Lionel closing US factory?!?!

[BDT in Minnesota]

sarpilot

I have often wondered why Lionel and other manufactures have rarely taken advantage of the lower labor costs in the southern states. I was born and raised in Michigan and my father was a UAW worker for many years. I would love to see Lionel work out a deal with the union but sometimes it is just not possible in todays business world. I live in Pensacola Fl now and there is almost no manufacturing of any kind in this area. Many people would love to have a steady job in a brand new Lionel plant here. The good thing is that they would work for about half the price as the workers up north. I know it would not be as cheap as China or Korea but still a big savings in labor costs. Maybe not a big savings up front because of the initial outlay but very good for the long term. Just a thought

STEVE

Add me to the list of those that value the Made In USA  label  on a product....Sadly, we are left with few  USA  made items available to us from any toy train manufacturer....Seeing a good old USA built  Pre-war 225 or Post-war 675 steamer rolling down the track is something special in itself....  I would  take a Lionel instead of  a Chionel any day..and ... No sloooow boat from China to wait for.  .I wish it was different, but ?????????   Chionel is offering some great new products for us to purchase and enjoy....If .......you still have a good old USA job  that hasn't been shipped overseas, and you can afford them....     Lionel was sadly caught in the overseas job exodus, like soooo tooo many others.

[railroaded]

I beg to differ, it gives me a chance to complain again. Nothing like beating a dead horse. Anyway, as far as I've seen, all the Lionel stuff I've bought out of China has been total crap for years and I've since given up on them and sold most of it off. I've begun hunting down, old, new in the box Lionel from the US and giving it to my son. One other point, the earlier poster forgot the disasterous move to Mexico for like 6 months back in '83. They sure saved a lot of money on that deal. The new stuff is of roughly the same quality, wires hooked up wrong from the factory, whistels that blow for 2 seconds and quit, transformers that stop working after 5 minutes, you can keep it all.

 

-B in B

[magicman710]

Correct me if I am wrong Chief but wasn't this thread in the 1st or 2nd page of the forum? I think threads that old should stay in their rightful place as being the beginnings of the forum...

[ChiefEagles]

magicman710

Talk about thread ressurection!!!

Some people have nothing to do.

[magicman710]

Talk about thread ressurection!!!

[sarpilot]

I have often wondered why Lionel and other manufactures have rarely taken advantage of the lower labor costs in the southern states. I was born and raised in Michigan and my father was a UAW worker for many years. I would love to see Lionel work out a deal with the union but sometimes it is just not possible in todays business world. I live in Pensacola Fl now and there is almost no manufacturing of any kind in this area. Many people would love to have a steady job in a brand new Lionel plant here. The good thing is that they would work for about half the price as the workers up north. I know it would not be as cheap as China or Korea but still a big savings in labor costs. Maybe not a big savings up front because of the initial outlay but very good for the long term. Just a thought

STEVE

[Kooljock1]

 Just so we're all up to speed here, Lionel left Manhattan for Newark to produce their trains cheaper. 

They then left Newark for New Haven to produce their trains cheaper. 

They then left New Haven for Irvington to produce their trains cheaper. 

They then built another plant on the Irvington/Hillside border to build their trains cheaper. 

They then moved to Mount Clemens, MI to produce their trains cheaper. 

They then moved to Korea to produce their trains cheaper. 

They then moved most production to China to produce their trains cheaper.

And this is new....how?

 Jon

[initagain]

Even though it was pointed out that this thread started about eight years ago, it goes to show you what has been gradually happening for that length of time and probably longer.  Domestic manufacturers haven't been able to compete with foreign (mostly Pacific-rim and mainly Chinese) manufacturers for years.  Why is that?  It's because the buying public has been looking for the cheapest prices for everything, and where are they going to get them, -the big-box stores that import the vast majority of their stock from overseas.  Has anyone ever seen the bumper-sticker that reads "still got a job?-keep buying foreign".  The statement tells it all.  It's a vicious circle that has spiralled out of control, and it has hit virtually every sector of the manufacturing industry and the economy in general.

[danguarddog]

Boy, was confused here for a minute, then checked the date of the first post, wow, 2001.

[UnionH&L]

The last item made by Lionel n the U.S. was a Berkshire locomotive. Supposedly, the 'Case Closed' cars were assembled here in the U.S., but the parts were made overseas. Lionel workers were members of the UAW. If you're interested, their headquarters on 23 Mile Road in Michigan is up for sale for $3.3 million.

