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Author Topic: The cost of operating in China  (Read 5751 times)

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Offline Newportnobby

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The cost of operating in China
« on: March 17, 2016, 09:54:56 PM »
Just to portray the increased costs to us of manufacturers using China as a base, I list below some items I pre ordered in March 2013 with the price ruling at the time and the price from Rails of Sheffield showing now:-

374-611 Farish maroon auto trailer (was £18.66) - now £31.88
371-987 Farish 64xx green late crest (was £59.46) - now £80.71
2D-001-003 Dapol class 33 green with SYP (was £83.95) - now £104.63

I have already cut some half a dozen locos from my pre orders and will continue to look very closely at what I consider to be 'must haves' as opposed to 'would like'. I would imagine if everyone did this, the manufacturers would then bleat about N gauge being an even smaller percentage of the overall model railway market. We're hardly likely to hear any response from Farish/Dapol but I'd be interested to see if Dave Jones has any comment to make @DJM Dave

Offline DJM Dave

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Re: The cost of operating in China
« Reply #1 on: March 17, 2016, 10:18:10 PM »
Hi,
I think the higher prices are here to stay.

With the recent exchange rate working against the UK£ I personally have seen quotes for products, when converted from US$ or HK$ raise considerably.

Leaving me personally wondering do I raise to keep a profit margin or do I eat the difference to keep the client.

However this is on top of the prices that we must now all have yo get used to, irrespective of whether we have to cut out cloth accordingly.

Wagons and locos are coming out looking better than ever, with finer details and better reliability and paint finishes. We all love them right? I certainly do, but being a European modeller too, I am aware that quality costs. Perhaps we are just catching up with Europe?

Certainly I've thought for a while now that UK N gauge over the last 5 years has been cheaper than they should be.

But.....and here's the rub..... Not only do you have to take into account those that are ,quite rightly, cutting their cloth accordingly but also the simple truth that N gauge is waaaaay smaller ( excuse the pun) in sales and product runs / sustainability than OO gauge.

There is, no matter what anyone else says, a 'plateau' of sales a model will reach before saturation.
Usually it's around 300-500 units per running number/decoration.
Once this happens the model, to all intents and purposes is dead in the water for further sales until the 'soak through' has happened in the market place and demand slowly raises until it's feasible to produce another batch in a new running number or decoration. Usually this signifies loads of cheaper N flooding the market at silly prices as manufacturers hasn't read the runes, and have over ordered.

This is easy to see, just by watching clearance bargains on monthly, or stock still shown in the warehouse 3/4 years after introduction ( especially helpful when you know their production run)

Companies will start to tighten up production numbers if they have any sense, as having stock on the shelf in a warehouse does them and you /I no good whatsoever as money is then tied up until it can be released for other models.

So.... Yes it hurts, but it's with us to stay. You want great products? You want people to be paid a fair wage for making them? Then that's your lot, and ( and I'm sorry if this sounds brutal), we better get used to it!

Cheers
Dave

N gauge Model Railway locomotive and rolling stock manufacturer.

Offline Chris Morris

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Re: The cost of operating in China
« Reply #2 on: March 17, 2016, 10:40:20 PM »
So will manufacturers move back to Europe? There must come a point , which may not yet have been reached, where the total cost of manufacturing in Europe becomes lower than China. Total cost is of course a hard one to work out. It's not just tooling cost and piece cost. There are time, lack of control of production and logistics costs to name but a few. Also the issue that manufacturers pay for tooling but cannot move it out of China.
I believe the Peco 2251 was manufactured in Europe and this had an rrp of about £130 some years ago. This was a lot more than locos made in China at the time because of the higher cost base. Judging by the way rrps are going we are probably moving closer to total cost of European production getting close to Chinese costs. Prices will be higher but I think time to production and quality control will be much better.
Working doesn't seem to be the perfect thing for me so I'll continue to play.
Steve Marriott / Ronnie Lane

Online railsquid

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Re: The cost of operating in China
« Reply #3 on: March 17, 2016, 10:55:20 PM »
Pontificating from my armchair, it's inevitable that the massive differential in costs would eventually contract, and shifting production elsewhere is suddenly not an option (or an expensive one) due to direct or indirect Chinese control over production. If it's any consolation, prices in Japan have been creeping up too in some segments; Greenmax in particular, which had outsourced entirely to China and which has been plagued by production problems, has effectively reinvented itself as as high-end niche producer (gambling that anyone who wants the models only it produces will be prepared to pay prices which are approaching British levels).

The exception is Kato, who seems to be able to produce quality models on schedule at stable prices, and coincidentally has kept its manufacturing entirely domestic.

