Lionel Lets Bill Bracy go...

[Anonymous]

I bet the Chinese get Lionel. Then look for Marklin to come knocking at Atlas's door. Mike and Maury are going to be playing in a rough neighborhood.

[Anonymous]

I think it's way too early to say what impact any of this will have on Lionel & the market. Everyone's busy speculating & taking WAG's. Time will tell.

Maybe Calabresse will turn things around; maybe the company will be sold tomorrow. With the recent judgement & UP suit pending, I'd think Lionel would not be terribly attractive to a buyer right now. Unless it's some train nut who wins a $200 million Lotto jackpot.

Tony

[Anonymous]

Wow! 19 People? Maybe more on Monday? I'm not prone to
very much guessing, but in this case, I would think like a few
others here and say that this looks like the end for Lionel as
we know it. Too many for a "restructuring". Looks more like a
huge "housecleaning" and that the inverstors are preparing
for disposal of the comapny and its assets.

I do remember Bracy saying at York last time that "...Lionel is
ALWAYS for sale." This lends credence to that remark.

As for the comment about a non-train company buying up
Lionel, that could happen. Just recently the Indian Motorcycle
Company was bought up (after collapsing due to financial
troubles) by a British investment company that specialises
in rejuvenating well-known brand names and companies.
(By the way, the collapse was caused by outrageous salaries
and perks taken by the executives, not enough quality control,
failure to meet production quotas and deadlines, and lack of
support to their dealers who were left stranded with no product.)
This investment comapany had also bought and rejuvenated
sporting goods brands and boat builders such as Chris-Craft
and the like. So that idea may not be as far fetched as it seems.

I don't think that the CEOs of Lionel over the last decade (or
maybe more) have really cared about anything other than making
a buck. Quality, delivery/release times/dates, ideas and ideals
have all hit the skids. They either need to get someone in there
who really understands trains, people and realistic economics
like disposable incomes of the MASSES, or then Lionel needs to
be gracefully "put to sleep" like a big old cat. But to continue to get
"executives" and "corporate wizards" who know nothing about the
goods that a company actually makes and sells, who simply come
on board to get a obscene salary and benefits package then leave
the bleached bones of the company lying on the dust is just plain
disgusting and wrong...for all concerned...the company, the reputation
of the brand name, and the customers...us!

(editied for typos and spelling)

[Anonymous]

A total of 19 individuals were let go last week--Bill Bracy and John Brady early in the week, and 17 others on Friday, including virtually all of the marketing and development teams.

Because she submitted her resignation a bit earlier to take another job, Cara probably got screwed out of her severance package. A bum deal for her, although it's nice to know that she has something else lined up.

My hope is that all the people who lost their jobs this past week will quickly find better things for themselves. A lot of valuable talent--not to mention just plain nice folks-- left those offices in Chesterfield on Friday.

[Bob Keller]

I've been out of the office since Friday, but the only thing I can add to the mix, is that Cara had previously put her notice in to go to a job at a Detroit area university. In fact we sent her a going away present. The upcoming week was to have been her final week at Lionel.

Monday could be pretty interesting....

[ChiefEagles]

Alllan, like your comments over on OGR. Especially like the one about being a mistake in letting the experienced staff go. Was not familiar with the guy [as I have been gone from the hobby for a while] but you and others in the hobby know him. I think that was a big "screw up". A new direction for Lionel????

[Anonymous]

Well, first of all, you should never count on toy trains going up in value. There are exceptions, of course, but with the tremendous variety of trains available today--old and new--long-term value should be about the last thing you think about in your hobby participation. If you enjoy your earlier American-made Lionel trains, hold onto them and enjoy them for the great toys they are, but don't figure that they're going to support your eventual retirement.

Insurance is certainly a very good idea if you have a fair number of trains and accessories. Many homeowner and renter insurance policies will NOT cover toy trains unless it is with a separate rider policy. Check with your insurance agent. If your insurer does not cover the trains (replacement value insurance is best), consider buying insurance from one of the firms that advertise in CTT, or join the TCA and take advantage of their group insurance plan.

Most likely firm to buy Lionel? That would only be pure speculation on anyone's part, but I would put my money on some entity outside the existing toy train industry. I'm not sure who that might be, but as long is it's NOT Mattel, I'll be perfectly content.

But I would not be too quick to jump to the conclusion that Lionel is going out of business. They may simply be undergoing a major restructuring, although for the life of me I can't understand why they would be doing it at this critical time of the year in terms of seasonal sales prospects.

[Anonymous]

I have a couple of questions. I have read that Lionel has fired some more people on their company and may be firing even more still. Question: Does this mean that Lionel will eventually be sold like it was in the 1960's and 1970's to some non-train comapny like General Mills or Kenner? I have a small collection of "real" Lionel trains (some are preWW2 and some are post WW2). Question: If Lionel IS going out of business does this mean my trains will increase in value? Should I get insurance on them? They are ordinary trains not anything special. Finally with Lionel going down fast and with all of the other financial problems (law suits, bad economy, lost jobs) there it looks like the company will be sold because the name is still a good brand and they do have some good items. Question: What train company (if it is a train comapny) would be the most likely to be able to buy Lionel and keep if going? I know about MTH but I think they have a lot of other expenses too. I'm just looking for information since I'm new to train collecting and I'm young compared to the rest of you all. Thanks.

