The cost of operating in China

[Newportnobby]

I agree with Alan in that I will support my local trader providing he can get near a major box shifters price allowing for no postage cost. However, rarely does this occur, maybe for the reason Alan has outlined above

[guest311]

The main problem I find with locos etc made in China is........

you buy one ...........







but a couple of hours later you want another 

[DELETED]

I was at a tank supplier in York last week to get some trianing on their waste water treatment systems so I could be an approved commissioning tech for them and they have all their tanks fabricated in Eastern europe now.  Even with shipping they get them cheaper and quicker than they could get made in the UK.  I made the comment I'm always sad to see this as I'm still "just" young enough to remember when I remembered byuing in the UK meant something and you were buying quality -these days the first sign of a UK product seems to be the "made in UK" sticker falls off, just before the product fails or the warranty expires.  I hate to support out-sourcing but I appreciate times have changed and it's gone that way for a good reason.

I do complain bitterly about the price-hike in N gauge over the last couple of years, particularly because when I did buy the ultra-fine detailed models, half the detail seemd to fall off by itself without me noticing until it was lost.  However, after many, many discussions I'm reluctantly accepting it's the way it's going*.  I still buy the Peco kits and have a few unpainted Dapol items in my wish list though, I just can't justify the price of allot of stuff now.

I DO however always support my local shops.  I would much rather buy less items through my local shop (if poss) or a Uk supplier than buy anything direct from outside the UK now.

*I had one job where we were buying 100Te cranes (>£1M'odd each ) from Norway where they'd shifted pre-fab of parts to Poland and it totally bit them in the ass though.  Quality and traceability went totally through the floor.  Thats another story though.

[joe cassidy]

So far no one has mentioned Union Mills in this discussion.

I don't know how old Colin Heard is but one day he may decide to hand over the reins

That would provide an opportunity for some one to build on what Colin has created and may be take on board new technologies like 3D printing where there are no tooling Costs to develop new produits.

I would invest 500 pounds in crowdfunding a "new UM" in the  hope of getting new locos at a reasonable Price.

Best regards,


Joe

[Portpatrick]

Some helpful comments about the economics of the business.

In Sept 1976, when I changed from OO to N, I bought a new Minitrix Britannia for something less than £15.  At that time, the RPI was c 42.  It is now c 260.  My Dapol Brit in 2011 cost me £90 (a good price at that time) .  Not sure what it would cost me now, but I guess a lot more than £15 uprated by inflation.  Of course the Dapol model is incomparably superior (setting aside mine still has those silly silver grey wheels).  I could apply the same comparison to the first Black 5 I bought in 1978 to the model today - a vastly better model but costing more in real terms.  In other words our models have already risen by more than general inflation, and are continuing to do so though the quality of presentation and running has massively improved.   There do seem to be some questions over QC and reliability, though I sometimes found in the early days I had to do things like unbind valve gear, or tweak pick ups to make proper contact.  Not difficult, but tiresome.


I recognise we have little choice but to pay more per item and many of us buy more selectively - thus reducing the size of the market and no doubt future supply.  I have no problem with Chinese workers wanting a share of prosperity.  That said if they want western prosperity they must also be prepared to meet western demands for production quality and reliability.  I ask myself whether American and mainland European manufacturers suffer the sort of quality and reliability issues we see reported on this Forum for our models.  Interesting/sad therefore to see Dave's comment on this thread suggesting that even European quality may now be slipping. 

It is of course true that we are heavily (though not totally) dependent on 2 bigger suppliers.  Our market is too small for there to be really effective competition.  But if quality becomes too low, N gauge modellers do have other choices - notably changing scale or even a different hobby.  It less a matter of we biting the hand that feeds us, but suppliers right through the chain accepting that their customer is the hand which feeds them.   Too many unhappy customers leads  to fewer/no sales and no profits.

[Chetcombe]

Fascinating thread, thanks to all who have contributed. As I write this I notice some parallels with the US TV news is on in the background with talk of how bad it is to be constantly losing manufacturing jobs in the US, how awful it is to have hundreds of billions of dollars in trade deficit with China and how US companies are struggling with exports due to the strength of the dollar. Yet the US economy continues to grow despite all these issues...

From my perspective, the 'value' of a new British N gauge model doesn't come from the place of manufacture, it comes from things like the choice of prototype (including the assessment of commercial viability which has got to be a challenging task), the design of the model (including innovative new features, clever design to minimize tooling and production costs while maximizing reliability etc), in speccing out the most efficient supply chain as well as effectively marketing the model. Interestingly all the value added elements of the process reside in the UK, as do the associated wages, sales revenue, profit and (I hope) taxes...