Takahachikawa - Japanese and other trains

Birmingham Knotmore Street - (ex) GWR mainline through the Midlands

Offline Yet_Another

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Re: The cost of operating in China
« Reply #4 on: March 17, 2016, 11:09:45 PM »
Probably worth iterating that Bachmann/Graham Farish are just trading names of Kader Industries, which is based in China. So semantically, it wouldn't be moving back to Europe, it would be moving away from China for those products.
Tony

'...things are not done by those who sit down to count the cost of every thought and act.' - Sir Daniel Gooch of IKB

Offline FourWheelCoach

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Re: The cost of operating in China
« Reply #5 on: March 17, 2016, 11:21:03 PM »
I wrote this in another thread where it attracted no comments.

Perhaps it will here?

I was in the Ian Allen book and model shop in Birmingham recently and it struck me that the prices of coaches and particularly wagons are astronomical for what they are: a few screenprinted plastic injection mouldings.
I had a look at a 1971 catalogue for comparison and adjusted prices in line with inflation:
Wagon from £3.30, coaches £10, 0-6-0 loco £81.

Loco price seems comparable and I would say the others strike me.as the sort of.price they ought to be. Granted some of the modern models have much better detail than older ones but manufacturing techniques have improved somewhat over the last forty-five years too.

Note I'm not suggesting Ian Allen are massively more expensive than elsewhere, that's just the shop I happened to be in.

I might add that pad printing gives a better finish than a hand applied decal and a couple of brush strokes of colour on a self coloured moulding but must also be cheaper than paying the bloke with the paintbrush.

Offline Chris Morris

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Re: The cost of operating in China
« Reply #6 on: March 18, 2016, 06:54:37 AM »
I am staggered by the cost of wagons. The cost of the components and raw materials must be negligible and there isn't a lot of labour in assembling a wagon. USA Trains, who make G scale stuff have most things made in China but their old style wagon series is manufactured in the USA. As has been said Graham Farish will have no interest in manufacturing outside of China but maybe Dapol will do at some point. I would be very happy to buy wagons as a fully painted kit - wouldn't take long to snap them together.
Working doesn't seem to be the perfect thing for me so I'll continue to play.
Steve Marriott / Ronnie Lane

Offline rogercrossley

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Re: The cost of operating in China
« Reply #7 on: March 18, 2016, 07:41:57 AM »
Someone has to pay for all those BMWs we see on the news driving around in China. Should we base cheap prices for our hobby on a low standard of living for the people who make our 'toys'? Roger.

ScottyStitch

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Re: The cost of operating in China
« Reply #8 on: March 18, 2016, 08:26:25 AM »
I wrote this in another thread where it attracted no comments.

Perhaps it will here?

I was in the Ian Allen book and model shop in Birmingham recently and it struck me that the prices of coaches and particularly wagons are astronomical for what they are: a few screenprinted plastic injection mouldings.
I had a look at a 1971 catalogue for comparison and adjusted prices in line with inflation:
Wagon from £3.30, coaches £10, 0-6-0 loco £81.

Loco price seems comparable and I would say the others strike me.as the sort of.price they ought to be. Granted some of the modern models have much better detail than older ones but manufacturing techniques have improved somewhat over the last forty-five years too.

Note I'm not suggesting Ian Allen are massively more expensive than elsewhere, that's just the shop I happened to be in.

I might add that pad printing gives a better finish than a hand applied decal and a couple of brush strokes of colour on a self coloured moulding but must also be cheaper than paying the bloke with the paintbrush.

Perhaps if the quality (and prototypical fidelity) of said coaches and wagons now, were comparable to that of 1971, the prices wouldn't have increased so much. Just saying.

ScottyStitch

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Re: The cost of operating in China
« Reply #9 on: March 18, 2016, 08:29:57 AM »
Hi,
I think the higher prices are here to stay.

With the recent exchange rate working against the UK£ I personally have seen quotes for products, when converted from US$ or HK$ raise considerably.

Leaving me personally wondering do I raise to keep a profit margin or do I eat the difference to keep the client.

However this is on top of the prices that we must now all have yo get used to, irrespective of whether we have to cut out cloth accordingly.

Wagons and locos are coming out looking better than ever, with finer details and better reliability and paint finishes. We all love them right? I certainly do, but being a European modeller too, I am aware that quality costs. Perhaps we are just catching up with Europe?

Certainly I've thought for a while now that UK N gauge over the last 5 years has been cheaper than they should be.

But.....and here's the rub..... Not only do you have to take into account those that are ,quite rightly, cutting their cloth accordingly but also the simple truth that N gauge is waaaaay smaller ( excuse the pun) in sales and product runs / sustainability than OO gauge.

There is, no matter what anyone else says, a 'plateau' of sales a model will reach before saturation.
Usually it's around 300-500 units per running number/decoration.
Once this happens the model, to all intents and purposes is dead in the water for further sales until the 'soak through' has happened in the market place and demand slowly raises until it's feasible to produce another batch in a new running number or decoration. Usually this signifies loads of cheaper N flooding the market at silly prices as manufacturers hasn't read the runes, and have over ordered.

