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Post by steveturner on Feb 17, 2017 11:06:46 GMT -8
So guys with what Mr Trump has been saying do you think we shall see a return of our hobby being manufactured in the USA. This could be interesting. I think Kadee is still made in USA, correct me if wrong. I do hope though if things stay as is our pricing does not skyrocket . What concerns me if things stay the same a different formula or equation concerning import taxes and tariffs might raise our hobby pricing which is high as it is. Going back prior to the influx of product from China I don't really know how much of out product was actually originally made in USA. Maybe Athearn was made in USA and maybe Atlas but not sure about Tyco, Bachmann,Lifelike and the list goes on. Maybe a fair bit is and was made in Europe. I don't live in the US and I am not a US person but I would like you US folks get jobs back and see MR products made in the US. Probably not feasible but the thought is good.Steve................I do like my Peco switches from England! HA!
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Post by riogrande on Feb 17, 2017 11:17:42 GMT -8
We already beaten that horse to death and Jason has pretty much given us all the info on that. I don't expect anything to change other than the usual price increases - its mostly a matter of how much they will be.
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Post by lvrr325 on Feb 17, 2017 11:38:58 GMT -8
Prior to 2000 primarily only the low end, train set brands were made overseas, Tyco, AHM, IHC, Life-Like, Bachmann, Model Power. Some from Hong Kong, some from European nations. But everyone has sold imports at some point, typically when it was cheaper to rebrand someone else's existing things as yours than to tool your own.
I believe Bowser still has some USA production.
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Post by steveturner on Feb 17, 2017 11:39:02 GMT -8
Could be usual or unusual price increases. Off the cuff Rapido being a Canadian company and not being versed as how Jason imports etc I don't know how the new tobe scene in USA will affect him. Interesting times. As a kid I remember most of my cheapish or plastic toys being made in HONG KONG. Steve
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Post by riogrande on Feb 17, 2017 12:03:00 GMT -8
I would guess that import tarrifs would have to be huge to actually make it worth doing everything in the US. And at that point the models would be priced out of most peoples budgets. The economy of scale is not the same but according to one article I read, the I-phone was estimated to cost about $2,400 if made totally in the US, and I think they've gone up since that report. I don't own an I-phone because I don't want to spend $600-$800+ on a smart phone - especially when I can get a pretty decent Android for about 1/6th the price or less. But I digress.
It all depends on how and where and how much, the tarrifs are applied if they are. As we remember, much overseas manufacturing was in Japan at one time, the Korea and for the more recent past, China. The factors being cost of labor and skilled labor and of course a fairly stable environment.
Many have pointed out Kadee as the shining example of trains that are totally made in the USA and if they can do it, why can't others. Jason has rebutted that too. If I can find his comments, I'll see if I can post them. Maybe he will see this and offer more comment.
