory is priced yet so it will likely be a while before I do anything in earnest. But it is likely that if it is of a prototype built before 1970 I likely have some locomotives, freight and passenger cars, buildings, and parts that somebody "needs".

    Charlie Vlk
     
  2. bremner

    bremner Staff Member

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  3. ArtinCA

    ArtinCA TrainBoard Member

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    Nope. When I was building my fleet, I would clean out a vendor at a train show of the ugly $4 MDC kits and repaint. Most buys were either in 1 engine deals or if I was working at a hobby shop, when the dist was cleaning out overstock. For what I had, it only took 20 years to collect. I can honestly say I haven't bought alot of MRR stuff online except for things the local shop could not get. I do the same with plastic models as well. I'd rather look it over before buying it.

    The woodshop comment wasn't snarky either. I know several woodworkers with huge equipment that wind up making boxes cause they're not sure how to make the stuff they have work. Me, I have a 10x10 ft room and build furniture with hand tools.
     
  4. urodoji

    urodoji TrainBoard Member

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    Charlie, didn’t realize you’re in Nashville now. I used to be a member of NWNTRAK. It’s been a while...
     
  5. GP40X

    GP40X TrainBoard Member

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    Thanks for the update, Charlie. I used to model the Fort Worth & Denver in N scale and that got "REAL INTERESTING" (trying to find FW&D sub lettering and changing road numbers without damaging the paint beyond repair). I never did finish my FW&D NW2 605, the only Chinese red switcher on the entire system.

    Getting back to the shake the box kits, it was nice to buy a whole box of 12 cars and then get a dozen MT trucks to build them. Have a whole fleet of cars instead of the one or two by MT. I also was much more inclined to weather the Roundhouse cars due to no collector value back then.
     
  6. SP 9811

    SP 9811 TrainBoard Member

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    Got this one a few days ago.
     
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  7. Inkaneer

    Inkaneer TrainBoard Member

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    That is true, In the past there were more production facilities and thus more competition which held down what they could charge for production. Today that is not the case. The competition has been largely eliminated and thus has little or no effect on what the production facilities can charge. This then becomes a fixed cost for whoever schedules a production run and that cost is passed on.

    P
    Well then here is your chance to enlighten the rest of us. You say you have spoken to the manufacturers so tell us, what are the production run numbers?

    Not so fast, I don't think you covered it at all. You can't pin the price increase on inflation. In the example I gave, inflation only accounted for 33% of the current price. What about the other 67%? Can't be raw materials as the price of oil is actually lower today than in 1980. Labor could account for some of the increase but not all of it. Shipping has actually become more efficient but shipping is not a major cost factor. How about molds and tooling? Actually the life of a mold depends on the material it is made of. Consider this statement I found: "Up until the late 1980s, soft injection molds, usually made of aluminum, were used for prototyping, seldom being used for more than 1000 parts. Modern alloys, along with molding machines designed to apply molding pressures more evenly and gently, have resulted in the ability to design low cost injection molds capable of running as many as a million parts. These economical injection molds can cost from 1/4 to 1/2 as much as traditional hard steel molds. At the same time that improvements were being made in machines and mold technology, the tools and procedures for rapid changeover from one mold and material to another mold and material were being developed, resulting in low cost injection molding for short runs."

    Here is the URL: http://dragonjewelinc.com/home4.htm

    By the way, plastic injection molding is alive and well in the USA. Google it!
     
  8. jpwisc

    jpwisc TrainBoard Member

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    Manufacturing options being eliminated has had a massive cost impact on the industry! This is not a fixed cost at all, rather a massive sliding scale.

    I can tell you didn't read my earlier post, you focused on one item (inflation) and skimmed over the rest. I gave two other major areas that have significantly impacted costs. As for the production numbers I'm not going to spoon feed you all your data. Do a little leg work yourself. Make some contacts. There are some great people who can elaborate far more in depth on the topic. You wouldn't believe me anyways.

    Plastic injection molding is very alive in the US, no doubt. I never said anything to the contrary. It is also far more expensive here. The example you made the link is so far off what is needed for model railroading. The setup cost needed to make the tooling for an N Scale boxcar can run ten times the cheap plaque example you gave.

    The labor costs in the US also make it very cost prohibitive to do assembly. That's why some companies injection mold components here, then send them to China for assembly. Again, costs covered in my earlier post.
     
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  9. Randy Stahl

    Randy Stahl TrainBoard Supporter

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    I'll work for intermountain box cars and tank cars....
     
  10. bremner

    bremner Staff Member

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    and yet Micro Trains produduces cars for about the same costs as the ones made in China.
     
  11. jpwisc

    jpwisc TrainBoard Member

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    I figured that would come up. I used to wonder why not everyone could do it if MT could. But then I noticed that MT quality hasn’t changed in the last decade. Same molds, nothing changed but paint schemes. If anything, they have had to reduce detail levels (note the hatch changes on the 2 Bay covered hoppers). The detail level on these is on par with Atlas Trainman, only the MT are more expensive (Atlas Trainman 3 Bay open hopper is $14, the MT is $21). Athearn, BLMA, IM, ScaleTrains, and ExactRail are all far superior cars, with better details. I would love to see what an MT car that matched BLMA quality would cost (Joe A, maybe you can weigh in here). I’d send them an email, but they still haven’t gotten back to me on the one I sent in December.
     
