K-line advertising

[3railguy]

In the 1980's, nostalgia grew the O gauge hobby. Brand loyalisim was natural because there was really only Lionel and Marx in the 50's for everyone to remember as far as 3 rail O gauge is concerned.

In the 1990's a combination of desire for scale realism combined with nostalgia grew the hobby. This explains the outburst of scale equipment. This hobby became segregated into collectors who remember Lionel of the 50's and hirail operators who model in a realistic fasion without a lot of concern as to who manufactures their equipment. As long as it's the engine and road they are seeking. This type of modeler is tomorrows market in my opinion and many will migrate from HO and N scales as they are today. I'm seeing this first hand.. They will be mixing brands and won't be wearing Lionel or MTH T shirts. Interchangability will be the rule and you won't convince people otherwise.

You can't just plot a growth chart of the past, photocopy it into the future and say this is the future. It isn't that simple. If you could, everyone would be getting rich on stock investing and they aren't. They loose their #### investing this way. You need to plot the curves on a broad scale and study what drove and is driving them to see where they are headed and make your buisiness plans accordingly. The curves on a broad scale rarely go in the direction they did in the past. i don't think O gauge manufacturers and dealers are studying the curves as well as they should be.

[Rescuedtrains]

After reading through this long thread I have a few personal obsevations to add. Strictly my opinion.

The best growth years for O gauge in terms of number of people involved with the hobby was the 1950's.

The second best growth period for the hobby was the 1980's to 1990's. This time it was the baby boomers coming back to rediscover the hobby and make new purchases. Technically these were not new people being draw in.

Advertising is IMPORTANT even if you have nothing new to sell. You must keep your name in the consumer's mind.

Steve

[3railguy]

QUOTE: Trains are something that can get in your blood. I believe it is either in there or not. No amount of cultivating will get the desire for trains out unless it is there in the first place. I certainly feel there are some out there who may have this desire but without the proper marketing may never know about the hobby

You hit the nail on the head. Certain people are born with a train gene and that gene is the lifeblood and future of the hobby. Not all kids are sucked into computer games. HO and N scales are still popular with young people today. The selection of HO and N equipment today is huge compared to what it was in the 60's and 70's. Young people envy O gauge for its size but do not have the money or space for O gauge. 027 is affordable but their tastes are scale oriented so they model in HO and N. It's likely when they get older, having money and space, they will switch to O gauge. How many of us modeled in HO or N in our teens or early adult life? From what I've read, many of us did.

The train club near me has an HO scale layout upstairs and a hi rail O gauge layout in the basement. Many of the young members work on and run their equipment on the HO layout and have home layouts that are HO. But they get a lot of enjoyment taking turns running the hi rail layout. Some own an O gauge engine or set outside their HO empires to run on the hi rail layout. It is very likely these individuals will make the transition in the future.

The cost of O gauge has nothing to do with greed. It has to do with size and it is real world economics. Believe me, if they could make them cheaper, they would. K-Line tried and failed the way I see it after their price increase on already cataloged scale equipment. You can't take the cost of HO and double it to come up with a figure that O scale should be. it doesn't work. It's an exponential factor and not all that simple.

As far as I'm concerned, the O gauge hobby has a long road ahead of it but their will be some major changes in the thinking and the way O gauge trains are manufactured. Manufacturers who aren't willing to make these changes are not likely to survive or become very small one man operations.

I know one thing for sure. The compatibility and interchangeability issue with command control systems and sound does not sell the O gauge hobby. The new ranks manufactures would like to see join the hobby tend to be roadname loyalists, not brand loyalists. This is the reason NMRA standards are practically the rule in HO and N scales if you plan to manufacture and sell something. Sure you are entitled to a proprietary system but don't plan on huge sales if that's your way of thinking. You can defend your rights to proprietary technology as Lionel and MTH are doing all you want but it falls on deaf ears. People will just walk away and have nothing to do with you. Marklin, for example, uses proprietary technology and has a very small HO market in the US along with a very small selection of US equipment. Talk to any seasoned *** and most will scoff Marklin for their lack of compatibility. If Jerry C, Mike W, and Nick L were to get intimantely involved with HO and N scales including getting involved with the modelers, they would understand where I'm coming from. They may even give each other a group hug, drop the lawsuits, and go back to their drawing boards. Atlas, Lionel, K-Line, and MTH each have their own unique strengths and weaknesses. together, can they contribute to the growth of the hobby immensly. This does not suggest consolidation. Consolidation would make them lazy. As long as they stay in their own little worlds and defend them, they will see their sales shrink.

To sum up my thinking of the future of the O gauge hobby, manufacturers must standardize or die because brand loyalists will soon be a dying breed. Manufacturers do not control the market. They are controlled by the market. Owning a buisiness of my own, I know this for a fact and I've been cut off abruptly thinking otherwise..

[Anonymous]

Very interesting--and different--perspectives offered by both Phil and Brian. Which one is closer to being right?

