China virus and production woes.

[trkilliman]

Just listening to the morning T.V. news. It was said that a huge number of production facilities have either been shut or are working with reduced staffing levels due to the virus and restrictions on movement.

Our production at home will have a hiccup as a consequence. One U.K. business owner said she was already experiencing supply problems, as the factory that supplies her is in the area the virus started from. Has the World put too many eggs in one basket in there rush to move production to China?  AFAIC much of the rush was to have things produced cheaply... and boost profits.
M&S used to have a lot of clothing produced in the U.K. but moved production in many cases to Asia. Several British factories closed as a result. I see their men's shirts at around £35-40 that are made in Bangladesh.  I wonder how little they pay for them?

I remember watching a you-tube video about the former Matchbox toys factory in East London. They had a large shift that had Mothers clocking on and off to fit in with their children's school times. Nimble fingers that would carryout/fit some of the small parts to the cars. One can assume the Ladies earnt some useful money and enjoyed the ambience that existed.

I have pondered a few times if this idea could be replicated in today's environment? With Farish prices rising as they have is it really still that cost effective having models produced the other side of the World? That said Kadar are I believe a Hong Kong company.

Whilst Dapol come in for some stick over reliability issues, they have managed to keep their prices somewhat lower than many items comparable to Farish. I wonder how much work is carried out at the N. Wales factory?

The virus is very worrying for us all. Let's hope it can be dealt with fairly quickly.  I think it's highly likely that many businesses across the Globe will be pushed to look at production possibilities on their own turf. This could be somewhat a game changer in the long term.

[Chris Morris]

You have to admire Peco for keeping most of their production in the UK. Ten years ago this looked like a bad decision  but now it looks like it was the right course. At least there should be no shortage of track and N gauge wagons.

China is such a huge country that we can't possibly know whether production of eagerly awaited new models will be affected. Luckily I'm not waiting for anything at the moment. I'm sure China will bounce back quickly once this is over but it looks like it's going to get worse before it gets better. I will be amazed if they are able to contain and eradicate this virus bit I wish them every success.

[The Q]

I have pondered a few times if this idea could be replicated in today's environment? With Farish prices rising as they have is it really still that cost effective having models produced the other side of the World? That said Kadar are I believe a Hong Kong company.

But their production Facilities are in Southern mainland China..

[red_death]

Has the World put too many eggs in one basket in there rush to move production to China?  AFAIC much of the rush was to have things produced cheaply... and boost profits.

I have pondered a few times if this idea could be replicated in today's environment? With Farish prices rising as they have is it really still that cost effective having models produced the other side of the World? That said Kadar are I believe a Hong Kong company.

Kader is from Hong Kong and most of their factories (possibly all now) are in Southern China. We've done to death the reasons behind Farish's price rises.

Whilst Dapol come in for some stick over reliability issues, they have managed to keep their prices somewhat lower than many items comparable to Farish. I wonder how much work is carried out at the N. Wales factory?

Certainly for N gauge very little is produced in N Wales.

I think that you've identified part of the problem in your post - do you want things produced "at home" or do you want "to keep prices down"? You can have one or the other - there is a lot of manual processes in making RTR train models and that means paying for assembly. A lot of our models are essentially hand-built.  While wages are cheaper in one part of the world (and there are the requisite skills eg design, tool-making and production) than the UK then bringing back production to the UK can only lead to price rises. Which is more important to you?

[njee20]

I'm also not sure that this is a good example of "all eggs in one basket" either - this is a continental, if not a global issue, it's not like the world's production of model trains has been concentrated entirely on one industrial estate somewhere!

I'll eat my hat if this suddenly drives production back to the west in any notable scale, in any industry.

[NScaleNotes]

I think it's highly likely that many businesses across the Globe will be pushed to look at production possibilities on their own turf. This could be somewhat a game changer in the long term.

Apologies this will be a long post but it's an area I'm particularly interested in so if you want to get the gist just read the first sentence:

Not likely given current the dominance of neo-liberal political/economic systems around the World.

There's a whole host of countries that production could be moved-to to ensure access to cheap labour until the robots take over all aspects of production. Initially other countries in Asia and then longer term if necessary parts of Africa. Europe is still building rail and seaport infrastructure to ensure the efficient flow of goods from outside the EU but also from it's 'cheaper' fringes. People must have noticed the increasing prevalence of products (particularly food and household items) once produced in Western Europe now coming from 'cheaper' Eastern Europe?
It'll be no different in the UK post EU either.

