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Atlas and Bowser Factories Closed

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Posted by riogrande5761 on Tuesday, July 31, 2018 6:40 AM

It might be possible for some types of businesses to move back from China.  Jason Schron of Rapido has discussed a number of times how he envisions model train manufacturing brought back to north America.  In a nut shell, be prepared to pay around two to three times the price for trains.  Of course people almost always bring up Kadee and Jason has explanations for that as well from his perspective as a model train company.

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Posted by nealknows on Tuesday, July 31, 2018 7:15 AM

We will survive! It would take years for LHS or online sellers to be totally depleted of goods! Let's take one day at a time. Right now, I have two thirds of my collection in boxes and over 100 BB kits not even built. If I would rotate all of my freight cars every quarter, it would take me two years to do a rotation! 

Breathe, grab your throttle and run your trains. Let the factories do what they have to do and then they will tell us and let's not become train stock brokers and specualte on things we don't have 1000% knowledge on. 

Now, anyone have any PS-2 covered hoppers in Cemex they want to get rid of?

Neal

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Posted by riogrande5761 on Tuesday, July 31, 2018 7:56 AM

Oh yeah, it isn't like there is a shortage of trains out there.  It would more be a matter of getting specific items that fit a modeling focus that could be more challenging.  But if you don't care what you are running, lots of trains.

Exactrail already commented that they are in the process of moving forward with another factory and Jason may be expanding capacity of his factories to help accomodate.  Apparently Intermountain was the biggest producer at the closed factory so they may take longer to get caught up than some with smaller production.

Would love to grab my throttle and run trains but I'm between layouts but am making cunning plans to get the basement finished toward that end.  Forty sheets of drywall were delivered last Saturday - 1st need to get outlets installed and then get a contractor to do the dry wall which will be painted sky blue.

Rio Grande.  The Action Road  - Focus 1977-1983

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Posted by Tinplate Toddler on Tuesday, July 31, 2018 8:31 AM

riogrande5761
In a nut shell, be prepared to pay around two to three times the price for trains.

I think this is not only slightly exaggerated. Chinese manufacturers have been asking good money lately, in fact, the their prices made it feasible for some manufacturers in Europe to relocate their production into the European Union and cxountries, in which the average wage is not that much higher, but the cost of quality control, communication and logistics are actually lower.

 

Happy times!

Ulrich (aka The Tin Man)

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Posted by riogrande5761 on Tuesday, July 31, 2018 9:18 AM

Tinplate Toddler
       riogrande5761
In a nut shell, be prepared to pay around two to three times the price for trains. 

I think this is not only slightly exaggerated. Chinese manufacturers have been asking good money lately, in fact, the their prices made it feasible for some manufacturers in Europe to relocate their production into the European Union and cxountries, in which the average wage is not that much higher, but the cost of quality control, communication and logistics are actually lower. 

Ulrich, Don't shoot the messenger, these kinds of figures are what Rapido has mentioned on a number of occasions.  It has also been reported that the iPhone would be similarly 2 to 3 x more expensive if made in the US.

Anyway, if what you say is true, why aren't all the model train companies moving back over to the US what with all the issues they have been experiencing over the past 10 years?  If it weren't so costly and affect product prices, it woudl be a no brainer right?  But it isn't happening probably because they know the prices they would be charging would be beyond what most would be willing to pay.  People already complain about the high cost of model train products.  I've read quotes putting iPhones made in north America at $2k or more, which is 2x the current cost made in China.

There is a 3 year old article which may be an interesting read:

https://thebusinessofmodels.wordpress.com/2015/03/27/hornby-paid-0-5m-to-end-its-chinese-supplier-misery/

"Our industry is currently tied to Chinese production, as southern China has developed the special skill set required to produce model trains. Bringing the manufacturing back to North America would cost even more due to very high start up costs and higher overhead"

Rio Grande.  The Action Road  - Focus 1977-1983

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Posted by dknelson on Tuesday, July 31, 2018 9:23 AM

My well-placed source says Wheels of Time, Con Cor "and several others" are also affected - to what degree I do not know.  He also said don't look for many new product announcements to come out of this November's Trainfest.