Well, my guess is that Phil comes closest to describing what has happened in O gauge in recent years, and Brian comes closest to describing what the future holds, which, in my opinion, points to a significantly smaller and more consolidated O gauge industry and market. As I've said so often before, the hobbyists themselves are slowly but surely becoming their own worst enemies. They want more for less, and they want what is produced to meet their increasingly highly specific interests and needs. In the long term, that simply will not work because it will invariably make it more difficult for manufacturers to determine what to produce with any assurance of getting a decent return on investment. And what they do choose to produce will have to cost more simply because the market for any specific item, especially at the higher end, will be much smaller. There's really no getting around that. And, of course, those higher prices will almost certainly lead to a shrinking consumer base over time. As I see it, this segment of the hobby is slowly choking itself by its own hands. Perhaps I'm wrong about that, but I think we'll know for sure within the next five years or so when, if the world holds together long enough, wel'' be able to come back and revisit this topic.

As for statements from the various manufacturer reps: These guys will always try to paint the best possible picture from their respective positions. You really need to take anything they say with a VERY large grain of salt because they and their staff will invariably try to put the best possible face on even the most dire reality. It's just the nature of the beast, not just in the toy train industry, but in any industry that is trying to make a go of it in the face of intense competition. None of these guys are liars; they're just adept at spinning things to their best advantage. It's the nature of the beast!

[brianel027]

Phil, I wasn't trying to infer that Calabreese wasn't being honest so I apologize you took it that way. Nor was I saying that the other company CEO's are liars. They simply want to put out the most encouraging picture as far as their own respective companies are doing. As you mentioned, we don't know the percentage of profit for Lionel's gross sales figure. Lionel certainly now has the lowest production costs they have had in decades. But they're also doing a lot of new product development and tooling. Clyde Coil keeps referring to new forthcoming developments and advances in TMCC, so who knows the money tied up in that. They also have other financial obligations and the on-going legal entanglements, which must be taking a toll on the bottom line.

Or K-Line for example... from the outside, things don't look real good from what one reads. Yet, the company is promising a new control system that will operate everyone else's systems. Who knows? I guess we'll see when it gets released. I think if the folks at K_line believed it was really hopeless, they'd say 'why bother.' So obviously they're giving it their best shot and putting out the best word along with it. There have been so many surprise legal developments for the train companies in recent years, so it is anyone’s guess as to what can and will happen next. But I would fully expect each train company to put out the best picture possible as to how they are doing, whether or not it actually pans out that way.

My only take on the statement that scale sells, is that the past two CEO's at Lionel have both said that the strongest area of sales improvement was in the starter set and traditional line of trains. I think John Brady said starter related sales were up something around 35-40%. One might think that if sales were really strong in this area, that more new products would be introduced in this market area. But you could also say that if sales are already good, why invest extra money when it isn't currently necessary? We also do not know who is purchasing these starter items: is it older hobbyists who are more budget constrained, or is it parents buying a first set for a son or daughter? Time will tell. Since the bulk of Lionel's advertising has been in train magazines instead of other family/child-aimed avenues, I'd be willing to lean towards the first suggestion.

I don't doubt for a moment that scale proportioned trains sell and that there is an audience for these products. But how big a percentage of the market are these items? Hard to say. MTH is dropping Locosounds completely from my understanding, so it must be that sales are not strong enough to justify offering it. Which illustrates the point, it gets made if it sells. Or maybe MTH doesn't want to bother with the added expense anymore... maybe they figure that Williams and Lionel have enough basic offerings.

But I also think there is an element of competitive spirit at play here along with trying to outdo the other company. Notice how when one company offers something new and different, everyone else does too for fear of being left behind (and losing sales to someone else). K-Line brought back the die cast cars after decades of not being made... now MTH and Lionel also offer them. K-Line came up with the "hidden" coupler button and now the others have it. Was it Lionel that brought out the new improved Milk Car first? Now Atlas and K-Line have their own too. I think most of us modelers would admit that though the competition has probably hurt overall sales of each individual company, the competition has also pushed the hobby forward in ways most of us could not have imagined 15 years ago. If there were no K-Line, Atlas, Williams or MTH, Lionel's sales figure would probably be higher. But we wouldn't have the product diversity either.

As with other types of consumer goods, the budget ones may sell more, but it is the upper level products that attract the attention. Although it's nice to see an occasional exception: the RMT Beep is a good example. The Beep appears to be doing very well, and now Lionel has offered their very decent budget priced Dockside Steamer and K-Line has introduced their Porter. They are different types of locos, but have a common appeal along with the quality Williams locos too, of being affordably priced.

Thanks for the well thought out response Phil. Too bad about your nephew too. Mine also likes his video games, but not at the expense of the trains. He wasn't as keen about trains until he saw we were going to do this together and that he would help... then he got real excited about it. He's into the hobby and I'm pretty proud of that.

[Anonymous]

I really don't know what is going on with K-Line either. I ordered three switches directly from them about one year ago and I have yet to receive them. They sent me an e-mail that they would be shipped as soon as they received them from overseas. I need to replace three Lionel switches that don't work properly. My steam engine stops in the switches and the switches just hum while trying to change positions. The K-Line switches that on my layout don't give me any problems.

