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Post by scl1234 on Dec 19, 2014 6:55:51 GMT -8
Another invalid and naïve assumption...that Athearn's profit suffers to any measurable extent just because they don't manufacture what you're looking for. Re the gasoline analogy: They manufacture what history has shown will sell, if you don't buy it today, someone else will tomorrow. They manufacture what has the best chance of generating a sale, even with a razor-thin profit margin; hence the continued survival of the company. You are saying that Athearn's production runs are the same size as always, or larger? If I can't find it, I don't buy it. I am not alone. You've just demonstrated you don't understand what "profit margin" is... If Athearn makes $1 each off 100 units sold ($10 each), that's a profit margin of one percent.Before the next production run, prices go up due to Chinese wage pressures, raw material cost increases, etc. so Athearn raises the price of each unit to $20. Athearn produces only 75 units knowing that fewer people will purchase a higher priced unit...but now they make $2.00 on each unit sold, again, a profit margin of...one percent. (with slightly higher revenues) Profit margin is always expressed as a percentage, not a dollar amount. It really has nothing at all to do with a few modelers deciding to boycott purchases because an item does not fit into their era.
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Post by atsfan on Dec 19, 2014 15:35:35 GMT -8
You are saying that Athearn's production runs are the same size as always, or larger? If I can't find it, I don't buy it. I am not alone. You've just demonstrated you don't understand what "profit margin" is... If Athearn makes $1 each off 100 units sold ($10 each), that's a profit margin of one percent.Before the next production run, prices go up due to Chinese wage pressures, raw material cost increases, etc. so Athearn raises the price of each unit to $20. Athearn produces only 75 units knowing that fewer people will purchase a higher priced unit...but now they make $2.00 on each unit sold, again, a profit margin of...one percent. (with slightly higher revenues) Profit margin is always expressed as a percentage, not a dollar amount. It really has nothing at all to do with a few modelers deciding to boycott purchases because an item does not fit into their era. You just demonstrated you don't understand what "total profit" is... Who is talking about percentage, I'm not. Total profits shrink, and worse, profits that could have easily been had are not there because of limited availability.
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Post by Donnell Wells on Dec 19, 2014 16:17:38 GMT -8
You just demonstrated you don't understand what "total profit" is... Who is talking about percentage, I'm not. Total profits shrink, and worse, profits that could have easily been had are not there because of limited availability. atsfan, you're not taking into account sales projections. What if they had only planned to sell so many units? What if they intentionally produced to only what was necessary to sell out a production run and meet their sales projections?
Also, you mentioned 'total profit'. Whether a company sells ten items for $10, two items for $50, or one for $100, total sales equal $100. Of course this is an overly simplified example, but if the company profits 20% of every revenue dollar collected, they earned $20 total profit.
And just so you are aware, the model railroad industry boasted $100 million more in sales in 2012 than it did in 2007.
Donnell
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Post by Great-Northern-Willmar Div on Dec 19, 2014 16:26:13 GMT -8
You just demonstrated you don't understand what "total profit" is... Who is talking about percentage, I'm not. Total profits shrink, and worse, profits that could have easily been had are not there because of limited availability. atsfan, you're not taking into account sales projections. What if they had only planned to sell so many units? What if they intentionally produced to only what was necessary to sell out a production run and meet their sales projections?
And just so you are aware, the model railroad industry boasted $100 million more in sales in 2012 than it did in 2007.
DonnellDonnell, Your clouding the hobby is dying cry with facts of its actual good health. Also, there are a few on this board that you couldn't convince the hobby is alive and well if you handed them that $100 million!
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Post by Spikre on Dec 19, 2014 16:35:59 GMT -8
Jimaloooey, hand me that $100Mill,and I'LL Believe !! Spikre
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Post by Donnell Wells on Dec 19, 2014 16:37:26 GMT -8
Well on one hand, he's basing his judgments about the state of the hobby on participation, and then he switches on basing them on sales figures. Personally, I have not seen a decline of participants in the hobby, and that's not just because I'm not looking for it. All over the country, train shows are being attended, and some shows are even breaking attendance records. In fact, based on sales alone, the model railroad industry eclipses the R/C industry by tens of millions of dollars!
So, whether one person alone, or ten thousand people together buys all of Athearn's hundreds of thousands of dollars worth of projected sales for a given year, Athearn would still make the same profit.
Donnell
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Post by TBird1958 on Dec 19, 2014 17:10:19 GMT -8
Just a relevant post to the OP.............
