Atlas acquires Microtrains

[Ed Kapuscinski]

I understand the trepidation, I even understand the speculation, as this is a sea change in the N Scale hobby. What seems a bit outsized is the vitriol. Give these guys some time to get this worked out. They are extremely aware of how important this is.

None of us know all the background on this. All I can say is that there is more to the picture than you are aware of. Eric and Vicki wanted to retire, and there was no one in the family to pass it on to. MTL does not own the building they are in. I do not know why they didn't offer it to the employees, but my guess is they know intimately what their financial situation is and whether or not it would even be possible.  While I would have handled the employees differently (and believe me, I think about that in my business a LOT as I get older), we really don't know what the situation is/was between MTL and the sale and the Edwards family and the company.

One of the huge problems being Medford based was consistent access to assembly laborers. the expense of training someone who then decided to go work in fast food (true story) and not being able to find replacements is a huge impediment to operation, not to mention growth. Key people were in place for a long time, and I am told those keys are being offered positions with Atlas, not just for transition, but ongoing operations. Whether they take the positions (which do not require them to move to New Jersey) or not remains to be seen. Call it BS if you like, but the challenges of maintaining that factory were discussed and it proved to be more difficult than was practical given location, resources and real estate challenges. And moving the facility to another place would be at least a year with all of the attendant problems and no assurances of any better staffing opportunities. (In this I speak from experience) Yes, there will be some job loss, and personally I feel bad about that. I know everyone involved would prefer not, but this is 2025.  I do know that Atlas is doing everything possible to maintain the release pattern and the identity of MTL. There is a lot of product planning and logistics to do so, but they are working on it.

I have received a lot of emails about how this affects the NSE. As you know Paul Graf (CEO) and the Haedrich family (Owners) of Atlas have also been very supportive of the NSE. I expect that it will continue. Will it be the same level as the combined support of Atlas and MTL? Remains to be seen, but I sure like this situation better than MTL just shutting down.

THANK YOU for posting this.

[thomasjmdavis]

Well, I will hope that the information in @delamaize  post above is correct. 

Ed- I agree people should not 'lash out'.  But Atlas shot themselves in the foot with their 'corporate-ese' broadcast email yesterday.  It certainly made it sound like they were moving everything overseas.  If they had sent out the message Delamaize was quoting above, then people would have a better idea about what they intend.  They should send out a clarification, not just put it up on facebook.

Atlas is a good company, and they make a good product.  Their acquisition of MTL implies an intent to EXPAND their footprint in N scale, and give N scale a lot more attention.  We'll see. 

[jdcolombo]

@thomasjmdavis

Just a note: the statement Delamaize quoted said only that no MT tooling was being transferred to China; it does not rule out such tooling going overseas to some other factory that Atlas owns or partners with.  This doesn't bother me, but I seriously doubt any MT stuff is going to be produced in the US post-acquisition.  The engineering, product development, R&D, and management will all still be here, and I suspect a LOT of MTL workers will be offered positions in New Jersey or maybe even in a satellite office in Medford, but don't be shocked if the tooling ends up in Korea or one of the other not-China countries Atlas listed in that statement. 

John C. 

[basementcalling]

I am actually a bit encouraged by the gossip - I still haven't seen any official word or a post from someone who is in a position to know for certain - that the tooling is not going to China. Avoiding having a Chinese factory claim ownership of the MT molds has to be a positive goal. Perhaps one avenue of this acquisition by Atlas is to jumpstart a production facility outside of China out from under the Kader factory terms and conditions. If so, it might be step 1 in a long term plan to develop a facility that could grow to accommodate more Atlas production over time. In 2025 economics, keeping it in the US is fantasy, not reality.

I remain concerned about production volume of monthly releases being large enough for Atlas to afford or justify the shipping costs if they cannot make enough product to fill a container, but I have no personal knowledge of how that plays in reality. I'm just speculating that MT monthly run numbers - long a closely held secret - aren't as large as Atlas production run numbers on their pre reservation and multiple road names released on a car at the same time are. Seems logical, but I may be wrong.

For employees, no way to sugar coat it, the timing sucks. Why are these mergers and aquisition always seemingly done just before the holidays? George's post about Eric and Vicky wanting to retire but no one in the famly wanting to take over the lead sounds a bit like what happened to MB Klein a couple decades ago, and is a common family run business story. I for one am glad they found a way to preserve the brand they built instead of just calling it a wrap completely.

