Idea for a big K-Line revival

[brianel027]

Sorry to disagree again Allan, but I think outisde of a scant couple items like the Porter, K-Line was right up to the end, alsleep at the throttle riding full speed ahead to a dead end spur that headed off a cliff.

Early K-Line products were the best and K-Line was never a better company than it was in the early to mid-1990's. The trains that made them the company they were got abandoned. The Husky Line was borrowed tooling from Chinese marketed trains and was in effect a waste of time and money and did little to accomplish what it set out to do. Most of the Train-19 items were from previously released items as were many of the traditionally sized trains, only at the end in 4 packs so you had to buy 4 cars to get the one you wanted. Or they were just 4 of the same car (with differing numbers though), but still reissued cars from existing paint masks.

I'm sorry, but K-Line lost sight of their original customers and got greedy. The early successes of the K-Line Collectors Club gave way to near give-aways intended to woo buyers to try K-Line products, but all it did was make those customers wait for the yearly offering that would be priced far less than the cataloged normal run counterpart. Check out the regular price of the GG1 versus the KCC version, and again from new tooling.

At least the KCC MP-15 was from tooling that had been around awhile and had some oppportunity to recoup it's cost. If K-Line hadn't been asleep at the throttle, they'd still be here today. And I could go into specifics on everything K-Line did wrong, and I could do it here as well as to Maur Klein himself. Had he bothered to listen to people like me, he'd still be in business and doing better than ever.

[FJ and G]

I think that pretty much answers all the questions I'll ever have on strategy or lack thereof in those markets![:O]

-------

(surprised thus far no one has mentioned having owned a Tenshodo)[:D]

[Jumijo]

QUOTE: Originally posted by FJ and G

Brian,

Excellent commentary.

Now, tell me this. If toy companies are charging $40-$100 for scale cars for a limited # of buyers, why don't they charge $20 a scale car if it costs $5 a car to make (since semi-scale might cost $2 to make). Surely, they would sell a bunch of these.

Brian's assessment is correct. The new tooling is expensive. And when compounded by several new tools at a time, or in a short period of time, it's exponentially expensive. And a quarter mill per new loco in development costs is a low estimate. The tooling alone costs that or better. There's also developement and design costs, assembly and materials costs to consider. Don't forget delivery costs. That big boat doesn't work for free.

A detailed, scale piece of rolling stock takes more time, effort, and material to make, but the bottom line answer to your question, David, is the consumers pay $40 - $100 willingly, thereby setting a market price. Pure and simple, it costs more because you're willing to pay more.

Twenty years ago, I could go into a hobby shop and by 7 or 8 HO Roundhouse freight car kits for $20 and have a great time assembling and weathering them. Now just one kit is $10-$15! Everyone is catching on about jacking up prices. Just like the oil companies - "let's see how far we can pu***his before there's a backlash".

Jim

[Anonymous]

Amen, Brian! Amen!

But I do think at least some of the manufacturers are slowly waking up to see the folly of their ways in recent years. K-Line was waking up, but, alas and sadly, too late. Williams and RMT definitely see the light, and my guess is they will continue to do quite well in the face of a declining market. Most important, they will continue to bring new participants to the hobby, and provide reasonable options for those already in it.

[brianel027]

The reason is simple Dave: tooling, development, production runs and consumer expectations.

In previous times items had lengthy and large production runs thus allowing greater opportunity for a company to make back the tooling/development investment. Modelers were not as demanding either.

Today's customers have come to expect completely new offerings with every catalog, not just the same previously released items in changed roadnames. 027 operators are far more likely to live with simple road name variety, hence the success of Williams and RMT. Products from those compaies I would imagine stand a much better chance of making a return on their development costs. With more road name selection, the production runs can actually be larger overall while pleasing a potentially larger variety of customers. The RMT Beep is a prime example here.

Can you imagine some scale detailed engine being offered in dozens of road names, regardless of whether or not those real rail lines actually owned that style of loco or rolling stock? Buyers of those kinds of products would not tolerate such a thing, not unless the headlights were prototypically relocated to match the exact prototype.

