View of the hobby from the Associated Press

[brianel027]

Hey gang, being a news junkie, I am always fascinated how the "outside" world views us in this train hobby. In the past, I've read articles saying this is a hobby for the rich and well-to-do, that the bulk of us in the hobby are middle aged and overweight, that there aren't enough kids in the hobby because the hobby doesn't care or cater to kids... all interesting observations.

Gang, since I posted this I heard from Bob Keller (sorry, Bob - working for small newspapers, we got away with bending rules sometimes) and of course I should know better... posting the entire AP story here is a copyright violation. So here's a link to the original story as I found it through Yahoo. I've edited down what I originally posted to just a couple of choice bits that I found interesting.

http://www.timesargus.com/apps/pbcs.dll/article?AID=/20050102/NEWS/50101004/1006


LIONEL COPES WITH LAWSUIT, BANKRUPTCY

BY SARAH KARU***he Associated Press
(Excerpts from original story)

George Hoffer, an economist and toy train enthusiast who has studied the industry and testified on behalf of MTH at the trial, said Lionel is to blame for the market glut because it produced trains similar to MTH's from stolen designs.

Andy Edleman, vice president of marketing at MTH, said MTH had just about caught up to Lionel in market share before 2000. He said Lionel began to slip because it continued to put out the same old models while MTH was pioneering new technology and enhanced realism. "They have lived off their reputation," he said.

Meanwhile, Lionel and other companies are struggling to expand their customer base. Their primary customers aren't getting any younger, and if the industry is to survive into the future, they need to bring children back to the hobby. Today's generation doesn't have the same fascination with trains that children used to have.

One of the marketing difficulties for Lionel and others is that their products are sold mostly in independent hobby shops and not where most people buy toys. Wal-Mart Stores Inc., Toys R Us Inc. and other mass retailers don't carry train sets because they're too expensive.

The Polar Express sets, priced at $250, have been a hit, but few have made their way into the hands of kids because established hobbyists snatched them up. The hope is that the movie - and by extension the train - will live on as a perennial favorite.

------------------------
Interesting reading, huh? I always find it curious when I read things that make some of the same points I have been making for many years now.

I will add that I wholeheartedly disagree with Geroge Hoffer's assessment. Is this guy really a train guy??? Is he blind, or simply biased? The glut in the marketplace can hardly be considered Lionel's own doing (though Lionel may certainly be to some fault for the legal problem they're currently in). Mr. Hoffer seems to have forgotten that there are many other companies making trains. That Lionel's prices were too high could certainly play into the reasons for the existance of K-Line Trains.

But remember that many of K-Line's early entires were copies of existing Lionel items, albeit more affordable. And although MTH did break much new ground with new engine releases and the total improved redesign of the steam engine chassis. But many of MTH's products are clones of existing Lionel items that Lionel designed, not MTH. Even some of MTH's oversized Railking box cars bear the same numbers of their 6464 counterparts... too bad they weren't the same size.

My point being that there is no shortage of product today for train buyers. The sad thing is there is so much duplication of product types from competiting companies, with not enough train buyers.

Where these other companies really got their foothold in the market was by offering products (be those new products clones or new original items) with equal or better quality and most importantly at much lower prices. Of course both K-Line and MTH were having their trains made for them in Asia years before Lionel had to make the same decision.

[Anonymous]

>>>I will add that I wholeheartedly disagree with Geroge Hoffer's assessment. Is this guy really a train guy??? Is he blind, or simply biased? <<<

This line in the article provides some clues:

George Hoffer, an economist and toy train enthusiast who has studied the industry and testified on behalf of MTH at the trial

- Lou

[nblum]

"MTH was pioneering new technology and enhanced realism. "

The question is whether Mr. Edleman actually believes this almost complete distortion of the facts, or is air pollution that bad in Columbia MD, thus altering perceptions of reality? :)

It is well known to all that between 1994 and 2002 if you wanted state of the art digital sound, you bought Lionel, if you wanted command control, you bought Lionel, if you wanted remote control electrocouplers, you bought Lionel, if you wanted a high end steamer with a wireless tether, you bought Lionel. During most of this period, if you wanted remote control of any sort, you bought Lionel. During the last two years, since 2002, if you wanted improved couplers without thumbtacks, you bought Lionel. So what technical advances, other than potentially lung and heart disease exacerbating voluminous smoke production, did MTH pioneer in the mid to late 1990s? PS1? Nice system for the early 1990s, but the battery is an engineering gaffe of the first order, and, in any case, that technology is solely the work of QSI.

