Lionel's ex CEO Gary Moreau

[Anonymous]

I found this link concerning Lionel LLC's former CEO, Gary Moreau, during a Google Search for Lionel:
www.hometownlife.com/HomeTownLife/NewsSearch.asp?pageType=Story&StoryID=85912
BillFromWayne
www.modeltrainjournal.com

[nblum]

Interesting. If I recall correctly, Charlotte, his wife, was someone he met at Lionel. Correct me if I'm wrong.

[FJ and G]

Bill,

Interesting. If he'd stayed at the helm, maybe Lionel would be in a better position today and might not have done crooked things. I believe that the beginnings of TMCC were started on his watch. Probably the best guy Lionel ever had since JLC.

(then again, maybe not)

[Anonymous]

TMCC was developed by Richard Kughn and Neil Young. It was introduced in 1994/1995 before Mr. Kughn sold Lionel to Wellsprings. Gary did try to license the technology but the original terms were considered too restrictive and almost no one signed up (exceptions were TAS and Digital Dynamics?). He did appear in the Trains Unlimited Episode "Toy Trains" and represented himself and Lionel quite well. Some of his problems involved QA issues with material being made overseas (e.g. Backshop). SInce he was not a "train" person, Wellsprings decided to replace him with *** Maddox. It should be noted that the issues surrounding the lawsuit occured on Mr. Maddox's watch.

Having read the transcripts of the Korean trial and the interview of a Samhongsa principal following that trial, I haven't see where "Lionel" did anything "crooked".

[FJ and G]

chuck,

Let me rephrase "crooked" to a better phrase: "incident that resulted in Lionel needing to shell out a couple of thousand."

:-)

[brianel027]

QUOTE: "The Bible is really a living document that can be applied as much to modern business as it can to your spiritual life or your spiritual journey," says Moreau.

"Business, in my opinion, should have a broader social responsibility than simply a high stock price and paying bonuses to its employees."

From a distance, I always liked Moreau. I liked what he said on the "Trains Unlimited" special and it's not improbable that he got a bum rap or was just a casualty of the corporate drive for increased revenue. No doubt the sacking of the last group at Lionel had much to do with that, as well as responsibility/blame for the whole MTH lawsuit mess.

I admire Moreau's transition and his writing a book on it. Being out of work as long as I have has been a trying and changing time for me also. I have a deep and profound understanding for things I did not at one time. I see the changes in the American economic landscape, and though they might be good changes in the long run, that has yet to be seen.

It's funny how it takes being pushed to the bottom of man's world to start looking up to God's world. Both the Old and New Testaments are full of references to wealth, justice, responsibility, payment of fair wages, charity and compassion.

No one can tell me that the moving of so many former US located companies and so many jobs overseas is driven by concern for American families, American workers and a sense of social responsibility. No. It's driven by the bottom line and the desire to make more money. It would be wonderful if the prices of these foreign made products reflected the actual costs of making these items. Yet prices of many of the overseas manufactured goods are going up. Is it any wonder that when people do shop, they shop not at the locally own neighborhood store, but at the corporate chain or on-line store that can offer the rock bottom price.

Companies plead poverty in order to cut wages and/or relocate overseas, and then dole out millions of dollars in bonuses to a handful of executives who made these decisions.I'm certain the value-added Lionel dealer located in a community that has suffered big layoffs isn't seeing his sales increase.

The values of humility, surrender, obedience, servitude, chairty and compassion are not always the same values of man's business world. In many cases the values are completely opposite.

Thank you very much Bill for posting this and the link to the story. I find the timing of this very profound and will be sharing this will folks at my church. I will also suggest my library purchase this book so I can read it.

[prewardude]

QUOTE: Originally posted by chuckn

It should be noted that the issues surrounding the lawsuit occured on Mr. Maddox's watch.

Having read the transcripts of the Korean trial and the interview of a Samhongsa principal following that trial, I haven't see where "Lionel" did anything "crooked".

