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Atlas and Bowser Factories Closed

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Posted by Anonymous on Monday, September 3, 2018 9:36 AM

richhotrain

Thanks, Ed, for posting that notice from Walthers.

That is very good news because without an alternate supplier to the retiring Shinohara, there would be a huge hole in the specialty track market.

Rich

 

The unavailability of Shinohara dual gauge switches caused me to buy Fasttracks jigs and point forms.

Not exactly cheap, but as long as Micro Engineering and Midwest Products exist I can build track.  Should ME disappear, theres still commercial flextrack/sectional track that appears at nearly every train show that can give up its rail for handlaying projects.  

I wonder how much it would cost to start up rolling my own rail...

 

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Posted by Doughless on Thursday, August 30, 2018 9:39 PM

I didnt mean to imply that someone's idea of "value" should be taken over market price.

But even though supply and demand dictates what market value is, those principals can only be a gauge for determining a price point if the market is completely free of "unfair" practices.

Airbus routinely undercut McDonnell Douglas, and the Japanese car companies could undercut American car companies because their government set policies that helped the airline and auto companies put products onto the world market at prices less than what their American counterparts could produce. Not to get political, but expenses that american companies had to pay for such as healthcare, benefits, etc, were burdensome relative to the foreign companies, who's governments paid for such things.  If airbus and Toyota had to pay for the same employees expenses as McD and GM were burdened with, their planes and cars would be more expensive and not be as competitive.

I have no idea about the market influences effecting model trains.  But it just seems to me that the mass produced popular item would cost less than the infrequently produced rare specifically detailed item, by quite a bit, if each product had to pay its own way.....amortize its own cost of production.  I can't see where a common 50 foot boxcar could be priced at $30, but another rarer model comes in at, say, $37. 

I have no data.  It just always felt to me that the pace and quality with which producers were churning out newly tooled high end models at prices around $30 to $50 just seems unsustainable to me, unless there are some geopolitical forces supporting it....which may change of course. 

 

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Posted by ATLANTIC CENTRAL on Thursday, August 30, 2018 9:08 PM

Doughless

Its my understanding that the high end finely detailed Kadee rolling stock (albeit common and infrequently released) can be bought for less than $150, like even 40, because the company sells so many couplers to offset the "loss" on the cars.  I wonder if that's true, or if that's just what other companies say to excuse why they won't do it.

If it is true, maybe Intermountain can sell american made cars for less than $150, since they sell so many wheel sets.

Frankly, I've always felt that the Chinese labor market was allowing companies to produce high end, rare one off, proto specific models for folks who didn't want to build them themselves, at a price and pace that's unrealistic.  To me, a product with that combination of detail, research accuracy, and quality should probably actually cost about $150 and $450.   A correction to somewhere closer to those price points is probably way over due for those kinds of models.

 

The value of anything is only decided by how badly the buyer wants it, and how badly the seller wants to be rid of it.

If that market value of any product does not exceed the cost of production, usually by a factor of at least 3 and usually 5, production will cease.

You may be right in one sense about a high detail RTR freight car being "worth" $150 based on labor to produce it in this country.

But that is meaningless if there is not a large enough "supply" of customers willing to pay that price to support a suitable "economy of scale" to produce the product at that price.

I don't think too many people are going to pay even $150, let alone more, for products similar to those currently made in China and sold in the $40 to $70 range.

As for Kadee, I seriously doubt they "loose money" on the freight cars - BUT - it is very possible they sell the freight cars at very small profit. Something they can likely afford to do based on the coupler business paying their primary overhead and making a comfortable profit.

And keep in mind, Kadee is making the move to direct sales of all their products - this will boost profit margins........

Direct sales is the future of retail in general, and the future of this hobby......

Sheldon

    

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Posted by Doughless on Thursday, August 30, 2018 8:39 PM

Its my understanding that the high end finely detailed Kadee rolling stock (albeit common and infrequently released) can be bought for less than $150, like even 40, because the company sells so many couplers to offset the "loss" on the cars.  I wonder if that's true, or if that's just what other companies say to excuse why they won't do it.

If it is true, maybe Intermountain can sell american made cars for less than $150, since they sell so many wheel sets.