[Phil1361]

Brian, I agree that the manufacturers are "patronizing one small segment of the O gauge market". Why do you think that is? First of a all 3 rail scale is not a small part of O Gauge it is a large part of O Gauge. That's why so many new scale products are coming out as compared to semi-scale O27 type equipment. Scale 3 rail sells-period! Plain and simple the manufacturers are catering to that segment of O Gaugers because that is what is upping their profit margins. Guys like you used to be in the majority as scale offerings in 3 rail O were slim to none. Now it is the complete opposite. After thinking about it, I now understand where you are coming from.

I was a kid who started out with 3 Lionel O27 train sets. Even as a young child I did not like the way certain trains looked next to one another. My two favorite piecese were my Alco FA and my Lionel milk car. These two looked good together to my young eye and looked like a real train. So when the scale stuff started coming out I easily got hooked. Down deep inside I always was a scale guy. Maybe things will turn around and in the future O27 will gain some of it's lost popularity or maybe it won't. One thing is for sure if more O27 type trains get sold the manufacturers wil start catering more to that market.


I don't think the problem is catalogs so much as it is the prices. Parents see the high MSRP prices of O Gauge and are turned off. If the parents really want their child to have trains as a hobby they will look into things and discover the discount mail order houses and the less expenisive O27 sized stuff offered by K-Line and Williams. What has to happen is kids have to ask for trains! Which most of the time they don't. I have a nefu who I bought a MTH starter set for, built him a layout with 8 switches, a milk car, a second locomotive and it just sits there collecting dust while he plays video games. I grew up in a middle class neighborhood. My friend up the block had a massive Lionel set with all the trimmings (locos,accessories,etc) so somehow he must have asked for trains from his parents and they found a way to afford them.

Trains are something that can get in your blood. I believe it is either in there or not. No amount of cultivating will get the desire for trains out unless it is there in the first place. I certainly feel there are some out there who may have this desire but without the proper marketing may never know about the hobby.

It can be done but people have to be interested in the hobby. I definitely agree the all the manufacturers preach to the choir. I also agree that some not all scale guys can be too picky. I want accurate models especially in the more obvious details but I am not one of those guys.

QUOTE: Final thought: I wouldn't put a whole load of stock on what the CEO's of the various companies say right now. Lionel is owned by Wellspring and Wellspring calls the financial shots. Calabreese is paid to put out a good word...

Brian you had a well written well-thought out reply until you wrote this. So you are telling me that Jerry Callabreese out right lied to some 200 OGR Forum members? Come on Brian. Remember the 60 million dollar figure represents overall sales which is good because a lot of trains got sold. It does not represent overall profit. I don't think the manufacturers are liars, they might round off a number but not out right lie. According to Tony Lash anyone who knows where to look can find out if that number is true. I don't know where to look so I can't verify as truth but I have no reason to doubt the man.

[Jumijo]

Here's what's laughable as far as scale enthusiasts go. Many demand that a loco or piece of rolling stock be hyper realistic, yet they find it perfectly acceptable to populate their layout with figures painted in high gloss paints, plastic structures with no paint, postwar accesories that scream "I am a toy", etc. If they have a layout at all. Yeah, some layouts are realistic, but not the majority, and not as many as one would think. I enjoy a scale loco just as much as the next guy, but is it worth all the vitrial if it isn't exact? Scale or no, they are still TOYS! And those toys, with their big $$ price tags, cost more than many people can afford. We should all count ourselves extremely lucky to be able to afford such luxuries.

Jim

[Jumijo]

My belief is that the toy train industry as a whole markets only to the audience that is already the hobby. It needs to market itself to the general public. Lionel, the most well-known name in toy trains, would do well to advertise in newspapers and main stream magazines and even tv. Why? Because there are still millions of people out there that had a Lionel train as a child and have nothing but fond memories of it. Those are the people train companies should be marketing to. Those people now have kids and grandkids to buy presents for. I bought my kids a couple of starter sets last Christmas based solely on my nostalgic memories of my youth. They are now 3 foot tall train nuts! Put the product out there in that fashion and people will lap it up! Nostalgia, a longing for the good old days, is and always will be in vogue in this country. The train companies would do well to capitalize on that in their advertsing, but not just in train magazines. If small time local businesses can afford to advertise on tv, so can the train companies. Spend some money to make some money. Think outside the hobby market to expand the hobby market. That's what needs to be done in the way of advertsing.

Jim

[winrose46]

In my case K-line got me back into model trains. I have post war trains 1952 - 1959 trains that I set up for 40 years. I did not buy any new stuff because I thought that the trains offered were cheap (flimsy) copies of what I had. In the 90's I looked at the market and declined to enter. Two years ago, I added the K-line Hudson and have been hooked on command control since. The quality of the products offered by Atlas (cabooses and refeers), K-line (die cast hoppers), MTH DCS and outstanding engines has gotten me up to running 14 trains with 16 engines. The K-Line hudson is even being converted to DCS Proto 2. For my kids and grand kids, I have given them the Polar Express and an MTH freight steamer starter sets so I am supporting both ends of the hobby. I am quite pleased with the direction the hobby is going and the effort being expended by MTH, Atlas and K-line. No I do not count rivets; however, I do like the increased amount of detail being offered.