My Genesis Rio Grande GP40-2s are really nice, easily the best models of that specific locomotive.
Great job Athearn!
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Post by Chad on Dec 19, 2014 17:28:30 GMT -8
I am not sure why some are always predicting the end of the hobby. Multiple manufacturers are producing multiple products with, as compared to 10 years ago better detail and road specific details. Businesses are not stupid, if model trains are not selling well to the point the manufacturer can not make a reasonable profit they would switch on a dime to make say spatulas.
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Post by atsfan on Dec 19, 2014 17:46:40 GMT -8
I am not sure why some are always predicting the end of the hobby. Multiple manufacturers are producing multiple products with, as compared to 10 years ago better detail and road specific details. Businesses are not stupid, if model trains are not selling well to the point the manufacturer can not make a reasonable profit they would switch on a dime to make say spatulas. I still am not seeing anyone predicting the end of the hobby.
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Post by John Sheridan on Dec 19, 2014 18:05:24 GMT -8
I am not sure why some are always predicting the end of the hobby. Multiple manufacturers are producing multiple products with, as compared to 10 years ago better detail and road specific details. Businesses are not stupid, if model trains are not selling well to the point the manufacturer can not make a reasonable profit they would switch on a dime to make say spatulas. I can tell you that I have never been busier over the last 2 years. Usually, the work slows down during the summer. However I have been going non-stop for 24 months straight.
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Post by WP 257 on Dec 19, 2014 19:31:06 GMT -8
Just a relevant post to the OP............. My Genesis Rio Grande GP40-2s are really nice, easily the best models of that specific locomotive. Great job Athearn! I am really truly happy that they are that great and meet your expectations. I really do not wish Athearn ill will; we need them in this hobby. I just wish they would do some things better, that's all. I was heartbroken that I couldn't find enough good Athearn Reading units of the particular two models I was looking for, and ultimately settled for some LV motive power that was available instead. I'm sure I'll be happy with the LV units, but at the same time I would have been happier if I could have found more than one good Athearn unit... I was very pleased with the Athearn SP Kodachrome tunnel motors that I had owned. New Year's Resolution is to actually keep the trains I buy for once.
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Post by lvrr325 on Dec 19, 2014 19:55:04 GMT -8
I see even in the MR review of the Tank Train cars there was a crooked ladder and a misrun brake line.
Are those really the same old MDC kits, with some upgraded parts, for $50 per car, or are they all new?
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Post by umtrrauthor on Dec 19, 2014 20:17:56 GMT -8
I think the characterization of those who don't want to pre-order is not "the few," but I don't have a defensible estimate of this fraction either. I suspect no one does. But I also suspect it's a non-trivial proportion. Besides the already discussed economic reasons why people simply can't choose to pre-order, there are also those who feel that they got burned by a pre-order and have elected not to go that route again.
I can tell you from anecdotal (not statistically significant) evidence, namely, the people I know locally, that maybe 3 out of 10 pre-order. In my house, it's zero out of one. Which makes one of me.
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Post by MONSTERRAILROAD on Dec 19, 2014 21:04:14 GMT -8
In bad economic times, people ALWAYS spend more money on their hobbies. Rather than pay bills people buy shtuff they want. That is what a major source says about hobbies in general. Who knows though, When my money is tight I do not buy shizzle!! I keep it in the bank or in my GAS tank!
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Post by Brakie on Dec 20, 2014 2:24:14 GMT -8
I am not sure why some are always predicting the end of the hobby. Multiple manufacturers are producing multiple products with, as compared to 10 years ago better detail and road specific details. Businesses are not stupid, if model trains are not selling well to the point the manufacturer can not make a reasonable profit they would switch on a dime to make say spatulas. I can tell you that I have never been busier over the last 2 years. Usually, the work slows down during the summer. However I have been going non-stop for 24 months straight. But,how can that be? Train shows like the hobby is dying! Everybody knows that! If I had a dollar for every time I heard the hobby is dying over the last 60 years I could buy a Rolls-Royce. The first time I heard the impending doom of the hobby was "Slot cars will doom the hobby"..That was in the 60s during the height of the slot car craze.