Frankly, I've always felt that the Chinese labor market was allowing companies to produce high end, rare one off, proto specific models for folks who didn't want to build them themselves, at a price and pace that's unrealistic.  To me, a product with that combination of detail, research accuracy, and quality should probably actually cost about $150 and $450.   A correction to somewhere closer to those price points is probably way over due for those kinds of models.

- Douglas

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Posted by BigDaddy on Thursday, August 30, 2018 7:20 PM

I'm busy and haven't watched this video.  It may or may not have anything to do with this thread, but since it's from Rapido, it's probably worthwhile watching it.

https://youtu.be/u0DYxnNL28Q

Henry

COB Potomac & Northern

Shenandoah Valley

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Posted by richhotrain on Saturday, August 11, 2018 4:57 AM

DRfan
  

Wow! Excuse me!  And I thought this was an open discussion....  I didn't know you owned the forum!  No wonder people are being turned off about this hobby. 

I don't want to pile on here, but from my viewpoint, the discussion on this thread has been perfectly normal and civil. I see it as an open discussion with no flaming or name calling.

As far as people being turned off about this hobby because of forum discussion, I have never heard that point of view expressed before.

Sure, some people may be turned off about some things like model railroading clubs or the cost of the hobby or the lack of video game excitement in model railroading. But, turned off about the hobby because of the tone of forum discussions?

If that is the case, just ignore the forums but don't quit or avoid the hobby of model railroading.  My 2 Cents

Rich

 

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Posted by Paul3 on Friday, August 10, 2018 11:34 PM

*facepalm* Sigh

Seriously?

Are we never to disagree...ever?  Debate a topic?  Present opposite arguments and counterpoints?  Are we allowed to only post happy agreements?  It sounds like it is only an "open discussion" if everyone has the same opinion.

And then suddenly my disagreement with a poster on a discussion forum is responsible for killing the hobby.  To quote a meme, "Well, that escalated quickly."  Mischief

selector,
Thanks, man.  I don't know what it is these days.  It's like every disagreement is treated like a personal attack.  *shrug*  I dunno.

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Posted by selector on Friday, August 10, 2018 10:40 PM

Easy there, DRfan.  He has merely mounted a counterargument with some flesh to it. If you still disagree, refute what he says with some facts of your own.  He hasn't kicked you in the teeth.  No need to get all huffy.

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Posted by DRfan on Friday, August 10, 2018 8:41 PM

Paul3
DRfan, China didn't "force" anyone out.  There was no existing market for what they started back with the P2K BL2.  Take a gander at the early 1990's Walthers Catalogs - there were more Euro models in it than USA ones.  China created their own market; one that no American company dared to even try. And you are fooling yourself if you think the cost of US-made high end models will be just "slightly" higher than Chinese-made ones.  Try two or three times the retail cost.  Are you ready to pay $450 for a non-sound diesel?  $150 for a boxcar? No US-made model can compare to the Chinese-made ones except Kadee.  But Kadee isn't going to make locos, cabooses, passenger cars, or much of anything else.  There is no comparison in quality because no American company other than Kadee has ever made a complex model like the Chinese do.

Wow! Excuse me!  And I thought this was an open discussion....  I didn't know you owned the forum!  No wonder people are being turned off about this hobby.

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Posted by NittanyLion on Friday, August 10, 2018 11:12 AM

The numbers are purely illustrative,not an example of what you need to do with a business. I was able to source the same types of machines for under $20k a machine on the secondary market,but if that's unrealistic, it isn't important to the general gist. Those aren't a recurring cost. Even if you had a stand up half a million in equipment, you're still getting hammered on your labor cost.

Which is why I pointed out the minimum wage. There's an absolute floor there. You cannot cut labor below that point. I made $7/hr just cleaning machined rings in a shop 15 years ago. That job probably pays closer to $10 now. Even if we make a wild stab and say our five workers are making $15/hr, that's $156k in labor. Over five years,  we have $780k in labor but our equipment was still $500k and had an amortized cost of $100k.

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Posted by maxman on Friday, August 10, 2018 8:58 AM

rrinker
I'm not even sure the majority of Rick's business is the model train products. He uses those machines for other things as well.

 

Here's his website: https://rixproducts.com/

I'm pretty sure that the model train products are not the majority of his business.  I think I read someplace that he made train stuff when his machines were not busy doing "real" work.

