The Guardian recently had an interesting interview with the new CEO of Hornby. http://www.guardian.co.uk/business/2007/dec/21/1
He makes a point about why production of models and toys is moving to China that had not struck me before. Cost is a big part of the equation, but the ability to keep releasing new products -- something we model railroaders have a keen interest in -- is a big part of it too. Here is a segment of the interview:
"The move not only lowered costs and improved quality, but also helped increase the pace of new product launches. Before the move, Hornby was producing one or two new Scalextric cars a year; today it is more like 15 or 16. Before shifting to China the firm was making only one new Hornby locomotive every three-to-four years. It is now introducing three or four a year. The company offers a comparison of costs, and a stark illustration of why nothing is made in Britain any more. The last Scalextric car tooled in Britain used four moulds and cost £107,000. The most recent car placed in China used seven moulds and cost £29,000. "It is not that it would be impossible to produce that quality of product in the UK, simply that you could not afford to do it and end up with a commercially viable product," he [CEO Frank Martin] says."
Dave Nelson
1. What are the people that USED to manufacture/engineer the products doing for a living now?
2. What would the US have done if we had had no manufacturing capability during world war II? (I know, the original post dealt with a British company, but the philosphy is the same.)
Model railroading is a HOBBY, not something we must do to survive, and even given that it's hardly possible to support our own workers. Note that I am no better than anyone else: virtually all of my RTR purchases are "made in china", and I probably would not be willing to spend even twice as much for products made in my own country. Hopefully two things will happen: off shore standards of living and environmental responsibility will go up raising off shore costs too, and local manufacturers will be able to increase efficiency and reduce costs.
Sorry....
Jim
One word...GREED...
Oh, let me count the ways they try and justify it...
Sooner or later, China will have a better standard of living -- workers will have better compensation, etc. -- and then everything will be more expensive everywhere!
Maybe manufacturing will move back to North America then.
Craig
DMW
loathar wrote: One word...GREED...Oh, let me count the ways they try and justify it...
Are you willing to pay 3-4 times the price for a model of equal detail and quality made in the USA? If so, you're probably going to going the custom built route.
Here's an order form for a Rutland K-2 Pacific from Eddystone Locomotive Co. If you will note, the base price is $800. http://www.eddystonelocomotives.com/orderform23.htm . That's a nice model and the Rutland is a very modelgenic railroad. For $800, you can get 1 Pacific (a bit more for DCC and sound). Eddystone will also modify Genesis or BLI light Mikes to B&O Q-3's for you if you like. Base price starts at $500. I believe you have to supply the locomotive.
Pic of loco and some explanatory verbiage: http://www.eddystonelocomotives.com/RutlandK2Pacific.htm
I'll grant you that Eddystone is not a manufacturer of mass produced models like BLI/PCM or Walthers, but if you think that manufacturing in the US wouldn't substantially raise the price of items, I'm afraid you're in for a rude awakening. Ascribing the transfer of model manufacturing to China as a simple case of "GREED" simply doesn't cut it as an explanation. Models have to be made at a price and in quantities that will bring a decent return on investment. Are you willing to pay double to triple the amount for your hobby items?
Andre
ouengr wrote:Greed may be an issue, but who is the greedy one?
In most cases, we the consumers are. We want the most for our buck. I often hear people compare a US made product to a cheaper import and accuse the American manufacturer of gouging consumers.
There are some economic trends that will work against China I would think. The exchange rates is one factor an the Yuan is increasing in value while the dollar is decreasing in value. If nothing else, the relative cost of Chinese products will trend upward. Also, Chinese general inflation rates are higher than in the USA. Transport costs should be increasing, too, along with fuel prices.
I was interested that it's the tooling costs that are being considered as well as the production costs.
GARRY
HEARTLAND DIVISION, CB&Q RR
EVERYWHERE LOST; WE HUSTLE OUR CABOOSE FOR YOU
Jay
C-415 Build: https://imageshack.com/a/tShC/1
Other builds: https://imageshack.com/my/albums
Tooling is part of production cost - Economics 101.
Right now the yuan is being held at an artificially low exchange rate by government fiat, just as the yen was until the 1970's.
China is facing serious environmental and sociological problems - the kind that can't be solved by a stone tablet from Beijing. Don't be surprised if you wake up one morning to discover that the price of 'Made in China' widgets of all stripes has suddenly gone ballistic. I could wish that it wouldn't happen (because of the impact on modelers who can barely afford this hobby) but it's a question of When, not If.