Free-trade, and perhaps more importantly the free-movement of money a.k.a profits, is not about benefits for us as consumers/workers, we generally lose jobs and productive infrastructure plus the profit, wages and taxes that would have circulated in the 'local' economy are free to flow into financial black-holes. The people elsewhere that gain productive jobs usually don't benefit from the health/safety and social benefits that workers in the old production centres were lucky to have or fought to secure (just like you describe regards Matchbox).
Of course a nice discount is passed onto us initially to soften the blow, then statements that we couldn't possibly produce this level of detail/quality with our old facilities but eventually prices creep back up and we find we have the worse of both Worlds.

We do need to acknowledge that the cheap goods in the current system we are used to DO have a real cost to someone or something, somewhere along the line.
Despite what we've been told for the last 20-30 (perhaps longer) years having a strong manufacturing base is critical to the functioning of the kind of economic system we are used to and just to preemptively counter the argument that we don't want all those factory jobs coming back to us: mass production doesn't have to be awful for the workers; mechanisation and computers mean we could have all been working at least part-time without a change in our material circumstances decades ago.

We also don't have to replicate the old or current systems. Goods can still be produced at reasonable cost with everyone getting a fair share of the profits a.k.a worker co-ops. You've only got to look to the past to see how many smaller companies were in the respective markets for most goods that are now dominated by a handful of major producers to get an idea of how it could look.
Sure it might be more 'expensive' than it is now but if the flows to the top would be addressed, any profits and resultant tax revenues would again be localised, workers would be earning decent wages and therefore the whole economy would have more money anyway. Therefore trying to compare prices between the current system and a new system and saying it would be more expensive is pointless. It's always worth remembering it's only like it is now because the current system seeks to extract maximum profit at the expense of everything else and ensures it flows in certain directions.

We do also need to be willing to not want as much in most aspects of our lives i.e. super cheap-food, no more fast fashion, short product life-cycles, quick profits on investments if we are lucky enough to have any. We could easily want less and resume producing and valuing goods that are built to last, are well designed, repairable and built using quality components.

Regarding our hobby (in fact most hobbies or niche markets), production will always be relatively expensive because of the limited volumes, we just happen to have been around for what you could call a 'golden' age in prices vs. production costs. Signs are that's slowly starting to change now as they trend-up and we for the most part, trend-down economically. If it is uneconomical to produce with a more equitable system of manufacturing we would probably have to go back to being a largely DIY endeavour supported by cottage industries just as it was in the beginning. However, we'd still have a whole new World of technology at our disposal as there's no reason to believe 3D printing is going away or new technological developments would stop. Just look to the work that the open-source community does.

It'd need a massive effort to change not only the system but also our mindsets though. As it's taken decades of incremental change to arrive at where we are now it'll either be a sudden massive, chaotic and very painful change (I highly doubt this virus in isolation is it though) or decades of slow incremental changes to go back in the other direction.
Perhaps with the rise of the robots and AI (and if the price of transportation ever starts to climb) this will all be moot and production will move back closer to retail markets anyway. However, if we're not already extinct, our lives and societies will need to be fundamentally different in ways we are only beginning to grasp and possibly can't even visualise if this happens.

[Adam1701D]

Perhaps we could see UK produced "Psuedo-RTR" with a finished base model and several sprues of separate parts for the buyer to fit. ViTrains did this with their OO locos a while back - it wasn't universally popular but helped to keep costs reasonable.

[kardkits]

If things are perceived as being so dire, in terms of pricing and cost effectivness for having production  in the UK, how come we do have a british business manufactoring rtr locos at a very reasonable cost.

I am indeed talking about Union Mills Models, Colin is a small outfit, making just enough models to keep himself out of a higher tax band, yes the level of detail is below what the likes of Bachmann or Dapol achieve but the overal running quality is much higher.

If Colin can manage UK production at a lower cost than outsourcing abroad, maybe other companies can do the same and just need to re-think their business plan.

I understand that a higher detail of product may cost a little more, and that Colin can dedicate his attention to each individual engine rather than batch testing, which probably is the main reason the other two companies can have so many faulty new items.