[brianel027]

Phil, I don't think I myself or Allan we saying the hobby is being ruined by scale enthusiasts. There are folks who like the scale stuff and obviously it has appeal to people. BUT in the past decade there has been a vast amount of new product introduced and nearly all of it has been high end and scale. Expensive cars and locomotives have only a certain amount of appeal because of the price. You can bet that the companies are putting a lot of money into the tooling and development of this product. A new scale locomotive can easily cost $150K and more to development in China. MTH has admitted to spending millions on the overall development of DCS.

In the old days, new products had long production runs and eventually paid for themselves. Tooling and components were adapted and modified to create other items... since the market was not as scale conscious, this wasn't an issue. Today, the products aren't being tooled for the longevity they once were, but you can be sure, they are not paying for themselves on their own. This is in part why Lionel's prices are so high. And why MTH continues to up their prices. And look at the debt K-Line has with their overseas contractor. This isn't saying the sky is falling. It is saying the manufacturers are absolutely patronizing one small segment of the O gauge market.

Yes Phil, there are all kinds of products. But the traditional beginner products are clearly in the minority. Since 1990, Lionel has only tooled up one single car for the traditional non-scale buyer. Just one. How many new scale products have been issued? In the past K-Line would offer easily a dozen and more "traditional" beginner locos every year. Not the case now. Lionel offers a few, and their new cheapened RS-3 probably hurts them more than helps them because of its' inherit cheapness and real lack of pulling power as it without modification.

With as good as it is for the scale hobbiests, I'm sorry but to me they do seem very demanding. The complaints on the fuel tank for the K-Line KCC SD70MAC are a good example. Gee, the engine costs $125! A single motored new Lionel non scale U36B as a higher list price for less loco.

Phil, you are right. The hobby isn't going to end. Neither Allan nor I said that. But I would urge you to try this experiment that I have done hundreds of time with the same exact single result: Show the new Lionel, K-Line or MTH catalog to the parents of a young boy who is interested in trains. First, they have to scroll through a 150-page catalog to find the 10-15 pages of items that are intended for them. Then you hear the comment (especially from the mom's) that this is not a hobby for kids, but for adults. I hear this over and over again. It's not that there are not decent beginner products. It is the "perception" that there are not because they are grossly in the minority in anyone's catalogs.

Ande if folks aren't aware Lionel is still in business, they certainly aren't going to know about Williams, who makes decent affordable trains. Or RMT with their terrific Beep locomotive.

Years ago, the owner of K-Line made the statement that they were going to be the number one train company with five years. MTH certainly thinks they're the number one company and so does Lionel. Since the trains have very poor overall retail visability compared to the past, the train companies are going after eachother's throats by trying to outdo eachother and chasing the same exact customers ... the ones who already know what Lionel is; the ones who clammor for the new catalog months before it's even printed; the ones who go to YORK every year; the ones who do not need to see the trains at a retailer in order to buy them and don't need to see them first before they buy them.

I think a family with young kids expects to see the trains first before they buy them. That's how the kids get excited about the hobby... just the way we did a generation ago. Retailing has changed and so has the hobby. That doesn't mean it's ending but it does mean it is changing. Whether this is for the better or not remains to be seen, but there are some warning signals.

And in the case of Lionel, even though they have many pages of traditionally sized cars, I don't think many parents consider $45 for a non-operating box car a good deal just because it is a postwar reissue. Parents with young kids are not concerned with collectible values or limited runs. They're looking for well made value priced trains for their kids to play with ... the same thing our parents looked for a generation ago.

Sure Lionel was expensive a generation ago too. But back then, Lionel was the premiere toy to have. Every kid wanted a Lionel train set. You couldn't pick up a cereal box without seeing something about the cool Lionel trains. Today, most kids have never even heard of Lionel trains and their parents think the company long went out of business. There is much more competition for parents "toy" dollars today. Lionel does not have the position of prestige today it once had years ago in the toy industry.

Final thought: I wouldn't put a whole load of stock on what the CEO's of the various companies say right now. Lionel is owned by Wellspring and Wellspring calls the financial shots. Calabreese is paid to put out a good word... Lionel still has finanical hurdles to overcome that he certainly cannot comment on. Or if he did, would probably start more trouble than that would be worth. Which beings to mind the first press release K-Line issued after the Lionel settlement that ended up dragging them back into court with a less favorable decision for them.

[Warburton]

Right, Allan. We'll make your addition "Corolary 4-A."
btw, it's nice to have guys like you (and the other contributors here) to discuss the overall train market with. Most train people I know aren't interested in the macro environment, just what such and such an item is going for at the latest train show!

[Anonymous]

Darn good summary, Warburton, and right on target!

All I would add is what I see as the "splintering" of the O gauge segment of the hobby in the past decade or so, with one group electing to remain with their traditional toy train roots and others gravitating toward the scale end of the hobby. That has an impact, to be sure. It certainly has made things more complex for the manufacturers.

[Warburton]

Actually, most of what has been said in this thread is correct. Synthesize it all and you get, 1) interested O gauge fans have leveled off in number; 2) overproduction by the manufacturers has caused their current problems -- too few people chasing too much product; 3) given the prices the manufacturers are charging vs. their costs in China, they can make money if they figure out the "right" product mix; 4) manufacturers need to find a good balance of hi-rail and toylike product to offer the market; 5) the market will eventually sort out the imbalances occuring now; 6) the lawsuits now plagueing the industry are really an unfortunate consequence of the keen competitive market the manufacturers are working in where each is trying to get a leg up on the others and some individuals at the manufacturers have pushed too hard and crossed the legal line.