According to MTH, their plans were stolen in 1998 or '99. If I remember correctly, Maddox didn't come on board until the latter half of '99. I always thought the plans were stolen under Moreau's watch(?).

As far as I'm concerned, Gary Moreau ran Lionel into the ground. Go back and look at MTH's catalogs from the late '90s, and then compare them to Lionel's from the same period. It's really kind of sad. [:(]

[Kooljock1]

I can't tell you about the time sequence of "events" surrounding the lawsuit, and when Gary Moreau left and *** Maddox arrived. It's possible that it even fell through the cracks during the transition.

But what I can tell you is this: Gary's room mate and good friend from college Glenn has been an active member of our church for years, as well as using much of his spare time running the board of the Greater Burlington YMCA. Glenn was Gary's best man at his wedding, and Glenn's daughter Emily was our baby-sitter. She was amazed that I had so much of "Uncle Gary's stuff" in my basement.

Glenn is a successful businessman, and a man of great faith. He practices both well. If he's had any influence on Gary, or vice versa, then it's been a good relationship.

As a side note, my Dad who was a former VP of Corporate Engineering Worldwide for Pfizer says business exits for three reasons:

1. To make a quality product that people need.
2. To provide meaningful work for people to do.
3. To earn money for the stockholders.

Without any one of these three elements, you have an unhealthy company. Eliminate jobs, and you've reduced not only your customer base, but the customer base of your customers, suppliers, and stock holders.

Without a quality product that people need, you're only driving short-term profits into a brick wall. When people understand it's a bad product and word gets out, it's over.

And without a reasonable return on investment, you won't have money to invest in the company's growth. Business should be a symbiotic relationship with the communities it serves. And it can do this very successfully if it is run with moral people at the helm.

Jon [8D]

[3railguy]

QUOTE: "The Bible is really a living document that can be applied as much to modern business as it can to your spiritual life or your spiritual journey," says Moreau, a former top executive with companies such as Oneida Ltd. and Lionel Trains.

OK, so he used the Bible to run Lionel, nearly put Lionel into receivership, and wasn't aware his subcontractor was building off black market AutoCAD discs. It's amazing how people have the nerve to exploit religion.

[brianel027]

I don't know Gary Moreau nor have I read his book yet. So I'm in no position to judge one's morals, merits or intentions. I don't know for certain that he (or anyone else) used the Bible to run Lionel. One would be mistaken though to read the Bible as a handbook or instruction manual for running a company.

I don't want to offend anyone's beliefs here. But assuming one believes, the Bible is the Word of God. If one's mind and heart are in the right place - or seeking to be in the right place, the Bible won't always tell you what to do, but will guide you in finding the right thing to do. If your heart is in the right place, then chances are better your actions will follow. And I'm talking about true seeking and true belief: not just a smoke screen used to warrant any kind of unjust decision in the name of God.

It's more than obvious from reading the papers that there have been and still are plenty of companies that put short-term profits, quaterly reports and shareholders interests above anything else. The leading employer in my area has eliminated thousands of jobs in the past few years and has caused immeasurable hardship to the community. Enitre departments were sacked with little attention paid to individual performance or contribution. The bottom line was calling the shots and entire departements were eliminated on the basis of cutting costs and nothing else. We have the highest unemployment rate in the state, yet the company has rewarded it's top few executives with over $14M in bonuses in the past 2 years.

In my thinking, what's the point of a company being profitable today if tomorrow, the people who used to work for that company can no longer afford their products? And how long does it take until working people elsewhere in the US can no longer afford to buy those products?

There has been plenty of cost cutting done with Lionel product over the years, and not all of it under Moreau's time at Lionel. Richard Kughn is widely credited for bringing life back to Lionel, but there was cost cutting done under his watch also. I have many cars from that period that are unpainted plastic. Plastic frames were introduced to more box cars during his time as well as plastic frames for the Alco FA's. If it were not for K-Line's better quality train sets, I'm sure Lionel's starter sets would have remained on the same quality level as they were in 1989-1990. Of course, the same comparison could be made between MTH and Lionel for different types of products.