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Post by John Sheridan on Dec 20, 2014 3:22:26 GMT -8
But,how can that be? Train shows like the hobby is dying! Everybody knows that! Someone needs to tell that to those who build the things we love so dear to us. I'll call cabal center first thing in the morning. Seriously, Is the hobby dying ? Oh dear god no. However, it is changing. Like the rest of the retail industry, it is going through the same process of metamorphosis from brick n' mortar to a online world. People who do not like change are typically the ones who cry "The hobby is dying!!! Oh noes! simply because they grew-up in a completely different era than where we are today. They are not adapting well to this thing called "The Internet (Aka the World-Wide Web) because the entire concept is completely alien to them. The major problem we face today is the cost. If the cost stabilized, then you would not hear so much griping about it as it would become the new normal. However, we keep seeing price increases every year - mostly due to oil prices but that might change with the oil market in free-fall. I know that I am more selective in my buying choices because dropping $45.00 on a tank car seems a tad weird for me. However, those Tangent tank cars are pretty awesome! So, instead of buying a fleet of them all at once, I buy a few at a time.
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Post by Brakie on Dec 20, 2014 3:54:18 GMT -8
People who do not like change are typically the ones who cry "The hobby is dying!!! Oh noes! simply because they grew-up in a completely different era than where we are today. They are not adapting well to this thing called "The Internet (Aka the World-Wide Web) because the entire concept is completely alien to them. -------------------------------------------------- True words of wisdom there.
From my view point the hobby grew up and left many in its wake clinging to the Blue Box era.I saw change coming years ago when we young modelers desired higher detailed diesels in the 60s.Our thoughts was simple..If they can add details to a brass steam engine why not diesels? I consider the early brass diesels from Alco,Trains and Hallmark as the first baby steps in the dawning of a new era.Even the Atlas/Roco models was a vast overall improvement and steps in the right direction.
As far as cost.Yes,$40.00 boxcars is a chunk of change but,look what we are getting.. A museum piece instead of a generic blue box or Roundhouse car.
I also think due to the cost of the hobby we will continue to see growth of highly detailed switching layouts.These layouts require less cars,locomotives,track,etc.
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Post by atsfan on Dec 20, 2014 6:38:58 GMT -8
In bad economic times, people ALWAYS spend more money on their hobbies. Rather than pay bills people buy shtuff they want. That is what a major source says about hobbies in general. Who knows though, When my money is tight I do not buy shizzle!! I keep it in the bank or in my GAS tank! I don't think that is correct. Maybe a few people. But I doubt the masses are out there starving in order to save up for the next GEVO release.
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Post by atsfan on Dec 20, 2014 6:42:22 GMT -8
I think the characterization of those who don't want to pre-order is not "the few," but I don't have a defensible estimate of this fraction either. I suspect no one does. But I also suspect it's a non-trivial proportion. Besides the already discussed economic reasons why people simply can't choose to pre-order, there are also those who feel that they got burned by a pre-order and have elected not to go that route again. I can tell you from anecdotal (not statistically significant) evidence, namely, the people I know locally, that maybe 3 out of 10 pre-order. In my house, it's zero out of one. Which makes one of me. Athearn's loss if they don't. Now before anyone goes off and exaggerates to say this means going back to the runs of 25,000 engines to collect dust………….if they make to pre order only, they are losing easy sales because there are more than a "few" people who don't , or won't pre order. Yet they are very likely to buy engines if they turn out well. So if Athearn is building in 0% production for non pre order sales, they are losing easy sales.
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Post by atsfan on Dec 20, 2014 6:43:53 GMT -8
I can tell you that I have never been busier over the last 2 years. Usually, the work slows down during the summer. However I have been going non-stop for 24 months straight. But,how can that be? Train shows like the hobby is dying! Everybody knows that! If I had a dollar for every time I heard the hobby is dying over the last 60 years I could buy a Rolls-Royce. The first time I heard the impending doom of the hobby was "Slot cars will doom the hobby"..That was in the 60s during the height of the slot car craze. I still don't see anyone here saying the hobby is dying.
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Post by atsfan on Dec 20, 2014 6:48:03 GMT -8
You just demonstrated you don't understand what "total profit" is... Who is talking about percentage, I'm not. Total profits shrink, and worse, profits that could have easily been had are not there because of limited availability. atsfan, you're not taking into account sales projections. What if they had only planned to sell so many units? What if they intentionally produced to only what was necessary to sell out a production run and meet their sales projections?
Also, you mentioned 'total profit'. Whether a company sells ten items for $10, two items for $50, or one for $100, total sales equal $100. Of course this is an overly simplified example, but if the company profits 20% of every revenue dollar collected, they earned $20 total profit.
And just so you are aware, the model railroad industry boasted $100 million more in sales in 2012 than it did in 2007.