There are also some large egos that have been at play here in recent years. Neither Lionel, MTH, Atlas or the recently deceased K-Line was willing to let the other guy have the upper hand on products offered or features or details. Which is why there has been so much foolish duplication. Customers have wanted this foolish practice too: "Well, I like the MTH Scale Hudson, but I won't buy one unless K-Line makes one." Or, "Gee if K-Line makes such a fine scale detailed GP-38-2, why can' the others? I won't buy a K-Line one, but when Lionel makes one, I'll buy theirs.

So the companies respond, making the same exact products, very often at the same exact time. How many scale sized expensive Hudsons can these companies expect the current market to purchase?

Meanwhile the buyer who complains and expects the least, gets overlooked the most. It's high time for a modern equalivalent (size-wise) to the long ago developed Alco FA. There's a market for a shortened height (3-1/2 inch) and shortened length (3-14 inches) modern Da***ype loco without the electonic extras in a list price range of around $100.00. But that kind of loco will not bring any praise or kudos from the attending crowds at YORK.

We said this before: too many products chasing too few dollars. And too many of those products are aimed at the smallest segment of the 3-rail market offering the smallest opportunity for future growth. Talk about foolish but foolish has been the key operating agenda of Lionel, MTH and K-Line. And it caused K-Line to go under. simple as that. It wasn't the Alco FA or the Alco S-2 switcher that put K-Line out of business... it was too many expensive scale sized trains that appeal to too few buyers.

A new scale steam engine can cost in the neighborhood of a quarter of a million dollars to put into production. You have to add that cost into the total production run divided by each individual unit. And sometimes that makes for a prohibitive cost. Answer: raise prices on everything else. Do a little experiement and count all the brand new tooled up items in any catalog in recent years, and then add in the development costs to each one of those items. The answer will once again tell you why K-Line went kaput. And one wonders how much longer MTH and Lionel can continue in the same vain? I guess until one of them wipes the other one out of business (which I'm sure is the unmentionable intent of both companies).

One day the toy train companies will wake up and realize they can't possibly please the monster of an audience they've tried to please. And likewise, the scale fans will have to accept the fact that the products they want are already in many cases being made, but in brass and in much smaller limited runs with prices that realistically reflect this simple fact. ie: no blowouts. If you want scale details with accurate windshield wipers and healight placement, there's a price to be paid for this. Or learn to do it yourself as the HO guys have been doing for decades. The Model Railroader magazine has always been chuck full of articles of how to kitbash one type of loco into another or how to make one kind more accurate. But the 3-rail guys don't want to do this because OUR trains are "priceless collectibles" whereas the HO ones are not.

The toy train companies cannot grow by aiming their products at the smallest portion of the market. And they can't keep raising prices on everything in order to help subsidize the high end. Again, if RMT can sell a dual motored decent running and reasonable running loco for $70, how is Lionel has to sell a cheap, all plastic single motored loco for $20 more???

[FJ and G]

Brian,

Excellent commentary.

Now, tell me this. If toy companies are charging $40-$100 for scale cars for a limited # of buyers, why don't they charge $20 a scale car if it costs $5 a car to make (since semi-scale might cost $2 to make). Surely, they would sell a bunch of these.

[brianel027]

Gil, I don't know what you mean by the comment "a way to go broke faster." I personally sat in the office with the owner of K-Line trains and heard him say in his own words that more money (profit) was made from the traditonal 027 trains than from the newer scale ones. The statement came as a zero surprise to me. The tooling and the dies to the older 027 trains have long been paid for: the recently developed trains costs way more than most of you imagine and most have not recouped their development costs, which is why prices keep going up on everything.

Should the truth be told, sales of the older traditional trains are helping to subsidize the development losses of the newer products, MTH has admitted to having millions (I think somewhere around $6M) into the total development of DCS. Lionel has millions tied up into their product development too, but Lionel makes some more of that money back through the licensing of TMCC to other companies. Why do you think the various train companies take the accusations of technology so ersiously???