[Phil1361]

Allan Miler wrotez:

QUOTE: The O gauge segment of the hobby is slowly drowning in a sea of devisiveness and bitterness, inspired in part by the actions of various manufacturers, but most certainly advanced and perpetuated by hobbyists themselves. Very sad to see, to be sure.

An then wrote:

QUOTE: Fortunately, as I stated in my previous post, there are a good many people in this hobby who represent the best that any hobby can and should offer. No question about that, and a number of them are right here on this forum.

I agree the manufacturers have created a devisive and bitter atmosphere but disagree it is perpetulated by hobbyists. Allan says himself there are a good many people in this hobby and I'll go one better. I think 99% of the people in this hobby are really nice people. I nor anyone else I know has perpetulated this hobby into devisiveness and bitterness.

I don't understand you guys at all. You seem to saying the hobby is being ruined by hi-railers who want scale products. I don't know about K-Line but Jerry Callabreese said at the OGR Forum Meeting at York that Lionel made 60 million dollars this fiscal year. That sounds pretty good to me.

There is a saying by George Carlin:
There are two kinds of people on the highway. Maniacs and Morons.
The maniacs are driving faster than you who should get speeding tickets and the morons are driving slower who should get off the road.

And there are two kinds of model railroaders. The first kind are people who just play with toy trains and the second kind is people who are ruining the hobby. Those that are less prototypical than you are bozos who just play with toy trains and those that are more prototypical than you are rivet-counting extrememists who are ruining the hobby.

I think Allan and Brian are simply not interested in or do not like scale O Gauge trains so to them those people who do are ruining/bringing down O Gauge with their desires and requests of O Gauge manufacturers.

I disagree. I think the manufacturers are doing good except for maybe K-Line. Certainly Atlas, MTH, and for sure Lionel is doing well. I get all the catalogs and I see planty of non-scale items in there. I just don't understand the doom and gloom attitude.

I do agree we will not see the growth we saw 10 years ago. The hobby of O Gauge as far as the number of hobbyists into O Gauge has certainly leveled off. I think we may see some small growth in O gauge 3 and 2 rail over the next few years but nothing significant. Did we all think the growth was never going to stop or level off?

I am certainly happy with all the choices we have today. I not worried about any companies going out of business or the state of O Gauge. Yes, it could definitely use some more exporsure but O Gauge is fine.

Allan wrote:

QUOTE: See the community of enthusiasts coming together harmoniously?

Every York at the OGR Forum. Not a single fight has broken out yet. I think the animosity you speak of is only here on the internet.

[Anonymous]

Too many manufactures charging too much to too few well healed buyers.

Development costs for all this technology is thinning out the manufacturers.

Only "hi tech" MTH and "no frills" Williams will survive.

Charlie

[cheapclassics]

This is an interesting conversation with various points of view. Based on my admittedly very narrow interests, this is the "best of times, the worst of times". When Lionel abandoned the Scout cars a few years ago, I thought there would be no more items to collect. Fortunately, Lionel did come out with a beautiful Alaska set that they add on to each year. As far as the best of times, I need look no further than MTH's Tinplate Traditions line. With a catalog as big as any Lionel made in the prewar era and at least one new product coming out each year (Blue Comet Baggage car), this is truly a golden era for standard gauge fans.

Having said all that, I tend to agree that a serious retrenchment in the hobby is coming, and I am not sure it is a bad idea at all. Even if someone had the money and space to acquire all the products that were made in a given year, would they really have time to enjoy them all?

Keep on training,

Mike C. from Indiana

[Anonymous]

Allan Miller posted this: " See anything near the kind of growth that the hobby experienced 10 years ago?"

Allan, neither you, nor I know if this is true or not. You do not have the data to make this conclusion.

[Anonymous]

If every train manufacturer went out of business, the Chinese would find something else to build. Very adaptable culture.

[Warburton]

A couple of years ago I was approached by a prospective buyer at my table at a local train show. He was interested in a "starter set" Lionel 4-4-2 steam loco I had for sale. Now, this was a $80-85 item, mind you. And this fellow wanted to know if it had Railsounds and Command Control!!!

When I told him, "no," just an air whistle and smoke, he walked away in a huff. It was then and there that I realized that the O gauge hobby was in trouble!

[3railguy]

QUOTE: "As noted here by Bob Keller and noted by me on a post much earlier, K-Line's advertised stopped before the legal problems came to a heat. K-Line has been making cutbacks in some areas over the past few years: the toll-free phone number was dropped, the 4 motored Alco A-A's became 2 motored A-A's, the die-cast couplers on the Alco's were dropped, etc."

I remember around three or four years ago or so, K-Line announced they were going gung ho with scale 3 rail at prices well below MTH and Lionel. The prices were attractive and some were incredibly cheap. It seemed to good to be true. I don't think K-Line understood the true cost of doing business when they ventured in to 3 rail O scale and suffered losses they did not anticipate. As a result, K-Line raised their prices last winter and several dealers and customers got pretty angry over it and resisted.

