Thoughts on the O/O-27 Gauge Market Today?

[Anonymous]

emmaandy,

I completely agree with you concerning the Docksider. I hope Lionel has the sense to do a second run with the same road names. This notion that once a run is complete there can't be another because it destroys the "value" of the piecehurts the new hobbyist or kid. Collect the more expensive stuff (that we all would like to see hold its value), but let the inexpensive stuff stay that way.

[Anonymous]

Very true 3railguy. However my point was not to propose a new control method but to say that there is a strong market for toy trains that I don't think some are taking into account. It is just that those toy trains dont look like the toy trains we are used to. Instead of three rails there is one. In 30 years these will be the "my first train set" remembered so fondly.

At www.rcblocks.com some of the forum members are already model railroaders who are making "realistic" model railroad type layouts with these toys.

A Rokenbok start set can be had for $80 and a monorail train with track added for $60. My feeling is as a parent this makes financial sence and it is understandable why given the option of trains AND trucks. The scale is somewhat close to O so they are close to compatable.

This market should be courted is my feeling. If you really want to secure a future for this hobby look at what is already happening. The ball is rolling already. If hobby shops picked it up and started carrying these toys like some already do with Thomas the Tank Engine, they could pick up a new audience.

[Anonymous]

My 2 cents:

1) I'm encouraged by the newest K-line offerings in the low-end market. They include rolling stock and engines specifically designed for your kids--including some battery operated sets with remote control. For the slightly older kids, they have street priced $150 sets that have action cars, lots of pieces for kids to play with, and nice looking track. At least one set (more expensive) has railsounds. For trains to keep kids interest, they need the "lego factor"--enough parts for kids to explore their creativity. This is where trains can beat the computer game. Now, what if one of the manufacturers could put together a set with remote control, sound, nice track, a switch and/or crossing, easy wiring, rugged cars and engine (drop the detail and die cast parts), an action car or accessory, a few figures and buildings, and do it for about $200 street price? If you look at what's out there, IMHO it could be done. BTW, adding $100+ to a set/loco to have sound and TMCC needs to be examined. How about a TMCC, Railsounds compatible locomotive (so they can be run by TMCC if the buyer expands their interest) with far less features and a very simple remote control system (throttle/dir/bell/whistle/switch/acc/uncoupling) that could be added for a lot less. Electronics are cheap. I assume it's the development costs that keep TMCC expensive.

2) I think O gauge trains for kids should be targeted at the 12 and under crowd. Honestly, for the money, kids who are "into" model trains will naturally move to HO or N in their teens because of price, realism, space, and expandability. I think it would be interesting to see how many adult O gaugers had Lionel trains (either theirs or their parents) as a young kid, lost interest or moved to another gauge, and now have permanent O gauge layouts in their basement. For young kids, HO is too hard to deal with--but a good O set, if made for a kid, is great.

3) As I've said elsewhere, I'm disappointed with the state of affairs regarding the Polar Express set. It is not a great set for kids (better IMHO for collectors actually) and, with the current price explosion, perpetuates the idea that Lionel trains are all worth their weight in gold. Don't get me wrong, I think the set is fantastic, but there isn't a lot of play value--especially if mom and dad are too worried about the $400 set that they won't let the 7 year old work the throttle. I only hope some people interested in the Polar Express set will opt for a more kid oriented Lionel or K-line set.

I know some of these thoughts have already been expressed in this thread, but thanks for reading on anyway.

One last note, I took my family to K-line Feb. Fair Days last year in NJ. K-line had opened about 4 or 5 of their starter sets (the Iraqi Freedom, the Trackside Construction, and I think a PRR set) in the middle of the room and just let the kids go at 'em. My kids played for hours and I noticed several other kids there for a long period of time as well. The trains seem to hold up fine (although I think they blew a few of the transformers) despite the fact that I personally saw pieces dropped, derailed, smashed, etc. It was great fun and convinced me that kids will play with trains if they are allowed to play with them. Thanks K-line.

[3railguy]

QUOTE: Any takers on my Rokenbok comments. Or are you old guys blind to anything that doesn't advertise in the toy train magazines or look like what you had. Maybe if I provoke you enough we could open a new area for some conversation on some expansion in this hobby.

I'm aware of Rokenbok and it is an innovative product. However, Lionel and MTH are into model trains and their advanced control systems like TMCC and DCS best fit how model trains are generally run..

[Anonymous]

My 2 cents:

When my Grandson was 7, I bought him a Lionel starter set. It was the logical choice at his age. Each year I have added to it. The add ons are not cheap.

I wander over to HO land and see a much greater variety of equipment at much lower prices. The space needed is much less than the equivalent 0 gauge.

I am not going to pay $1K for a loco for him when I can buy several HO locos at a much lower price.