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Posted by rrinker on Friday, August 10, 2018 7:51 AM

 I'm not even sure the majority of Rick's business is the model train products. He uses those machines for other things as well.

 $150k for the machines? A USED model of one of the two that he just added to his shop sells for over $105K USD. You're off by almost an order of magnitude on the cap cost of the equipment needed to replicate Rick's shop. In addition to the molding machines, there are other machine tools needed to make the molds. Even buying all used, precision machine tools like that and the injection machines are NOT cheap.

 ANd while you MIGHT be able to get minimum wage workers skilled enough to runt he injection molding machines, you will NOT get a toolmaker foor minimum wage, not even close - that's another one of those jobs like the ones Mike Rowe talks about where you can earn quite a nice salary without a college degree. It does take training and experience to become a skilled machinist, but that's trade school, noot college. Most definitely not a minimum wage job.

                         --Randy

 


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Posted by NittanyLion on Thursday, August 9, 2018 2:50 PM

riogrande5761

  As Paul pointed out, and others, it's the labor costs, not the factory investment.   

 

For some context of scale, I looked at Rix Products. The building is a simple prefab steel building of 7500 square feet and presumably houses every aspect of the company. Finding a comparable vacant property anywhere in the US is trivial. I found several suitable properties just outside Pittsburgh that settled around 20 cents a square foot a month on average. That's $1500 a month and $18k a year.

If employ 5 people and pay them minimum wage for PA, my labor costs are $75k a year.

Once I get the initial $150k in upfront costs for injection molding machines, raw materials and molds are relatively low cost compared to the $75k I have in labor costs. Yes, I might have $60k tied up with a single mold, but that's a one time cost that can be amortized over years. Labor cannot and will also get more expensive over time.

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Posted by Anonymous on Thursday, August 9, 2018 11:48 AM
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Posted by jeep35 on Thursday, August 9, 2018 11:11 AM
I think you make a lot of excellent points. it's really just speculation on our part as to why this particular manufacturing facility has ceased to operate. I'd be curious to know is this a true factory like we are used to in the West. You clock in at the start of your shift and you do whatever work you're assigned to for however long your shift lasts or do they act as a sort of coordinator that "farms" out the work to smaller mom and pop operations.
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Posted by Tinplate Toddler on Thursday, August 9, 2018 9:35 AM

ATLANTIC CENTRAL
And that is part of the issue, a blue box kit was easy to produce with just a few people, in very large volumes. Todays high detail products, not so much.

Sheldon - that nails it! Maybe we want too much, while not appreciating the extra detail in terms of price. I never understood why we need to have super-detailed cars when you can see trhe detail on on clese-up photographs. But thta´s a different story.

ATLANTIC CENTRAL
But there were LOTS of them.

And there still are - on both sides of the Big Pond. There are countless small enterprises catering for the hobbyist, not only the big names.

Happy times!

Ulrich (aka The Tin Man)

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Posted by ATLANTIC CENTRAL on Thursday, August 9, 2018 9:24 AM

Ulrich,

True, when model trains for North America were made mostly in North America, it was mostly a lot of small/medium sized companies. But there were LOTS of them.

Athearn, Walthers, etc, only numbered their empolyees in double digits for the most part, maybe the very low hundreds as a high point.

LIONEL was likely the biggest in their heyday.

One main reason none have been public companies.....too small.

But that does not mean they did not crank out a lot of product.......

Athearn and Wathers have been very prolific in their history.

And that is part of the issue, a blue box kit was easy to produce with just a few people, in very large volumes. Todays high detail products, not so much.

Sheldon

    

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Posted by Tinplate Toddler on Thursday, August 9, 2018 9:03 AM

rrinker
Not sure what you mean by never a large model train industry in the US. Lionel, American Flyer, Varney, Mantua/Tyco, Walthers, Athearn, MDC, Bowser, Penn Line, Atlas - all that stuff was made in the US. And many brands that weren't used Pittman motors, those were 100% US made as well. Apart from Lionel using Rivarossi as the source of some of its early (first go around) HO, most of this stuff was still all made in the USA until at least the 60's, and depending on the manufacturer, beyond. It was the 60's when the idea of having things made cheaply in Hong Kong took over, partly coinciding with the business fad of the giant conglomerated corporation.