[Fardap]

If things are perceived as being so dire, in terms of pricing and cost effectivness for having production  in the UK, how come we do have a british business manufactoring rtr locos at a very reasonable cost.

I am indeed talking about Union Mills Models, Colin is a small outfit, making just enough models to keep himself out of a higher tax band, yes the level of detail is below what the likes of Bachmann or Dapol achieve but the overal running quality is much higher.

If Colin can manage UK production at a lower cost than outsourcing abroad, maybe other companies can do the same and just need to re-think their business plan.

I understand that a higher detail of product may cost a little more, and that Colin can dedicate his attention to each individual engine rather than batch testing, which probably is the main reason the other two companies can have so many faulty new items.

I think you ask and answer all the questions there. No doubt from peoples comments on here that the UM locos are great and run well.

From my viewpoint they look like Ngauge (even OO) from the 70's basic details and moulded bodies and handrails etc. I like the high detail and accept that I have to pay a premium to enjoy that product.

Lump Fish roe and Beluga Caviar are essentially the same product at vastly different price points, so it is each to their own. I for one would hate to see the details lost for cost.

Steve

[NScaleNotes]

If things are perceived as being so dire, in terms of pricing and cost effectivness for having production  in the UK, how come we do have a british business manufactoring rtr locos at a very reasonable cost.

I am indeed talking about Union Mills Models, Colin is a small outfit, making just enough models to keep himself out of a higher tax band, yes the level of detail is below what the likes of Bachmann or Dapol achieve but the overal running quality is much higher.

If Colin can manage UK production at a lower cost than outsourcing abroad, maybe other companies can do the same and just need to re-think their business plan.

I understand that a higher detail of product may cost a little more, and that Colin can dedicate his attention to each individual engine rather than batch testing, which probably is the main reason the other two companies can have so many faulty new items.

Exactly, it can be done and there are creative ways of doing it as both you and Captain Electra have suggested.
The following statement applies to all outsourced manufacturing by the way: to prove it's impossible to bring production back to the UK we'd need to see details that'd companies would not want to reveal because then we'd know what kind of profit margin they are trying to maintain with outsourcing.

Fundamentally we need to accept that if a business model relies on cheap overseas labour to stay profitable then something is wrong. In their defence it might not necessarily be something wrong with the company, once the flow to overseas production started other companies probably had to join in to stay competitive, so the problem could also be the wider market and economy it operates in, for example, workers wages and therefore consumers disposable income not keeping up with the costs of production, free trade rules allowing existing markets to undermined by cheap overseas products.

However, none of this hides the fact that somewhere, sometime, someone got greedy and realised they could make more money by outsourcing and everyone else including consumers (lured by temporary low prices) jumped on the bandwagon.

[Buffin]

Do Hornby manufacture in China? If so, their big month by month release schedule is going to be knocked for six pretty quickly.

[red_death]

Perhaps we could see UK produced "Psuedo-RTR" with a finished base model and several sprues of separate parts for the buyer to fit. ViTrains did this with their OO locos a while back - it wasn't universally popular but helped to keep costs reasonable.

I'd be sceptical that significant portions of the market would be willing to accept that - I can't prove this assertion, but I do know the difference in scale of sales between kits and RTR.  To be honest leaving off a few bits of detail won't dramatically reduce prices.

I am indeed talking about Union Mills Models, Colin is a small outfit, making just enough models to keep himself out of a higher tax band, yes the level of detail is below what the likes of Bachmann or Dapol achieve but the overal running quality is much higher.

If Colin can manage UK production at a lower cost than outsourcing abroad, maybe other companies can do the same and just need to re-think their business plan.

Apples and pears and you've answered the reason UM survives - Colin is a one man band with the skills and knowledge to do everything from research, tooling, production and assembly himself.  Try costing that up for UK production (I have), that is even assuming you can find the skills needed and willing to work on the small batches the UK N gauge market buys.

Sorry but you can't extrapolate anything from UM to any sort of larger RTR business.

The following statement applies to all outsourced manufacturing by the way: to prove it's impossible to bring production back to the UK we'd need to see details that'd companies would not want to reveal because then we'd know what kind of profit margin they are trying to maintain with outsourcing.