As for those folks saying Atlas isn't primarily an N scale company, you are not wrong, but off base. If we took a poll for the Mount Rushmore of N scale manufacturers, I'm pretty sure Atlas would be one of the top 4. They helped drive the major growth of N scale starting in the 80s with their partnership with Kato to make better running locomotive, and then continued and expanded that when they moved into Chinese factories. Long ago, Atlas or Kato made engines were THE only reliable way to go with N scale diesels. Have they fumbled a few footballs recently? Yes. The code 55 track rail spikes issue, and the turnout construction and availability problem were two self inflicted debacles, as is the misplaced ditch lights on the new GP60 run. Not every company would upgrade older mechanisms from their "classic" era locos to be DCC friendly, but they have.

Losing MT stinks from a comfort level. Dunno what I'll do now around the first and fifteenth of the month to replace surfing sites looking for who had the first post about new monthly releases or weathered offerings? Maybe I can listen to a railroad podcast instead?

[bbussey]

My only concern with that sentiment is that Atlas is not a primarily N scale company. Like many large companies (looking at you, Walthers), N scale is a side hustle for them with HO and O being where most of their market lies. Multi-scale manufacturers love to tell us how N scale is small potatoes compared to HO.

How does what MTL does "scale up" to how Atlas does business?

How does a completely different way of doing business (local manufacturing, near-realtime announcement to delivery in monthly releases) fit into Atlas' business model?

Therein is the source of our collective angst.

I don't see how that statement holds water.  Atlas is the most prolific manufacturer of N scale behind Micro-Trains and have been for half a century, and no other manufacturer did more to elevate the image of N scale over that time period than Atlas including Micro-Trains.  And if you include all product lines (motive power, rolling stock, track), Atlas is #1 by far.

[Dave V]

I don't see how that statement holds water.  Atlas is the most prolific manufacturer of N scale behind Micro-Trains and have been for half a century, and no other manufacturer did more to elevate the image of N scale over that time period than Atlas including Micro-Trains.  And if you include all product lines (motive power, rolling stock, track), Atlas is #1 by far.

This isn't me bashing Atlas. I'm grateful for all the awesomeness Atlas has brought to N. But we've all been burned to many times by other product line mergers to not have any concerns at all about a major buyout like this. I'm not ready to share in the unbridled enthusiasm just yet.

Referring to my statement you quoted, I still don't think I'm incorrect when I say their HO market is bigger than their N scale market though. Save for Kato, everyone's is.

I get it, you're in the industry and that means compared to your opinion, mine is worthless. That's fine. I'll shut up. Time will tell. But I do think it's probably quite fair to assume that any hopes I'd had of MTL resuming its HOn3 line have also completely evaporated. In general, though, history informs us that these buyouts lead to less choice, not more. History is often a very good teacher.

[bbussey]

And, frankly, I think we're all allowed to mourn the loss of an independent manufacturer with such a long, storied history that has been--in a very real sense--a foundation of N scale.

A foundation of N scale?  Kadee developed the magnetic knuckle coupler in 1969, for certain a signature milestone in the scale and it became prominent with the introduction of the Micro-Trains Line of freight cars in 1972.  But no one did more than Atlas in the 1960s and early 1970s to establish the foundation of N scale, primarily by being the largest manufacturer of N scale track in the world, by far, and Atlas revolutionized motive mower design in 1983 with the introduction of the RS-3.

People freaked out at the time when Micro-Trains was formed from Kadee when the owners split in the 1980s, yet that worked out.

[thomasjmdavis]

@thomasjmdavis

Just a note: the statement Delamaize quoted said only that no MT tooling was being transferred to China; it does not rule out such tooling going overseas to some other factory that Atlas owns or partners with.  This doesn't bother me, but I seriously doubt any MT stuff is going to be produced in the US post-acquisition.  The engineering, product development, R&D, and management will all still be here, and I suspect a LOT of MTL workers will be offered positions in New Jersey or maybe even in a satellite office in Medford, but don't be shocked if the tooling ends up in Korea or one of the other not-China countries Atlas listed in that statement. 

John C.

Thanks John.  You're right. I was reading too much into what I was reading.

[bbussey]

I am actually a bit encouraged by the gossip - I still haven't seen any official word or a post from someone who is in a position to know for certain - that the tooling is not going to China. Avoiding having a Chinese factory claim ownership of the MT molds has to be a positive goal. Perhaps one avenue of this acquisition by Atlas is to jumpstart a production facility outside of China out from under the Kader factory terms and conditions. If so, it might be step 1 in a long term plan to develop a facility that could grow to accommodate more Atlas production over time. In 2025 economics, keeping it in the US is fantasy, not reality.