Dave Nelson

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Posted by wjstix on Tuesday, July 31, 2018 9:35 AM

I wonder if this is actually "factories" or just one factory? It's not unusual for several US/western companies to all have products made by the same company in Asia. My understanding is there are several US musical instrument manufacturers who all use the same company in South Korea to make their guitars and basses for example, even though the end products are sold under competing brand names.

Stix
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Posted by Anonymous on Tuesday, July 31, 2018 9:52 AM

riogrande5761

 

 
Tinplate Toddler
       riogrande5761
In a nut shell, be prepared to pay around two to three times the price for trains. 

I think this is not only slightly exaggerated. Chinese manufacturers have been asking good money lately, in fact, the their prices made it feasible for some manufacturers in Europe to relocate their production into the European Union and cxountries, in which the average wage is not that much higher, but the cost of quality control, communication and logistics are actually lower. 

 

 

Ulrich, Don't shoot the messenger, these kinds of figures are what Rapido has mentioned on a number of occasions.  It has also been reported that the iPhone would be similarly 2 to 3 x more expensive if made in the US.

Anyway, if what you say is true, why aren't all the model train companies moving back over to the US what with all the issues they have been experiencing over the past 10 years? 

What Ulrich said is true for Europe as we have some lower wage countries like Rumania, Hungary and a few more eastern European countries nearby.
Regards, Volker

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Posted by Portland Bill on Tuesday, July 31, 2018 9:53 AM

I went through the initial US tarrif list when it was first published and concluded that it did not include model trains. And remember that a tarrif is paid by the buyer, not the seller, so a factory would only close after sales volumes had dropped below economic volumes, which would be some way downstream, unless US brands were cancelling orders in anticipation. The language from Atlas and Bowser is about delay, not cancellation. Here's hoping that the InterMountain GP10 + 16 are not affected, as i am waiting for a couple of those that have been promised for a while!!!!!

Bill.

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Posted by Tinplate Toddler on Tuesday, July 31, 2018 9:55 AM

riogrande5761
Anyway, if what you say is true, why aren't all the model train companies moving back over to the US what with all the issues they have been experiencing over the past 10 years?

Well, as a matter of fact, it is true. For instance, Piko´s Hobby line of products was made in China and has been moved back to Germany. Piko still manufactures their G scale range of products, but in a factory owned and run by them. Other than than the US brands, Roco, Fleischmann, Marklin, Trix, Bemo and others never gave up manufacturing in Europe, although wages are much higher than in the US or China.

 

Happy times!

Ulrich (aka The Tin Man)

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Posted by Tinplate Toddler on Tuesday, July 31, 2018 9:57 AM

VOLKER LANDWEHR
What Ulrich said is true for Europe as we have some lower wage countries like Rumania, Hungary and a few more eastern European countries nearby. Regards, Volker

Model trains are still being manufactured in high wage countries like Austria, Germany and even Norway and Sweden.

Happy times!

Ulrich (aka The Tin Man)

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Posted by Doughless on Tuesday, July 31, 2018 10:39 AM

wjstix

I wonder if this is actually "factories" or just one factory? It's not unusual for several US/western companies to all have products made by the same company in Asia. My understanding is there are several US musical instrument manufacturers who all use the same company in South Korea to make their guitars and basses for example, even though the end products are sold under competing brand names.

 

IIRC, a few years ago Bachmann bought a big factory where a lot of companies were building their trains.  Then they all had to scramble to find new factories, or factory. 

I wonder if this factory in question is the one that received a lot of the Bachmann expulsions.

- Douglas

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Posted by BRAKIE on Tuesday, July 31, 2018 10:44 AM

You can add Intermountain to that list.

https://www.intermountain-railway.com/

Larry

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Posted by wjstix on Tuesday, July 31, 2018 11:38 AM

Tinplate Toddler
Other than than the US brands, Roco, Fleischmann, Marklin, Trix, Bemo and others never gave up manufacturing in Europe, although wages are much higher than in the US or China.

 

Well, higher than China anyway. I don't think European wages are higher than US wages for the same type of job....particularly if you look at take-home pay, since our taxes are lower.

Stix
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Posted by riogrande5761 on Tuesday, July 31, 2018 12:11 PM

Tinplate Toddler
 
riogrande5761
Anyway, if what you say is true, why aren't all the model train companies moving back over to the US what with all the issues they have been experiencing over the past 10 years? 