Granted, the hobby would not be the same today if it were not for the development of all the new technology and new detailed products. But as for a way to "go broke faster"... K-Line did not go under from making 027 toy trains... they went out of business making too many costly scale proportioned trains that costs far more in tooling and development that their potential sales could possibly bring in, especially when consumers waited for blowout prices on these products.

Had K-Line stuck with their older 027 kinds of trains with a substantially slower process of product development, they'd still be with us today.

PS: last I knew it cost Lionel about $2.00 to make a import a box car that they retailed at the time for $26.00. This is a box car with zero tooling costs. Sound to me like non-scale is a sure fire money making way to do trains. Examples: RMT, Williams and Industrial Rail (which went under for reasons other that poor sales - Atlas will do very well with Industrial Rail and if I had the money, I would have bought that Industrial Rail tooling in a flash myself and started my own company).

[3railguy]

I dunno, it seems to me train companies have an even mix of low end and mid range equipment followed by a smaller selection of high end equipment. With Atlas's purchase of Industrial rail tooling, another surge of low end equipment is on the horizon.

These are situations I often see. A serious operator seems to want one $300 engine verses three $100 engines. A month's overtime covers that. Or a guy gets a $1,000 plus tax return and decides to treat himself to a $1,000 engine.

But then with the cost of fuel at record levels once again, what I'm saying here doesn't hold a lot of water at the moment.

[Jumijo]

QUOTE: Originally posted by jimhaleyscomet

Brian, I do not post well thought out answers like you...but I imagine there are a ton of us O27'ers like you who are wanting and willing to buy non scale TOY trains.

Jim H

There are potentially thousands more who need only be introduced to O gauge. If the sets are in retailers stores, not just hobby shops, parents and grandparents will buy them for their families, etc.

Kids don't care about chuff rates or prototypical gee gaws. They don't care about scale. They just enjoy playing with the trains. Some of us, myself included, never lost that mindset. We are the fortunate ones.

Jim

[Anonymous]

Sounds like a way to go broke faster.

[jimhaleyscomet]

Brian, I do not post well thought out answers like you...but I imagine there are a ton of us O27'ers like you who are wanting and willing to buy non scale TOY trains.

Jim H

[Poppa_Zit]

Oops, mixed metaphor.

Let's hope they wake up and smell the coffee. Then, after things start going well, they can take time to smell the roses.

[Anonymous]

Good post, Brian!

My feeling is that Lionel--along with most of the other manufacturers--is slowly waking up to the realization that there's likely more money to be made, more exposure to be gained, and more satisfaction to be achieved by devoting increased attention to the more affordable end of their respective product lines. That will also allow them to be far more selective in choosing higher-end products to make, none of which appeal to especially large audiences because of the more focused interests at that end of the spectrum. They have devoted a good decade to catering to the more "selective" elements of the hobby, and I'm not at all sure that has yielded all the results they most desired in terms of their prospects for long-term growth. Maybe they are finally waking up and smelling the roses, as the old saying goes.

[brianel027]

You know Jaabat, despite our once in awhile differing takes on FasTrack, the more I read what you say about the hobby, the more I realize you and I have similar thinking.

I'm not the only person I know who broke ranks with the "Lionel Mystique" and went with the better value for the price. Despite the recent seemingly fascination with "scale detailed" trains, I firmly believe it is the more toyish end of the hobby that offers ptoential for growth in the future. And despite the "Frankenstein monster" reaction some have to the term "027" I also firmly believe it is the 027 types of trains that also offer the most flexibility to the beginning customer.

I am hoping that Mr. Calabrese's statements concerning the incorporation of K-Line products into the "Lionmaster" line is being made to please the majority of posters on these internet forums (who get very hot under the collar unless the topics are on enhanced expensive technology and expensive scale detailed precise train replicas... purchased as blowouts from mail order venues).

I am hoping that more common logic will prevail at Lionel headquarters and that some of the "lower-end" 027 products will find their way into this spoken of growth that Calabrese is seeking.

There are good elements to both product lines. I'd love to see some of the MARX origin 027 cars issued with the Timken type Lionel plastic truck. Likewise I'd like to see some of the Lionel cars issued with the superior visual and operational K-Line newer Timken type truck used on the Train-19 cars.

