Athearn, MDC

[ericsp]

Has anyone noticed that all Athearn and Athearn Genesis products are listed as "Discontinued When Sold Out" or "Sold Out" on Walthers's web site? I am guessing that Horizon Hobbies is cutting off Walthers as a distributor (I seem to recall reading that Horizon said they will be the exclusive distributor for Athearn when they bought them out).

I predict that the next Walthers Catalog will not have Athearn or MDC listed.

It seems to me that this will hurt sales, possibly considerably, espically since trains shops seem to be on the decline (at least in Central California). Can anyone think of a major model train manufacturer not listed in the Walthers Catalog? The only possiblity I can think of is LBF.

Also, since Athearn produces only some of its products at any one time, I found Walthers's online catalog the best way to find out what Athearn is making. Now how are we suppost to find this out?

What does everybody else think?

[cacole]

Yes, Horizon Hobby is a Walthers competitor, so Walthers will probably not be allowed to sell Athearn and MDC in the future. How Horizon Hobby will manage the distribution of these products is still up in the air. Two hobby shop owners I have talked to here in SE Arizona say that Horizon Hobby is impossible to deal with, so they will not be selling Athearn or MDC when their existing stocks are depleted. Internet sellers will possibly also be cut off.

[willy6]

walthers sent me an e-mail last week and said they are trying to work out a deal with the new owners of ATHEARN/MDC. also Toy Train Heaven out in PA. a big distubutor of ho/n scale products e-mailed me and said "no more blue box or MDC"

[jsanchez]

I talked to Walther's awhile back and they said they really tried to work something out with Horizon, but they were basically not being cooperative. I think between the legal problems with Union Pacific and diminished sales, they are going to have to eventually work with Walthers. It is just common sense. Horizon only carries a fraction of the model Railroad product lines that Walther's does. The other thing is the shrinking role of traditional hobbyshops in the business, sales are quickly shifting to the internet and Horizon seems to dis-like internet sellers, even though it is 2004 and not 1955. I'm one of the many businesses Horizon will not sell to, even though we move large volumes of trains and do have a small retail location. They did not like the fact I live above the shop and we are located in a residential neighborhood. We are a full time business and member of the local chamber of commerce. this is not enough for Horizon., however. Toy Train Heaven/ English's cut back on Athearn due to difficulty with Horizon, there are plenty of other companies out there that are more supportive. The sad part is the hobbyist suffers now, by not being able to get Athearn as easily or seeing what is available through Walthers. We have basically replaced our Athearn inventory with Walthers, Branchline, Kato, Model Power , life-like, Atlas and other lines

[Anonymous]

My guess is that Horizon someday might REPLACE Walthers. Horizon also deals with non-railroad hobbies and is building a real critical mass. As to how difficult Horizon is to work with, I know one hobbyshop where the owners is not that businesslike and he complains about difficulties. On the other hand, I know two other hobbyshop owners who say that Horizon gives them great service--better than Walthers.

Personally, I think that the hobbist is best served if there are two stong distributors--that will prevent monopolistic endeavors.

[bcammack]

Is Walthers diversified in the hobby industry like Horizon? It might be a prudent business path to take if they are not.

[darth9x9]

Hey JimdeBree,

You should probably get your crystal ball checked. The only way Horizon will replace Walthers would be if one of the following happened:
- Horizon buys every (or most every) manufacturer that Walthers distributes
- Horizon buys Walthers

Both scenarios are highly unlikely. There isn't enough money to be made in the model railroad industry to pull of the first one. Walthers would have to be very desperate for the second. Walthers is doing well with their own products as well as their distributorship. Walthers is easier to deal with and they have an established distribution network.

[Anonymous]

Bill--My sense is that Horizon will raise the bar for Walthers and Walthers will have to make some changes to stay competitive. Horizon is clearly growing very fast and will soon have economies of scale that are similar to those of Walthers. Horizon is expanding their product line at a more rapid rate than is Walthers. with all of the acquisitions that Horizon is making, they must have some venture capital behind them, while Walthers seems to be a family run business. If I were Walthers, I would take the Horizon threat seriously. Do I think Walthers will go out of business--no. But is it possible that Horizon could replace them as the pre-eminant supplier of model railroad stuff. I could see that happening over the next several years.

[darth9x9]

Well Jim, only time will tell. [;)]

[Anonymous]

What I think will be interesting is to see what happens to Accurail, Intermountain, Stewart and others. The smaller players seem to be getting acquired.

[ericsp]

QUOTE: Originally posted by JimdeBree

What I think will be interesting is to see what happens to Accurail, Intermountain, Stewart and others. The smaller players seem to be getting acquired.