QUOTE: In my opinion, the recent Lionel postwar releases are ALL way overpriced, even at mail-order levels. $50 for a postwar 2-dome tank car with a sheet metal frame is highway robbery as is $60 for a depressed center flat car. The tooling and dies have long since been paid for.

Lionel's standard issue traditional sized rolling stock has an MSRP of around $26.00 give or take. There are some higher priced custom runs. Depressed center flats have diecast metal bodies. Yes, the PWC cars are more expensive. But you need to realize there are more labor steps with the old style tooling. It wasn't designed for today's automated manufacturing methods either. Lionel field wound motors and magnetraction for example is much more costly to manufacture than can motors and traction tires. Can motors are bought off the shelf and made by the millions for everything from cordless drills to power automotive windows. The PWC sets such as the Wabash F3 set and the recently announced VGN Trainmaster set have been popular and the discount prices are a good value in the eyes of many. There are people who want stuff made the old fashion way and for good reasons. Namely nostalgia that gives them a warm feeling and rugged construction. For anyone who thinks nostalgia is a foolish reason to buy a train then we may as well stop buying trains all together because trains do nothing more than entertain us. Postwar lionel was not cheap in the 50's either. many sets cost a weeks pay or more.

Lionel's scale series cars have an MSRP of around $55 which is what near identical offerings by Atlas and K-Line is asking. As far as the detail complaints are concerned, these cars are mass produced and cannot be customized for individual roads at that price. Additionally, there are certain details mass production tooling cannot copy. Only importers of $300 brass models can satisfy these people. Frankly, some of the new scale offerings from Lionel and Atlas such as their steel side reefers and 70 ton hoppers look and feel like $300 brass models.

[Anonymous]

Good observations, Brian! That's pretty much how I see things, as well, in terms of mistakes made and lessons apparently not learned. There's certainly little or no danger of the O gauge segment of the hobby evaporating and drying up, but unless things change rather dramatically, you can be pretty darn sure that five years from now it will be a significantly smaller segment of the overall hobby than it is today.

I need to clarify something in my original post on the topic of K-Line and the lack of advertising. I did not mean to imply that K-Line's recent legal difficulties are solely responsible for the cutbacks in advertising. They are, I expect, most assuredly a contributing factor, but sources inside the industry told me several years ago that K-Line was digging itself into a financial hole, and the overt signs were there for anyone to see. The legal filings showed how deep this hole really is, but I'm also sure the more recent legal wrangling has impacted where they allocate what are quite obviously limited resources.

[brianel027]

As noted here by Bob Keller and noted by me on a post much earlier, K-Line's advertised stopped before the legal problems came to a heat. K-Line has been making cutbacks in some areas over the past few years: the toll-free phone number was dropped, the 4 motored Alco A-A's became 2 motored A-A's, the die-cast couplers on the Alco's were dropped, etc.

But I must disagree that the legal battles are strangling advancements in the hobby. With or without the legal problems, this has been a long time coming. Even a couple of the major mail order retailers say the hobby is too expensive and that sales are down significantly. This was happening long before the legal problems heated up.

There was a time when the train companies could invest in new tooling, make new products and then have a significant long production run of those products, thus recouping their investment costs for that new product development. That's not happening today. Segments of the adult train buying market have become very demanding and picky, and the train companies have been more than willing to "preach to the choir" in the spirit of competition (and spite) to accommodate the adult market.

But like in a card game, if you are doubling your wager with every draw of the cards, sooner or later you'd better win or you are going to lose big time. The train companies have been trying to up the ante with every single catalog release. Train customers have come to expect this. Products and tooling made only a few years ago are now obsolete and outdated on technology and detail levels. Technology introduced 5-10 years ago is now not good enough, and the adult train market is more than willing to let the train companies know it isn't good enough in no uncertain terms. Look at the original MTH Premiere line. Mike Wolf invested the extra dollars and tooled these products for longevity. They became sub-par in only a few years and have now become the "Scale" Railking line. Need I mention the at one time cutting edge PS-1?

Run some trains for a child, and he'll be very impressed with the first original version of Lionel Railsounds as will be the typical parent of that child. The kid will probably be impressed with no sounds at all save for the ones in his imagination. The typical kid doesn't count rivets either. My 11-year nephew notices roadnames though. He wanted a engine like the ones he sees today. And his custom painted Alco FA in Conrail looks just like the real thing to him.

The typical adult train buyer probably won't be satisfied with the upcoming Railsounds version 5. When the new Lionel scale Milk Cars came out, I started reading complaints about what was prototypically wrong with them immediately. The train companies need more customers like me and my nephew on a technology level: I'm very happy with the MPC-era Mechanical Sound of Steam. Even the MPC-era electronic Sound of Steam is pretty darn cool in my book. My nephew is equally fascinated how this simple cylinder in the tender makes this cool chugging sound.

