price rises - how long can this be sustainable

[B757-236GT]

I think one of the other issues is especially in the diesel range is they are running out of mainstream stuff to do, ok there are lots of one offs but some of those havent sold that well in OO so in N its going to be a brave company that comissions ones. I think the other problem is that they have over announced stuff just like they did 10 years ago (remember the OO gauge 166 that took 5 years to get produced!).

In terms of the price rises there is certainly a rising demand for second hand models but in N gauge at least there is hardly any comming on to the market meaning even those prices remain keen. The same is true in OO, i keep a small stock of Airfix/Lima Prairies and replica Panniers. I sell them for around £28 and they sell all day long when you consider a newer bachmann one even secondhand will set you back £45 and new its now £80. I would say at least 35% my sales are now Secondhand, around 50% are accsessories and 15% new coaches and rolling stock.

Richard

[pctrainman]

I spent over 30 years training Apprentices in heavy Engineering and apart from a few who had mostly had their attitudes ruined and their expectations raised too high by having first attended Uni the vast majority were as keen as Mustard to learn and get their hands dirty  , it is a fallacy that todays youth are workshy afraid of a bit of grime or just want to sit at a PC and this as with almost all Fallacies has been perpetrated by the very people that this discussion has been told to ignore , come and live in the real world because if you don't soon start to Wake Up  you'll very soon find that everything of value is gone .

[Roy L S]

My view on this..unfortunately this hobby is in its last years. It will die as soon as this last generation of modelers die. It may sound pessimistic or sad... it is both, more realistic than pesimistic. I am 43, when my father started on the hobby  I was 6, back in that day it was expensive but my father could afford it among many other things like raising a 3 children family by his own.
Now I struggle to build a tiny layout all with second hand stock from ebay and cheap chinese supplies. Back in Spain I wouldn´t even dream of doing this... it has taken a good job in the UK , clearly above the average level, for me to TRY and do something...using all second hand and the stock I preserved from the 70s. New stock is still a dream for me... no point in going there, with an above average salary I CANT afford it. That should be telling you something.
To worsen things... I received a new locomotive as a birthday present... made in china...quite pricey... WHAT A LEMON!! I had to return it immediately.
That´s why I can´t be optimistic about this hobby´s future. If someone like me can´t afford it then it´s dead... in the sense that the ones that should be the main focus of the market just can´t afford it.

I'm not sure I agree that the model railway hobby or even N Gauge specifically is in it's last years but I do agree that the era of it being a cheap hobby with availability of low cost highly detailed models is well and truly over. Where the reasons for this lie is open to debate, my feeling is that a new pricing structure has been imposed on Bachmann Europe to bring prices of UK models more in line with European ones which have always been more expensive. It is an internal company decision - we will never really know the full reason, or whether indeed our models were actually previously being manufactured at a loss.

The impact of these price hikes has most certainly been to damp down demand, by how much who can say - 10%? 20%? Certainly not enough to kill the hobby but sufficient to price some people out completely.

In my view even many years down the line model railways will still continue in all popular scales, even if it is based more around a Society and cottage industry type support. The advent of technologies like 3D printing and enterprising people like Wayne (Finetrax), Alan (Etched Pixcels) etc will ensure this. The wheel may have turned full circle in that scenario but if that does happen railway modellers will still have the means (in my view) to pursue a viable hobby - they may just have to do some modelling!!

Roy

[Claude Dreyfus]

One answer can be going Japanese as I've done. High quality locos under £50- and carriages with tail lights for under £15. Not everyone's cup of tea (or sake) I know but it's worked for me. And it's all designed to be packed away and taken out again easily in those wonderful bookcase style boxes.....

Like many people though - I need British steam and early diesel. I'd be more than pleased if the Japanese manufacturers entered this market.

now there is a thought 

perhaps when sales fall, and of course profits too, companies will look to Japan to manufacture, rather than China.
Bachmann / Farish are of course tied to their Chinese manufacture because of their parent company, but perhaps there might be hope for others to look east and save the hobby.

Sadly, that is highly unlikely.

What so many UK modellers fail to acknowledge is that the UK market is really small in comparison. US, German and particularly Japanese models are dealing with a whole different market - Farish may celebrate if they sell 20,000 of a particular model; Kato would cancel it and it would not see the light of day again. US and Japanese model prices are driven by the competiveness of their markets, hence the combination of superior quality and competitive pricing.

Note also that both Tomix and Micro Ace have a lot of their products manufactured in China - MA use the same factory as Bachmann I believe.