If I may go off on yet another tangent, you reminded me of something. Accurail told me that they probably will not be producing cars painted for UP or any of its victims because of the royality thing.

[darth9x9]

I personally talked to Intermountain and Stewart in the past two weeks (working on two special projects) and neither have any intent to sell. Intermountain had the classic saying, "We're always for sale if the price is right." So far no one has come close to what Intermountain would consider a reasonable offer.

[darth9x9]

Hey ericsp,

My sources tell me that is currently Kadee's policy. They will not be producing any UP nor CSX predessor schemes because of the licensing issues.

[ericsp]

As you all may know MDC and Athearn have been consolidated at a new facility in Carson, CA (next city south of Compton). Does anyone know if this is also a manufacturing facility?

There are a couple of ironic and humorous items with this. First MDC used to be in Hawthrone, CA. Then in the 1990s moved to Carson City, NV. I seems like the just moved to a new facility (still in the Carson City, NV area). Now they are back in the LA area. Second, MDC is moving from Carson City to Carson. Considering the wildfires they may be glad that they have moved.

[BRAKIE]

Guys,I feel in the coming years we will see more buyouts of smaller companies *maybe* Atlas and KatoUSA included by big distributors or at least become the sole distributor of Atlas or Kato.
As people are spending less time with hobbies in general (those old "I don't have the time,money etc" excuses) I can understand why we *may* see streamlining of the hobbys.Good,bad or ugly I don't know.Time will surely tell.

[Anonymous]

Eric--Athearn leased its new facilities from one of my clients. While I have not seen the interior of Athearn's facility, I can say that it is located in an industrial park whose buildings are designed for logistics rather than manufacturing. The building is located in the Alameda corridor which is southern California logistics superhighway. My guess is that the ecomomics of manufacturing compel that part of hte business to be done overseas. southern California is very expensive place to manufacture and the air quality concerns prohibit the use of paints, etc.

By the way, I view the acquisition of MDC by Athearn/Horizon as a positive for the hobby. As I posted several months ago in the Atlas forum, MDC is a tired company whose products are dated and are not up to par with the competition. The integration of MDC and Athearn will allow for a greater selection of quality product.

Brakie--I agree with you--every industry is consolidating. Why should model railroading be an exception? There are several trends that I think will make this inevitable. first--today is the golden age. A large population of baby boomers with lots ofdisposable income to spend on the hobby is fueling the hobby. In ten to twenty years the generation X and younger population will not participate in the hobby to the extent that the baby boomers do today. That demographic trend alone will result in retrenchment and consolidation. Then if you have two larger companies Walther and Horizon competing for supremacy, they will naturally seek to acquire smaller companies. At some point the price will be right and the owners of those companies will sell.

I also expect to see consolidation in the DCC industry as DCC becomes a mature product. I would not be surprised to see Horizon acquire some DCC manufacturers as well. This is a very interesting thread.

[Don Gibson]

QUOTE: Originally posted by cacole

Two hobby shop owners I have talked to here in SE Arizona say that Horizon Hobby is impossible to deal with, so they will not be selling Athearn or MDC when their existing stocks are depleted.

In the world of $ale$ NO ONE is impossible to deal with. Dealer's want's discount on credit. Horizon wants orders. It's a tradeoff.

Disributor's offer credit. 30/60/90 day terms for quantity purchases. What do you think a 'dealer' going to tell you if his credit is no good? "My credit's no good"??

Obviously they either only sold blue box, or they cannot meet Horizon's minimum requirement.

[Anonymous]

It's funny Don should mention credit terms and order quantities becuase I was going to post on them.

I talked to a LHS owner and he liked the Horizon since they lengthened his time for payment and increased his credit line. Another owner was worried that Horizion couldn't keep up with orders since everything would centralized. If they were out then there wouldn't be any alternative sources for these products.

As for the hobby and business in general there great concern about keeping overhead low. Also aren't some of these Model RR companies owned by people who want to retire? I was told that MDC wasn't making enough money to be attractive so Horizion got it for a song. Horizion's thoughts may have been to eliminate a competitior and increase their market share. Sad for the people in Nevada? Yes but evil or wrong? No.

Before anyone posts that I wouldn't have that attitude if it happened to me...it has and it wasn't pleasent. I didn't take it personally since it was a business decision.

While this may mean a price increase for kits the trade off maybe reworked molds and better products. I doubt Horizion could get away with raising prices and milking the product line until it dies off.