Well, as a matter of fact, it is true. For instance, Piko´s Hobby line of products was made in China and has been moved back to Germany. Piko still manufactures their G scale range of products, but in a factory owned and run by them. Other than than the US brands, Roco, Fleischmann, Marklin, Trix, Bemo and others never gave up manufacturing in Europe, although wages are much higher than in the US or China. 

Ulrich, I'm talking about IMRC, ExactRail, Wheels of Time, Trainworks, Atlas etc. - US brands.  Those other brands (Jedi hand-wave) those are not my droids.  That's all fine and dandy but no good to me.

So again, why aren't they moving back to north America to manufacture trains here in the good ol US of A or Canada?  

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Posted by Anonymous on Tuesday, July 31, 2018 1:36 PM

riogrande5761
So again, why aren't they moving back to north America to manufacture trains here in the good ol US of A or Canada?

Costs? Here is an interview Jason Shron gave in August 2012: http://cprailmmsub.blogspot.com/2012/08/china-and-model-railroad-manufacturing.html

Summery: A Rapido VIA Park car would have cost the customer about CAN $400 calculated with non-union wages at that time. Today it would cost even more but the difference to the Made in Chine price would be smaller. China's wages are rising faster than in the USA or Canada.

Would you be willing to pay CAN $400+ for a plastic passenger car? It might be an extreme example but the direction is right.
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Posted by Tinplate Toddler on Tuesday, July 31, 2018 1:48 PM

If Jason were correct, then any manufacturing in the US or Canada would not make any sense at all.

Compared to Germany, US or Canadian wages are bargains, but how can a business like Bemo design a passenger car, make the tooling, manufacture and assemble it and sell it for Euro 80 and still make a profit on it?

There is not an easy answer to that, but effective design and efficiency are possible answers.

 

Happy times!

Ulrich (aka The Tin Man)

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Posted by BATMAN on Tuesday, July 31, 2018 1:50 PM

wjstix
.particularly if you look at take-home pay, since our taxes are lower.

https://tradingeconomics.com/country-list/personal-income-tax-rate 

Plus most if not all of these countries have excellent free health care, education and a long list of safetynet/compassionate benefits that make for a relatively stress free quality of life. 

So take all that into account when chewing on the numbers.

 

Brent

It's not the age honey, it's the mileage.

https://www.youtube.com/user/BATTRAIN1/videos 

You can never ever out-train poor nutrition.

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Posted by Anonymous on Tuesday, July 31, 2018 1:52 PM

Tinplate Toddler

 

 
VOLKER LANDWEHR
What Ulrich said is true for Europe as we have some lower wage countries like Rumania, Hungary and a few more eastern European countries nearby. Regards, Volker

 

Model trains are still being manufactured in high wage countries like Austria, Germany and even Norway and Sweden.

 

It has always been a mix for the German companies, Germany and China.

Now Roco/Fleischmann have 100 people in production in Germany, 240 in Slovakia, 220 in Romania. The last two are European low wage countries.

Marklin/Trix still have 150 people in production in Germany, but 650 in Hungary with much lower wages than Germany. 

With outsourcing into these countries they can avoid China but the work is not back in Germany.
Regards, Volker

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Posted by Tinplate Toddler on Tuesday, July 31, 2018 1:59 PM

wjstix
I don't think European wages are higher than US wages for the same type of job....particularly if you look at take-home pay, since our taxes are lower.

I agree when we talk about Romania, Bulgaria, but not Germany, Austria, The Netherlands, France, Italy etc. Wages are about $20/hr,, but you have to add the same amount for the employer´s contribution to SS and NHS.

Happy times!

Ulrich (aka The Tin Man)

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Posted by riogrande5761 on Tuesday, July 31, 2018 2:11 PM

Tinplate Toddler

If Jason were correct, then any manufacturing in the US or Canada would not make any sense at all.

Yes.  I am basing my earlier comments on Jason who knows the model train industry from the inside out.  I didn't have any links or quotes handy so Volker stepped with the goods.  Thanks.

So was I slightly exaggerating earlier then about the increase in cost?  No.  CAN $400 for a plastic passenger car probably is 2 x or possibly more than manufacturing it in China.  I stand by my original statement.