Excluding limited run locos, The price of acessories for 0 gauge are way beyond what I am willing to pay and may be part of what are discouraging new fans to get into 0 Gauge,

[Anonymous]

It would be nice if the nice but inexpensive trains like the new,( but gone from everywhere, for sale for twice the original price on ebay,) Lionel 0-6-0 docksider were made more often. It seems that this type of product is needed to get more "new" people. If only some of this type of product were left on the shelf for them. I could say the same for the Polar express set directly intended for a new audience. Oh well.

A starter set is needed for the adult collector that would not need to be replaced out of embarassment with all new things when the new hobbyist sees what everyone elses set up looks like. The hobby is expensive enough with out this early initiation-like double payment.

[Anonymous]

Any takers on my Rokenbok comments. Or are you old guys blind to anything that doesn't advertise in the toy train magazines or look like what you had. Maybe if I provoke you enough we could open a new area for some conversation on some expansion in this hobby.

I realize that the sci-fi looks of the Rokenbok monorail may not appeal to some but even Lionel did this recently with the Phantom series. Toys can be fantasy based kids like this. When I was a kid I coveted the Black Cave Flyer and the L.A.S.E.R. Lionel trains as well as the HO Tyco Turbotrains that glowed in the dark and raced up the wall. Those were pure fantasy and I loved them more for it.

If the reason no one here is interested in the monorail toy is the fact that it must have a dedicated separate right of way that is not three rails I can point to toy train historic president. In the new MTH tinplate catalog they are making replicas of the Leland Detriot Monorail from the early 30's.

Here are some of my ideas of what could help make 3 rail trains appealing to contemporary audiences(and kids). Instead of seeking out licenced characters that cost an arm and leg the companies should make themed train sets with a more general theme appeal or include characters the companies themselves create and then can licence out. (If anyone is listening at one of the companies I know of no kids who play old west theme games at this time and there are no cartoon or toy lines so that does not seem a direction to go.)

Something that can fit figures into or onto the train seems like a good start. The Polar Express set had figures but I don't know if any real kids got one. Maybe if they made larger trains scaled to fit 3 and 1/2 inch figures like Star Wars and GIJoe that treated the O-27 track as narrow gauge so the kids could defend or ambu***he train with other toys they already have.

Somehow including a game element like Magic cards or Pokemon collectable cards seems a way of raising interest that really appeals to kids now as well as deversifiying product. Also Manga and Japanese style Anime type charactors are very popular now with kids.

I know some older urban kids would love to have some of those subway sets to "customize" if they only knew about them. Which gets me to my next point. Advertising beyond the captive train magazine audience is a must if you want to continue this.

People my age who collect toys collect action figures mostly, not trains. This is reflected at the newsstand there are at least four action figure magazines and who knows how many manufacturers direct thir toy lines not only at children but at teen and twenty something collectors. If toy train manufacturers could find a way of reaching out to them that may be a good solution for a larger audience.

In the eighties Tyco made a HO scale Transformer toy train set. It was a natural fit because what the Transformers are a transportation toy (car, train or plane)that changes into a robot. Today Transformer action figure collectors seek it out on ebay and bid against the toy train people because of the cross promotion. If some train manufacturer today teamed up with Hasbro to make a new Transformer train set that could transform and was part of the Transformer TV show and comic books I am positive it would draw Tranformer collectors into the hobbyshops. A big plus would be that it may even make it into the Big Box Retail stores where Tranformers are already a well received toy line.

Several companies put licenced characters and products on their trains. Presumably other people outside of this hobby collect things with these licenced likeneses on them. This was made clear to this hobby recently when Union Pacific demanded licence payments. How can train manufactures reach out and find these other collectors with other interests that are interested in the line they have payed to put their collectible likeness on the product. The toy train makers should try to get the most milage they can out of this because already they are down money. One way to raise interest is to actively seek them out put ads in their collecter magazines, send review copies to their collector magazines, drum up interest on their internet forums. Once someone has one car with the thing they like, they may buy others, and before you know there is a new hobbyist.

Otherwise without some kind of expansion a few years down the road, people my age and younger in this hobby may have a really good train collection and very little competition to keep prices up but probably no new toy train products to speak of.

[3railguy]

QUOTE: Brianel, even in the 1950s the reason toy trains "worked" as a hobby is that adults, specifically Dad in most instances, took an interest in toy trains as well. This was necessary and essential to Lionel's success, given how expensive they were even back then.

That is true. There was a large adult market for Lionel trains in the 50's. A good majority of the big ticket items such as F-3 sets, trainmasters, GG-1's etc. were sold to adult model railroaders or collectors while 027 sets were bought for kids. It's the reason so many big ticket items show up today in like new or mint condition.

[Anonymous]

These are very well thought out arguements. This is a topic that I am very interested in. I am probably from one of the more unrepresented age groups in this forum in my late 20's with a week old baby boy. I wish I could afford some of the trains I see in the catalogs but I just sit and wish.