And Hoffer? He's completely off the mark, as one might expect from a paid witness against Lionel. Misinformed at best, intentionally obtuse at worst. He's an economist for goodness sake. Didn't he notice the recession of 2000-2002 and the enormous increase in product available during the late 1990s to early 00's from ALL manufacturers? His comments defy belief and are an appalling performance, IMO.

[Buckeye Riveter]

Parts of this article sound familiar. I'm not sure but it might have been in the Detroit Free Press a couple of weeks ago, but there is some new information in this article.[^]

And now we know:
In the meantime, Chapter 11 bankruptcy, which Lionel entered last month, protects the company from having to post a bond while the appeal is pending.

Spankybird and I have been speculating on this for sometime via email and could never find a definitive answer.

Also, I better up my spending to get to average.[:D][:D] I wonder what Mrs. Buckeye will think.

[spankybird]

The due date for filing the appeal has long past. Does anyone have a site or place to see if they did ever file the appeal [?]

[TurboOne]

Happy New Year to all ! This article was in our local fish wrap a few weeks ago. Right before Christmas. Love them editors always so positive and helpful.

The point in the article about kids hits home, But for me not in O gauge. HO is very kid unfriendly. On these forum HO has been great, but "its got to be real" is not kid friendly. When I went down to the Railroad museum in San Diego, There are two huge HO layouts. They are the bulk of the museum. But at the Lego and 3 railer room, they were families, grandpas showing their kids the trains, and even 30-40 year old men talking about how they had trains when they were kids. The 3 railers made it fun for all, and yes in the museum there is a scale O layout as well, but very few people checking it out. And the club members didn't come talk to the patrons. The 3 railers talked to everybody, handed out candy to the kids, and showed that the article needs to see what is happening in the 3 railers room. I would love to see them get a bigger area, and let them be what they are; the best ambassadors in the business. And they don't even get paid, they pay themselves.

Thanks to all the 3 railers especially Doug here @ trains.com for being so awesome.

Tim

[Buckeye Riveter]

QUOTE: Originally posted by spankybird

The due date for filing the appeal has long past. Does anyone have a site or place to see if they did ever file the appeal [?]

If Lionel didn't appeal or missed the date, their attorneys should be canned pronto. Calabrese has been quoted once or twice now saying they are appealing or going to appeal. If the attorneys and Calabrese are not on the same page in the hymn book, they are in big trouble. It is very hard to imagine they are not going through the necessary but laborious steps for the appeal.

[spankybird]

QUOTE: posted by Buckeye
If Lionel didn't appeal or missed the date, their attorneys should be canned pronto. Calabrese has been quoted once or twice now saying they are appealing or going to appeal. If the attorneys and Calabrese are not on the same page in the hymn book, they are in big trouble.

Buckeye, I couldn’t agree more with you. What really worries me is, both CTT and ORG posted when the Judgment entries were made, both reported when Lionel filed for bankruptcies, we have the web link for the bankruptcies papers and filing, but NOTHING on the actual appeal.

I would like it confirmed by a reliable source and hopefully web link to the filing.

[3railguy]

I find the credits Edleman gives MTH to be almost comical. Sure MTH developed a lot but not to the extent Edleman brags up. I doubt the jury members (or journalists) have any real experience with PS-1 engines. As far as technology is concerened, it was Lionel's remote control TMCC system, which was much more advanced than PS-1, installed in the stolen designs that killed MTH sales. Not market flooding. Atlas O and K-Line have been giving MTH a run for their money too. It was Lionel's Richard Kughn who financed Samhongsa's venture into diecast in the late 80's. MTH was a middle man. QSI developed the electronics and Mabuci supplied the power. Somehow, Edleman thinks MTH developed it all. So does an uneducated jury. In the train market that is. They were college educated but how many universities study O gauge trains?

The big question is how well did Lionel know? Considering the damage assesment, you would think people like Mourea, Maddox, and/or Grubba would be in some sort of trouble with the law but I don't see anything happening there. Lionel may of knew a lot or for all we know, Lionel felt Korea Brass was reverse engineering Samhongsa designs which is perfectly legal if you're Edleman.

I'm not doubting Lionel's hands were dirty. I just don't think they were as dirty as Edleman makes them out to be. I believe a lot more truth in the matter will be laid out in the appeals trial and Lionel's damages will be reduced.