Compared to Germany, US or Canadian wages are bargains, but how can a business like Bemo design a passenger car, make the tooling, manufacture and assemble it and sell it for Euro 80 and still make a profit on it?

Perhaps Jason could explain the differences in US/Canada vs. Europe.

Personally, this topic affects me as a US or north American hobbyist and my favorite companies are affected by this closure.  Suggestions by some that these companies (ExactRail, IMRC, Tangent, Trainworx, Fox Valley, Atlas, etc.) bring their manufacture back to the US are simply uninformed.

Europe, that must be a different beast and I have no idea if any model train companies which serve that market (European trains that is) were affected.  If not, then it's kind of out-of-scope to this topic isn't it?

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Posted by Tinplate Toddler on Tuesday, July 31, 2018 2:12 PM

VOLKER LANDWEHR
It has always been a mix for the German companies, Germany and China.

I don´t think this statement is quite correct. Some manufaturers like Brawa (one of the most expensive brands) relies completely on Chinese manufacturing and assembling. Others like Roco/Fleischmann have moved resources to Vietnam and/or have factories within the EU.

Well, discussing European issues does not lead in the right direction. The question is what can be done to fill the gap the closure of that particular Chinese factory has created. Bringing the production back into the US is an option which should not easily be dismissed.

Happy times!

Ulrich (aka The Tin Man)

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Posted by BATMAN on Tuesday, July 31, 2018 2:15 PM

A corporation is a piece of paper in a drawer in some Government office somewhere. A corporation does not have a soul, nor does emotion come into play, nor should it when making decisions on the soundness of the corporation. 

Corporate law dictates that the President/CEO/Top Dog/Big Banana, base his decisions on what will best benefit the shareholder(s) or the company. Now, the board of directors or shareholder(s) can steer the corporation in a particular direction as it sees fit. You will often see a corporation put on its social conscience hat and all of a sudden become let's say "environmentally conscious", don't be fooled they only do it as it is fiscally sound to do so. By law, the head cheese must make his decisions based on the mighty dollar. Of course, if that person is the only shareholder, they can do as they wish.

There are many third world countries left on the planet to pick up the slack as other countries price themselves out of the market. Eventually (not in my lifetime) all boats will float and sending aid around the world in the form of bags of grain will end as economies develop.

Brent

It's not the age honey, it's the mileage.

https://www.youtube.com/user/BATTRAIN1/videos 

You can never ever out-train poor nutrition.

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Posted by riogrande5761 on Tuesday, July 31, 2018 2:20 PM

Tinplate Toddler
The question is what can be done to fill the gap the closure of that particular Chinese factory has created.

What can be done?  1) do exactly what Jason has done, open your own factory that is yours.  AFAIK, he has two.  From what I understand, Athearn did something similar after being burned about 9 years ago.  2) find space in another factory already going - Athearn did that when their factory shut down - moved the RTR stuff to the factory making Genesis products.  Jason may be able to expand capacity at one or both of his factories to fill the gap for some of these companies.

Bringing the production back into the US is an option which should not easily be dismissed.

I think Jason would have a strong financial argument against that which Volker already commented on.  But again, you'll have to take that up with Jason.  *shrugs*  The take-away is that the cost US hobbyists would have to pay would be so excessive, it would be a deal breaker for 90% of us.  Thats why it is easily dismissed.

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Posted by BATMAN on Tuesday, July 31, 2018 2:31 PM

Will somebody explain to me how the Chinese Government can "hold the tooling" and point me in the direction of somewhere I can read about it? 

Somebody owns the tooling and there have to be agreements in place regarding that. My eyes are bleeding from trying to find out about this. I tend to read business publications so I can maintain my standard of living and I have not seen anything about tooling being held hostage.

Speculation is not fact.

Brent

It's not the age honey, it's the mileage.

https://www.youtube.com/user/BATTRAIN1/videos 

You can never ever out-train poor nutrition.

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Posted by Anonymous on Tuesday, July 31, 2018 2:31 PM

Tinplate Toddler
I don´t think this statement is quite correct. Some manufaturers like Brawa (one of the most expensive brands) relies completely on Chinese manufacturing and assembling.

I didn't strive 100% correctness. I just wanted to put into perspective your statement that some European companies never gave up production in Europe.