Today I went to three different hobby shops to find the now so elusive new Lionel Santa Fe docksider to match my 70's era Lionel Rock Island docksider(now remotered and repowered). What a difference. But from my choices you can tell what price league I am in as a student. But I digress back to the point.

A phenomena that I have tried to raise in this forum that I think could be a possible saving grace is a toy that is carried at most mom and pop educational toy stores, the type that would carry playmobile. The toy is called Rokenbok. It combines a video game type controller with remote controlled vehicles. Up to four controllers plug into the base station and up to eight vehicles can be controlled from it. The vehicles each have a slot for a numbered key that determines the indentity to the base station.Pushing a button you can sellect through all of the different vehicles. So it functions similar to a simple command control. Several construction type vehicles with tank treads or wheels are available as well as a freight monorail. All of the vehicles have an automatic load / unload feature powered through pushing a button on the controller.

The point of it all is the sorting and moving of colored balls that could stand for any product. I was using my Lionel power plant with it because it seemed appropriate in a sick twisted Yucca Mountain way. The monorail can make a six inch radius turn on its track and can go up very steep inclines.

At every store that has these the demonstration table is very popular with the little ones. A factor may be that a start set can sell for around $100. According to the monthly contests at the company web site www.rokenbok.com it's popularity carries over to some older kids unlike Thomas. As I see it this is toy trains just in a slightly different form.

Older toy train enthusiasts should embrace these developments as a continuation. Hobby store owners I have talked to seem very uninterested which I think is short sighted. Even here in San Diego the model railroad museum has no displays of the toy train company based in the same city. Thomas the Tank Engine is one way, but this toy and toys like it is another way to attract more children to the hobby. Three rail discrimination....kidding.

Some adults have started to make layouts with Rokenbok. We have a forum at www.rcblocks.com. If you are interested stop by. It is much smaller than here but that way you could meet everybody.

[cnw1995]

See, as much as I really want to believe if only (paraphrasing here) the toy train producers really worked at marketing to families and kids with affordable stuff, the hobby would really grow, it doesn't make sense to me because (in only my opinion of course) the market just isn't there. The leisure time / entertainment or whatever you want to call it market in 2004 is heavily, deeply, permanently fragmented in many many niches - toy trains being a very small one of them. The only behemoth categories for growth are electronics-related - and they have their own pitfalls (guessing wrong on a development platform, missing a 'game' trend, etc.). When trying to grow a niche - the place you start is with your existing customers - which are not families nor young kids but (generalizing here) nostalgia-driven layout builders, collectors, and more prototype-following modelers. As a producer, you try to encourage them to buy more of your new stuff - and try to expand the contexts where these customers can do so. One substantial market (first tapped in the 80s) is the ever-aging boomers - who will be looking for something to do as they enter their 60s in 2006. Now the problem is many have no past experience with toy trains to wax nostalgic about - and they also have substantial interests in a wealth of other activities - all of which are frantically competing for this audience's continued attention. So instead of trying to attract the new K-Mart / Sear or Walmart into carrying your products - by the way, this will never happen - toy train sets are too big (take up too much shelf space), slow-selling - in relation to the other episodic-selling or other media-driven toys- and too expensive) - I would recommend trying to flog our stuff to aging boomers. Partnerships with their affinity groups would be interesting to pursue. Of course our various opinions boil down to marketing research that's out there to peruse and our own personal anecdotal experiences. But in my opinion, trying to sell a family a low-end train-set through a big box retailer without there being any interest or other context within that family to eventually make it bigger is a dead-end game.

[brianel027]

Tom, that was an excellent summary you wrote. Hope you'll continue to post here. That is very good.

Now to those who may disagree with some of my feelings, I need to ask have you ever taken the time to show a kid friendly layout to kids?? I have. I did it for years. I would be at shows where there were lots of nice, big, expensive modular layouts with the latest top notch trains running on them. And then there was me with my door layout running inexpensive 027 trains. And families would come back time and time again and tell me my layout was their favorite!

I know why too. In this day of adult oriented, scale oriented, expensive electronic oriented trains my layout and the trains I ran showed families with children the possibility that it could be done. My layout was something they could actually attain - which was the whole point of the layout. To make a metaphor, folks may dream of owning a Mercedes, but end up getting a Kia.

I would have parents, and mothers in particular, taking notes - yes, actually taking notes - on what I had done and how to do it. I would take the time to give them simple, non-expensive advice. I had single mothers buy trains from me. Even single mothers can figure out how to order a door from a lumber yard and paint it green. I would advice to put down a layer of indoor/outdoor carpeting on the door, loosely attached so that wires could be run between the door and the carpeting. I've had other dealers come up and thank me for helping them to sell a train set to a beginner or a family with kids. Moms want to relate to their sons too, even if it's just something like painting the little people together - which I also saw happen.

It's not rocket science. Can we adults forget about what trains WE want for a minute, to consider what trains a kid might want? Can we forgive the importers for making a few less scale model replicas so they divert some money into making some newer updated "toy" trains? (From what I read on the forums, probably not.)