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Post by jonklein611 on Feb 17, 2017 12:25:49 GMT -8
I would guess that import tarrifs would have to be huge to actually make it worth doing everything in the US. And at that point the models would be priced out of most peoples budgets. The economy of scale is not the same but according to one article I read, the I-phone was estimated to cost about $2,400 if made totally in the US, and I think they've gone up since that report. I don't own an I-phone because I don't want to spend $600-$800+ on a smart phone - especially when I can get a pretty decent Android for about 1/6th the price or less. But I digress. It all depends on how and where and how much, the tarrifs are applied if they are. As we remember, much overseas manufacturing was in Japan at one time, the Korea and for the more recent past, China. The factors being cost of labor and skilled labor and of course a fairly stable environment. Many have pointed out Kadee as the shining example of trains that are totally made in the USA and if they can do it, why can't others. Jason has rebutted that too. If I can find his comments, I'll see if I can post them. Maybe he will see this and offer more comment. Newsletter 82: "For those of you wondering "Why can't they start up this factory in Canada?" the answer is simple. If we started the factory in Canada, we would never be able to repay the setup costs, and our models would cost five times as much as they do now. We've seriously looked at it, and that's not an exaggeration. So manufacturing has to stay in China for now." |
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Post by Paul Cutler III on Feb 17, 2017 13:07:55 GMT -8
Steve, Really? The only way our high end hobby products get made in the USA is if it's cheaper than elsewhere, and since I don't see us working for peanuts anytime soon, it would mean that overseas costs would have to skyrocket. Think $300 plastic diesels are bad now? Just wait until they're $1000 or more. Please note that I did not say "return to USA" because, other than Kadee, we've never had high end hobby products made entirely here. If you want to return to the days of US production, you also have to go back to the quality level we had back then: one-piece bodies, molded on detail, one number per car/loco, limited road names, and limited choices. Atlas never made any engines or rolling stock in the USA. It was always Austria (1970's), Japan (1980's) or China (1990's to today). Just pick up any Atlas model and look at the stamp on the bottom. What Atlas used to make in NJ was track and accessories...and perhaps their old model building kits. Kadee is unique. They can pay minimum wage and get good people to build models (which is Bowser's problem). Their models don't use a lot of glue or a lot of parts; most of it just snaps together, and they've only come out with 5 different cars in 20 years. Some manufactures do that annually. Right now, Bowser is shooting the plastic in Pennsylvania, shipping it raw to China, who then assembles it, paints it, and ships it back. In yon olden days, LLP2K shells were made in China but the drives were made in the US. That's why they were always sold apart. lvrr325, Um, not really. The first high end plastic model is the Chinese-made LLP2K BL-2, which came out in 1990. For some backstory, read this: www.atlasrr.com/News/mrting.htm |
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Post by scl1234 on Feb 17, 2017 13:33:30 GMT -8
[Political]I don't think anyone should lose sleep over a US border adjustment tax. It's a bad idea that hasn't yet been realized as such.[/Political]
Prices will go up because (chinese) wages, transport, raw material or R&D costs go up.
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Post by Artur on Feb 17, 2017 13:36:59 GMT -8
What's the obsession with having it made in US or Canada. Make it where it's most economicall for the company, this benefits the consumer and also creates jobs here. I don't see manufacturing ever coming back unless people are willing to work for 50 cents per day, these jobs would not benefit anybody.
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Post by dharris on Feb 17, 2017 14:10:51 GMT -8
Needlessly dragging politics into model trains.
Trains are a hobby I specifically use to AVOID this nonsense.
This has been flogged to death, buried, and dug up again now.
Model trains have been made in China for decades.
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Post by Brakie on Feb 17, 2017 15:33:41 GMT -8
Needlessly dragging politics into model trains. Trains are a hobby I specifically use to AVOID this nonsense. This has been flogged to death, buried, and dug up again now. Model trains have been made in China for decades. I see the hobby differently after my near fatal heart attack in the last week of March, 2005. I realized beyond a doubt in the grand scheme of life it's insufficient and just a hobby to enjoy. If I never bought a new engine or freight car it wouldn't matter since I have more then I can ever used and a car goes through the in/out interchange cycle won't be seen again for months. To be sure I am still excited about ST SD40-2 with DCC/Sound after that who can say? Know this..It will need to get me excited enough to want one. |
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Post by Deleted on Feb 17, 2017 15:34:43 GMT -8
[Political]I don't think anyone should lose sleep over a US border adjustment tax. It's a bad idea that hasn't yet been realized as such.[/Political] Prices will go up because (chinese) wages, transport, raw material or R&D costs go up. Prices (on items that sell) go up because people are willing to pay more, and do. Inputs like wages, transport, material, etc, do not set prices. There is no "black box" function between input costs and selling prices. If there were, and you received a new Genesis U50 for free as a prize (or whatever), at what price would you offer it for sale? When you sell something, your concern is not how much you paid for it (a sunk cost, gone, past...), but how much the buyer will pay for it. Because companies try to maximize overall profit, things like keeping customers coming back, not pissing people off, etc are a huge part of price-setting, especially when repeat business is important. When you put your house, car, lawnmower, or model rr stuff on the market, what you paid for them does does not matter. Example: You bought a car for $12,000 four years ago. You've spent $8,354 on it since. How much do you sell it for? Answer: You can't tell because inputs have no bearing on your asking prices (well, it shouldn't but some people will hoard an item because they "have to get at least what they have in it" Aka a hoarder. The same goes for businesses, and model rr business are no exception. I own a small business. According to the "input costs set prices" theory, a product that costs me $20 in material and $100 in time should sell for how much? The answer is- as much as I can sell it for while growing the business and not irritating clients & potential clients. Of course a person or company must sell items (over the entire business line, individual items can be priced differently for various reasons) for more than it cost to acquire/produce or they will go out of business. The lack of understanding of basic economics in the West is stunning. Some people consider that a success. |
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Post by darrell on Feb 17, 2017 15:50:46 GMT -8
The major considerations for offshoring production is the labor cost for assembly (no one wants to build a kit anymore) and paint and decoration regulations.
