Interesting Concept from Rapido.. (300 vs 750)

[learmoia]

Taken from the Confederation set listing:

"Here's the caveat: We need orders for 300 trains in order to produce this. As an added encouragement, if we get orders for 750 trains or more we will tool up 100% accurate CP 2200-series coaches so we won't have to use the similar CN coaches. "

Order 300 Foobie sets (1800 cars?) and we'll foobie the release.. Order 750 sets (4500 cars) and we'll do the release foobie free  (tool the correct car)

I'd be curious if they hit the 4500 car mark.. (also gives you an idea how many cars it takes to justify tooling in HO at Rapido's quality/price point..) (About $120,000 (399.95 RetailX750X40%.. Which I'll bet is break even.. )

Cool Concept..

~Ian

[ljudice]

I liked this hobby more when new things came out regularly and I was excited to see and buy them.

Now it's beginning to sound more like an international futures option day trading exercise.

[Puddington]

The CPR 2200 series car is a hot button topic in HO scale passenger circles. It was "iconic" in Canada, built first in the late 40's with other "semi streamlined" cars (The Grove series sleepers most famous) and they ran with CP until the late 60's. They then went to a few secondary owners and most ended up being used and scrapped in Mexico. Today some can be found on the Royal Hudson consist. Their "Bowen" semi streamlined look is derived from UK cars of the era.

The problem with these cars is; they don't look like anything else but a 2200 series coach. The CPR only had two significant liveries, maroon and gold and silver and a maroon stripe (to match the Budd Canadian cars) A few got the CP Rail red stripe. Secondary users are few and far between; the Algoma Central, the aforementioned BCR Royal Hudson cars and a couple of US short lines, plus the Mexico users. Not exactly a treasure trove of paint schemes to run.

The fact of the matter is that every time we do the math, the project as a stand alone is a loser. The costs vs sales don't make sense.

Then there's the Confederation Train. The 2200's were used on that train (albeit with blanked windows) and were quite distinctive to those who are real Confederation buffs. If, and this is where the "deal" comes in, we can get enough interest in the Confederation Train we can amoritize the tooling costs for the 2200 into that project, add on sales of the regular in service paint schemes and make the project a financially viable one... it's just that simple.

Jason is, if nothing else, sometime brutally honest about our company. Instead of saying nothing about the 2200's; instead of just saying "no" he's "throwing down the gantlet" (so to speak) and giving modellers a chance to get the 2200's they want. Some have seen this as unfair; one or two people have commented that they feel we are using one project (an expensive one) to "force" those who want the 2200's to spend money. I am not sure how we can "force" anyone to do anything... we're making an offer; open and honestly.... and we'll see what happens.

So; that's the story about the 2200's and the Confederation Train..... we'll know by early October what we can do.

[Rossford Yard]

Now it's beginning to sound more like an international futures option day trading exercise.

Yeah, sort of.  On the other hand, I see calls for "mfg. transparency" on other threads, and you can't get more transparent than that!

It does seem as if they are putting some kind of "onus" on us to order that we really never have seen before to quite this degree. Taking into consideration that it is a veeeerrrrrry specific tooling they are considering making for a very specific sub set of modelers, it seems reasonable. Given most of here do jump at any new product that fits our era, road, etc., its hard to see complaining about telling the mfg that we are going to buy it in advance, when its almost a foregone conclusion! (yes I understand it is hard financially to commit to $400 or more at a very specific time, which may fluctuate with delivery schedules, but still....)

I know this is kind of a rerun of several other posts I have made over the years, but I sure see the side of the mfgs, given the small volume of product, the risk they take, etc.  It all helps get us what we seem to demand - ever greater prototypical fidelity in a shrinking market, which has to be hard on them. 

It would seem to me that the extra $56-63K (350 setsx$400x40-45%wholesale) would be the approximate cost of all new tooling that must be covered in one run, since I doubt there would be a lot of interest (at least for 5-10 years) for a second one.  Whereas the $48-54K for 300 sets, of old tooling, would cover running the second set from existing molds, paint, boxing, ads, etc.  I guess that sounds right that tooling is just over half the cost of a new passenger car (probably applicable to any rolling stock, at least fairly close)

Either way, its numbers like these that generate sympathy for the mfgs in me, not scorn.  I mean, of that $100-120K wholesale cost, what do you think profit is?  $10-24K at most? That sort of volume seems pretty low for anything other than a small, family owned business. 

For fun, I transferred those general numbers to Atlas.  Going by their catalog, they will have about 8 new loco releases this year and about 30 rolling stock releases, in HO.  If they average 6-7 paint schemes each, and the 300 unit minimum orders, that translates to 15K locos @ $150 average retail and about 60,000 pieces of rolling stock @ $25 retail average.  At 40%, they gross about $1.5M, with perhaps $150K profit.  Double or triple that for O and N sales combined, plus track, etc.  Still not a big company by any means, and they are the biggest fish in the MR lake!