[Anonymous]

It has been reported elsewhere that not only were Bill Bracy and John Brady let go, but other key players were given their walking papers on Friday. If true, I see that as the beginning of the end for Lionel LLC. The name will likely continue under some owner or another, but it appears that Wellspring has cut the heart out of the team--a heart that can not and will not be easily replaced.

[3railguy]

QUOTE: Originally posted by Sandy Jorgenson

Who is Tony Lash anyway? Is he a part owner of MTH. He seems to know a lot about MTH's business. He also likes to bash Lionel.

Tony Lash is Mike Wolf's secretary. He's kind of cute and likes to brag about MTH. He's quick to let us know how things are going with MTH and their competition.

[Dave Farquhar]

I think more along the lines of "high end" and "low end" myself. You've got collectors who buy the trains but hardly ever run them, and they'll pay big bucks, and then you've got your hi-railers who are more operators than they are collectors, but they're also just as willing to pay big bucks. They're both profitable but their needs may be different.

The "low end" are the people who buy $150 Christmas presents. Or cheaper.

The number of blowouts you see suggests nobody has the high end completely figured out. If I had it figured out, for that kind of money I guarantee I'd be making trains instead of fixing computers. Or maybe, as you suggested, Doug, the market is saturated.

If the market is saturated, then you have to expand it. Besides, the target market is largely made up of middle aged men, and middle aged men don't live forever.

But to make new high-end customers, you have to hook them somehow. Some of it is HO scale people who decide they want something bigger, but why count on that as your sole source? And why cede the Christmas village market to Bachmann?

The low end could be profitable. The Christmas village people buy lots of stuff every year. And Marklin got into trains in the 1890s because it was a dollhouse maker wanted something for boys that they would keep for years on end and expand through gifts, big gifts and small gifts, like a dollhouse.

[cnw1995]

That's a very valuable perspective, John. I didn't mean to paint collectors as people who don't care about the price of things. And for different people, those price points are relative. I find it interesting to speculate whether the collector's marker occasionally reaches saturation- with more product (especially similar products like 2 'brands' of K4s) chasing fewer collectors until more people enter the market or the excess product is dumped. Isn't it interesting (and a dilemma for the makers) that the same product doesn't come close to satisfying both markets?

[spankybird]

check out his web site

http://www.tonylashexpress.com

[Anonymous]

Who is Tony Lash anyway? Is he a part owner of MTH. He seems to know a lot about MTH's business. He also likes to bash Lionel.

[3railguy]

CNW, collectors are perceived in many ways. To me it is somebody who is serious about the hobby, buys frequently, amassing a collection. Prices are a concern but we have our limits. Depending on tastes and budget, to a collector, $25, $50 or $60 affords a nice car but we may not be willing to pay more. To someone new in the hobby looking for a little fun but is not real serious, $50 for a car may seem outrageous. When I think of the mass market, I think of Sears and the shopper who is looking to spend $150 on a big XMAS gift for his or her child. Not $2,000 for an Allegheny, some scale cars, a ZW transformer, and a loop of 072 track. This is serious stuff and collectors often buy it to play with. They could care less what it's worth on the secondary market. It's like going from a $100 Huffy Mountain Bike to a $1,000 Trex. They are like peddling air.

The problem is, we can only afford to buy so many engines and cars. The market as a whole doesn't seem large enough to support the amount of stuff that is being cranked out. I mean, thinking as an individual, I'm in it deep enough with Lionel and Atlas and now K-Line is throwing more stuff at me. I just can't afford it all and I wonder how many others are in the same boat.

As far as Lionel and MTH and high tech goes, I should reitterate that some consumers like it simple, some like it sophisticated. Lionel has a niche and so does MTH.

[cnw1995]

Interesting, Dave, about an upgrade path - that works in all sorts of hobby objects and toys - just look to see how it's done with R/C things. I guess I would concur that both markets are necessary for growth - it's got to drive the company's batty to figure out how to address both - the collector's is a known, but the mass market would have a bigger payoff if you get a hit (along with commiserate risk).. I thought of the niche marketing as well - for areas like the Christmas village group as well. Heck. Dept. 56 even has a retail outlet in a Chicago mall. Bachmann seems to be deliberately going after that market with their On3 trains.

[Dave Farquhar]

I like these last couple of posts. You guys are thinking.

The focus is different between mass market and collectors, but the market needs both if it's going to be sustaining. How did today's collectors get into the hobby? Judging from the pictures of the people I see on these different boards, an awful lot of them are in their 40s and 50s. So I'm guessing they had an O27 set in the '50s or '60s as kids.

There are a handful of companies selling really cheap O gauge sets in the mass market. They look a lot like those plastic 4-wheel sets Marx sold for $13 in discount stores from the '50s into the early '70s. And while Marx used "Complete! Nothing more to buy!" as a selling point, their sets were upgradable and everyone knew it. You could buy more track, and you could replace the flimsy and too-light 4-wheel cars with something more substantial, and eventually buy a better locomotive too. The cheap sets of today sell but there's no upgrade path, so they don't stick.