None of us posting on this thread are running a train company, but I must admit Jaabat's and Thor's notion of K-Line products being marketed initially as a "K-Line by Lionel" line makes sense. Just as with the various product line designations Lionel already has like the "Postwar Celebration" and "Lionmaster." Some have jokingly used the term "K-Lionel." But you know, that's not such a bad idea.

Time will tell though. I my opinion, Lionel has always had an attitude of invincibility, quality and the one-and-only brand name in 3-rail trains. Sixteen years ago when I started getting interested in trains, I did pick up a Lionel catalog first... but my first several set purchases were all K-Line. As were many of my initial purchases, which probably beat Lionel on a level of ten to one. I won't even mention the damage MTH must have done to Lionel sales when MTH first came on the scene.

For me, it had nothing to do with the Lionel name or the over priced Lionel products.
The Lionel name did remind me of trains and got me looking again. But it was the LOWER PRICE and BETTER QUALITY of the NON-SCALE 027 K-Line trains that got me to buy and buy and buy again.

I hope Lionel realizes voices lilke mine are the minority on these train forums, but are the clear majority of the buyers Lionel needs to pay attention to. Otherwise, we'll wait for the new Atlas Industrial Rail line and RMT trains - which is the best train company to come about in the past few years, and the only company that seems to understand the dollars that are waiting to be spent on non-scale well made affordable TOY TRAINS!

[Anonymous]

Well, I don't know about the future of any K-Line products, but I ordered a couple of additional locomotives from Western Depot earlier today--another Porter and another Plymouth. Figured I might as well get what I want while the getting is good.

As for Lionel with that Gawdawful Large Scale set. . . well, I wi***hem luck with that one. Sure not a set I would want to own, or would recommend to anyone else. And, as others have noted, I don't think that set will do a thing to bring more people to the hobby in any scale. A very disappointing experiment, as far as I am concerned, but perhaps the gullible public will gobble' em up like Thanksgiving turkey.

[Jumijo]

QUOTE: Originally posted by thor

. . . The way I see it, if you want to try experimenting to bring in more beginners why not use the K-Line name? That way if you screw up and frankly I think that G gauge Christmas idea is a screwup, then its K-line the failure is associated with rather than your premium Lionel brand.

That was exactly the point I was trying to make, Thor. "K-Line by Lionel" wouldn't harm Lionel's brand image if it somehow failed. If it succeded, they could take the lessons learned and start morphing the K-Line brand into Lionel for the next time.

QUOTE: Going up against the real bottom feeders for the Christmas tree circle is, in my opinion, a big mistake. IF Lionel 'owns Christmas' as Jerry claims, I think its the "Oh gee, wow, thanks Mom and Dad" aspect of something really splendid and NOT the 'just another gaudy piece of crap' market which is more than adequately supplied by the dollar store stuff.

I'm rooting for Lionel, I really am but some of Mr Calabrese's stated assumptions seem to me to be ignoring the lessons of history.

Agreed. I also think the Xmas train is a huge mistake waiting to happen, but you can't underestimate the taste of the American consumer. But even among non train buying folks, Lionel is known for their O gauge trains. Why not pu***he Polar Express as the Xmas train? It's a modern day classic. That way, people who buy that set would at least have a reason to seek out other Lionel O gauge products to go with it. G gauge? No future sales there except for the yearly new car to add to that set, and frankly, very few purchasers are going to add on to it.

Jim

[thor]

Yeah Lionel's not making any sense to me about how they're going to handle K-Line. First Jerry gives that speech about 'the funnel' in the latest OGR, sounds good to me, I'm all for cheap toy trains that's my basis for self improvement. In fact I'd RATHER buy a bottom feeder and uprate it myself to have something unique. So there you are with those K-Line molds you've got your introductory trainset lineup all ready to market? Then you say you're going to use the K-Line for your mid range? Huh?

The way I see it, if you want to try experimenting to bring in more beginners why not use the K-Line name? That way if you screw up and frankly I think that G gauge Christmas idea is a screwup, then its K-line the failure is associated with rather than your premium Lionel brand.