[Garfield]

 Shows what I know. I thought they already had. I have never bought a Lionel product that was not an import.

What products were still being made in the U.S. of A?

Any one know what union the Lionel workers are?

There was a Norge / Magic Chef / Maytag (diffrent owners though out the years) plant near where I grew up.  They made washing machines. The workers were members of an Aeronotics union. As far as I know no Norge / Magic Chef / Maytag washing machine has ever achived flight.

[Captaincog]

I have gotten back into the Lionel/O guage trains just about 2 years ago and I cannot remember anything that I have purchased was made in the USA from Lionel, except the old stuff that I have bought. In fact, it has been with much disgust that everytime I look at the item I have bought is made in China. I was just thinking the other day how cool it ould be to once again start viable manufacturing within the USA of things that were quality and cost competitive that customers would want to buy. I am sure it can be done, just someone must be willing to do it.

[Algonquin]

Hi Paul,

I to feel the same frustration. However, I do not believe this move (if it happens) is fully the fault of Lionel Management. For a long time I have been purchasing Lionel over MTH, Williams, Weaver and K-Line because I grew up with Lionel and justified the higher prices since they were manufactured in the USA and had a great service network. However, over the last four years, these competitors have mounted a significant campaign to take market share away from Lionel.

This is particurlary the case with MTH (MTH recently indicted they would sell over 50 million dollars worth of trains, about half Lionels total revenue for a year).

All these other manufacturers have eaten away at Lionels market share by manufacturing their locomotives, cars and accessories overseas taking advantage of significantly lower wage rates.

About two years ago Lionel began to significantly increase the proportion of their trains made overseas (I believe last year about 50% were made overseas). In order for Lionel to stay competitive with these challanging competitors, Lionel must be able to sell their trains for the same price as their competitors. This way they can maintain the same profit margin as their competitors and maintain the same levels of capital investment (for example money for new locomotive tooling) as their competition.

With the added cost of manufacturing in the USA, Lionel cannot make as much profit on the sale of a train as their competitors and therefore, does not have the funds to reinvest in new capitol as their competition does. As in every industry, this will eventually put you out of business.

I believe that Mike Wolf of MTH saw this advantage clearly when he started importing engines for Lionel from Asia in the early 1990s. It was clear then that trains could be manufactured for significantly less overseas. Mike Wolf did what any good business man would do when he saw this opportunity, he took advantage of it (I would have too). Two years ago MTH could sell any engine Lionel made for 30-40% less and still make the same profit.

I believe the Lionel name still means something and that a lot of people are willing to pay a little more for a product made in America. But there is a limit to how much more. MTH and others brought prices significantly below those Lionel could meet manufacturing in the US and have succedded in taking away significant market share from Lionel, and with it American jobs. Think about how many people Lionel would have to employ today if it had to make 100% of its trains, MTHs, Williams, Weaver and K-Line's. You would probably have over 1000 people working in the factory.

I also don't believe we should blame the other manufacturers for making all their train product overseas. And specifically, Mike Wolf, who was the first to realy take advantage of the overseas opportunity.

Todays markets are international and to stay in business you must be competitive. I believe, Lionel must make trains competitively here in the US. If they don't they will go out of business.

I hope Lionel can find a way to make their US manufacturing competitive. If not, I agree they must close down the factory for the longevity of the company. Either way I will continue to support Lionel as long as they make a competitive product.

Tim P.

[Anonymous]

Fellow Lionel Enthusiasts,

I sent an e-mail to Lionel management via their web site (www.lionel.com) about the proposed closing of their US manufacturing plant in Michigan. I haven't gotten a reply yet. I think it's a shame that Lionel is considering closing it's remaining US manufacturing facility. If this happens, my loyalty to Lionel will be gone and I will buy from their competitors for sure. If you care about US-made Lionel products and saving 350 American jobs, then please send an e-mail to Lionel. Here is what I wrote:

Lionel Management,

It is with great sadness that I write this letter. I am disheartened by the news that you are considering closing your manufacturing plant in Michigan. I believe you should reconsider. People in the toy train arena that I am associated with buy Lionel trains for three main reasons: 1) Nostalgia, 2) Quality and Diverse Product, and 3) Made in the USA. I for one have purposefully not purchased products from the likes of your competitors, namely MTH, even though they produce beautiful items as well. My main reason for not supporting these other companies is that I believe in supporting our own economy and also because Lionel produces quality products that fit my needs. If manufacturing is moved to either Korea or communist China, then I will have no reservations about purchasing items from your competitors. I am not alone in this point of view. Many other train enthusiasts that I am associated with feel the way I do. Essentially, without an American-made product line, there is nothing left to keep me and hundreds of other train operators and collectors loyal to Lionel. I believe this will actually hurt your sales in the long run, as others like me will buy more products from your competitors. Again, please reconsider this and keep Lionel “Standard of the World”.