DonnellIf Athearn only plans to make 1000 your correct. But if that is there projection and it instantly sells out, it is too low, as they could easily sell 100 more beyond pre order only. I guess they could argue they could raise prices even more to slow down the sell out of 1000, but I think that is bad business for them beyond the immediate month. Where did the $100 million more in sales figure come from? That sure is a ton of $. 2007 was also the start of the recession.
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Post by bnsffan on Dec 20, 2014 6:57:38 GMT -8
After following this tantalizing post, I must admit that I do agree with atsfan on one point: "If I can't find it I can't buy it." Case in point: I have not found an Athearn Genesis Alaska Railroad SD70MAC and as atsfan predicted I have not bought it. Clever dude that atsffan. This principle applies to more than model trains. My wife asked the deli clerk for a pound of Alpine Lake cheese which he did not have so she did not buy it.
Respectfully, BNSF Fan
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Post by John Sheridan on Dec 20, 2014 8:03:24 GMT -8
But,how can that be? Train shows like the hobby is dying! Everybody knows that! If I had a dollar for every time I heard the hobby is dying over the last 60 years I could buy a Rolls-Royce. The first time I heard the impending doom of the hobby was "Slot cars will doom the hobby"..That was in the 60s during the height of the slot car craze. I still don't see anyone here saying the hobby is dying. Re-read what I was saying.
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Post by John Sheridan on Dec 20, 2014 8:18:18 GMT -8
[ Athearn's loss if they don't. Who says they are building only pre-order? No one does that exclusively. If they feel it is a popular model then more are made. Of course the amount made depends on the number stipulated in the contract. It is better to not have inventory, move to the next project & wait until the next run comes up. They are not "easy sales". They are models sitting on the shelf waiting to be sold. It is also part of someone's inventory be it the manufacturer, distributor, or POS. Much as you want to wish for the-good-ole-days(tm) that train left long ago. Get used it the new model. Which is not so new.
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Post by Judge Doom on Dec 20, 2014 8:52:48 GMT -8
After following this tantalizing post, I must admit that I do agree with atsfan on one point: "If I can't find it I can't buy it." Case in point: I have not found an Athearn Genesis Alaska Railroad SD70MAC and as atsfan predicted I have not bought it. Clever dude that atsffan. This principle applies to more than model trains. My wife asked the deli clerk for a pound of Alpine Lake cheese which he did not have so she did not buy it. Respectfully, BNSF Fan Some people have already overcome that little thorn. Can't find a rare to find model like an ARR SD70? Buy a BNSF or other popular roadname, strip it and repaint. Or hire a custom painter to do it. It may cost a bit more, but you're guaranteed to get one. That's what many that want more obscure roads that Athearn, Atlas et al never produced have done for decades. And there's always substitute items. While finding an alternative Alaskan unit may be trickier, if one is looking for a BNSF GP40-2 and they're all sold out or hard to find, one might choose to settle for a BNSF GP38-2 or GP50 in the same paint scheme instead. While some might specifically want a GP40-2 and not buy anything else, others might just be looking for a BNSF-painted 4-axle EMD. If Athearn only plans to make 1000 your correct. But if that is there projection and it instantly sells out, it is too low, as they could easily sell 100 more beyond pre order only. I guess they could argue they could raise prices even more to slow down the sell out of 1000, but I think that is bad business for them beyond the immediate month. Where did the $100 million more in sales figure come from? That sure is a ton of $. 2007 was also the start of the recession. Not entirely. They may have a target for the required profit amount and just meeting that would be fine. Any extra demand is gravy on the cake. AND if demand turns out to be higher, that unsatisfied demand is usually still there, and can be fulfilled with a second or future runs. Look at Bowser and some of the recent Atlas releases - initial run, and second run a few months later, often already scheduled before the first run hits the shelves. The NSC boxcars were all preordered like hotcakes, likely because only x were produced. And surprise surprise, a second run is coming very soon with some repeat and new roadnames. A company can build a gazillion models in the hopes dealers and customers will buy them all up, and get stuck with shelves of excess inventory at their warehouse for years when they all don't sell out (that's their $$$$ spent that's just sitting on shelves collecting dust), or a company can build to order and only fulfill whatever orders they get (plus a safe extra percentage, if that), which is the least risk-averse approach and guaranteeing a sell-out (resulting in a more immediate ROI when they're all gone from the warehouse, and more cash in the bank *right now* to do another run or other models). The latter is what a lot of model RR manufactures have switched to and are doing now, with subsequent runs to fill any extra demand.