I recently had a conversation with what can only be called a die-hard postwar train guy who always hit me as being in it for the money. He asked me what happened to my layout and why I didn't do the shows anymore. And then he told me he though my layout and my efforts did more to bring new people into the hobby than anyone else he'd ever met. "Wow" I thought. Besides the compliment, I was surprised he even noticed. I thought he was too busy consulting his price guide to notice that there were actually families with kids at these train shows.

Some might say that parents don't take the time today as they once did. I say to that, neither does anyone else. Dealers don't want to take the time to deal with small potatoes. Train collectors don't want to take the time. Even the train companies don't want to take the time... look at the product... look at the prices of most of that product... look at the lack of promotion... look at the catalogs and who they're aimed at. The first minute a train product is made without all the expensive extras that might appeal to beginners, the first thing you read on the forums is "gee I wi***hey'd make a scale version on that" or "gee, why don't they throw $100 worth of electronic features into it." The RMT "Beep" is a prime example. As is the new Lionel Docksider. Add the electronics yourself if you need them. Add the sound yourself if you want it. Add the scale details yourself if you want them. Add the weathering yourself if that's the way you like your trains: the companies cannot make trains to PLEASE everyone. It's nice once in a great while that they do make things that have appeal to beginner and budget modelers.

Times have certainly changed. And many of the arguements and points I hear do absolutely have validity to them. BUT I've been on the front line and I am telling you there is interest! No kid ever walked away from my layout without having the chance to run the trains if he or she so wanted to. Someone has to take the time to show folks the magic of the trains and the possibilities. And it takes more than just little ol' me.

If the importers make it a priority that they REALLY want to see kids back into the hobby, it will happen. It may not happen like years ago in the quantities that once were sold. But it will happen. If the companies continue to make scale, expensive adult oriented trains the priority, as they are now with beginner product as a sideline from age old tooling - it will never ever happen.

[tgovebaker]

First of all, thanks to everyone who has weighed in on this topic. I've found your responses -- as well as the discussion of incomes, inflation, and purchasing power[:)] -- very interesting.

A couple of clear themes emerge from what you've shared. First, the market is obviously much smaller today (despite the dramatic increases in population) since the 1950s. This reflects the decline of railroads in American transportation and, more importantly, in American culture and myth-making. It also reflects increasing competition for the "entertainment" dollar (or guilder...), which is itself informative. In earlier eras, we didn't think of trains as "entertainment", but rather as a hobby, or something to play with. In fact, "entertainment" can be largely passive, whereas "play" -- especially with a model railroad -- requires imagination. Many an American educator today laments the decline of imagination and the rise of passive entertainment-seeking...

Second, as the market has contracted, too many manufacturers now seek to chase too few customers by offering too many versions of the same thing. Within-market differentiation seems minimal, with several manufacturers offering nearly identical versions of the classic Santa Fe F3s. Moreover, too much of the focus is on the higher end of the market, with limited runs of very detailed cars. The recent Lionel aluminum cylindrical hoppers are beautiful cars -- but cost over $60.

Against the backdrop of a shrinking market, the overall economics have changed pretty dramatically. One posting made the point that in the 50s, Lionel could sell hundreds of thousands of units (the classic F3 Warbonnet, for example). Today, we estimate that a run might be only 1,000 units. There are no returns to scale in that environment, so R&D and tooling costs need to be covered in higher prices. On top of that, the model train business now looks like the movie business, with each manufacturer hoping for a "blockbuster" that sells out, thus covering its costs and adding enough margin to subsidize the also-rans.

Another theme that emerged, albeit less prominently, is the lack of differentiation, with most manufacturers positioned in the same place. From a business standpoint, this doesn't make a lot of sense. Everyone wants to be the "innovator" -- and to price accordingly. This has left -- as several of you point out -- the bottom of the market largely underserviced. Out of these big, beautiful catalogs, only a handful of pages feature affordable, entry-level products appropriate for a young child.

The final key theme is one that really resonates with me personally, and that is the issue of "play value". Ironically, my mother sent me a copy of "The Art of Lionel Trains" for my birthday, and it arrived yesterday, just before I got the news of Lionel's bankruptcy filing. Leafing through the book, I was struck by the consistency of the imagery from the early days all the way through the MPC era and into the 80s: in nearly every catalog, the trains are linked explicitly to the delight of a child (inevitably a boy), and often the parents. The absence of focus on entry-level trains today, and thick catalogs that feature no "young engineers" really stands out now. This failure to reach out to new railroaders with products and images will ensure smaller and smaller markets in the future.