The cost of machining the tooling in North America is still sightly higher although the US and Canada are moving forward with technology at a quicker pace than China, which has either reduced costs "here" or kept them level. The Chinese factories use the same injection molding equipment as here but their equipment is cheaper as they aren't required to include the same safety appliances as we are required to add here.
The US and Canadian injection molding companies are able to compete with Chinese manufacturers because of technological advances (like simple robotics). The North American plastics manufacturers have been forced to turn to automation in order to compete, and are generally very successful. But, they can't compete with assembly work because the typical Chinese labor rate is still lower. A downside of automation is fewer employees running the equipment.
The cost of designing freight cars, locomotives, etc. is still slightly lower in China, but I believe, based on my experience working with Chinese companies is that they are willing to use design work as a "lost leader" in order to get the work into their factory. There are people here in the US and Canada that do design work and the files are then sent to China for cutting the molds.
If there wasn't assembly, paint and decoration involved (like military and automotive model kits), it could be very cost effective to do the work in North America, plus save the cost/time (time is money) of trans oceanic transportation.
As labor rates in China continue to rise and China pushes away from toys to focus on technology products (like electronics), we are going to see the price of our model RR pieces continue to escalate to the point where either folks will quit buying it, or, production will move to other developing countries with extremely low labor rates.
There is still some design, tooling and molding done here and then the parts shipped to China for assembly, paint and decoration, but it's pretty minimal now. Kadee is an obvious exception to the rule. They do everything in the US and their products are competitive in pricing and exceptional in quality.
Maybe in the not too distant future another industry (with larger R&D dollars) will figure out how to automate more of the assembly and decoration processes and our industry can piggyback on it and do more of the work in-house. Probably have to happen in one of the southern/southeastern states where the cost of living is low (low wages) and environmental regulations aren't as strict as other areas.
