K-Line February fair days has been cancelled.

[brianel027]

I for one wouldn't hedge any bets on anything being collectible from anyone these days. Example: the Lionel Greendale set, limited production (ridiculous list, low quality) and still readily available.

Just because a train company goes under isn't a guarantee that prices on their products will increase on the collector market, as in this case of K-Line, as others elsewhere are speculating. There are plenty of examples of this. The basic MARX steamers and diesels out run and out perform many other more expensive and nicer locos, yet the MARX locos are hardly high priced collectibles even at this date.

While the high end product from K-Line was nice, it didn't have the lengthy production runs and probably wasn't made in the quantities that other K-Line products were - there still has to be a market demand. And behind that demand there has to be the consumer desire and the economic prosperity to fuel that. Many average train buyers here in the states have more than likely been affected by the recent changes in the US economy. I have no doubt that the over-speculative, high priced, over spending train buying days of the 1980's to the early 1990's are well over with for the foreseeable future. This is illustrated by a couple of recent hits in the brnad new train offerings like the RMT Beep, RMT Buddy, the Lionel Docksider and other similar budget train items.

High end items will always be around, like the new Lionel Acela. But as for bread-and-butter sales, I think this is going to turn towards lower priced, more afforable quality trains - should the manufacturers respond to this. It's obvious with the success of the above mentioned items, there is a demand for these kinds of products. How ironic that K-Line stopped making their non-scale MARX clone Budd Diesel many years ago, and how RMT has revived it with success that probably most would not have predicted.

One more thought: with the limited runs of the high end K-Line products, especially the locomotives - there's the problem of parts availability, nevermind warranty issues. And I can tell you from first hand experience, just because parts on a K-Line loco look similar and maybe even exactly like Lionel parts is NO guarantee the Lionel parts will work in the K-Line loco... they probably won't.

K-Line themselves hadn't even gotten to stocking parts for some of these items unlike many of the lower end non-scale trains (for which parts were available and in stock) that not many give credit to for putting K-Line on the map in the very first place.

[Anonymous]

This whole situation does point out that it is a shrinking pond. I was always amazed at the number of cars and engines that all of the manufacturers were putting out. It was HUGE. The real question for K-Line owners will be warranty service (good luck). If you want one of those big engines, though, I would jump as the blowout prices will likely never be repeated. My gut feeling is that K-Line's high-end scale-size trains will be very collectible in the long term. Import numbers were probably not too big, and the last couple of years has seen some wonderful quality.
I don't think anyone will be jumping into this market real soon with a revamped line. However, someone with the right mindset for import could probably make a few bucks by bringing in limited edition cars and engines. I could see some of the better dies and designs, like the last year of accessories, going into new hands. If Sandra Kan is owed $4M, selling off part of those assets might help recoup the money.
In the end, this was bound to happen, but it exposes the real costs that all of these companies have incurred in the last decade. Just like the late 20s with the Mayflower, the State Set, the Prosperity Ltd, and Boucher's Comet - it sure was fun while it lasted....let's hope the others don't end up following suit for the same reason.

[Anonymous]

The fact that nobody has exactly been scrambling to buy up what remains of K-Line should, I think provide a pretty good indication that things are changing in this niche of the hobby, and that the changes are not all that positive. This is not a "sky is falling" pronouncement, but just acceptance of a reality that is awfully hard for anyone to deny--at least if they're being honest with themselves.

[Bob Keller]

K-Line didn't pay for the product after it was made - so it isn't K-Line's product to sell (this was covered in painful detail in one of the bankruptcy documents), through an indirect means, the manufacturer of the product is liquidating it to recover their costs.

Sanda Kan didn't propell K-Line into bankruptcy court. Sanda Kan is still apparently in negotiation to buy the K-Line assets and has been fronting operating funds to K-Line pending sale.

[mickey4479]

I don't know anything about the model RR marketing and distribution philosophy. But if Sunmodel bought inventory from K-Line, I assume they can sell it for whatever they want, unless there is a contractual provision with K-Line that requires a minimum retail price. What is interesting is that Sanda Kan is reportedly out $4 million. Putting K-Line into bankruptcy and liquidating K-Line to dust does not help Sanda Kan too much recoup their money. There likely other creditors as well. At some point, Sanda may want to keep K-Line afloat 9with significant controls) to have a chance to recoup their $. I think the lawsuit did propel K-Line into bankruptcy so they have protection from the consequences of the Lionel lawsuit. That is what Lionel did to stay afloat until the MTH judgment is resolved.

[majorjkg]

sunmodelcorp.com is offering K-Line O-Scale K4s ($349.99) and Berkshire ($449.99) at greatly reduced prices compared to the K-Line catalog. Why is K-Line sacrificing their top-of-the-line TMCC product and doesn't this bother Lionel. And how does this relate to the lawsuit?