The important thing about "play value" is that it does not require a scale product, or absolutely perfrect reproduction of the prototype. It simply means that you have a good, rugged product that sparks the imagination. When I was a child, I didn't really care that the Lionel automatic signal man was taller than the caboose. I was delighted that he came out and waved his lantern. I recently bought a used copy of Harvey Weiss' classic 1970s book "How to Run a Railroad," in which he emphasizes some very basic things to do in order to maximize the fun of model trains. I loved that book when I was a child, because it ensured that my entry-level Chesapeake Flyer was the absolute center of the universe (albeit one with the "Electronic Mighty Sound of Steam," the Railsounds of 1976), I shipped freight all over the basement, for years. I wonder now, in today's crowded, undifferentiated market, if anyone at any of the major companies actually remembers "how to run a railroad."

One of Weiss' recommendations to young railroader was to avoid passenger service and concentrate on freight trains, on the grounds that the latter are much more fun to run. Passenger trains simply go around the layout, but freight trains actually move freight, necessitating cranes, warehouses, log dumps, mines, and industries. With this in mind, the forthcoming Lionel Acela Express really stands out. It will cost over $1,500 a pop and could well be the blockbuster Lionel needs. Early reports are that many dealers have sold out their pre-orders. This, I remind you, is a passenger train (albeit a beautiful and very comfortable one in real life), but one that runs only on Amtrak's Northeast Corridor. Where is the "play value"? And who would buy a $1,500 train for their child?

To me, the Acela really captures what is wrong with the industry. The train will be beautiful, and will be gobbled up by collectors, who will display it, but eventually go back to their more interesting freight trains. Meanwhile, entry level options are few and far between...

Again, many thanks for all your comments. This has been very interesting.

Best,

Tom
San Francisco

[spankybird]

I believe a big difference is back in the late 40 and early 50’s, RR were the major employer in the U.S. Many Dads or Uncles work for them. IF your Dad didn’t work for the RR, you know someone who did work for the RR.

How many of you today know someone who works for the RR [?]

It could have been many things, pride in your job, showing your son what you did at work and what RR was about, or maybe how you would run the RR if you owned it, or maybe it was just JC promoting Father – Son building together thing.

What ever, but because the RR were a much larger part of our economy in the 40’s – early 50’s, so was toy – model trains.

[Big_Boy_4005]

QUOTE: Originally posted by nblum

You cannot sell things to people that they do not want, at the price point that can be reasonably achieved. People, in general, have no interest in toy trains, except at Christmastime. No amount of public relations is going to change that. You can tweak it at best.

Yes Neil, I believe this is the larger problem when it comes to getting people into the hobby.

Real railroading just doesn't have the appeal that it once did. Most of the big names we grew up with are gone. Passenger trains are gone, except for Amtrak. Steam engines are gone, except for a few working locomotives that have been preserved. The number of people employed by the railroads has dwindeled.

If you think about it, during Lionel's first 70 years, their popularity really followed that of the real railroads. There were a couple of blips due to the economy, namely the depression and WW II. Lionel's popularity went right in the tank by the mid 60's. General Mills pushed the rock up the hill through the 70's, and now a few of those kids are coming back for "seconds". For baby boomers, this hobby is an easy sell.

Today's kids don't see trains the way we did. It is almost like trying to get them to eat vegetables, though we think it's candy. There are too many other distractions working against trains.

So, where are all of these Polar Express sets going? Are they going to be run under Christmas trees? Are they going to "us elderly children" because we find them quaint? Or are they going to real kids to be played with?

The only answer of any value to the future is real kids!!!!

[nblum]

Brianel, even in the 1950s the reason toy trains "worked" as a hobby is that adults, specifically Dad in most instances, took an interest in toy trains as well. This was necessary and essential to Lionel's success, given how expensive they were even back then. Today, the interest on the part of Dad is missing, and so is the commitment of money and time in the family for this hobby. So even though kids still like these toys, there are few parents who care enough to make the financial and time commitment required. Toy trains just aren't where it's at for adults, by and large.

[nblum]

Scott, your points are all correct, but I would simply argue that the resources a family can draw on to buy a train set or locomotive is the total family income, not the individual income of the primary breadwinner (usually the only breadwinner, as you point out, in 1955). Indeed, the entrance of women into the workplace in serious numbers is one explanation some economists offer for the increased material affluence of most families in recent decades. That having been said, almost none of that additional income has been spent on toy trains, much to our distress.

[brianel027]

Sorry Neil, gotta disagree wholeheartedly again. I've been on the front line with a kid friendly operating layout at far too many train shows for far too many years to know there isn't interest except at Christmas. There is interest and kids are still fascinated by trains. Parents also find an appeal in a hobby that can involve the whole family, that invites active participation and learning and doesn't involve the television screen.

It's sad that one of the few places you can go today to see an operating train layout is at a train show. And even many of those don't have operating layouts.

There is a desire for nostalgia after 9/11 that has not fully been realized by the train companies. Making the bulk of the product high end items doesn't help. Making it hard for average retailers to sell the product doesn't help. Allowing large mailorder places to be the only ones who can offer discount pricing isn't helpful either - at least as far as growing the hobby is concerned.