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Post by Great-Northern-Willmar Div on Dec 20, 2014 8:58:28 GMT -8
[ Athearn's loss if they don't. Who says they are building only pre-order? No one does that exclusively. If they feel it is a popular model then more are made. Of course the amount made depends on the number stipulated in the contract. It is better to not have inventory, move to the next project & wait until the next run comes up. They are not "easy sales". They are models sitting on the shelf waiting to be sold. It is also part of someone's inventory be it the manufacturer, distributor, or POS. Much as you want to wish for the-good-ole-days(tm) that train left long ago. Get used it the new model. Which is not so new. According to the owner of my LHS, EngineHouse Services, numbers over reservations by the manufacturers has been sliced over the last year plus. In the past for the Johnny come latelys, they may have had a chance to get a few extra models for those customers. Now, that is nearly impossible, if not totally impossible. Its not just Athearn, but also Atlas and Intermountain. Can't say how tight Bowser is cutting the numbers. Even for the popular roads like Santa Fe, Southern Pacific, etc. finding extra stock is non-existent. Paul, the owner of EHS, will stock models which he KNOWS he can sell in Northeast Wisconsin, like Bowser C-430's in GBW. Even then the people that missed the reservation window will reserve some or all of the stock he had earmarked for the store's shelves, meaning when the models arrive nothing ends up on the shelves. In today's model railroad world a retailer HAS TO BE a good business person. To much money to loose by taking crap shoots at what ifs.
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Post by curtmc on Dec 20, 2014 12:09:37 GMT -8
John, both Atlas and Athearn are now basing production numbers (for many models) based on preorder amounts with production limited to no more than 5% over that.
When I received a defective Athearn item last year I noted to them that they should make at least 10% more than preorder number to cover possible factory defects or shipping mishaps. The reply I received is that they wished "the bean counters" would let them make even 5% above preorders.
Also, one FB posting BY ATHEARN when the Athearn SDP45s came out noted that only a few dozen of the models total (not by roadname) were not already spoken for before Athearn got them.
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Post by WP 257 on Dec 20, 2014 12:18:35 GMT -8
Not everybody likes PWRS, but their business model is one that keeps them in business.
They have made it clear to me on the phone that they want rid of every item within 2 to 4 weeks, or it will never sell. (It's the same at the actual importers.)
At the price these trains cost, and the fact most distributors are routinely working on bank credit lines well into 6 figures, having one or two of everything leftover is way too costly in monthly bank interest.
That's why it is financially better for the health of the supply chain to undersell and have a complete sellout. Better to lose a few sales than to pay interest fees and inventory taxes (in some states).
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Post by Great-Northern-Willmar Div on Dec 20, 2014 12:52:18 GMT -8
There is a reason why, we see the volume of announcements and the mega flow of new products in this hobby. The reason is so simple.
Keep the money moving.
The manufacturers keep numbers tight, not to over produce. When a run hits the loading dock of Athearn, Atlas, Intermountain, Bowser and Walthers. It is already sold. A few stragglers may be available, but we are not talking even 50 models of a particular road name and number. The manufacturers have made their money and projected profit before they even open the containers doors. The few extras are in some instances insurance for broken and defective models. Once the dust has cleared on the inspection process, the extras can be extra icing on the profit cake.
Since the manufacturer has its money and profit back in the bank, they can contract with their builder in China for another round of product.
This theory that the manufacturer, distributor and retailer must bog themselves down with shelves full of models on the off chance that a few that refuse to make reservations, might decide to actually make a purchase, would cause the new product express train to crash into a crumpled heap. All the people crying on this forum, other forums, Facebook, etc. for new products like C-415's, SDP40F's, Genesis SD40-2's, Genesis SD45's, etc. would likely never see these new from the ground up models. All the money would be sitting on a shelf, actually costing the supply chain money in interest on loans, etc.
All businesses today need to move product jimmy jam skippy because of the caring costs on the money needed to produce the product in the first place.
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Post by Deleted on Dec 20, 2014 18:41:26 GMT -8
After following this tantalizing post, I must admit that I do agree with atsfan on one point: "If I can't find it I can't buy it." Case in point: I have not found an Athearn Genesis Alaska Railroad SD70MAC and as atsfan predicted I have not bought it. Clever dude that atsffan. This principle applies to more than model trains. My wife asked the deli clerk for a pound of Alpine Lake cheese which he did not have so she did not buy it. Respectfully, BNSF Fan I've also noticed that whatever I'm looking for is always found in the last place I look.
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