[ChiefEagles]

I remember the late 70's and early 80's when folks made fun of K-Line. I bought a lot of their track and etc due to price. Stored it and it came out 20 years later better than the Lionel track stored with it. I came back into this hobby and found they had made great moves. I hate to see them go under. Maybe it will survive somehow.

[Warburton]

You can readily see the problem of a shrinking market in the new TCA "Headquarters News" (got mine yesterday). Due to substantial decreases in membership AND purchases of TCA merchandise (i.e. convention cars,etc.), the TCA has cut trade listings (interchange) out of half the HQ News editions, will eliminate one issue altogether, and wants to raise annual dues from $25 to $32. I think this is a telling symptom of the situation regarding reduced enthusiasm for tinplate trains in general. Add to this factor the enormous oversupply of new items offered by the manufacturers over the past 5 to 10 years, and you can see why what's happening with K-Line and the others is happening.

[brianel027]

Joe, you are right in that K-Line had introduced some neat things. I've been a long time K-Line buyer.... way before most of you. I still mourn the loss of their greatest little engine, the non-scale Alco S-2.

But all those items you listed all come with tremendous tooling costs. I think truth be told, K-Line made too many new products with a price point that helped sell them, but didn't recoup enough to even help pay for the tooling. K-Line had the $4 million debt with Sanda Kan BEFORE the lawsuit. Given the low cost of actual product from China, I think it's a safe bet much of that debt is the result of new tooling and product development.

And even with K-Line's already lower than everyone else's list price point, they still had to blowout products and in particular high-end locomotives. Consumers have gotten very used to the blowouts which are good for them but bad for dealers and the importers. No doubt, even at blowout prices, K-Line still turned a profit, but obviously not the profit point needed to pay supppliers and salaries. I'm also aware that the engineer in question, Grubba was paid very very well by K-Line.

What worked in the past, doesn't bode well with today's hobbiests. When MPC introduced the U36B it was made with similar parts to the GP9 and run for a number of years in roads that weren't necessarily prototypical. Most MPC developed tooling and accessories are still being used today, so this tooling has long paid for itself.

Ironically the target audience somewhat forgotten by K-Line and Lionel is the same audience that is not nearly as demanding and the audience for which the companies can actually turn profit. Most starter set items are rehash items and they don't even bother to spend a little more and make new paint masks, instead relying on the old moth-eaten standards. So believe me, the starter 027 trains are profitable for the train companies, and possibly the most profitable of all items.

Take the RMT Beep for example: not necessarily popular with scale prototype modelers but very popular with everyone else. The loco is non-prototypical as are most of the rainbow of postwar and current modern roadnames it is available in. With minimal tooling upgrades, the BEEP will easily pay for itself, it it hasn't already.

The last time Lionel made an affordable quality beginner Conrail loco was 1978, outside of the overpriced underquality U36B from 2 years ago. They have never made either an affordable starter BNSF or Norfolk Southern loco ever. So must be Walter over at RMT has an outstanding IQ because he figured out what all the biggest minds at K-Line and Lionel couldn't figure out (and at much higer salaries!!!).

Long live RMT. May K-Line rest in piece. Maybe someone can take over K-Line who will remember the folks that put K-Line on the map in the very first place with the (gasp) non-scale toy trains they once made so well and more than likely profitably too. But they'll need deep pockets to pay off the debts and legal fees first before they even can invest anything into production runs.

[Anonymous]

I believe you're right on target, Brian!

Lawsuits or not, it was inevitable that the market could not sustain itself. There aren't enough new faces coming in; prices continue to rise because costs are rising; the O gauge consumers, in particular, have become increasingly finnicky and demanding; and the economy in general, although reported by the "experts" to be in sound shape, is certainly not regarded in that way by a great many Americans who are facing rapidly rising costs in all areas and, at best, a fairly uncertain future in terms of their own jobs, health care, retirement, etc.

Various legal actions may have expedited things a bit, but the eventual shakeout was not only predicted by many, but also something of a foregone conclusion in light of all that is happening.

[Anonymous]

Briane1027

I agree somewhat with what you are saying, however I view it a little differently. Yes, there were 3 main companies making o-guage trains. However, i believe the straw that broke the camel's back was the lawsuit. Think of how much K-line's Quality, Packaging, and inovations had improved....just in the last 5 years. They had the TMCC lisence, and were using it well. They were coming out with some great scale and starter type locomotives. I don't know of anyone that has not flipped over their Plymouth Switcher, Porter, Scale Berk, Mikado, or Starlite Diner. They had the best Alluminum Passenger cars around for a long time, and it has forced others to improve theirs.I know they are innocent until proven guitly, but feel that they could have developed their own upgraded transformer and wiring harness. It has always been legal to reverse engineer, rather than copy something for years. That would have been better than running the risk of a law suit, or even worse the situation that they are in. I am not sure if they did or not, but I hear that both MTH and Lionel have cut way back on their productions and are only building the number that they receive in pre-orders or early buys. It did not appear that K-line was doing that, and to your point spending more than their means. There will always be those guys that can afford to spend the $1,200-$1,800 on a Locomotive. But for every one of those guys or gals, there will be a dozen people with the ability to spend fron $100-$600 on a locomotive, which is the market that K-line has been focused on for years.