This is easy to see, just by watching clearance bargains on monthly, or stock still shown in the warehouse 3/4 years after introduction ( especially helpful when you know their production run)

Companies will start to tighten up production numbers if they have any sense, as having stock on the shelf in a warehouse does them and you /I no good whatsoever as money is then tied up until it can be released for other models.

So.... Yes it hurts, but it's with us to stay. You want great products? You want people to be paid a fair wage for making them? Then that's your lot, and ( and I'm sorry if this sounds brutal), we better get used to it!

Cheers
Dave

Agree 100%  Just because we can't afford it, doesn't mean we are being ripped off. I think we would do well to remember that.

Offline martyn

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Re: The cost of operating in China
« Reply #10 on: March 18, 2016, 09:25:48 AM »
Irrespective of point of manufacture, my own thoughts are generally along the lines of 'you can't have Fleischmann quality at Triang prices'. It seems a  British obsession of price against quality.

Whether we have reached the quality level for UK models is moot point-but it is much higher than when I started in N forty years ago.....

Mind you, Peco still seem to have most of that eras wagons on sale :)

Martyn

Offline Webbo

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Re: The cost of operating in China
« Reply #11 on: March 18, 2016, 09:52:52 AM »
Pontificating from my armchair, it's inevitable that the massive differential in costs would eventually contract, and shifting production elsewhere is suddenly not an option (or an expensive one) due to direct or indirect Chinese control over production. If it's any consolation, prices in Japan have been creeping up too in some segments; Greenmax in particular, which had outsourced entirely to China and which has been plagued by production problems, has effectively reinvented itself as as high-end niche producer (gambling that anyone who wants the models only it produces will be prepared to pay prices which are approaching British levels).

The exception is Kato, who seems to be able to produce quality models on schedule at stable prices, and coincidentally has kept its manufacturing entirely domestic.

Kato is an interesting situation. Most North American manufacture occurs in China, yet Kato exclusively manufactures in Japan is really not that more expensive than the Chinese stuff, but at the same time retains a reputation as being of the highest quality. So what is really happening here?

Webbo

Offline Newportnobby

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Re: The cost of operating in China
« Reply #12 on: March 18, 2016, 09:57:31 AM »
Thanks to Dave for an interesting insight.
I have no issue in paying for quality and, of course, believe anyone should be paid a decent living wage.
However, there seems to be a discrepancy between the pricing of stock from the main 2 players in the UK N gauge market. As an example, I have just paid £127.46 for a Farish Royal Scot yet the pre order price for both the Dapol Schools and Battle of Britain is £116.11. OK, those prices will probably increase before the models are with us, but overall I think Farish are making a meal of the 20% per annum wage rise in China. As an example, the auto trailer has increased 70% since its announcement and it's still not with us yet.
I did comment on this forum last year that I expected prices for larger locos to hit the £200 rrp mark by the end of 2016. I hope this will not be the case but am sure it will happen next year if not.
This will trigger more modellers/collectors to review their purchasing habits and, I'm sure, will shrink the market further.

I'd really rather this thread doesn't go down the route of price v quality as that has been done to death elsewhere. Whether we like it or not, prices are rising consistently regardless of running issues with locos so we're stuck with it. Caveat emptor.
I'm more concerned with how others see the pricing going and how the market will inevitably shrink as a result.

Offline Steve Brassett

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Re: The cost of operating in China
« Reply #13 on: March 18, 2016, 10:04:00 AM »
I am staggered by the cost of wagons. The cost of the components and raw materials must be negligible and there isn't a lot of labour in assembling a wagon. USA Trains, who make G scale stuff have most things made in China but their old style wagon series is manufactured in the USA. As has been said Graham Farish will have no interest in manufacturing outside of China but maybe Dapol will do at some point. I would be very happy to buy wagons as a fully painted kit - wouldn't take long to snap them together.
Plastic might be cheap but tooling costs aren't.

Offline Dorsetmike

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Re: The cost of operating in China
« Reply #14 on: March 18, 2016, 10:28:34 AM »
I'm getting to the point where I will have to try very hard to justify expenditure on new locos.

Mostly my stock is either kit or scratch built as there are only 6 pre 1940 SR locos available RTR, (M7, Terrier, N class, T9, 700 and 0395) the forthcoming Dapol Schools will probably be my last RTR purchase, unless someone produces an Arthur or Lord Nelson, although that could be a doubtful purchase as I have 2 Nelsons being hacked from second hand LMS 4-6-0s and half a dozen other 4-6-0s kit bashed. I doubt Union Mills will produce any more ex LSWR locos as not many of the 4-4-0s stayed active for long in BR days.
Cheers MIKE
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