Thank you,

Paul Wilga,
Train Collector & Operator, Age 33

[Algonquin]

Hello,

I would also be very disappointed if Lionel completely closed its American manufacturing facilities.

I have been a proud supporter of Lionel products and have felt in the past that it is worth more to "buy American". However, over the last five years it has become increasingly difficult to continue justifying the price difference. The value (quality and price) of product manufactured overseas by other companies (MTH being the main competitor) became so much greater than what Lionel could produce here in Michigan that many loyal Lionel customers (even myself) began to buy the other manufactures product.

Lionel has moved to a more competitive position with the other manufacturers by developing it own import program. Now it is suppling products like the big/detailed steam engines and super detailed diesels like the C-420 and RS-11 that are extreamly competative with MTH products. Do you honestly think the Michigan plant could product a highly detailed (lots of hand labor) product like the RS-11, fully loaded for $300. The GP-7s are made in Michigan, are significantly less detailed and require being sold at the same price. I believe Lionel knows that these could be made overseas for significantly less.

I was under the belief that the loyal collector market (buying F-3s and such via Post War Celebration Series and the Archive Series) was willing to pay more for American made product and that this was sufficient to justify continued production at the Michigan Plant (I am hoping to procure one of the KCS F-3s very soon).

Appearently Lionel Management may not believe this. Today Lionel manufactures a significant part of its product overseas. I believe this puts them in a very good bargaining position with the Unions in Michigan. Lionel knows today that they can manufacture ALL their product overseas and provide better value than they can currently produce it for in Michigan.

Lionel may believe the gap in value is not that great since they gave the Union until Monday to propose a plan to continue production in Michigan. If Lionel believes the gap is too big, the plant may be history. Typically, Unions may make some consessions but they cannot give too much back without putting the manufacturing employees in difficult finacial positions.

This may be a management move to help keep cost in line at the factory. I guess will will know more next week.

If the manufacturing moves to Michigan who benefits?;

The Hobbiest - Yes more value

Lionel - Yes more competitive and more profit

MTH - No this would put them on an even foot with Lionel and Lionel still has its name recognition. I belive this would stop MTH from aquireing Lionel market share. Although it is my opinion that the errosion of market share to MTH has been significantly curtailed by the importing Lionel has done over the last year or two.

Lionel Man. Employees - No obvious?

Tim P

[Anonymous]

I think it stinks, the profits are up and Mr "Bachmann made in Communist China" Maddox still wants to screw the workers and ruin an American tradition. As a train dealer, I know one of Lionels stongest selling points was that it was American made, many of the most loyal Lionel customers would only buy Lionel because of this. Now they have no reason NOT to buy MTH, K-line etc!!! I think Lionels biggest problems is it is too restrictive with selling to many dealers and wholesalers. Anyone can sell MTH and K-line trains and accesories,but not Lionel , it is easier to get in the nuclear arms business than to sell Lionel accesories. Many Hobbyshops in my area have been rejected by Lionel, so they push MTH, K-line Williams,Industrial Rail, no one wonder MTH passed up Lionel!!! This is a bigger problem for Lionel than whether their products are made by Americans or Chinese. Low labor cost are not a cure all, Quality of Products is what really sells look at Mico-trains in N scale as a prime example they are all proudly made in the U.S.A and sell like hot cakes inspite of all kinds of Chineese made competition, I don't see how people like Maddox or Roger Smith(ex-Gm Head) can live with themselves, killing American manufacturing little by little. Along with the free trade policies supported by Republicans and Democrats, that no working people support!!I guess the Lionel workers can become part of the new service economy of Taco bells and failed dot coms. A stong economy still needs a strong manufacturing base, I feel we as Americand are very rapidly finding this out!!!, as the pink slips arrive. If Lionel really wants to save money maybe they should replace Mr. Madox with a lower paid Chineese executive.

Still trying to make a living in manufacturing(semiconductors)
James S.

[Anonymous]

Wow! I just read the news about Lionel thinking about (have already decided?) closing their one and only US factory. So much for "Made in the U.S.A", huh?