In terms of UK pricing; I do not believe it is sustainable in the long-term. The general cost of living is increasing and items such as this are very much luxury goods - even more so if some models are nowhere near up to scratch in terms of reliability and Quality Control.

Alternatives? Well, I would love to see more Japanese layouts and people starting to sample the delights of J-train modelling. Hearing and seeing a lot of reactions at shows and on forums, I suspect a good number would rather stick with what they know and complain about prices, rather than take the plunge and do something different!

[macwales]

Hi

I have almost given up on new loco purchases. My layout is British steam in the main. I will in future only buy sale items.

Fed up with poor quality runners (increase in price equals zero increase of chance of getting a good un!)

Fed up with waiting years for promised models to appear.

Fed up with price hikes (way above inflation)  on both locos and rolling stock.

It seems (if the comments on here are anything to go by) that I am not alone. Many seem to be entering the second hand market.

All in all the manufacturers are in a spiral.. Higher prices - less sales - more promises to the future followed by longer waits - higher prices - less sales - .... and so it goes on.

I am pessimistic about where it will all end. £300 for a loco? Even the rich may not pay that!

AH!  .... Who needs a new loco ---- that old one looks good enough going round and round and its a good puller!

All this will never increase the number of British outline n Gauge enthusiasts. But for me Japanese trains?- never.

Cheers

Mac

[Pengi]

Alternatives? Well, I would love to see more Japanese layouts and people starting to sample the delights of J-train modelling. Hearing and seeing a lot of reactions at shows and on forums, I suspect a good number would rather stick with what they know and complain about prices, rather than take the plunge and do something different!

Funnily enough, i have become much more interested in Japanese and Continental trains generally since going over to N gauge. The Japanese trains from Kato are very reliable.

[Roy L S]

I am the opposite. If I couldn't model British Outline in N I would change scale, continental and American railways do hold my interest but in nothing like the same way.

Roy

[austinbob]

I am the opposite. If I couldn't model British Outline in N I would change scale, continental and American railways do hold my interest but in nothing like the same way.

Roy

Likewise Roy. Although I have probably got enough stock to last for years without having to buy any more so my N gauge interest will be held for some time to come. Still keep seeing 'must haves' far too frequently and have to prioritise much more these days cos of the prices.

[Ben A]

Hello all,

No one doubts that labour costs in China have risen significantly - as has been quoted previously in the thread this is Government policy there.

Presumably we all accept that the UK N Gauge market (how many modellers?  50,000?) is a tiny fraction of that in, say, the US or Japan.

So if we accept the above, then where does that lead us..?

The labour cost is a multiplying factor in the final cost. 

The basic formula, excluding taxes, is that costs double at each stage.  I don't think this is unreasonable - companies have to make a profit, pay their employees etc.  A 100% mark-up would be considered small in some other markets - catering, for example, where a piece of fish that might cost a restaurant £1 sells for, say, £15.95.

So if it costs X to make a model (materials and labour) then Bachmann pay the factory 2X.  They then charge retailers double this as trade price, ie 4X, and the retailers double this in turn so RRP is 8X.  Let's discount discounts, for now, and that the formulae are a little skewed by taxes, but it's broadly accurate.

Meaning that, if Labour costs increase by Y, then the effect of that in RRP terms is magnified by a factor of 8.

Also, there have been lots of complaints about the reliability of steam locomotives.  I only own two (both Tornado in different liveries) and one of those had to be fixed, so I can sympathise.

On the other hand, I have dozens of diesel locos and they tend to run smoothly and reliably.

From this I deduce that steam locos present a greater engineering challenge in N due to their outside motion, irregular body shapes etc.  This is hardly rocket science!

(As an aside, let's not forget that for historic reasons the US and Japan switched away from steam far sooner than the UK, so although Kato do make good steam locos, they don't have to make nearly as many different ones as Farish.)

So what is a manufacturer to do to improve reliability of steam engines?

Better reliability means designing in better systems, using better materials, testing and checking more models and rejecting more too.

This all costs.  If you're making 50,000 models you can load those costs into the design stage, you spend more on testing, on materials, on checking, knowing that these costs will be spread across more models in the long run.

If you need to limit design costs because you're only producing 3,000 models, then you will inevitably have cut some corners.  Your "pass" threshold for components or mechanisms is lowered.

To save more money you use cheaper motors, less robust materials, less costly moulding machines.  You test 1 in 5 models, instead of every one, so you reject fewer of them.