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Post by Deleted on Feb 17, 2017 16:23:58 GMT -8
...If there wasn't assembly, paint and decoration involved (like military and automotive model kits), it could be very cost effective to do the work in North America, plus save the cost/time (time is money) of trans oceanic transportation.... I (and many RR modeler friends) have been talking about the possibility of undecorated "flat" or "modular" kits for 30+ years now. Instead, railroad models have for the most part gone the other direction to the point of unit or car number-specific details on RTR models. I suppose there are many reasons why railroad models are different than military, auto, ship, or aircraft models & modelers. I think one big reason is that foe many modelers (not collectors), RTR allows time that would have been spent on a single model to be put toward a layout or even building a model train consisting of numerous individual models. The vehicles/aircraft/ships in other hobbies are usually "stand alone" models. |
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Post by Judge Doom on Feb 17, 2017 19:37:02 GMT -8
Prior to 2000 primarily only the low end, train set brands were made overseas, Tyco, AHM, IHC, Life-Like, Bachmann, Model Power. Some from Hong Kong, some from European nations. But everyone has sold imports at some point, typically when it was cheaper to rebrand someone else's existing things as yours than to tool your own. Not really true, a lot more mid- and upper-range stuff was being made overseas. Kato in Japan, and the Atlas/Kato/Stewart tooling crossovers (Japan, by Kato), all the Life-Like P2K stuff (China), Atlas with Roco in Austria... Presumably, it was the kit makers like Athearn and Bowser that were doing a lot of it in the US, since they didn't have to pay labour to assemble too much (just package the kits, or put the basic blue-box loco chassis together and slap a shell on it, everything else in the parts baggie). |
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Post by lvrr325 on Feb 17, 2017 20:46:39 GMT -8
"Primarily" does not mean "every single thing other than these few manufacturers". Almost everyone has at some point imported portions of their product line. The first to import and sell as their own was I believe Lionel when they introduced an HO product line made for them by Rivarossi in Italy. AHM picked up from there (OK Crown clones of Athearn cars, Rivarossi locos) with others following later. I didn't want to spend an hour typing out a redundant rough history of imports in the HO model railroad market.
Atlas more or less always imported some items - in the 1960s they had a large line of structures but most of them were European kits, I forget just who made them. In the 1970s the diesels were made by Roco and so were some track components - I just sold a double-slip swtich, brass, marked Atlas Made In Austria on the bottom. They also sold Athearn cars as their own. Later they worked with Kato in Japan.
And in the 1990s production began to shift from Hong Kong to China. Bachmann, for instance, not only does the production change but some changes were made in individual models themselves, the shell for a Hong Kong USRA 0-6-0 will not fit correctly on a China drive. Even Mehano was in the process of shifting to China when they went bankrupt.
Bowser used to have a whole production for cast metal engines and parts, but they got out of it to make new products like the current locomotive line. You could have bought the whole works including a customer for some products at one point.
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Post by steveturner on Feb 17, 2017 22:06:19 GMT -8
I think many structures were originally Pola maybe of Germany then a Scandinavian company, the names on the tip of my tongue.. Interesting that Peco has a world following and I'm not too sure if their product still made in England. Peco like a few others appear to have stood the test of time. Walthers still churns out some European originals............moulds I think that have changed hands many times. Steve
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Post by Deleted on Feb 18, 2017 12:19:37 GMT -8
The hobby would definitely suffer if tariffs are placed on imported goods from China...Without a doubt. The amount of products being offered would greatly diminish; as the trickle down effect of less products and higher prices took its' toll on the hobby.
But, if you get around some people in our hobby...during the train shows...they beckon for the good ole' days where models were all the same...and paint schemes were slapped on freight cars regardless of their prototypical validity...when things cost $10, etc.,
I hope it doesn't come to pass for our hobby...and there are far more serious issues than trains, IMO.
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Post by autocoach on Feb 18, 2017 17:14:12 GMT -8
I think many structures were originally Pola maybe of Germany then a Scandinavian company, the names on the tip of my tongue.. Interesting that Peco has a world following and I'm not too sure if their product still made in England. Peco like a few others appear to have stood the test of time. Walthers still churns out some European originals............moulds I think that have changed hands many times. Steve Peco track products including USA Code 83 are still made in Beer, Devonshire, UK. New products coming out all the time, including first RTR OO gauge Bullhead code 75 rail turnouts due by Easter. Their Bullhead flex track has been a big hit in the UK as it actually looks like older UK track. The "streamline" code 100 and code 75 are generic European HO type track. I understand it is the most widely stocked track product on the continent. Roco and Tillig are the big competitors for up market track on the continent. I am not sure about the line of N scale locomotives Peco sold a while back. They may have been made elsewhere. Ken Adams (Who models the Southern Railway of the UK along with the Southern Pacific in California.) |
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Post by stottman on Feb 19, 2017 2:23:14 GMT -8
The missing equation is economy of scale. That, and the infrastructure is now gone.