Of course, I didn't delve into the details of how much is Trainman, Master Line, new molds vs. old, etc. etc. etc. And, certainly, we hope that more general interest models they make (GP units, etc.) garner much more than the 300 unit minimum it takes to make a run.  But, they may also have some sales clunkers to balance off the home runs.  My numbers are probably off, given the assumptions, but I know a lot of $3-10M companies that have far less costs (as consultants, or whatever) and product, risk, etc.

Overall, MRR looks like a pretty average business to me, and I am more than sure that anyone in it does it to make a modest living doing something they love and for us like minded modelers.  If pre-ordering very specific items makes sense for them, it makes sense for me!

[Snark45]

I liked this hobby more when new things came out regularly and I was excited to see and buy them.

Now it's beginning to sound more like an international futures option day trading exercise.

I concur.
At present, I’m the proud owner of >150 locomotives, articulated trainsets and railcars and over 1000 freightcars. I acquired these items not because of an overwhelming interest in the model industry, but because I like having a variety of toys with which to populate my little fantasy world. Frankly, endless speculation on business operations is part of a world I left behind when I retired and it bores me. The reason I became a modeler in the first place was to escape from that world.

I like to think that the folks doing the manufacturing are as adept & as bright as the rest of us. If they’re not doing what seems to be an obvious thing, it’s likely they’re being prevented from doing so by market or supply-chain realities, not because they are somehow oblivious fools.

Suggestions for future product to a manufacturer you respect are a good idea, but it’s unrealistic to assume that your special interests can or should be accommodated. As an individual, the best way to ensure future product, I would think, is to buy what you like, avoid what you don’t and patronize manufacturers who can tell the difference. This produces what is called market fluidity and Ebay has built an empire on it.

I would suggest we form another discussion category called “Sure-fire Speculation for Success in the Hobby Business” or some such so that those of us who are escapist relaxation freaks and not frustrated business groupies can avoid that category and get on with our fun.

Respectfully, Harry

[Puddington]

With regard to "success in the model train business" the adage goes like this...."How do you end up with a small fortune in the model train business?..... Start with a large fortune..."

[sirenwerks]

I'm no CP modeler but if the car below is the one in question, I'd be up for a trio or more:



But I would like to add that, given this car is a) unique enough not to be passed off with an OTM product and b) one that might not/probably won't meet manufacturer's profit desires, might it not be one that is better suited for release via the likes of Shapeways?

[ljudice]

[Rossford Yard]

....... might it not be one that is better suited for release via the likes of Shapeways?

Sorry to wonder about the business side for those it offends, but this is a good question.

20 years ago, the big guys worked with little guys, like Bev Bel (more in HO, of course) to get reasonably priced custom painted models, which we loved.  It seems MRR got big enough for a while to push many of the little guys out, and reduce cooperation, but in the new 3D printing age, and perhaps more fidelity required in a smaller market, maybe its time for that sort of thing to make a comeback?

Now, I wonder if the same principle could apply to say, using a Kato, Walthers, or IM) more or less standard 89' passenger car frame, so a shell producer on shapeways could add more appropriate and prototypical shells for specific trains?  The bigs could probably tool several hundred more frames when they run their passenger cars for just a few pennies each, and increase their sales volume of each frame mold.  And, some smaller company would take the risk of a new model type they might never produce.

Of course, they would have to get agreements as to what shells the small mfg would produce now and in the future.

[Puddington]

(CPR Passenger fanatic comment - those cars in that photo are the precurssors to the 2200's they are 2100's...like to get those too....)

The 2200's are done in N scale as a resin kit by Geoff Gooderham and have been been offered as an HO kit in the past.



Here's the rub; not everyone (heck; a small percentage IMHO) is a "modeller" that is a "model railroader". we see it there on TRW - guys who have little or no interest in scratching or bashing - they want RTR and that's their comfort zone. Nothing wrong with that whatsoever - it's a big tent; room for all.

Thus we get back to these "marginal" prototypes; not enough variety and market appeal to be a sure winner in RTR; enough interest and buzz for people to believe it should be made....... there are lots of prototypes out there in this category; heck the FL9 is one but some crazy group of rail obsessed nutbars are taking a highly detailed RTR stab at that.... crazy man, crazy.........

[ljudice]

Just to be clear, it's very interesting learning about the business end of the hobby...

[Snark45]

Sorry

No more rants, I promise

Harry

[thomasjmdavis]

Note to Puddington,

Personally, I would do that N scale single window coach in your byline first.  But then, I am not an CP modeler working in HO.

Seriously, though, if a car can be successfully tooled up when all you figure to sell are numbers in the hundreds or low thousands, that is a pretty responsive manufacturing/supply chain you have.

[jnevis]

Just to be clear, it's very interesting learning about the business end of the hobby...

+1
I don't have a dog in this fight, no layout to speak of and prefer more modern stuff out West anyway, but the ins and outs of production is interesting if nothing else for the background history that comes with threads like these.  Who had what for prototypes and why it was decided on to be built as a model, with some of the compromises that are taken.  It makes the "trade-space" discussions I get stuck with at work seem easy by comparison, and we're dealing in $millions per unit and quantities in the 10s.

[learmoia]

I think the DME had one or two of these in their business train..

I'll see if I can dig up pictures.

The trucks are definitely the most unique part of this car.

~Ian