That leaves manufacturing, most of which has moved to China. Clearly this has lowered cost and improved the quality of N gauge models, but has fallen short on timeliness. However I don't blame the Chinese manufacturers for this, I think it is more to do with small production runs for N gauge models (a production line's nightmare is to constantly stop, re-set for a different product and restart) and a lack of competition. If our UK market was big enough we would have Dapol, Farish and others bringing out competing models which would give more of an impetus to being first to market. Instead models are announced way too early, probably to try to prevent competitors from announcing similar models. The result is that nearly every model is chronically late.

In summary i would like to see more competition in our little market As this would improve timeliness, encourage innovation and even help reduce costs...but recognize that N gauge may not have sufficient scale (sorry about the awful pun!).

So I salute the innovation of the UK N gauge companies and their employees. The UK N gauge market is probably more healthy than it has been since I started in N in the 1970s, in terms of the variety of rtr models offered at least. China is clearly trying to adapt as it becomes a higher cost place to manufacture - how soon before N guage manufacturing shifts to India or the next wave of evolving economies...

[scruff]

A good thread, Thanks to Mick for starting it and to Dave for his insight.

From my point of view, I seem to be reducing the amount of "Must have" purchases, I keep my list in a database and I have had to invent a new category called "reserve" to which I have added at least 10 loco's so far. I have also prioritised purchases, ranked from 1-5. If I manage to get the items in priority 1 I will be happy..
Before the price increases I put stuff on the list and bought them as they were released, Now it is very different with only 6 loco's on the list in priority 1. I doubt I will get any in the "reserve" list unless I win the lottery!
I would hesitate a guess that the market will shrink in size because peoples disposable income is not finite and wages/pensions have got a fair way to go to catch up with the price increases,not just in model railways but in general household bills too.

Cheers
Mark

[Newportnobby]

I would hesitate a guess that the market will shrink in size because peoples disposable income is not finite and wages/pensions have got a fair way to go to catch up with the price increases,not just in model railways but in general household bills too.

Exactly, Mark. Originally the price increases were based on the fact the Chinese government were insisting wages should increase by 20% per year for 5 years. Other costs may rise/fall but let's estimate labour is 40% (I have no idea of the accuracy of this) of the overall cost, then 20% of 40% = 8%.
So how can an auto trailer rise 70% in 3 years?
The manufacturers should realise that UK wages rise/don't rise generally in line with UK inflation i.e. we don't get 8% to help pay for our hobby! Our money goes to paying for all the 'stuff we need to live' that far exceeds inflation.

[Snowwolflair]

I would hesitate a guess that the market will shrink in size because peoples disposable income is not finite and wages/pensions have got a fair way to go to catch up with the price increases,not just in model railways but in general household bills too.

Exactly, Mark. Originally the price increases were based on the fact the Chinese government were insisting wages should increase by 20% per year for 5 years. Other costs may rise/fall but let's estimate labour is 40% (I have no idea of the accuracy of this) of the overall cost, then 20% of 40% = 8%.
So how can an auto trailer rise 70% in 3 years?
The manufacturers should realise that UK wages rise/don't rise generally in line with UK inflation i.e. we don't get 8% to help pay for our hobby! Our money goes to paying for all the 'stuff we need to live' that far exceeds inflation.

The value of the pound has collapsed so you need more to buy the same.

[scruff]

I just did some quick sums and it looks like a 20% increase for 5 years will cause a labour cost increase of nearly 150% or nearly 2 and a half times their original cost.. i wonder what proportion of the costs are attributable to labour costs..

Wish I got a 20% wage increase....!

Cheers
Mark

[Snowwolflair]

I just did some quick sums and it looks like a 20% increase for 5 years will cause a labour cost increase of nearly 150% or nearly 2 and a half times their original cost.. i wonder what proportion of the costs are attributable to labour costs..

Wish I got a 20% wage increase....!

Cheers
Mark

20% on a typical factory worker wage of $300 a month is not a lot!

[scruff]

That means when the 5 years is over they will take home $746... That is quite a big increase in my book..

Cheers
Mark

[Newportnobby]

The value of the pound has collapsed so you need more to buy the same.

Only a 'recent' occurrence. We've already had 2 or more increases from China.

[Snowwolflair]

Don't think i would work in a factory for £2,500 a year. Almost slave labor rates.

Also the RMB has been climbing for +10 years.

Our government even added 5% to VAT ..............   it all adds up.

The rule is it costs what it costs, and the real question is can typical modelers afford what it costs. 

They did not used to but for many years we have had affordable prices that seem to be going away again.

also remember as China gets too expensive manufacturing will move to Vietnam, Thailand Laos etc.