Cost cutting isn't necessarily a bad thing, so long as prices reflect the changes in quality and it doesn't alienate customers. I imagine it is a challenge to monitor actual production when your factory is no longer across the parking lot, but across the Pacific Ocean. Long before Lionel actually closed the Michigan plant, various parts, components and products have been made overseas.

As to the thought that Moreau ran Lionel into the ground, remember Lionel was already owned by Wellspring. I'm in no position to know how Wellspring dictates what Lionel can and cannot do. I would think that any CEO of a company that is owned by an investment firm might not have as much freedom to call the shots as a CEO who runs his own company. Just as I'm certain that not everything that happens at Lionel pleases minority owner Neil Young. I've read that Neil was very much against closing the Michigan plant and moving production totally overseas.

But in business, someone always has to take the blame, whether it is justified or not. Look at the recent "housecleaning" back in October at Lionel. Were all those people who were let go really responsible for the lawsuit mess? Whether they were or weren't, I would imagine the folks at Wellspring were upset with the turn of events

Also, Lionel was already far far behind what the competition (MTH especially) was offering even before Moreau took the helm. When Maddox was named CEO and announced Lionel was closing the Michigan facility he said it was because Lionel was not competitive and that their labors costs were too high. I always read that to mean that Lionel could not afford to do all the new tooling that was needed. When production went to China, that's when Lionel really started introducing many newly tooled products. List prices for Lionel product have decreased little since the move to China despite very dramatically lower labor costs. With the new catalog, the prices are up on nearly the entire line. I'm certain this has nothing to do with actual production costs, but more to do with making a return on all the new tooling and the increased financial strains of the whole MTH/Lionel lawsuit mess.

Certainly there were some product mistakes made during the Moreau period. The Construction Train Set, the Volcano Train Set and the N&W Starter Steam Set come to mind. Had these sets been priced more reasonably, maybe the curtailed quality wouldn't have been such an issue. In my opinion, Lionel always has been and is still overpriced, especially in light of what the competition is offering. But we've always known that there is an element of paying for the name and the "orange and blue" box. And an admission in so many words that Lionel doesn't want to hurt the aftermarket collector prices by lowering new product retail prices too much.

I guess what I'm saying is that I'm not going to judge Moreau as a saint or sinner. But like Kooljock was saying, I've been though and seen and read enough to know there are far too many companies who are putting their long-term priorities in what I believe are the wrong places. In that sense, maybe some Biblical truth is in order. And those who use the Bible to jusify their own selfish interests, don't really understand what the Good Book says. Unfortunately many have twisted God's words in the name of the worst actions... it's happened before and it'll happen again. Those who truly understand the scriptures will act in accordance and obedience, not out of fear but out of joy and the compassion of giving and doing the right thing.

[Anonymous]

VERY well said, Brian!

[3railguy]

The biggest problem with Moreau was he didn't know the market or the difference between a GG1 and an F-3. Anyone who knew better and second guessed him was dismissed. He made a lot of mistakes and scoffed off his forewarnings. He was litterally escorted out the door, lock, stock, and barrel.

Now he's writing a book aimed at christians who wi***o suceed in life. That's like Martha Stewart sitting writing a book on savy stock trading.

[Chris F]

Richard Kughn sold Lionel to Wellspring Associates on September 29, 1995. At that time, or shortly thereafter, Gary Moreau was named president of Lionel LLC.

The theft of MTH locomotive parts drawings from Samhongsa occurred in 1998 or 1999.

Richard Maddox was named president and COO of Lionel LLC on July 26, 1999.

Korean media reported the drawings theft in March of 2000.

The MTH lawsuit against Lionel LLC and Korea brass was filed in April of 2000.

The above information came from back-issues of CTT and from Lionel's website.