Again, people won't buy what they don't see. Seeing it is no guarantee that they will buy it. But not seeing it is a sure fire way to be sure they can never buy it.

Even with the train magazines, which didn't exist a generation ago, an operating display layout will do more to sell trains to newcomers than will a full page advertisement.

[garyseven]

Maybe I took one too many sociology classes, but I really can't consider your argument using family income, as being valid.
Neil, you're a really smart guy, you know with minor exceptions there were three socially accepted college degree programs for women in 1955: Home Economics degree, Nursing degree and "Mrs." degree. Women working outside the home were shunned in the neighborhood, pay scales for the women who did land decent jobs were extremely disproportionate to men at the same job, and when they did succeed, which hardly ever happened, they bumped into a glass ceiling. In 1955 the only women allowed to be working in boardrooms, operating rooms, and courtrooms were stenographers, nurses and secretaries.
This is why you have to use individual income as a valid compairison - and it's not really good either, but that's another story.

We will agree to disagree - but I had to give it one last shot.

[nblum]

You cannot sell things to people that they do not want, at the price point that can be reasonably achieved. People, in general, have no interest in toy trains, except at Christmastime. No amount of public relations is going to change that. You can tweak it at best.

[brianel027]

Neil, hate to tell you but most families did have at least one car in 1955 [:)]. I know, I was there. You are right though, that the overall quality of a starter set today is eons ahead of the low end sets of 1955. But there was much more selection on the low end at that time also.

You are right too that trains did sell better at that time. Yes, real trains were more a part of life and more kids wanted trains. BUT Lionel was also advertised on national media. Several major department store chains (Sears, Mont. Ward., JC Penny) not only had Lionel sets in their own catalogs, but Lionel also made exclusive versions for them too. Lionel Trains were also for sale in a variety of places that people actually shopped, and most of these places had display layouts too. Even K-Mart during the mid-1970's carried Lionel product... not just sets, but separate sale items too. Of course, there was also still some national media advertising in the 1970's too from Lionel.

THIS is the BIG difference between then and now, nevermind adjusted income levels. Today, it is something of an exclusive privilege to be able to sell the Lionel line. Have you ever seen the actual Lionel dealer agreement?? Let me tell you, you do not need to go through so much trouble in order to sell video games or any other hobby like RC cars or rockets. Exclusive is one thing... foolish is another.

In order to keep every Tom, *** and Harry from selling Lionel product, they have an agreement that would completely turn off the average business owner. Especially since you would be selling a product that gets no national support or advertising outside of the toy train magazines. Product that you are pretty much forces to sell at full list because of the poor margins offered to small dealers. And where you are NOT first in line to receieve dibs on reduced inventory wholesale prices. Believe me, the big mailorder places can offer the blowout prices because they're the only ones who are having the reduced wholesale levels offered to them. In some cases, it's cheaper for a small dealer to actually order from Train World than it is from their normal wholesaler.... not a very practical way to sell product.

Granted things for the American wage earner are different now than they were in the past. There are also many other things competing for this income. Remember, cable TV did not exist in 1955. Nor did the internet. A telephone was just a basic telephone in 1955. Heating and energy costs, insurance costs, health care, taxes and education costs are all WELL ahead today of their adjusted inflation levels of 1955. Families may make more, but they are definitely paying more for the basics (although the basics of today are a far cry from 1955).

Again, the big difference was Lionel Trains were for sale everywhere. Marx Trains were even for sale in more places. There was advertising and operating display layouts. The average kid knew very well what Lionel Trains were back then. Probably today, the average kid doesn't have a clue what they are.

You can't sell something if people don't know what it is and don't SEE it for sale where they shop. And it doesn't take a degree in economics to figure this one out.

[nblum]

Expensive and affordable are two different but overlapping characteristics. My initial contention is that many families were willing to take a big financial hit for toy trains in 1955. They sold hundreds of thousands of Santa Fe F3s. Not today. The perception of the value and importance of the product are vastly different during the two time periods.

Add to that difference that family income has almost tripled in inflation adjusted dollars since 1955, and the circumstances are such that trains are more affordable (less expensive relative to family income) in 2003, although still very expensive relative to other choice toys. If the bottom end locomotive today is modestly more expensive than the CPI would account for, and family income, inflation adjusted, has almost tripled, aren't beginner level locos and trains more affordable today than in 1955? The reality is that despite the affordability very few people are willing to buy them. The fact that there are high end expense models that are less affordable may be correct, but these models are made in very small numbers and have features not present on the 1955 high end models and the 2003 low end models.

In the end, a thousand fold greater number of individuals bought toy trains in 1955 than in 2003, despite their expense back then. That tells us something about their affordability, but moreso about their desirability. The reason more families had trains in 1955 has much less to do with their affordability, which was perhaps 1/2 to 1/3 as affordable in family income as today, and more to do with their desirability, IMO.