One thing that might be contributing to the decline of the hobby is that trains aren't as central to our daily lives anymore. Afterall Amtrak is struggling and most people don't ride the rails as a major means of transprotation. In the 50's most Americans had taken a trip on a train but few on an airplane but now it's reversed.

I don't know what the future holds for the hobby but unless you enjoy yourself it's doomed to fail.

[ericsp]

QUOTE: Originally posted by JimdeBree

Eric--Athearn leased its new facilities from one of my clients. While I have not seen the interior of Athearn's facility, I can say that it is located in an industrial park whose buildings are designed for logistics rather than manufacturing. The building is located in the Alameda corridor which is southern California logistics superhighway. My guess is that the ecomomics of manufacturing compel that part of hte business to be done overseas. southern California is very expensive place to manufacture and the air quality concerns prohibit the use of paints, etc.

Athearn's old location is nearby. Also, I have been to Carson by the Dolores yard and all over it south of Interstate 405. I can't speak for the area of Carson that Athearn/MDC is in but there is plenty of manufacturering in Carson. By the way, have you seen any SP locomotives at Dolores lately?

[Anonymous]

Eric--There still is a considerable amount of manufacturing in Carson, but no new space is being built for manufacturing facilities. The newer logistics friendly buildings have 40 foot ceiling, large loading docks and are designed to accomodate the fast trafficing of merchandise from the docks to the consumer. It is interesting that Athearn chose a site that is logistics friendly where virtually no manufacturing is going on. Had they been interested in manufacturing, they could have leased space in an older building that is not logistics friendly at a much lower rental rate.

I haven't seen many SP locos at Delores or anywhere as UP has pretty much repainted all of them. I drive by Taylor Yard on the way home. From a distance I see a number of gray locomotives that look like they are getting ready to be repainted.

[ericsp]

QUOTE: Originally posted by JimdeBree

Eric--There still is a considerable amount of manufacturing in Carson, but no new space is being built for manufacturing facilities. The newer logistics friendly buildings have 40 foot ceiling, large loading docks and are designed to accomodate the fast trafficing of merchandise from the docks to the consumer. It is interesting that Athearn chose a site that is logistics friendly where virtually no manufacturing is going on. Had they been interested in manufacturing, they could have leased space in an older building that is not logistics friendly at a much lower rental rate.

I haven't seen many SP locos at Delores or anywhere as UP has pretty much repainted all of them. I drive by Taylor Yard on the way home. From a distance I see a number of gray locomotives that look like they are getting ready to be repainted.

Rix Products has some pictures of their manufacturing facility on their website <http://www.rixproducts.com/new_shop_and_tool_room.htm>. It does not appear that the injection molding machines need much height. I don't know much these machines weigh, so I don't know if they need a specially reinforced floor (beyond that a werehouse has), but I doubt it. Am am guessing that they use a CNC controlled lathe to make the axles. Given the size of the product, they probably have about the same requirements as the injection molding machines. Its not like they are building real trains that are large, heavy, and have stamping machines the stamp with several hundred tons of force. All of the places up here that do injection molding are in light industrial or more or less warehouse districts (actually almost all of the industry here is distribution or light manufacturing). In conclusion, I would say that the move means they may not manufacture there, but does not necessarily. Did they receive plastic pellets via rail at their old plant?

Too bad about the SP locomotives. Fortunately SSW 7647 is currently working out of here on locals.

[Anonymous]

I don't know how they received shipments at their old plant. Their new plant does not have rail access.

[jsoderq]

Athearn did not get plastic by rail. They don't use enough and have several grades and types of material. 200,000 pounds of plastic is a big pile and would require automatic handling equipment, not worth the cost unless you are running continuously. Plastic comes in 2,000 pound boxes, precolored or not, most molding machine hoppers only hold about 60 pounds in the small machines used for model railroad stuff I ran 3 ton up to 155 ton machines the biggest would be very tight in a garage. The hoppers are filed from ladders or walkways as the barrels are fed by gravity. Maintenance and changing large molds requires a fair amount of room and lifting equipment

[ericsp]

Yesterday I sent an e-mail to Athearn to ask if they will continue to produce kits. They replied today and said that Athearn will produce kits at their factory as long as there is a demand for them. So, EVERYBODY BUY ATHEARN KITS, I bought two today.

[ericsp]

Does anyone think that it is odd that Athearn Ready-to-Roll prices are about 1.5 times the kit prices and the Genesis prices are about 3 times the kit prices considering that the kits are made in the USA while the rest are made in China? I can see the manufacturing cost for the Genesis being a bit more than for the kits, but nowhere near 300%. The profit margin on the RTR and Genesis lines must be significantly more than on the kits.