Kadee makes their stuff in the USA.. But as someone pointed out, they have only put out a handful of models, and they do everything in house in White City, Oregon. And I doubt they pay their workers minimum wage. In Southern Oregon, minimum wage gets you Pothead that lasts a couple weeks. At the same time, unlike California for example, they can pay a lower wage and still get decent workers.
As opposed to others, who are sending a suitcase of money and a bunch of prototype photographs to Yucheng Mould Products in Dougguan China. But the company farming everything out to China is pumping out a new model a month, so they have to have a high turnaround and return on their investment.
German model RR companies still make allot of stuff in Germany, detailed similar to US stuff, and for similar prices . But again, economy of scale.. They don't have the same "pre-order" system with 12 new models a year either though. When they do farm stuff out, it is to places like Romania, Hungary, etc..I assume because of tariffs.
Now, how are China, Germany, and Southern Oregon all connected? The manufacturing infrastructure is already there. As compared to a start up company. Of course they could never afford to lease a huge building, employ a designer, a tool maker, buy injection molding machines, painting machines, and pay someone $12-15 an hour to assemble model trains all day.
The last Athearn "blue box" loco I bought was in 1993. Price on the box is $33. I would argue that prices on most things have doubled since then.
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Post by Brakie on Feb 19, 2017 4:40:35 GMT -8
As opposed to others, who are sending a suitcase of money and a bunch of prototype photographs to Yucheng Mould Products in Dougguan China. But the company farming everything out to China is pumping out a new model a month, so they have to have a high turnaround and return on their investment.
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Then a contractor could take that suitcase full of money and make a cheaper knock off engine or car that competes with the original owner's models.
Some of those models are already out there.
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Post by rapidotrains on Feb 22, 2017 5:39:02 GMT -8
Interesting discussion, and I'm glad it has been kept civil! :-)
Here is what I wrote in our last newsletter:
The Hobby and International Trade
For the student of international relations, the last few months have certainly been interesting. I'm sure the academics will be able to devote entire textbooks to the political upheaval that took place around the world in 2016. But for a business owner, it's been a bit terrifying.
I was recently asked by a UK magazine if I felt that either Brexit or the election of President Trump has affected my business. I responded simply by saying "I like stability." Since Brexit, the British pound lost 20% of its value. This made two of our projects instantly unprofitable. One is still going ahead (the N scale Pendolino - I hope you ordered yours as the deadline was on Tuesday!) but the other project has been "paused," and I can't honestly say for how long.
The possibility of stiff tariffs being imposed on imports from China to the United States is another thing that has all of us model train manufacturers worried. I understand and respect the desire to balance the trade deficit between the United States and its trading partners. But model trains have primarily been built in China since the 1980s.
The core of the industry - and thus the talent and experience - has been based in Guangdong province in southern China for over 30 years. We can't bring these jobs back to Canada and the United States because they were never here to begin with. Here's why:
In recent years our hobby has evolved from shake-the-box kits to museum-quality models with incredible, prototype-specific detail. This has only been possible due to the talents of the very experienced engineers in the model train factories combined with a much lower cost of labour in China than in North America. It takes about eight hours of work to trim, paint, print, assemble, test and package a typical Rapido model. Obviously it will never be cost effective to do that assembly work in Canada at $15/hour. The assembly cost alone of a $110 retail model would be $120!
As it is, we in the model train industry have had to work with tighter and tighter margins. The amazing detail comes with a price, and the cost of living in China has tripled over the last 12 years. That means our assembly costs have tripled. But our retail prices have not. In fact, our locomotives are roughly the same prices as they were in 2011.
Do I support the drive on both sides of the border for better, well-paying jobs for Canadians and Americans? Absolutely. Do I support kneecapping a niche industry through punitive tariffs which will NOT result in these models EVER being made in North America? Absolutely not.