[garyseven]

Neil says:
"So while the top of the line locos may have been proportionally more affordable in 1955..."
(With a top of the line loco in 1955 being $50 and top end in '04 being $1800- I am glad we now agree!)


Wouldn't you agree that the bottom end locos may be proportionally more affordable or about the same in 1955 too?

Come on Neil, they were not "much more expensive" in 1955.[;)]
(With a bottom end loco in 1955 being $14 and bottom end in '04 being $100)

[nblum]

Well, we'll just have to agree to disagree. The fact is families were prepared to make more sacrifices in 1955 to buy their young sons Lionel trains than similar families are in 2003, regardless of price. Lionels were THE toy back then. Now they are somewhere between 20th and 50th place I'd guess. And Lionels and other trains are much better value in that the bottom of the line models have better sound, reliability and other features than the models from 1955, as a broad generalization. The top of the line model in 1955 didn't have much better sound than the bottom of the line models, and they certainly didn't have digital command control, extraordinary detailing and electrocouplers as the current era locos have.

So while the top of the line locos may have been proportionally more affordable in 1955, many more families today could afford a $1000 loco than could afford a $50 loco in 1955. They're just not interested, with rare exceptions. Some of this potential but not real market for today's product is population growth, some increase in family income, some increase in productivity and some inflation.

Most families today have two incomes or 1.x incomes. A family lives off its income, not its average income per adult. Back in 1955 fewer than 20% of women with schoolage children were in the workforce, and, as you say, their salaries were terrible. Today that proportion is increased by more than two fold and women earn much more equitable salaries. So I think it is reasonable to compare total family income in 2003 to total family income in 1955, and it has more than doubled, close to tripled even accounting for inflation. This dramatically affects affordability of trains and,of course automobiles (most families didn't have one, much less two autos in 1955).

[garyseven]

Neil asks:
"But I believe your median income is individual worker income, not family income."

With what employers paid women in 1955 with what women are making today (with respect to same profession) and the promotion cap of the "glass ceiling" and other sociological and educational factors, it would not be valid to use anything but individual worker income.

Now as far was what was available in 1955 I will be the first to tell you I have no idea what was available for what price...(and I don't have a time machine built out of a DeLorean) but it appears, at least to me, that locomotives were not "much more" expensive in 1955. On the contrary, they were actually cheaper - especially top end and bottom of the line.

[brianel027]

I know one of the train magazines did an article pertaining to the inflation index and the MSRP of trains today. The conclusion of that article was that the vast majority of trains today (even reissues of identical products from the past) are way ahead of inflation.

As a kid, I remember being able to save my allowance for a month, and then go to the local train shop and buy a Lionel operating crane car. I even bought a operating newstand too. I can remember buying a used Alco on my allowance too. A kid today would need to have a pretty hefty allowance to do that - especially from a local train shop. Not to mention that there aren't that many local shops that sell trains, and what few there are sell them (by necessity) at full list or maybe if you're lucky, at 5-15% off list. Today, you'd have to stick to an non-operating K-Line Train-19 car or a starter set $25 car from Lionel. Maybe one of the cheap Lionel $30 dump or searchlight cars. Those dump cars have long been due a minor modification to the frame, as the tabs break far too easily, especially on the dump cars with coal bins attached.

Given that, there are some decent affordable trains made today if you aren't a stickler for scale detail and don't mind not have some sort of digital control. Again, one of the problems is a matter of perception. When a newcomer or that parent with a kid, takes a gander at any new catalog from K-Line, MTH or Lionel, what they're going to see is the vast majority of the catalog is expensive (depending on your definition of expensive) scale sized / detailed trains that simply are not intended for the hands of young engineers - it's that simple.

And saying to a child or the parent of a kid that there are deals on ebay and by mailorder is not the same thing as walking into a train shop and gawking at everything, choosing what you want to buy - seeing it and holding it first! This is a big problem in the hobby today. Right up there in the top 5. Mailorder is wonderful for the experienced buyers...even folks at Lionel encourage people to check out Charlie Ro and Train Expresds. But this is a formula for doom to the unexperienced buyer who needs to see things first. And I won't even mention the wonder and excitement of seeing an actual operating display layout (I used to love those when I was a kid!!) because today they're even more far and few.

The importers are ALL (with the exception of Williams and RMT and previously Industrial Rail) going after the easy dollar - the adult scale market. And they're doing it out of competition, spite and to one-up eachother too. It's a darn right foolish way to do business, but that's what they're doing.

And the adult scale buyers are also partly to blame here too, with their specific lists and demands of precise models and variations they want made. And if so much as the headlight is in the wrong spot, they have a fit aboout it. It's understandable to some degree, since they're paying so much. But even the HO guys are willing to chop, and cut and kitbash items to make them specific for a particular railroad. BUT I forgot... we can't do that with THESE trains because they're valuable COLLECTIBLES. Yeah... scale milk cars: orginally worth $60, now worth half that as a blowout.