Atlas posted a statement that the tooling is not going to China.

[Dave V]

A foundation of N scale?  Kadee developed the magnetic knuckle coupler in 1969, for certain a signature milestone in the scale and it became prominent with the introduction of the Micro-Trains Line of freight cars in 1972.  But no one did more than Atlas in the 1960s and early 1970s to establish the foundation of N scale, primarily by being the largest manufacturer of N scale track in the world, by far, and Atlas revolutionized motive mower design in 1983 with the introduction of the RS-3.

People freaked out at the time when Micro-Trains was formed from Kadee when the owners split in the 1980s, yet that worked out.

Granted, I'm conflating Kadee and MTL in this statement since the latter grew from the former.

You're coming after me like I hate Atlas or something, but that's not even close to the truth. I simply have real concerns based on how other product line buyouts have gone in this hobby.

[bbussey]

I get it, you're in the industry and that means compared to your opinion, mine is worthless. That's fine. I'll shut up. Time will tell. But I do think it's probably quite fair to assume that any hopes I'd had of MTL resuming its HOn3 line have also completely evaporated. In general, though, history informs us that these buyouts lead to less choice, not more. History is often a very good teacher.

Your opinion isn't worthless.  I just think you're making assumptions without having any insight of what the Atlas game plan is.  I think it's unfair to assume without evidence that the venture will either fail or render a lesser version of Micro-Trains than what existed yesterday.  I think it's valid to be wary, but that it is more prudent to wait and see how if plays out.  All the right things have been said in multiple Atlas and Micro-Trains press releases and social media posts.  Are they not owed the courtesy of us seeing the end result before judging whether or not it is a success or failure?

[learmoia]

Atlas posted a statement that the tooling is not going to China.

But it IS going overseas...


Here is the full statement from FB.

Atlas Model Railroad Company, Inc.
There’s been a lot of talk about Micro-Trains tooling being ‘shipped off to China,’ so let’s clear that up right away. While Micro-Trains has had some limited production in China in recent years — at some of the same factories Atlas uses — none of the U.S.–based tooling is being moved to China. That assumption just isn’t accurate.
Atlas has been around for over 100 years. The company was started by an immigrant from Czechoslovakia, and over the decades manufactured products in the U.S., Japan, South Korea, Austria, Germany, England, Italy, Yugoslavia, Brazil, and yes, China. The point is: Atlas has always used a global production mix, choosing partners who can meet the quality, tooling and cost requirements for each specific product — not relying on any one country.

Something that often gets overlooked is that Atlas has always been headquartered in New Jersey. That’s where administration, R&D, marketing, advertising, parts and repairs, customer service, and distribution all take place. Those are American jobs that stay right here. On top of that, Atlas regularly works with engineers, designers, and consultants from across the United States on product development, tooling, electronics, and problem-solving. A lot of U.S.-based expertise goes into every product line, including we hope, some MTL employees who are offered Atlas jobs, and decide to stay.

To be clear, no Micro-Trains molds or tooling are being sent to China. The core operations will remain firmly in the United States, and Atlas is actively looking to employ former Micro-Trains team members. Our goal is simple: preserve the Micro-Trains product line, support its skilled workforce, ensure product availability, and maintain the same high level of quality and fidelity that customers expect from Micro-Trains and Atlas

[bbussey]

Question:  How many former Fox Valley models have be reissued since the Scale-Trains acquisition?  None of the transition-era rolling stock.  I think only the Silverside gondola.  Why is no one upset about that?

Atlas has reissued a number of Walthers and Life-Life models to date, even though they had to retool parts for some of them.  I'm very happy to see the FAs again.  But the windshield tooling had to be replaced along with the mechanism being modified for DCC/Sound, and they are superior to the still-excellent Life-Life version of the model.

Regarding the BLMA etchings - yes there are contractors available to etch parts, but how many are going to pre-package them?  I love the quality of etched and laser-cut parts from PPD in the Kingdom, but the parts come in bulk on the master sprues.  Works great for me and for personal projects, but not for the mass market strategy that Atlas employs.

[busdriver]

I just got an email from Midwest Model RR that Atlas Model Railroad Company has acquired the assets of Micro-Trains Line Co.

I'm not sure how I feel about that.  I like both and the options provided.

Bryce

[bbussey]

But it IS going overseas...

That wasn't the argument.  The argument was that the tooling is going to China, which is untrue.  The initial press release stated the tooling was moving overseas.