In my view a £80 steam locomotive is going to have had corners cut in development and manufacture to keep it down to that price.  This is a reality that Fleischmann and others have known for a long time.

Perhaps I have been suckered in by both manufacturers and retailers? 

Maybe.  But consider the obvious:  there are no model shops in prime shopping locations any more.  The car park at Bachmann (I visit fairly regularly) is not full of Porsches and Jaguars.  They are not hosting lavish trade events, or spending huge budgets on advertising on TV or national newspapers.  Hornby have had to issue profit warnings and their CEO has left.

Is this really the behaviour of companies who have never had it so good, who are raking it in?

Or is it the fact that, broadly speaking, costs are rising, they are being largely honest with us and if they are to stay in business some tough decisions are needed?

But the message here is not "well, I would pay more if I know the loco was going to be as reliable as Fleischmann" but "it's all too expensive so let's  boycott items to teach them a lesson."

So, setting commercial realities against customer expectations, what is a manufacturer to do?

Cheers

Ben A.

[Newportnobby]

A good summing up of the situation, Ben.
What sticks in my craw, though, is that the Chinese government has copped for the majority of the blame and been used as a 'cover' for higher prices by the manufacturers. I have worked in 2 separate manufacturing industries in the UK and the percentage labour cost of the total manufacturing cost worked out at 40% in both cases. If labour costs rise by 20%, the only effect on the total cost is 20% of 40% i.e. 8%, which doesn't justify in itself the swingeing increases Farish have pushed through.
The above is based on UK labour costs. The Chinese costs must have been far, far less for their government to decree what they decreed, so possibly the 'true' increase in the total cost was as low as 4%. By all means, anyone working in manufacturing in the UK can go to their company Cost Accountant and ask what the percentage labour cost is of what they're producing so as to check my figures.

[Thorpe Parva]

I have been following this thread with some interest and I think that Ben's comments are spot on.

I recently considered purchasing the newly available Farish Royal Scot 46122 as it would have been a "nice to have". In the end I decided to spend just a few pounds more and get two locos from Union Mills. I now have a 3F & 2P which are excellent runners and totally appropriate for my modelling era/location.

I think that there is an issue with the choice models that are available. When the Farish 4F was released I immediately purchased two and will probably get more in future. There was a latent demand for this model and I believe that the same applies to a revamped 8F & 25/3. I guess these will appear at some point in the future.

One reservation I had about 46122 is that although I have more than 20 locos, none of these are weathered. I don't really want any weathered locos & if I did then I would probably do it myself. It seems that Farish bring out a weathered version of a loco when it has been available for a while & it enables £10 to be added to the RRP. This may be easiest for Farish from a manufacturing standpoint but I believe that they would get more sales by releasing pristine models with different running numbers.

A few months ago I did purchase a couple of "nice to have" locos, a BR 5MT and a WD, but only because Hattons had them available at a bargain price. Without the price reduction then I would not have bought them.

With regard to wagons then I have cut back my purchases dramatically and have decided that I will focus mainly on building wagons from kits & just make the occasional RTR purchase.

I think that as others have said in other threads, I will still spend the same amount of money but it will be spent more selectively.

[Roy L S]

Also, there have been lots of complaints about the reliability of steam locomotives.  I only own two (both Tornado in different liveries) and one of those had to be fixed, so I can sympathise.

On the other hand, I have dozens of diesel locos and they tend to run smoothly and reliably.

From this I deduce that steam locos present a greater engineering challenge in N due to their outside motion, irregular body shapes etc.  This is hardly rocket science!

(As an aside, let's not forget that for historic reasons the US and Japan switched away from steam far sooner than the UK, so although Kato do make good steam locos, they don't have to make nearly as many different ones as Farish.)

So what is a manufacturer to do to improve reliability of steam engines?

Better reliability means designing in better systems, using better materials, testing and checking more models and rejecting more too.

This all costs.  If you're making 50,000 models you can load those costs into the design stage, you spend more on testing, on materials, on checking, knowing that these costs will be spread across more models in the long run.

If you need to limit design costs because you're only producing 3,000 models, then you will inevitably have cut some corners.  Your "pass" threshold for components or mechanisms is lowered.

To save more money you use cheaper motors, less robust materials, less costly moulding machines.  You test 1 in 5 models, instead of every one, so you reject fewer of them.

In my view a £80 steam locomotive is going to have had corners cut in development and manufacture to keep it down to that price.  This is a reality that Fleischmann and others have known for a long time.