You have a limited number of modelers who can afford and have the space to run these kinds of locos and cars, yet the importers are flooding the market with them. Even with their cuts in production runs, there are simply too many of these types of trains for the intended audience - even popular items like the scale milk cars. BUT try asking any one of the importers to cut back on these types of products and see what the reaction will be!?

When Calabrese was named CEO at Lionel, there was a furor on the other forums with folks in a panic hoping that Lionel wouldn't go back to just making toy trains! Oh me gosh, like there isn't anything else being made from MTH, K-Line, Weaver, Atlas and others to fit their scale train needs.

Furthermore, with all the recent legal rangling, now Lionel has a list of scale locomotives that they are no longer allowed to make without redoing them all over again. What a waste of time and money. And yet they can't make even one single new non-scale traditionally sized modern locomotive in a roadname other than the Pennsy or the NYC. Even just tooling a new shell to put on an existing sheet metal frame.

It's ironic that the two real hits Lionel seems to have right now are the "Polar Express" sets and the new little $99 dockside steamer. That docksider was a very good move... pleasing both audiences... the scale guys and the traditional 0/027 guys... well almost. I see some already complaining that the docksider isn't detailed enough and lacks TMCC and Railsounds, and that a weathered edition Polar Express or a scale proportioned version should also be made. Reminds me of little kids who have eyes that are bigger than their stomachs. Or in this case, eyes that are bigger than the overall market will absorb.

Yeah, like there's a severe shortage of trains being made to scale proportions without TMCC.

And with the recent Chapter 11 announcement from Lionel, I'm sure the last thing they need to do right now is to make even more obscure model trains that will have to be sold at blowout prices a few months down the road.

[nblum]

Your math seems correct. But I believe your median income is individual worker income, not family income. There are many more two income families today, and I believe median family income is higher today than in 1955, when two income families were uncommon. I believe median family income in 2003 was closer to $52,000, or almost twice what you are quoting.

In any case, the $15 loco was bottom of the line in 1955, $120 in 2003 is almost below the bottom of the line for Lionel. The most expensive loco in the 1955 Lionel catalog was the GG1 at $50 or so. That's 1/30th to 1/35th of the price of the top of the line in 2003. So inflation varies depending on the type of product as well. A typical mid-range Lionel loco was in the $25 range in 1955, only half the price of the top of the line, and still a big chunk of money. A typical Lionel loco in 2003 was $400, or 16 times as much as the $25 in 1955, still a big chunk of money. Expensive in both eras. But whereas Lionel locos varied in cost from about $14 to $50 in 1955, in 2003 they vary from $70 or so to $1,800, a much, much wider spread.

[garyseven]

In 1955 the median income was $3,400 per year
In 2003 the median income was $30,941 per year
Given the $15 locomotive in your example, based on a 40 hour work week, the median worker in 1955 would have to work 9.17 hours to afford that engine.
A 2003 median income worker, based on a 40 hour work week, working 9.17 hours could afford a $136.50 engine.

Neil summerizes:
"Lionel (or American Flyer) trains were much more expensive, especially compared with incomes, in 1955, than they are today, even corrected for inflation by whatever formula one chooses."

Is my math incorrect or dId I choose the wrong formula?!?

[nblum]

Compare an automobile today with what one cost in 1955. It's not a six fold increase in cost, it's more like 10-20 fold increase, because the products are not the same. Likewise, in 1955, Lionel probably made a few hundred thousand locomotives of some types. The number today is probably more like one-tenth or one-hundredth of that. Strict use of the CPI is probably not appropriate when both the volume of the product and the technology in the product are so different.

In addition, $20 was a larger proportion of the median salary in 1955 than is $120 or even $200 today. Unless I'm misremembering, a median salary in 1955 was a couple of thousand dollars, so $20 was perhaps half a week's salary. Today the median salary is more like $40,000, so $120 is more like a fifth of a week's salary.

In summary, Lionel (or American Flyer) trains were much more expensive, especially compared with incomes, in 1955, than they are today, even corrected for inflation by whatever formula one chooses.

[garyseven]

nblum says:
"For those of you who weren't there in the 1950s and before, three rail O gauge trains have always been expensive. $2.00 for rolling stock and $15 for a locomotive translates into prices 10-20 times that today given the much smaller market and inflation."

To be accurate and not inflate inflation.[;)]and to keep honest people honest, what cost $2.00 in 1955 would cost $13.08 in 2003. What cost $15.00 in 1955 would cost $98.09 in 2003
(Source - the pre-1975 data are the Consumer Price Index statistics from Historical Statistics of the United States (USGPO, 1975). All data since then are from the annual Statistical Abstracts of the United States. )

Neil, just how did you calculate for "a smaller market?!?"

[Anonymous]

I have what I think might be a rare O-gauge UPS box car from the late 80's. I am pretty sure they are very rare, and the fact that I have one has me curious if it is worth anything, if any one has any information on this box car please let me know about it. Thank You.