The "choir" the train companies have been singing to for the past 10 years cannot possibly buy all these trains in the quantities needed to make these new products profitable as soon as they need to be for the train companies. Even when K-Line introduced this new stunningly detailed and bargain priced SD70 loco for their club, everyone started griping the fuel tank wasn't right. In today's adult scale detailed market, enough is never enough. This is what's wrong with the hobby... it's not just the lawsuits. It is as much the unforgiving, demanding, spoiled adult train market as any thing else. Of course, the competitive spirit of the train companies has given way to greed, spite, revenge, loss of integrity and cost cutting. The accusations of stealing are a symptom of the train companies trying to reduce costs and cut corners in order to accommodate the excessive demands of the adult train market. Again, if this new K-Line SD70 was priced at hundred's more, I could understand the complaining, but NOT at this BARGAIN price. Of course, when any new engine is released today, regardless of price, the first question that gets asked is "well, is it prototypical and to exact scale?"

Go to the other train forums and you read complaints about chuff rates, not enough smoke, not enough detail, incorrect sound for the specific locomotive model, incorrect headlight arrangement, etc. Good thing there were not these train forums like these during the 1950's.... I wonder would the original Lionel F3 would have seen the long production run that it did? Probably magnetraction wouldn't have been good enough either. Come to think of it, is Magnetraction prototypical?

FANTASY PRESS RELEASE: Today Lionel has announced the recall of every single engine ever made with the Magnetraction feature. It will be removed at the customer's expense because it was never prototypical. The customer will also pay shipping charges. Failure to do so will result in immediate legal action against all customers who resist. Lionel has hired additional Chinese laborers in anticipation of this work. Lionel regrets ever introducing this non-prototypical feature in their line of trains and anticapates many sincere heartfelt thank you cards along with the $200 check for the mandatory removal of this unacceptable feature.

Now folks, I've had my complaints on the hobby too. The hobby has too long ignored growing the hobby in the youth market and recently it has been too little, too late. I'd be happy if K-Line brought back the original Alco S-2 switcher from the early 1990's - with it's so called "flaws" and all. I'd be happy if someone would introduce just one squat shortened, smaller, non-scale modern diesel for the starter market. You wouldn't find me griping about the chuff rate or the incorrect rivet count. I think the K-Line Alco S-2 looks better than many of the newer more scale detailed kinds of engines. The one thing I'd love to see is some modern road names on starter products... even these same identical products that have been in production for decades. Paint masks are an insignificant cost when compared to new development and tooling of products.

And despite some bargain train set prices and add-on incentive packages being offered by the train companies to entice newcomers into the hobby, prices are still up dramatically. The Lionel starter cars have increased almost 60% in list price in the past decade despite having significantly lower production costs in China with absolutely no new tooling costs to be made up for on these items. What few changes have been made in tooling have been to cheapen the items and decrease production costs, like plastic frames on the Lionel boxcars, Alco FA's and the RS3's.

In my opinion, the recent Lionel postwar releases are ALL way overpriced, even at mail-order levels. $50 for a postwar 2-dome tank car with a sheet metal frame is highway robbery as is $60 for a depressed center flat car. The tooling and dies have long since been paid for. But the high prices are in part to pay for all the new tooling being done on the scale end (that is not making money and recouping the investment fast enough) and in part to contribute to deflation of the after-market collectible price levels of the original counterparts.

But do I think the "sky is falling" on the train hobby? No. But the clouds are definitely changing formation. The state of the US economy is helping either. Some would say it has been the new technology and detail advancements that have made the hobby what it is during the past decade. That maybe so. I think you could just as easily argue now that these same so-called advancements (and the increasing cries for ever-increasing levels of detail and technology) have contributed to the sorry mess that the hobby is in. There simply aren't enough train customers to support the hobby at the technology and price levels things are currently at. And those new customers will not be reached without some kind of advertising and more products that are quality made and affordably priced. And with the financial stranglehold the companies are in, this won't happen right now.

Maybe the adult buyers could be enticed to go back to the days when they ordered one train item to run and another half-dozen to speculate on. Of course, they probably today won't double in value within a year, but at least the train companies might be able to sell some of these trains at the quantity levels needed to make all this new tooling and product development profitable.

K-Line (and the others) would probably appreciate that. So next time you call and order one engine, they'll bill you and send you another half-dozen. Don't get mad. Thank them instead. You're helping to pay off the accumulated debts on all this new tooling. Unless you were happy with the older non scale Alco FA's, MP-15's and S2's... come to think of it, I was.

[Anonymous]

QUOTE: Originally posted by mackb4

. . . Maybe all the train companies will realise the cost of their mistake and return shipping back to the U.S. like Dell computers have.But I told my dad the same thing you mentioned about the void of the K-line ads,and he had also noticed the same.Maybe the economy is hurting the toy makers too.

I can't imagine that you will ever see the train manufacturers return production to the U.S. We're well past the "point of no return" in that regard because there's no way the various firms headquartered here could take that step and still retain profitability. The trend in recent decades was to have the trains made in Japan and Korea. Then production moved to China. When China becomes too costly, for whatever reason, the manufacturers will move elsewhere in the developing world--Southeast Asia, or perhaps even India, or some other country in the Middle East or on the African continent.

As for the U.S. economy: It is supposedly strong and growing at a respectable rate. So we really can't blame what is happening in the toy train market to what is happening in the overall U.S. economy--at least not yet. That may certainly change in the near future as oil prices continue to rise (I paid $3 a gallon for regular for the first time in my life yesterday) and when the housing market begins to deflate.