Cheers

Ben A.

Hi Ben

I agree with you in part at least. Expectations of cheaper prices will mean lower quality/corners cut, a much simpler model or all of those things. Not to also forget that 20% of the price is VAT for most of us. There can also be no doubt that although numbers vary the production runs of UK prototypes will be much smaller meaning that costs must very carefully controlled and recovered more quickly.

However I do not agree that there have been "lots" of complaints about reliability of steam locos. More than Diesels quite probably, but not lots when considered against the volume produced (as opposed to a relatively small number of people on forums such as this who complain). Steam models undoubtedly present more challenges in production terms, but treated with care they are in my experience as reliable as their Diesel counterparts. I have had just as many problems with diesels as steamers albeit relatively few with either. Maybe I am lucky, maybe a bit over protective in how I treat them, but whatever it is the fact remains I have few problems.

Costs have gone up, these have been passed on. Possibly off the back of a change in pricing structure by Kader - who really knows, but given Bachmann Europe is tied to Kader's Chinese factories for production, they are stuck with it and therefore of course so are we.

I do not personally agree that people are boycotting Bachmann because of these price hikes. I feel it is as much to do with the prices going beyond what certain people can justify (possibly afford) so cloth is cut accordingly. £13.50 for a weathered 16 tonner will take a bit of getting used to for example, but they are very nice.

My big concern is that the pricing and lack of new models will lead to a contraction of the Market for British N and from that a degenerative spiral downwards. I therefore hope Bachmann (and others) manage to find a balance that enables them to make enough money to invest in new models that are an affordable (but realistic) price. To do that maybe expectations in terms of separately fitted detail etc do need to be slightly lower, but possibly not so much that it is too much of a reversal.

Regards

Roy

[austinbob]

Steam models undoubtedly present more challenges in production terms, but treated with care they are in my experience as reliable as their Diesel counterparts. I have had just as many problems with diesels as steamers albeit relatively few with either. Maybe I am lucky, maybe a bit over protective in how I treat them, but whatever it is the fact remains I have few problems.

I think most peoples' complaints about quality of locos is when they don't work out of the box. I have had a number of these, as have others on this forum. That is the main improvement that is required - it MUST work out of the box. The manufacturers should have an inspection/test regime that checks enough locos to give statistical confidence that the majority (say 95% or some other defined figure) will work properly.

This is normal practice for all products and I don't see why N gauge locos should be any different.
I don't see why doing this would necessarily put the price up as a greater confidence that the loco is gonna work will reduce the number and cost of returns.

Most locos, if they work properly from the off, generally continue to work reliably as you have said. Even then I've had a couple of steamers with valve gear that fell off or apart. Again a fairly common problem which has been reported.

[Ben A]

Hi Roy,

Yes, not owning many steam locos myself, and having a 50% failure rate, I think I may have fallen into the trap of thinking a that a few complaints on here equate to a systemic problem that probably isn't the case.

Thanks for the sense of perspective.

As to boycotts, I was merely reflecting a suggestion earlier in the thread.  For me that would be a pyrrhic tactic -   I can't see how it will do anything other than force manufacturers away.

Cheers

Ben A.

[Roy L S]

Steam models undoubtedly present more challenges in production terms, but treated with care they are in my experience as reliable as their Diesel counterparts. I have had just as many problems with diesels as steamers albeit relatively few with either. Maybe I am lucky, maybe a bit over protective in how I treat them, but whatever it is the fact remains I have few problems.

I think most peoples' complaints about quality of locos is when they don't work out of the box. I have had a number of these, as have others on this forum. That is the main improvement that is required - it MUST work out of the box. The manufacturers should have an inspection/test regime that checks enough locos to give statistical confidence that the majority (say 95% or some other defined figure) will work properly.

This is normal practice for all products and I don't see why N gauge locos should be any different.
I don't see why doing this would necessarily put the price up as a greater confidence that the loco is gonna work will reduce the number and cost of returns.

Most locos, if they work properly from the off, generally continue to work reliably as you have said. Even then I've had a couple of steamers with valve gear that fell off or apart. Again a fairly common problem which has been reported.

Hi Bob

I would be very surprised if the failure rate was close to 5% of each production run (which your 95% would reflect). I have heard an overall figure of 3% given, I think this was consistent across both manufacturers. Don't forget for every person who has a problem and complains (often very vocally) there are likely to be 20 or more satisfied customers who say nothing.

Regards

Roy