I didn´t say there was never a model train industry in the US.  I said there was never a large manufacturer - large meaning employing more than 1,000 people. By the time I joined the hobby, most of the manufacturing facilities had already been moved outside of the US, with Athear making the move to China as late as 2009.

Marklin currently employs more than 1,100 people in Germany and Hungary. Roco´s figure reads in excess of 600 in Austria, Slovakia, Romania and a smaller figure in Vietnam.

Model railroading has always been a quite expensive hobby in Europe, partly due to much lower wages  in the early years until the mid 1970s, but mainly due to the VAT, which currently runs at 19% and even in excess of 20% in some countries. On a pre-tax basis, European model trains are not more expensive than what you folks pay in the US for products made in China. Don´t look at the prices you see when visiting the websites of the leading importers of European model trains - they are just crazy and up to 45% above the pre-tax level in Europe!

Happy times!

Ulrich (aka The Tin Man)

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Posted by rrinker on Thursday, August 9, 2018 7:19 AM

 Not sure what you mean by never a large model train industry in the US. Lionel, American Flyer, Varney, Mantua/Tyco, Walthers, Athearn, MDC, Bowser, Penn Line, Atlas - all that stuff was made in the US. And many brands that weren't used Pittman motors, those were 100% US made as well. Apart from Lionel using Rivarossi as the source of some of its early (first go around) HO, most of this stuff was still all made in the USA until at least the 60's, and depending on the manufacturer, beyond. It was the 60's when the idea of having things made cheaply in Hong Kong took over, partly coinciding with the business fad of the giant conglomerated corporation. Tyco and Lionel are a couple that came under control of what were mostly food companies, and promptly got run right intot he ground with poor quality. Those companies might have known how to sell cereal and cake mix but they had no clue about the model train market.

 The US has had a pretty solid tradition of model train manufacturing. It was in part the fine machining capabilities of those model train companies that contributed greatly to the war effort during WWII. Varney, for example, had a bunch of precision screw lathes that could make small parts with a precision that other industries, who made parts measured by the ton, couldn't do. 

 

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Posted by riogrande5761 on Thursday, August 9, 2018 6:37 AM

Tinplate Toddler

Correct me if I am wrong, but there has never been a model train manufacturing business to the extent as seen in Europe, with rather large enterprises like Marklin, Trix (now a brand of Marklin), Fleischmann (now a brand of Roco), Roco (a late comer in the industry), Rivarossi, Lima, Mehano.


Europe is really a different beast with it's own economy.  There are a lot of things that are different but probably play a role in why you really can't compare Europe manufacture of trains to the US.  I haven't even looked at European trains for at least 15 years but I always took notice of the much higher prices of engines and cars and just figure they were much more expensive because of the higher labor costs.  But for whatever reason, Europeans were acclimated to those costs - and probably didn't have train collections as large as many US hobbyists - and for obvious reasons - at those prices, you can't buy nearly as many.

For whatever reasons, US hobbyists are acclimated to a different prices structure, and not only for models but other things like gasoline etc.  We probably pay less taxes but also don't have national health insurance. There are probably all kinds of costs built into the European economy that makes it apples to oranges.  So while it's great to talk about your world of Europena trains and manufacture, I'm not sure it's directly relevant to the US/Chinese model train discussion, which is a different beast based on a different set of rules and economic factors.

Moving the production back to the US therefore would mean building a new factory which would certainly require a sizable capital investment with rather little prospect of a high ROI. I doubt that a bank would lend money for such a venue. In my humble opinion, this is actually the biggest obstacle in moving the production back to the US, not the wage difference, which becomes less each year.

No.  As Paul pointed out, and others, it's the labor costs, not the factory investment.  Add the two together and its even worse.  Now it's true that Chinese wages have been rising and that causes the cost to make detailed models in China higher - but when it rises enough, it still may not make sense to move back to the US, but I would guess eventually another low wage market would be sought out, just like when manufacture moved from Japan to Korea, and then to China - but so far, China still seems to be the best place to be, for how long - a few years yet maybe.

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Posted by riogrande5761 on Thursday, August 9, 2018 6:25 AM

Paul3

And it doesn't really matter if all the manufacturers combined to form model train factory in the USA or not.  The cost of labor is the Number 1 cost in making a model today (a single Rapido coach has 198 pieces), and the reduction or elimination of the Federal Min. Wage is just not going to happen.