Chuck (modeling Central Japan in September, 1964)
I hope I don't contribute to the demise of this thread, but I would say that China holds a lot of American dollars, and if their own Yuan rise against it, things will go bad for both parties in a full gallop.
No matter what happens, the hobby will do poorly in the long run. Hobby prices will rise if Walthers and Atlas and BLI hope to stay afloat. What we will grudgingly pay $80-90 for now will rise to $100, and perhaps beyond to $110-120. Some guys will leave the hobby, not necessarily immediately, but over time. The rest of us will continue to scrimp and dig deeper. A few of us will lie to those we purport to love in order to slip some purchases through the gate.
I agree with loathar. It is greed...a vice that knows every face.
I want, you want, they want. Trouble is the word "want" is corrupted from its earlier meaning of "unmet need." I need an SD-40-2 in CP livery. Why, will you die without it? Well, no, but....I want one.
Oh, I see.
Greed. The vice that recalls no names. It can't recall loathar's name, nor mine, but it could pick us out of a crowd.
3railguy wrote: ouengr wrote:Greed may be an issue, but who is the greedy one?In most cases, we the consumers are. We want the most for our buck. I often hear people compare a US made product to a cheaper import and accuse the American manufacturer of gouging consumers.
3railguy -- you are so, so right.
It's basic economics. Life has been sweet for us in N.A. and it will remain so for the next few decades -- but the change is upon us...
One can be contrarian all one wants, but facts is facts!
modelmaker51 wrote: So, who's gonna have any money to buy anything when all the jobs have finally gone to China? And they will as long as China remains a dictatorship.
I couldn't agree more. One can quote all the statistics you want and spout off all the economic theories but it all boils down to "no jobs = no money". Eight to fourteen dollars an hour jobs make you someone that exists, not a consumer in the classic sense.
Bill Tidler Jr.
Near a cornfield in Indiana...
All the mexicans that sneak over here of course. Did everyone think they only pick fruit and vegatables? ( I mean other than our elected officals ) Go to a construction and see if anyone speaks english.
American say they want to buy products made in America, but then they say the prices are too high and won't pay.
Of course, these same consumers also insist their employers pay them the wage to which they have become accustomed, so the products they make cost more than the same ones coming from China and Mexico.
I am not an economist, but " back in the day" most all model RR products were made in the good old USA, except brass. I know we complained about prices then when we had to pay $29.00 for a Varney steamer. I realize the quality has improved drastically, but the prices kept up with inflation. So why now do we have to go off shore? It seems that manufacturers wanted to make more money. For example, a neighborhood shoe store used to sell Herman boots & I used to buy them. Walked in one day to buy another pair & was told they don't carry them anymore. You see, they moved offshore & although they cost the company 1/2 what they used to cost, the wholesale price to the store remained the same. So the store owner dropped the line.
This can also go the other way. Moving offshore drove the last nail in Mantua's coffin. They were struggling & thought going offshore would solve the problem. They picked a bad manufacturing plant & they underestimated the learning curve. Everything seemed to slip thru quality control & they ended up with junk being shipped back home. Just couldn't hang on long enough to get things straightened out. Jerry
Well,
The cost of the model products go to a disaster in the european market.
Marklin is sold because of liquidities avaibility.Arnold Rapido the inventor of Nscale and the group Rivarossi were in bankrup before sold to Hornby.
Recently LGB had the same issue.
There are some other manufacturers you don't know in USA because of their exclusivity of european products which have follow the same way.
Big european manufactures are going too in China like Hornby and the few remaining are thinking of the move in the next coming years.
The only reason is cost, because in Europe we have a lot of taxes and the working people are very expensive to pay, not their salaries but the taxes on their salaries.
A few year ago some publication had say that Model Trains will dissapear in Europe as an industry market because of the cost of production and the cost of models for the modeler.
A small steam loco in Nscale (my scale) is around 225 euros (326 usd) with poor running qualities beside the american ones and a diesel reach the 150 euros (176 usd).
So the youngsters didn't play anymore trains and the modeler are old ones.
There is no many new models each years because the market is small.
Many people are now looking for American models because of course COST, only that.
I am not ready to pay such a lot of money for an hobby an certainly the youngsters can do it.