Fundamentally we need to accept that if a business model relies on cheap overseas labour to stay profitable then something is wrong. In their defence it might not necessarily be something wrong with the company, once the flow to overseas production started other companies probably had to join in to stay competitive<snip>

However, none of this hides the fact that somewhere, sometime, someone got greedy and realised they could make more money by outsourcing and everyone else including consumers (lured by temporary low prices) jumped on the bandwagon.

You can look at the accounts of pretty much most if not all the UK manufacturers and see that none of them are making obscene profits (indeed some are making losses).  I think that you have the wrong end of the stick when it comes to model railways. 

We don't manufacture in China out of any desire to hide profits or be greedy but for the simple reasons that China has all the skills and experience readily available and because we are constantly told on here and elsewhere that model prices are already too high.  I've done the calculations as to what impact producing in the UK would cost and they are not pretty - if however I'm wrong and that what people really want is UK produced models then let us know, but be under no illusion on the volumes that the UK N gauge market sells in you are looking at a minimum of doubling the prices (and more likely quadrupling the prices) and assumes you can find the skills.

[NScaleNotes]

Of course, the original question did mix up mass manufacturers like clothing manufacturers and model railways so I'd tried to make it clear I wasn't targeting anyone in particular. I did also make the point is that model railways is a niche market and our expectations have come way out of line with what is possible for a number of reasons not just the availability of cheap overseas production. Perhaps I wasn't clear enough: Non-sustainable manufacturing has become the norm in most industries.
Eventually costs will have to go up in China. What then, move on to the next unsustainable place or use that as an opportunity to change things and bring manufacturing back?

Revolution is a pretty new to the market so I understand you are competing for hobby budget £'s against companies that have already outsourced so it's a very difficult market. Now the interesting question is then: would you still produce overseas if competitors manufactured here too?
The skills must already be here (perhaps latent) as you say you've been able to cost it.

Of course people will tell you they want everything cheaply if you ask them but model railways were not on Maslow's hierarchy of needs last time I checked. If the reality is that it can't be done for current prices then to live in a sustainable World people will have to make a choice about how much they really want not need something and pay the price.
I hate to say it because I really do love seeing the variety and quality of current model railway products but perhaps if prices need to double or quadruple then model railway manufacturers should accept it's not a suitable candidate for sustainable mass production and a traditional business model as we know it. So we come full circle and go back to cottage industries and DIY where people do it because they love it. I'm sure Revolution and others could still have a business even then but it'd be different for sure.

Like I said it's the whole economy we are in that has hidden the true costs of production from us, for example, we've all heard the horror stories about electronics production, working conditions in clothing shops and environmental damage in China but most of us choose to look the other way. Of course not all factories are like that either but they are still ultimately unsustainable as they won't be able to keep costs down forever and I'm sure that's pretty much a universally accepted belief even in the manufacturing industry.
I suppose I just want to see a healthy, sustainable economy everywhere in the World. Some will probably call that naive but it's something to work towards at least.

[The Q]

Do Hornby manufacture in China? If so, their big month by month release schedule is going to be knocked for six pretty quickly.

IIRC Hornby have a greater problem their China manufacturer (on licence) was bought by.... Kader.. So guess who's products will lose first...
Hornby moved Airfix to India after problems with China, and Humbrol back to the UK.
to move Hornby models outs would require trying to get the moulds back....that would cause much disruption...

[woodbury22uk]

Do Hornby manufacture in China? If so, their big month by month release schedule is going to be knocked for six pretty quickly.

IIRC Hornby have a greater problem their China manufacturer (on licence) was bought by.... Kader.. So guess who's products will lose first...
Hornby moved Airfix to India after problems with China, and Humbrol back to the UK.
to move Hornby models outs would require trying to get the moulds back....that would cause much disruption...

I think you will find that Hornby multisource their products from several Chinese suppliers having already suffered the consequences of having one major manufacturer who was taken over by a major competitor. I understand that there is a way of identifying the factories from the production codes used in Hornby's packaging. Recovering tooling from a supplier is always an issue and is not unique to China.

Hornby factory topic here indicating at least 8 sources:-

https://www.rmweb.co.uk/community/index.php?/topic/92424-hornbys-new-factories-whos-doing-what/page/4/