Going up against the real bottom feeders for the Christmas tree circle is, in my opinion, a big mistake. IF Lionel 'owns Christmas' as Jerry claims, I think its the "Oh gee, wow, thanks Mom and Dad" aspect of something really splendid and NOT the 'just another gaudy piece of crap' market which is more than adequately supplied by the dollar store stuff.

I'm rooting for Lionel, I really am but some of Mr Calabrese's stated assumptions seem to me to be ignoring the lessons of history.

[phillyreading]

It wasn't just the high end tooling that killed K-Line, THE LION(Lionel) helped stamp out K-Line with their frivalous lawsuit. K-Line had very good quality and at a more affordable price than Lionel, also K-Line was very good at customer service.
Lee Fritz

[Jumijo]

To me, K-Lines allure was its low end offerings. I was somewhat shocked to read that Lionel intends to market the mid-range K-Lines items. Yeah, that suburban tank engine was pretty nice, but I always thought they offered the best entry level rolling stock of the big 3. In particular, their passenger cars, which strongly resembled Lionels O27 versions, but were an inch or so longer.

What I would suggest is that Lionel consider marketing K-Line starter sets "By Lionel" in big box stores, maybe year round. Jerry Calabrese said he wanted to sell Lionel sets in those retail stores during the holiday season, but would not discount or cheapen the brand to do so. Selling K-Line sets, especially at a discounted price would increase sales and would have the added benefit of not "cheapening" Lionel's brand name.

Jim

[brianel027]

There's one thought that strikes me with more than substantial irony...

K-Line came into existance with the purchase of the former plastic-car based MARX tooling. This is tooling that MDK actually owned, and to my understanding, not all of it went into new production. So pops up the question, did this tooling go to China with the production facility move, or was this tooling included lock and stock in the recent settlement?

My point is purely subjective, but I find it somewhat amusing - that if some of this older unused MARX tooling was still in the property of Mr. Klein - that the possibility of this new train venture that many speculate on (with comments like "we haven't seen the end of Mr. Klein") might potentially be offering the very types of products that K-Line started with. The same types of products that K-Line eventually ignored in order to intentionally go high end (and in the process, unintentionally go into deep debt making these new high end products) and unintentionally also go out of business.

I just think it would be such a hoot to see some sort of new K-Line company offering the very types of products that even they themselves also seemed to hold in disdain.

But then again, these were the products that go them started once.... maybe again too?

[Anonymous]

Although I would never consider Maury Klein out of the game for good, I kind of doubt he has the resources or backing to get going again in any major way--certainly not to the extent that K-Line was in the past as the #3 producer of toy trains.

I'm planning to buy a couple of more K-Line locomotives in the next couple of days or so, even though I know there likely will be problems with getting them fixed if I ever need that in the future. The items I'm planning to buy are cheap enough that I can afford to consider them as "disposables" or "shelf queens" if need be, but I would be wary of buying any of the top-of-the-line stuff. I don't have much faith that Lionel will put forth any great effort to care for K-Line customers of the past.

[Anonymous]

QUOTE: Originally posted by FJ and G

Make trains for a different country. Take Japan. Tenshodo used to make brass here but went to Nippon to produce trains........

I am a bit confused here in you wording. Do you mean Tenshodo made trains in Japan then moved to Nippon?

Japan and Nippon are the same place.

How does this affect K-line. Thier products were made in Korea for a different country....the US. What other country do you mean?

[FJ and G]

Give it time. As the old saw goes, "Three women cannot be set to produce a baby in three months."

[phillyreading]

Sounds like a good idea! However who is going to pay off the old K-Line debt?
Maybe the founder of K-Line can go into business with a new company but the name K-Line may have to be scrapped, in other words he would need a new name for his company-something other than K-Line or MDK.
Lee Fritz

[FJ and G]

Make trains for a different country. Take Japan. Tenshodo used to make brass here but went to Nippon to produce trains and get higher returns since the Yen is much stronger in relation to the dollar (as are Euros).

http://www.tenshodo.co.jp/railroad/index.html

(also, scandals, bankruptcies and various and sundry nefarious deeds are not as big a deal in some places)