So for me and because I like so much this hobby, I dont care were the models are made, I want just an affordable price that's all; the rest is just pure consideration.
For example, just see how many Atlas/china made models run in US or in the rest of the world; I don't think that a lot of these modeler have care about the conditions they are made.
Happy new year.
This issue of off-shore production has been raised before. The simple fact of the matter is that Western consumers have an insatiable appetite for "stuff", but we want it all for nothing. It strikes me as more than a bit hypocritical that people flock to WallyWorld in droves to buy their cheap stuff and then get all indignant about the flow of manufacturing jobs to the far reaches of the planet.
As for predictions about the future, I would say that China will indeed get its quality act together, just as Japan and Korea did. I would also say that there is still a LONG way to go before the cost of production in China gets high enough to warrant moving production elsewhere...there are all kinds of cities there with millions of inhabitants that most westerners have never even heard of...if costs get too high in Shanghai for example (which is indeed already the case, for certain industries), well you just pack up and move to a different city where labour costs are lower and laws regarding the environment and treatment of labour are more laxe. There are more special economic zones there than you can shake a stick at, and virtually every city has incentives for industry. (As a point of clarification, the labour laws previously referenced in this thread are of no practical value to workers and will not add significantly to Chinese manufacturing costs, and as a further point of clarification, you don't need a "dictatorship" to foster this kind of environment).
As previously stated, China has so much US currency in its pockets, it could destroy the US economy overnight if it chose to do so. Therefore, all this tough talk from politicians on the balance of trade with China is just so much hot air.
At the end of the day, if you want to stem the tide, then put your money where your mouth is. The problem is not China, the problem is "us".
Cheers.
Dallas Model Works wrote: 3railguy wrote: ouengr wrote:Greed may be an issue, but who is the greedy one?In most cases, we the consumers are. We want the most for our buck. I often hear people compare a US made product to a cheaper import and accuse the American manufacturer of gouging consumers.3railguy -- you are so, so right. It's basic economics. Life has been sweet for us in N.A. and it will remain so for the next few decades -- but the change is upon us...One can be contrarian all one wants, but facts is facts!
Is Peco track actually made in the UK? People seem pretty willing to pay double the price for that over Chinese Atlas track.Shinohara? A Japanese company I believe? People paying 2-3 times the price for that stuff. People WILL spend more for a quality product when the choice is there. The choice of U.S. made products has just been taken out of the equation.(I dare you to try and find some.)BTW-Those U.S. companies crying poor that are sending jobs over seas and closing American plants that they say can't compete. The ones crying for Federal bail out money. Those same companies just gave their CEO's $30 billion in Christmas bonuses.(a new record) Some individuals getting as much as a $40 million bonus. (on top of their $200 million salaries.)Good old American GREED boys and girls...And I swear to GOD if someone comes back with the statement "When adjusted for inflation" concerning these REDICULAS salaries, I'm gonna reach through the screen and punch em!
Regarding jobs, the proverbial horse is already out of the barn. Why close the barn door now? USA negotiated the China trade deals in the late 1990's and subsequently China joined the WTO. We still have full employment (better than 5% unemployemnt) here and we have shortages of qualified workers for good paying jobs (Not manufacturing).
Regarding China's investment in US Treasury securities, it's a good investment for China. According to Bloomberg .com, the yield over the recent 12 months was 8.7%. That's not too shabby. If China chooses to dump its investment, it will need to sell them in the free markets. Uncle Sam won't be bankrupted if that happens.
There are plenty of jobs transporting containers from ports to inland locations these days. Look at the increased container volumes on BNSF from ports of Los Angeles and Long Beach for example. Soon BNSF will have its entire mainline from LA to Chicago doubletracked (former Santa Fe).
That said, I buy "Made in USA" every time I can.
Where was all this fine outrage when the Southern and Western states took all the New England manufacturing jobs after WWII? There are still a lot of abandoned mills in southern New England...where did all those jobs go? South and West, that's where. Today, it's the same story, but now the South and West are losing to overseas markets instead.
I drive through Brockton, Fall River, Lowell, Providence, Waterbury, Willimantic, Attleboro, Mansfield, etc., and I see all these large brick buildings that are empty or filled with condos or shopping (if they're lucky). I know these were teeming with business 60 years ago...and when I hear about the "woe is us, we're losing jobs to China," I think: Tough noogies, deal with it. New England did.