[palallin]

QUOTE: Originally posted by nblum

"MTH was pioneering new technology and enhanced realism. "

The question is whether Mr. Edleman actually believes this almost complete distortion of the facts, or is air pollution that bad in Columbia MD, thus altering perceptions of reality? :)

Having spent some time in extended email correspondence with Mr. Edleman, I can confirm that, yes, he does believe MTH's propaganda (or at least he's paid well enough that he can spout it wiith a straight face). Despite the fact that I don't like much of what MTH has done, I can understand that Wolf deserves a fair amount of credit. Nevertheless, let's credit him for what he actually did, not the legend in his own mind.

[nblum]

I should add that Mr. Edleman's comment about "enhanced realism" is correct. One of the reasons for MTH's inarguable success in the mid-1990s was offering three rail trains that appealed to hi-railers with greater scale fidelity than Lionel had. But to state that MTH was pioneering new techology, prior to about 2000, as compared with Lionel, as I pointed out above, is pretty much 180 degrees from the truth.

When Lionel moved its production offshore and started making more prototypical locomotives and rolling stock at more competitive prices, it is not surprising that MTH's sales tanked, given the simulataneous recession and dramatically increased competition from the likes of Atlas, K-Line as well as Lionel. The notion that MTH lost sales primarily because of competition from a handful of Lionel scale locomotives does not reflect what actually happened, IMO. This is one of the main reasons I consider this litigation without merit.

[spankybird]

Did Lionel every file there appeal [?]

What really worries me is, both CTT and ORG posted when the Judgment entries were made, both reported when Lionel filed for bankruptcies, we have the web link for the bankruptcies papers and filing, but NOTHING on the actual appeal.

I would like it confirmed by a reliable source and hopefully web link to the filing Buckeye, I couldn’t agree more with you. What really worries me is, both CTT and ORG posted when the Judgment entries were made, both reported when Lionel filed for bankruptcies, we have the web link for the bankruptcies papers and filing, but NOTHING on the actual appeal.

I would like it confirmed by a reliable source and hopefully web link to the filing

[nblum]

From the Federal District Court of Eastern Michigan:

"PLEASE TAKE NOTICE that on December 14, 2004, the United States Bankruptcy Court for the Southern District of New York entered a “Stipulation and Order Modifying Automatic Stay to Permit Post-Judgment Motions and Appeal Concerning Judgment Obtained by Mike’s Train House, Inc.” A copy of the Stipulation and Order is attached here to as Exhibit “A”."

In other words, the battle goes on.

[spankybird]

I sorry to disagree. They filed with the bunkruptcy court not the Court of Appeals. The due date for them to have filed their appeal was 30 days (Dec 3) after judgement entry(Nov 3). Unles the bunkruptcy court ruled on their motion before Dec 3 and then Lionel filed there appeal, the ship has sailed.

[nblum]

I don't think you understand the process. The federal bankruptcy court issued a stay of the original federal district court verdict to allow for post-verdict motions and the appeal of the original verdict. The original verdict is in never-never land for the duration. Not only has the ship not sailed, but MTH's hopes of collecting any money anytime soon has been torpedoed. :)

[Buckeye Riveter]

QUOTE: Originally posted by nblum

I don't think you understand the process. The federal bankruptcy court issued a stay of the original federal district court verdict to allow for post-verdict motions and the appeal of the original verdict. The original verdict is in never-never land for the duration. Not only has the ship not sailed, but MTH's hopes of collecting any money anytime soon has been torpedoed. :)

Neil, I must say that from my experiences with construction contractors going bankrupt, your explaination is on the mark.

Is there a web site that one could read "Exibit A" that was referenced in your earlier posting?[?]

[nblum]

Documents are only available on the Federal PACER site, which requires registration and a small fee for each search and a page charge (8 cents/page) per document.

[AlanRail]

The confusing thing here is the bankruptcy; when a debtor files for bankruptcy in Federal Bankruptcy Court almost all actions are tolled; even the time period for an Appeal to the US District Court of Appeals 6th Circuit. (USDCA- 6C) So the 30 day period is not a limit to filing an appeal.

In other word the bankruptcy court (BC) controls all actions by the bankrupt and the creditors. The first step is to lift the automatic stay that occurs whenever a debtor files for chapter 11.

The Bankrptcy court must grant the lifting of the stay. Next Lionel will seek an extension from the BC to file the appeal in the USDCA-6C.


Alan

[Buckeye Riveter]

QUOTE: Originally posted by nblum

Documents are only available on the Federal PACER site, which requires registration and a small fee for each search and a page charge (8 cents/page) per document.

Thanks for the clarification. I know about the Federal PACER site and the registration. Just thought maybe you had another source. [8D]