    Last edited: Feb 10, 2018
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  12. Inkaneer

    Inkaneer TrainBoard Member

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    No, it is a fixed cost to whoever schedules the production run. The 'pre-order' system seeks to avoid having inventory so production runs are quite small. Nobody is running a million of anything, at least not in this hobby. Smaller runs means less items to spread the cost of production especially if the production facility minimum is higher than the quantity wanted.

    Yeah, that's the answer I expected as I really didn't think you had access to that information anyway.

    I never said the two were the same. I posted that to counter your point that molds wear out and need to be replaced. But how often does that occur, every 1000 pieces, every 10,000, every 100,000, or every 1,000,000 pieces? I suspect that mold life is a lot longer than one may expect.

    Which gets back to the original topic. Why not save the labor cost by making kits that the modeler can invest some 'sweat equity' in? That way the price comes down. But how much labor cost is involved in assembly? Also, how much does it cost to ship a container from China to the US? Consider the fact that if the container destined for Baltimore or New York is off loaded on the West Coast it may still have to be transported across the US either by truck, train or plane. Docking the ship in any East coast port involves going through the Panama Canal which means more time and thus more money. In addition ocean shipping has always been hazardous and there is no guarantee that your shipment will arrive, let alone arrive safely. So there is transportation insurance to add to the mix. Ocean transport costs and increased insurance cost have to be included in the mix.

    So, strictly from a modelers perspective and thinking outside the box, why not market the product differently to save costs. First, get rid of the jewel box. Most modelers put the car on the layout and the jewel box goes in a bin somewhere. Granted there are those who want to have the jewel box so offer them as a separate item with a separate price. Second, ditch the trucks, wheels and couplers. Most people use MT's now a days and the trucks and couplers go into a bin. A side benefit is that modelers can use the truck, wheelset and coupler of their choice without paying for a proprietary items which they will not use. Third, package the cars in blister packs of five and ten each. Since the defacto standard for N scale is the MT truck and coupler which comes in a bulk pack of ten pairs this would avoid the old hotdog and bun situation of having ten hotdogs but only eight buns (or is it the opposite).

    Now as far as detail parts go I think the hobby world is split on this. Those modelers whose cars get handled a lot tend to want less detail (think Ntrak or members of a club who transport their stuff) while those collectors or those who set a car on the layout and normally don't remove it may want detail parts pre installed. But one thing is certain and that is this hobby has to contain costs or the basic economic relationship between price, supply and demand will work to the hobby's detriment regardless where production is outsourced. Bringing back those kits maybe an old idea that needs a new look.
     
  13. jpwisc

    jpwisc TrainBoard Member

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    I think I touched a nerve. I’ve never seen anyone get so upset at being wrong.
     
  14. Inkaneer

    Inkaneer TrainBoard Member

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    A red herring remark if there ever was one. Always throw in a red herring when your arguments don't work.

    One more thing here, compare the price increases between rolling stock and locomotives. Locomotive prices have gone up mainly due to DCC and DCC+ sound. But they have gone up. How much? Not nearly as much as rolling stock. Today, an Atlas RS1, without DCC, costs $120.00 MSRP. The RS 1's I bought back in 1980 or so retailed for $75.00, an increase of 67%. Now an Atlas 90 ton hopper current (2016) MSRP is $19.95 while back in 1980 they were $2.25, an increase of 886%. Big difference between 67% and 886% don't you think? Look at the added detail on a locomotive with glass inserts, handrails (painted too), horn, bell, full pilots, etc. A lot more assembly required on a locomotive than a piece of rolling stock. So please explain the discrepancy in price increase percentage.

    Also, I want to note that it is not my intent to pick on Atlas in any way. My first foray into Nscale was with a Bachmann trainset the F9 engines of which quickly suffered the dreaded split gear problem and were replaced by a pair of Atlas RS11's and over the years I have accumulated quite a collection of Atlas cars and locomotives. I still have the jewel boxes with the price tags still on them. That is where I got the price of $75.00 for the RS1 (It was actually $74.95). I could not locate any MDC jewel boxes with original price tags on them so I didn't know their original retail price and thus didn't use them in my example. Other manufacturers like Kato, Intermountain, Bluford Shops, etc. have not been around since the eighties and so were ineligible.
     
  15. jpwisc

    jpwisc TrainBoard Member

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    If that isn't the blade of grass calling the clover green...

    As for you loco price, good question. The prices have still gone up.

    As for your percentages, the cost of a piece of rolling stock hasn't jumped that much. The MSRP might be that high, but the actual cost isn't. You bought that hopper in 1980 (I wasn't shopping yet, so I'll believe your number) for $2.25. You can buy that same hopper today for $13-$13.95 (depending on the shop). So in reality the price has only gone up $11. Still a jump, but only 557%. The percentage sounds like a lot, but it's only $11 an item, while the loco example you gave has climbed $45 an item. These increases seem reasonable for the rationale I gave.
     
  16. Eagle2

    Eagle2 Staff Member TrainBoard Supporter

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    Hint for all: if you want a topic stopped, diverge far from the initial point and turn argumentative.
     
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