Limited Production Runs and The Market

[wallyworld]

 As a long time collector of new products, whether rightly or wrongly, we seem to be entering an era of limited production runs, as well as escalating retail costs. I realize that there is a possibility of a diminished market due to the economic climate but is there a possibility that as a profit seeking enterprise, we are either seeing examples of what the manufacturers think the market will bear or is this the equation of supply and demand? In other words, make fewer and sell them at a higher cost? Any insights?

[mersenne6]

  I guess it would depend on which product and manufacturer/importer.  For example, I know that 3rd Rail recently announced they had made a new arrangement with their builder which would permit smaller runs. My understanding is they did this to respond to requests for locomotives which, while popular with a segment of the hobby, didn't have the kind of appeal that would result in large orders.  I, for one, am thrilled.  Ever since I first saw a picture of the Northern Pacific's big 2-8-2's I thought it would be a fantastic sight running on my layout.  I also knew that, because of the railroad and the lack of interest there would probably be no chance of ever seeing this happen.  Now, because of the new arrangement, it looks like this is going to happen and I've already placed my order.  I realize the engine will probably cost more than one with a larger run but, in this case, my take is that it is either this or no model at all.

[brianel027]

I don't think it's a matter of making fewer to sell products at a higher cost, but rather to prevent having a glut of products that don't sell, thus causing blowout pricing and in time, diminishing the value of other newly introduced products. This was well illustrated in the last few years of the original K-Line company.

It also depends on which end of the hobby you are looking at. As far as Lionel is concerned, there seems to be no limitation to the basic stater end products. These are products they want to have available to meet demand... well illustrated by the success of the Polar Express set. With that one, it was a matter of not being able to keep up with the sales demand. Lionel seems to sell plenty of Dockside switchers and the new 0-8-0 starter set steamer. And of course, there's the ever popular 4-4-2.

The higher end, more scale products have a smaller audience to begin with. And though there is absolutely a market for these products, it isn't as big. Yet there are all the higher costs of bringing a new accurate product to market. The CEO's of the train companies have all stated in the past that it is very costly to bring new scale products to market, even with overseas development and production. And that it takes several successful sell out production runs to even break even on many of these newer accurate models.

It's not like the old days where, for example Lionel could slap a new shell on a GP9 chassis and it could be a new locomotive. One of the common criticisms from scale modelers of Williams was the use of inaccurate trucks from one loco to another. You can't have it both ways. Cobbing parts from one loco to another may not make for an accurate model, but it does keep manufacturer costs down. And many budget traditional modelers are not bothered at all by these compromises. They're more happy to find new affordable products.

Of course, costs keep rising even for basic products that have been around for years with no recent development or tooling costs. I'm sure there are a variety of reasons for this, not the least of would certainly be the increased costs of oil - for the production process, and for shipping across the Pacific.

[phillyreading]

I don't think that too many companies will be offering much in limited runs unless you pre-order and pre-pay for the product. I have noticed that a few hobby shops are holding onto their top of the line engines and true scaled to proportion cars a lot longer than before.

If I had the money, I too might be tempted to buy some limited run items. Limited run items may help keep prices up for the whole model train industry but very few people will be able to purchase them.

I can't speak for all of this country but south Florida is going through another phase of layoffs, this second or third round is even hitting toll collecters, on the FL Turnpike. Currently southeast Florida has the highest unemployment rate in the USA, or about 21% unemployed and rising. Winter tourist season just ended and almost half the people went back north, so that means layoffs in Florida again. Most people down here in south Florida can barely afford to pay monthly bills let alone buy high dollar trains.

P.S, I am not trying to be negative but just give an honest idea of how south Florida is doing.

Lee F.

[Andrew Falconer]

What I was thinking when you mentioned limited production is were Lionel Standard O freight cars from the 1980's and 1990's.

 

Lionel's plastic bodied Standard O freight cars from the 1970's, 1980's and 1990's injection molds were run in limited quanties even for moderately priced cars.

There are some obvious paint schemes from real railroads that have never been applied on these cars even after 10, 20, 30 years of being in production.

The Lionel GP30, U30C, and SD60/SD70MAC are well made models, but not the highest priced Diesel Locomotives, but they too are available in limited quanities. 

They made 4 road names in the first year of production of each, then that number dwindled to one or two occasionally.

They are not flooding the market with O Scale, until they can find enough retail venues to sell all of it.  

Andrew

[wallyworld]

 Your comment made me think of another scenario..which maybe inferred..is the market overly flooded with unsold stock?

[Bob Keller]

I think we are a year or two past the market saturation caused by over-production in the early 00s. I don't think that most manufacturers or retailers want to go down that path again.

[wallyworld]

Ogaugeoverlord

I think we are a year or two past the market saturation caused by over-production in the early 00s. I don't think that most manufacturers or retailers want to go down that path again.

 

You brought up an interesting aspect of the hobby that effects us directly.It made me think of what I would do if I were in a marketing and product development meeting at MTH or Lionel, Bachman, etc. It is a calculated risk as to what prototype, what decoration and how many to make to bring to market, even before a catalog is printed. It cannot be an easy task. Then coordinating overseas with the factory, shipping costs, packaging etc. A lot of coordination. It would be interesting to be a fly on the wall and watch this process unfold. I wonder what the "worst dog" was,,outside of the Pink girls set..as well as the all time best seller was or is.

[richhotrain]

Ogaugeoverlord

I think we are a year or two past the market saturation caused by over-production in the early 00s. I don't think that most manufacturers or retailers want to go down that path again.

 

No complaints here.  2003 to 2007 is when I bought most of my fleet of engines for my HO layout.  The availability and pricing was tremendous so, for me, it was a buyer's market and I got a lot of great deals.

 

[Bob Keller]

As a hobbyist, there were some great buys to be had - for example I got a new K-Line 2-8-2 for $165 - but if you were selling the trains in order to make a mortgage or pay the light bill, that was something else.