K-Line has one that does have an upgrade path, but the company that's best positioned to hit the low end of the market is Lionel. They have the name recognition.

For that matter, I've seen Lionel-branded cheap cheap sets in stores on occasion. But they're made by a licensee and there's no upgrade path to the other stuff.

I'd be interested to see what would happen if Lionel licensed its name to Scientific Toys or one of the other makers of the $10-$25 train sets and just got them to use couplers of a size and height that make them compatible with regular Lionel. Then you've got a cheap kids' set that could hold interest long enough to make them want to upgrade. And what about making a $50 set to market to the fans of holiday villages? They're sized right for O scale anyway. The only thing missing from these villages is a working train.

There seems to be room at the mass market to do lots of interesting things.

[cnw1995]

John, yours is an interesting post. We've seen different perspectives on the list in the past about the collectors market vs. the mass market (appealing to kids, young families). I'm of the opinion the two are pretty mutually exclusive. If I can generalize, collectors want something relatively unique or uncommon (in production terms), with high prototype fidelity, aren't that concerned with cost. The other market - I'm not sure calling it mass is relevant - since with the blossoming of the electronics in toys - it seems more niche-based than ever - is concerned with play value, reliability or robustness, and availability and cost at the retail level. If it's true that Lionel is changing to go more mass-market to boost volume and revenue, it will be interesting to see what they produce...

[3railguy]

The way I percieve it is the terminations had little to do with lawsuits. It was a cost cutting move and Lionel wants to put more focus on the mass market. Bracy and Brady apparently had too much focus on collectors. A market that's saturated and full of blowouts. No way to make money. These are my perceptions mind you, not facts.

I'm sick of these rudderless Lionel ship posts. K-Line and MTH are just as guilty as Lionel for flooding the collector market with too much stuff and "me too" lookalikes. Atlas started reefer maddness so K-Line jumps on the bandwagon with two pages of them. Same schemes, same price. Same goes for MTH and their Erie Builts and so on.

It's sad to me because in the past couple years Lionel has made a number of home runs with their newly tooled scale engines and freight cars. When Lionel came out with their first scale cars (cattle car and gondola), I wrote Brady about how great they were and how glad I was to see him back because I remember him from the MPC days. He replied saying a whole new entire line of these cars were on the way. Boy was he right. When I got my steelside reefers, I staired at them for an hour. I make up trains with these new cars along with atlas and they blow my mind in ways postwar never did and never will. So now the guys who orchestrated this are poofed.

These are my own personal feelings. As far as the collector market is concerned, nobody can replace Brady at Lionel. Hopefully the new guy pulls a GM and Lionel brings Brady back. I hope they bring Jim Bunte back too. He was at Lionel at the wrong time. Many think Mike Wolf will get the Lion. It won't work. Not a cut at Mike, but Mike is not the Lionel type. Mike is into high tech without much focus on simplicity. Lionel is into high tech with a lot of focus on simplicity .

[Dave Farquhar]

Tony Lash is claiming over at OGR that Jerry Calabrese, former CEO of Marvel Comics, is the new Lionel CEO. It'd be an interesting crossover. There's a parallel between comic books and toy trains in that they were both intended for kids but lots of adults never outgrew them (or rediscovered them later in life), and the comic industry is good at promoting itself to non-comic enthusiasts (which Lionel has struggled to do). So I can see what made him attractive to Wellspring.

[eZAK]

Now that heads are rolling.....!!!

How much water can the 'Titanic' take on before it sinks??

[Anonymous]

I bet Mike Wolf ends up with Lionel.

[Anonymous]

Lionel is owned by a large investment conglomerate that probably couldnt care less about model trains.Obviously the large lawsuit awarded to MTH is a big drag on their bottom line. Blame in any orginization has to start with the top.
Hopefully his replacement will not be some bean counter who is out of touch with the customer base and further tarnishes the Lionel brand name with cheap quality.

Dale Hz

[Anonymous]

Let me be the first to throw my hat in the ring as a canidate. Qualifications? Diesel, electric and steam, passenger and freight and over quite a bit of territory tas well. I can see the headlines now..."Engineer takes control of Lionel trains.."

[nitroboy]

It means Lionel better ship that dang TCA suprise accessory OR ELSE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!



I guess they are looking[:D]

[Bob Keller]

Lets not get that one started up again, John! I'm not sure if our servers can take another round!!!

[3railguy]

The Korean maffia is really, really nasty. First they frame Lionel into a lawsuit. The collecting community is at arms with each other over it, and now Brady and Bracy get their walking papers. Sad, very sad.

[Anonymous]

Bill Bracy, who was CEO, and John Brady, who was vice president of marketing, are indeed gone from Lionel. There is no official word concerning who will be taking charge.

Neil Besougloff
editor, CTT

[FJ and G]

It is interesting that after the announcement, they didn't announce his replacement.

Was he let go?

Of course not. He left to spend more time with his family. :-)