Paul A. Cutler III************Weather Or No Go New Haven************
We Americans speak with our wallets. All you have to do is look at Wal-Mart. We "talk the talk" but we don't "walk the walk". ME INCLUDED!
As for me, I'm going to back to reading my book "Chinese for Dummies" as America continues to sell out to the Chinese Communists. I'll be suprised if we're all not speaking Chinese by the end of this century.
BTW-Those U.S. companies crying poor that are sending jobs over seas and closing American plants that they say can't compete. The ones crying for Federal bail out money. Those same companies just gave their CEO's $30 billion in Christmas bonuses.(a new record) Some individuals getting as much as a $40 million bonus. (on top of their $200 million salaries.)
And I bet the same companys had to layoff the poor guy barely making it right before christmas.
loathar wrote: Dallas Model Works wrote: 3railguy wrote: ouengr wrote:Greed may be an issue, but who is the greedy one?In most cases, we the consumers are. We want the most for our buck. I often hear people compare a US made product to a cheaper import and accuse the American manufacturer of gouging consumers.3railguy -- you are so, so right. It's basic economics. Life has been sweet for us in N.A. and it will remain so for the next few decades -- but the change is upon us...One can be contrarian all one wants, but facts is facts! Is Peco track actually made in the UK? People seem pretty willing to pay double the price for that over Chinese Atlas track.Shinohara? A Japanese company I believe? People paying 2-3 times the price for that stuff. People WILL spend more for a quality product when the choice is there. The choice of U.S. made products has just been taken out of the equation.(I dare you to try and find some.)BTW-Those U.S. companies crying poor that are sending jobs over seas and closing American plants that they say can't compete. The ones crying for Federal bail out money. Those same companies just gave their CEO's $30 billion in Christmas bonuses.(a new record) Some individuals getting as much as a $40 million bonus. (on top of their $200 million salaries.)Good old American GREED boys and girls...And I swear to GOD if someone comes back with the statement "When adjusted for inflation" concerning these REDICULAS salaries, I'm gonna reach through the screen and punch em!
You wouldn't hit a guy with glasses on now would you?
And what does this have to do with the model railroad industry? The OP was posting about Hornby and its move to manufacture in China.
And since you've gotten so far off topic, the Toyota Corolla in my driveway was made in Fremont, CA with most of the parts being of US origin. Interestingly enough, Honda has been sending US made Hondas to Japan for nearly 20 years. http://query.nytimes.com/gst/fullpage.html?res=940DEFD6123AF932A25757C0A96E948260
Also, it appears that the Japanese market is a bit behind us getting the latest Accord (called the Inspire in Japan) http://www.edmunds.com/insideline/do/News/articleId=124040
Toyota manufacturing plants in US: http://www.toyota.com/about/our_business/operations/manufacturing/index.html (scroll down to "Engineering and manufacturing" to get full list.
Kia joins Toyota, Honda, Subaru, etc.: http://www.iht.com/articles/2006/03/14/business/cars.php
Want more? Google works.
Driline wrote: loathar wrote: Dallas Model Works wrote: 3railguy wrote: ouengr wrote:Greed may be an issue, but who is the greedy one?In most cases, we the consumers are. We want the most for our buck. I often hear people compare a US made product to a cheaper import and accuse the American manufacturer of gouging consumers.3railguy -- you are so, so right. It's basic economics. Life has been sweet for us in N.A. and it will remain so for the next few decades -- but the change is upon us...One can be contrarian all one wants, but facts is facts! Is Peco track actually made in the UK? People seem pretty willing to pay double the price for that over Chinese Atlas track.Shinohara? A Japanese company I believe? People paying 2-3 times the price for that stuff. People WILL spend more for a quality product when the choice is there. The choice of U.S. made products has just been taken out of the equation.(I dare you to try and find some.)BTW-Those U.S. companies crying poor that are sending jobs over seas and closing American plants that they say can't compete. The ones crying for Federal bail out money. Those same companies just gave their CEO's $30 billion in Christmas bonuses.(a new record) Some individuals getting as much as a $40 million bonus. (on top of their $200 million salaries.)Good old American GREED boys and girls...And I swear to GOD if someone comes back with the statement "When adjusted for inflation" concerning these REDICULAS salaries, I'm gonna reach through the screen and punch em!You wouldn't hit a guy with glasses on now would you?
I think he's mad enough to just use his fists.