My own feeling is that the toy train industry, as it relates to O gauge, simply grew at a rate that could not be sustained by growth in the potential and/or real market for toy/model trains. As hobbyists themselves became increasingly demanding in terms of what they wanted and what they would accept, especially in regard to more costly, higher-end products, the manufacturers bent over backwards trying to accomodate the demands. This created a self-perpetuating scenario of growth and product line expansion that was impossible to sustain and bound to lead to trouble. And that's where we find ourselves today. And yet the demands for more of this and more of that (all with even more detail and at lower prices, of course) continue unabated--demands that cannot possibly be met by any firm that finds itself serving a market that is not growing at the rate needed to absorb the increasingly specialized product line expansion.

That's why I contend that the fault doesn't really rest with the manufacturers, who have tried to do their best to make what the market is asking for; it rests with hobbyists who have simply become unrealistic in their demands and expectations. And all one has to do is read any of the on-line forums to see example after example of how and why this is true.

Nobody can predict with any real degree of accuracy how all of this will shake out, of course, but my guess is that a few years from now we'll see fewer manufacturers dedicated to ths segment of the hobby and fewer products being offered, coupled with a far more realistic business approach aimed at balancing what is made with what will actually sell. In fact, we're seeing this trend today, with an obviously financially overextended K-Line, Lionel cutting back on the overall size of its offerings, and MTH canceling products that don't meet advance order expectations, for example.

To be sure, none of this signals the end of the hobby--that's simply not going to be the case. But it does mean that some of the more finnicky and demanding folks in this hobby are going to have to adapt to a changed reality, or move on to something else.

At least that's how I see it unfolding. [;)]

[mackb4]

Well surely asking for protection is a way of claiming in court your not making money to justify not paying a legal settlement.But you have to go farther than just that,and they have taken those steps in not placing ad's.But also I saw in the news that China is forcing it's so called labor orginizations to pay higher wages,which in turn is going to affect the price it cost to buy your goods from the toy train comanies.Maybe all the train companies will realise the cost of their mistake and return shipping back to the U.S. like Dell computers have.But I told my dad the same thing you mentioned about the void of the K-line ads,and he had also noticed the same.Maybe the economy is hurting the toy makers too.

[3railguy]

I have to agree with Allan on this. This year's Lionel, MTH, and K-Line's offerings look like last year's offerings. It isn't what it was like ten years ago when we were blasted with a sea of new products and technology. It's been quite some time since I've seen any break-through technology announced. It seems like the only announcements I've seen lately is how John Doe got caught with his hand in the cookie jar and brand X is being sued and filing for bankruptcy protection.

[Anonymous]

Didn't say that the sky is falling. Just stating a personal observation. Look around a bit and see for yourself. See the very real problems in the industry (and not exclusively legal problems)? See anything near the kind of growth that the hobby experienced 10 years ago? See the number of train shops growing? See any concerted effort being made to promote this segment of the hobby? See the community of enthusiasts coming together harmoniously?

Fortunately, as I stated in my previous post, there are a good many people in this hobby who represent the best that any hobby can and should offer. No question about that, and a number of them are right here on this forum. But I doubt that anyone could seriously dispute that, all thing considered, we're seeing a bit of a downhill slide. And it seems to me that before a problem can be solved, it has to first be acknowledged.

[Anonymous]

Allan Miller posted this:
"The O gauge segment of the hobby is slowly drowning in a sea of devisiveness and bitterness, inspired in part by the actions of various manufacturers, but most certainly advanced and perpetuated by hobbyists themselves. Very sad to see, to be sure."

Allan, you crack me up!!!

The sky is not falling. Sorry to be the bearer of good news....

[Anonymous]

The O gauge segment of the hobby is slowly drowning in a sea of devisiveness and bitterness, inspired in part by the actions of various manufacturers, but most certainly advanced and perpetuated by hobbyists themselves. Very sad to see, to be sure.

Fortunately, there are other segments of the hobby out there to enjoy in the relaxing and satisfying way that a hobby is meant to be, and fortunately there are a great many hobbyists in all scales, including O, who refuse to allow themselves to be sucked into the messy quagmire that is so painfully evident these days.

I was reading a thread about *** Maddox's retirement from Atlas on another forum. Following a string of some congratulatory posts--entirely appropriate under the circumstances--some of the baser elements of the hobby turned the whole thing into something of a hateful, spiteful diatribe against the man. Truly a shameful display. I'm just glad that nobody on this forum has felt the need to be so callous, uncaring, and outright thoughtless, and I'm especially glad that the vast majority of those who participate here are generally far more closely aligned with the true spirit, tradition, and simple joy of toy trains.

But the above example--and it is just one example--was presented here simply to demonstrate just how far we have deviated from our roots in recent years. There are, thank goodness, still a great many very good, helpful, and well-mannered people in this hobby--always have been and always will be. It's just a shame that the public face of model railroading and toy trains, especially as it is so often and openly displayed on-line, is not something we can all be proud of.

Now back to playing with my in-progress holiday layout--O gauge, various manufacturers represented, and all great TOYS!