Tinplate Toddler
Bringing the production back into the US is an option which should not easily be dismissed.

You are right if you are willing to pay twice to three times the current price or content with less detailed product kits, e.g. Accurail.

High detailed assembled locomotives, cars are waiting for roboters able to assemble them before returning.
Regards, Volker

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Posted by azrail on Tuesday, July 31, 2018 2:40 PM

How does Kadee do it in Oregon, yet offer the same quality level as the stuff from China at almost the same price?

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Posted by BATMAN on Tuesday, July 31, 2018 2:53 PM

Tinplate Toddler
Compared to Germany, US or Canadian wages are bargains

When I was in Logistics for the Feds, we had my counterparts come from many countries all over the world to see how we did things. I had people from Switzerland, Germany and many other countries partnered with me for two weeks.

The Europeans made twice as much as I did, however, their housing cost were four times mine and I had a 5000 SQFT home and they lived in a 1500 SQFT apartment.

It is hard enough to argue apples and oranges but when neither has heard of a pear or a pineapple. Time go traveling.Laugh

Brent

It's not the age honey, it's the mileage.

https://www.youtube.com/user/BATTRAIN1/videos 

You can never ever out-train poor nutrition.

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Posted by Anonymous on Tuesday, July 31, 2018 3:34 PM

azrail

How does Kadee do it in Oregon, yet offer the same quality level as the stuff from China at almost the same price?

 

The was a thread about kit manufacturers on MR forums in September 2017:
http://cs.trains.com/mrr/f/88/t/264946.aspx

riogrande5761 cited Jason Shron from another forum:

It's quite simple how they do it. Kadee sells thousands of couplers at a wonderful markup - we all dream of markups like that. They are able to subsidize their gorgeous freight cars with that coupler markup. (And Kadee freight cars really are gorgeous.) Same goes for Micro-Trains. 

That's why those two companies can do production in North America. 

If Rapido was selling millions of widgets for $1 each that only cost us $0.05 to make, we could use that extra profit to subsidize North American production or to bring down the prices of overseas-produced models enormously. 

If there is a company that can either do RTR production in North America or they can produce RTR models in China at a hugely lower price than everyone else, then there is always a real economic reason behind it, such as cross subsidization (discussed above) or selling a loss leader for the purpose of market penetration. That means "I want my model in every store so I will not make any money on the project but at the end I will be in every store." Seeing a handful of companies producing models onshore or cheaply does not mean that all of the other companies are gouging the customer or that we could really make models much cheaper if we wanted to. 

There are even projects Rapido has cancelled after they were fully designed because we realized that in order for them to make profit we would price ourselves out of the market. We have one freight car that would have retailed for $60 in 2013, which was way too high for a car that small. It had about a million extra parts. We had to shelve it. Maybe when other, similar freight cars get up to that price we can finally make it, because we can probably still make it for $60.

-Jason

On the Kadee website https://kadee.com/htmbord/answer15-17.htm
Is a short article (#118) “The Costs of Doing Business as a Manufacturer” Kadee complains about the ever rising minimum wages:

In Oregon we have to deal with the mistaken politically correct mandatory minimum wage increases that seem to be the trend with politicians without any foresight looking for support and votes without any regard for the employer as to how they are going to pay a higher wage without an increase in income.

So I assume that they pay just minimum wages.
Regards, Volker

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Posted by SouthPenn on Tuesday, July 31, 2018 3:34 PM

BATMAN

Will somebody explain to me how the Chinese Government can "hold the tooling" and point me in the direction of somewhere I can read about it? 

Somebody owns the tooling and there have to be agreements in place regarding that. My eyes are bleeding from trying to find out about this. I tend to read business publications so I can maintain my standard of living and I have not seen anything about tooling being held hostage.

Speculation is not fact. 

China is a communist country. The government owns everything.

 

Got this from Hogtrainz:

"URGENT NEWS!!!   We have been informed that the factory producing trains for the following Manufacturers has closed.  Although manufacturers are scrambling to set up shop in a new facility - massive delays and cancelations will be forthcoming."

This affects the following:
Atlas
Bowser
Fox Valley Models
Intermountain Railway Co
Tranworx
 
 
South Penn

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