The only way to make the trains here is to either make them very simple or raise the MSRP to a price few will stomach.

The above is the one simple fact that for some reason is being over looked over and over and over by everyone who thinks manufacturing highly detailed model trains in the US is a something that can be done.  As they say, this isn't rocket science - it's basic economics 101.

riogrande5761,
The funny is that Kadee cars were considered "crazy expensive" when they first came out.  I can recall quite clearly many of my fellow club members swearing they'd never pay $20 for a boxcar.  Why do that when you can buy an Athearn BB kit for $7?  And used ones for less than $5?  My, how times change.

I remember that and when they came out, they were pretty much out of my price range - when I first saw them I recall them being about $24-$28, but maybe I was n't on the bleeding edge with them when they first came out.  Since I was also focusing on mid-1980's through early 1990's and most of Kadee rolling stock is too early for that time frame, in general, I somewhat ignored them.  I've back dated by about 10 years so I have picked up a small number and may get a few more eventually since they offer versions that overlap into the late 1970's and early 1980's period.

As far as Kadee prices, that was a lot relative to the much cheaper prices of other contemporary models, and they have risen a good deal since then keeping pace somewhat with other well detailed models we see from other companies.  I often see NIB Kadee freight cars at shows for between $20 and $25, which isn't bad - they are nice cars.  I remember when Tangent first came out with their original car, the 4740 covered hopper for $44.9x and as beautiful as they were, it was beyond what I could wrap my head around.  It was probably at least 5 years after the were on the market before I bought my first Tangent cars; since then other makers have priced models into similar range as Tangent while Tangent has pretty much held the line on their model prices.  They've become one of my favorites in recent years.  I managed to find and buy 8 numbers of the original D&RGW 4740 hoppers released back near the beginning and for about 36 to 38 dollars to boot.  Lovely cars.

 

jeep35

So, after all the various theories about the factory closing (tariffs, environmental issues, whatever) was it true the real reason was the owner just wanted to retire?

Only reports of environmental issues or owner wanting to retire - different claims by different people - who is right?  No idea.  One contact I had communicated the factory was closed down for a month and at the end of the month, it would either re-open or close for good.  That was only one contact.  I imagine most, if not all of the model companies are working to secure alternate factories, which is the smart thing to do. No body wants to have a fickled fate.  Some have already commented that alternates are already in-process but I don't know if there is enough capacity in other factories to pick up all of the projects or only a portion of them - probably the latter.  We'll know more in the comming months.  All I know is the break in flow of models will let my budget start to cool off as it's been fast and furious lately for me.  I could use the break myself for a few months.

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Posted by Tinplate Toddler on Wednesday, August 8, 2018 11:40 PM

My first encounter with US prototype model railroading was back in the late 1960s, when I received a gift subscription to MR. In those days, the RTR market was dominated bei either products of Japanese manufacture (brass) or European made products, which were sold under US brand names like AHM, LifeLike or Tyco. Key players were Rivarossi, Mehano and Roco. US brands manufacturing in the US were Model Die Casting (MDC or Roundhouse, Athearn) and Atlas (track, later importing from Roco).

Correct me if I am wrong, but there has never been a model train manufacturing business to the extent as seen in Europe, with rather large enterprises like Marklin, Trix (now a brand of Marklin), Fleischmann (now a brand of Roco), Roco (a late comer in the industry), Rivarossi, Lima, Mehano.

While Europe retained manufacturing resources, nearly all US capacities were moved to China. Moving the production back to the US therefore would mean building a new factory which would certainly require a sizable capital investment with rather little prospect of a high ROI. I doubt that a bank would lend money for such a venue. In my humble opinion, this is actually the biggest obstacle in moving the production back to the US, not the wage difference, which becomes less each year.

Happy times!

Ulrich (aka The Tin Man)

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Posted by jeep35 on Wednesday, August 8, 2018 11:10 PM

So, after all the various theories about the factory closing (tariffs, environmental issues, whatever) was it true the real reason was the owner just wanted to retire? The Chinese people are very industrious and very business savvy. If the business of manufacturing highly detailed model trains is profitable someone will eventually take over the operation. If the retirement story is correct it seems odd that the owner couldn't find someone to take over the operation. Perhaps the profits weren't good enough. Just a thought.