[brianel027]

Think of it this way folks: for years we've all wondered how long the 3-rail market could support all these companies. For years we've all recognized that "someone" was eventually going to go under. This has been the topic of editorials in the trains mags, as well discussed by the owners themselves of the various train companies and speculated over on the various train forums.

And now it has happened. What becomes of K-Line as we knew it, is still unknown. What is known is that they owe a lot of money to their major Chinese supplier. So while many hope that someone will come along and revitalize the company with new management (and a new influx of investment dollars) in hopes of seeing more new innovative and scale products - I wouldn't hedge any bets on it.

K-Line obviously had more money going out than coming in, which could result from a variety of factors, but one of those big factors is tooling and product development costs - which affects all the companies. In the good ol' postwar days, a company could tool up a new locomotive and then produce it for years and years, thus allowing the opportunity to recoop the initial investement. Williams does this today, but there are also many modelers who would never consider a Williams locomotive as they are not scale enough. Nor come with digitial control.

Let's suppose that a new scale locomotive costs $200,000 to develop and make ready for production (a figure not far off from reality). You need to sell a lot of units to not only pay for the acutal production run, but you need to constantly reissue this item for some years inorder to see a return on that initial development costs. And I highly doubt that any train product today has the quantity production run numbers seen during the postwar era of trains.

Today's typical scale modelers are far too unforgiving and too demanding to want to see this happen. Some moan over the fact that a Hudson doesn't have the correct prototypical number on it, nevermind seeing that same Hudson released in subsequent rail lines that never owned Hudsons.

Another thought maybe someone can answer: When was Lionel's hourly labor cost at it's American plant last at the rate of 50-65 cents per hour? It's been a long time for certain.

Atlas has announced 10% price increases and more than likely Lionel will do the same. K-Line probably would too. It isn't because of labor, since their labor costs haven't been this low for production since WW2 easily. Yes, fuel costs are going up which affects shipping and plastic costs - but those price increases affect the American consumer too in differing ways: heating your home, getting to work, etc. ie: less money for spending on non-essentials..... like trains.

Once again, I believe the price increases are in no small part being driven by the product tooling and development costs. I sincerely doubt should K-Line come under new ownership that we will see a flood of brand new products being released. More than likely we would see reissues of the K-Line products already developed as any new potential owner needs to get the past debts paid off first. Sandra Kan wants their $4 million and that's a lot of trains.

All the new train products are wonderful, but there is a cost. None of these new products pay for themselves immediately and one can rest assured that across the board price hikes help to pay for these new products. From what I have been told, it costs K-Line (and probably Lionel) around $2.00 to produce and ship a box car to the USA that retails for anywhere between $20-$50. There is far more profit to be made from reissuing older products from established tooling. The K-Line GG1 reportedly costed around $20 to produce and ship to the USA, of course that doesn't factor in tooling costs. And Mike Wolf has admitted that he has invested millions into the development of DCS.

To me it's no small wonder that one of the train companies didn't go under sooner.
-You have a finicky demanding market that may or may not be shrinking, but is definitely not spending money on trains the way it did only a few years ago.
-You have regular increases in list prices making it harder for small train dealers to compete with mail order places, so you have less visability of the hobby.
-And it's not just the train hobby... but companies everywhere are closing American plants to move overseas. Practically every single plant closing in my neck of the woods has mentioned Chinese labor as part of the reason. That's 5,000 less American jobs in my area. And though there are new jobs being created, none of them pay what the other jobs did. I'm not the only one affected by this. I've spoken to other local train guys and they are NOT buying trains the way they once did because they don't make the money they once did.

As one guy just said to me: Let Lionel raise their list prices. That'll will just be just one less train car that'll I'll be able to buy next year.

Then we both laughed and wondered if any of the Lionel executives would take a salary dut to keep prices down? Much more laughter. And then we wondered if Wellspring might be tempted to find a Chinese CEO to replace Calabreese would would work for 50 cents an hour?

[Buckeye Riveter]

Yesterday, when I was in Davis Trains, a K-Line Superstore, two things hit me as odd. First, their selection of K-Line was really low for this time of year for their store. The stock of Lionel and MTH looked normal. Usually, even after Christmas, they have had a good deal of K-Line items for sale.

Second, all the K-Line was on sale but none of the Lionel, MTH, Atlas, etc was on sale.

BTW, in March they usually have a good deal of items on sale.

[dwiemer]

I was curious about that. Did not see any anouncement to the Feb Sales days on the web site. I guess they will have a News message. Sad.
Dennis

[laz 57]

Wonder if and when there will be a blow out sale?
laz57

[Locomotive681]

They have cancelled due to there current status[:(!]
They might not make it to february[:(]