So yes, I am slightly terrified. Rapido makes trains for three different markets and not just the United States. But we are deeply committed to our American customers and our line of American models. I honestly don't know what the future will bring. A high tariff on imported hobby products would shut down every hobby shop in the USA. I hope that sober thought will prevail and our industry won't end up as collateral damage in a trade war.
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Post by riogrande on Feb 22, 2017 6:42:16 GMT -8
I can't add much to this except I hope tariffs are not slapped on hobby imports from China; it will solve nothing except to severely curtail the availability of new products coming to us, which are already quite expensive; the only small comfort I have is that I have plenty of trains at this point but I'd rather not have things go in the direction of few if any new products coming to market in the future.
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Post by Deleted on Feb 22, 2017 19:32:11 GMT -8
Obviously I cannot speak for our President, but it would seem, one would think, that any tariffs would be applied to other industries besides this one.
Even if that happened, what about our friends in Seoul?? YES, it might be a headache but there would still be a way forward.
8 hours is pretty fast for assembly...l am assuming locomotives are closer to 20 hours? If not 24?
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Post by talltim on Feb 23, 2017 2:26:25 GMT -8
Are locos that much more complicated to assemble?
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Post by Deleted on Feb 23, 2017 5:12:24 GMT -8
There can be 3 times as many parts in a loco as what is in a passenger car. Some locos easily exceed 500 parts now. This is why production will not come back here ever. Your 15 dollar an hour fast food worker (assuming wage increase some want in US) will not be capable of assembling locos to any quality standard that most of us would accept.
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Post by Gary P on Feb 23, 2017 5:29:17 GMT -8
There can be 3 times as many parts in a loco as what is in a passenger car. Some locos easily exceed 500 parts now. This is why production will not come back here ever. Your 15 dollar an hour fast food worker (assuming wage increase some want in US) will not be capable of assembling locos to any quality standard that most of us would accept. I can not imagine the horrible output from one of the current fast food $15/hr workers here in the US.  Sure, some of them may care, and those are worth every penny they earn, but there are also some that look like they are totally disinterested in anything, must less doing a quality job. |
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Post by kentuckysouthernrwy on Feb 23, 2017 6:38:26 GMT -8
There can be 3 times as many parts in a loco as what is in a passenger car. Some locos easily exceed 500 parts now. This is why production will not come back here ever. Your 15 dollar an hour fast food worker (assuming wage increase some want in US) will not be capable of assembling locos to any quality standard that most of us would accept. I can not imagine the horrible output from one of the current fast food $15/hr workers here in the US. Sure, some of them may care, and those are worth every penny they earn, but there are also some that look like they are totally disinterested in anything, must less doing a quality job. I sure wouldn't want any of the grease from the supersize fries on my new rolling stock. Let's let Jason import them all to Canada, no tarif, then buy them from a dealer in Winnipeg or such while the exchange rate is $0.76 to C$ 1.00. Win Win....  |
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Post by Deleted on Feb 23, 2017 7:19:16 GMT -8
Obviously I cannot speak for our President, but it would seem, one would think, that any tariffs would be applied to other industries besides this one. Even if that happened, what about our friends in Seoul?? YES, it might be a headache but there would still be a way forward. 8 hours is pretty fast for assembly...l am assuming locomotives are closer to 20 hours? If not 24? How many cars / locos are assembled by one person in those 8 / 20 / 24 hours? |
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Post by Paul Cutler III on Feb 23, 2017 8:09:37 GMT -8
texasandpacific,
500-part locos were never made in the USA. It can't "come back" here because it never happened here...just sayin'.
BTW, the whole thing about "fast food workers"...you know that applies to everyone, right? People working retail, stocking warehouses, working in factories, etc. But fast food workers are somehow always used as the example of minimum wage, and always in a dismissive way. Why is that?
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