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Posted by Paul3 on Wednesday, August 8, 2018 10:32 PM

csmincemoyer,
It is possible for someone to disagree on a point without it getting personal.  In fact, you are not the only one that has brought up Kadee & Accurail on this subject, just the latest.  I've disagreed with your statement (that since Kadee and Accurail can make it work in the USA, then Atlas, Bowser, et al, could) in a even-handed way using facts and my opinions. 

AFFA in China supposedly produced 25% of the market, not 75%.  And it doesn't really matter if all the manufacturers combined to form model train factory in the USA or not.  The cost of labor is the Number 1 cost in making a model today (a single Rapido coach has 198 pieces), and the reduction or elimination of the Federal Min. Wage is just not going to happen.

The only way to make the trains here is to either make them very simple or raise the MSRP to a price few will stomach.

riogrande5761,
The funny is that Kadee cars were considered "crazy expensive" when they first came out.  I can recall quite clearly many of my fellow club members swearing they'd never pay $20 for a boxcar.  Why do that when you can buy an Athearn BB kit for $7?  And used ones for less than $5?  My, how times change.

 

 

 

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Posted by csmincemoyer on Wednesday, August 8, 2018 8:46 PM
Well that's kind of my point. We now know that one factory seems to have produced 75% (+/-) of the RTR models on the market. Why can't that business model work in the US? As I stated, you always read that manufacturer A or B can't produce quality, cost effective models in North America. Could a North American company produce cost effective models for a number of manufactures here. If Athearn, Atlas, Kadee, etc....shared the same factory, could Kadee add to their product line if one of the costs could be spread among different manufacturers? I'm just thinking out loud.
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Posted by riogrande5761 on Wednesday, August 8, 2018 8:35 PM

Csmincemoyer,

No need to shy away.  Paul wasn't trying to throw you under the bus in particular.  Many people bring up Kadee as a shining example a company in the US that can produce nicely detailed ho models that aren't crazy expensive. 

But if it were economical to do, then detailed RTR companies like Athearn, ExactRail, Tangent, Intermountain, Atlas and others would be moving production here in the good ol us of a.  It seems plain enough that they should if it were doable.  

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Posted by csmincemoyer on Wednesday, August 8, 2018 8:17 PM
Paul, Certainly sorry for bringing up Kadee and Accurail. Guess that's why I don't hang around these forums much anymore.
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Posted by Paul3 on Wednesday, August 8, 2018 7:40 PM

I wish people would stop bringing up Kadee and Accurail.  They have almost nothing in common with what's being done in China.

In the past 21 years, Kadee has created 40' boxcars, 50' boxcars, PS-2 covered hoppers, 50 ton hoppers, and 11,000 gal. tanks.  That's it.  Just 5 models in over 20 years.  And these models are some of the most common prototypes available.  If you only want a new model once every 4 years, and only of the most common prototypes, then the Kadee method is what you want.  Personally, I prefer many more models on the market that are not just the most common ones.

Accurail makes kits; mostly low number of parts kits that share as many common parts as possible with each other.  A typical Accurail kit has less than 20 parts.

DRfan,
China didn't "force" anyone out.  There was no existing market for what they started back with the P2K BL2.  Take a gander at the early 1990's Walthers Catalogs - there were more Euro models in it than USA ones.  China created their own market; one that no American company dared to even try.

And you are fooling yourself if you think the cost of US-made high end models will be just "slightly" higher than Chinese-made ones.  Try two or three times the retail cost.  Are you ready to pay $450 for a non-sound diesel?  $150 for a boxcar?

No US-made model can compare to the Chinese-made ones except Kadee.  But Kadee isn't going to make locos, cabooses, passenger cars, or much of anything else.  There is no comparison in quality because no American company other than Kadee has ever made a complex model like the Chinese do.

 

  • Member since
    April 2015
  • 72 posts
Posted by DRfan on Wednesday, August 8, 2018 6:58 PM

I am not trying to argue, I think China dominated the model train market simply by producing model at extremely cheap prices. Once they forced others out, they controlled the market and there is no one left to produce models. As far and sticker shock goes, I gladly buy US made goods including freight cars, sure they cost slightly more than the Chinese models but I really think they are better made.

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