Walthers buys Life-Like

And how does it affect LL Canada? (Which seems to be a somewhat-separate entity, though I'm unclear on the exact connection). In N-scale, LL is an important source for Canadian RRs.

-- Kizhe

Hobbycraft has exclusive rights to the LifeLike brand in Canada, which means that it's the exclusive importer of LifeLike products into Canada, both US and Canadian prototype. It also contracts for production of models of Canadian protoypes under the LifeLike brand. BTW, the importing is direct, not via the US. The pricing of Canadian roadnames reflects the small production runs, which are now usually 88 or 144 of each roadnumber, and often less. Eg, only 50 sets of the CN newsprint cars with graffiti were made. They were sold out at Hobbycraft almost as soon as they arrived.

HTH

According to what I hear, that will happen on 15 August. Froggy,

Who are the other big distributors of Life-Like?

Well if Horizon won't sell Athearn to Walthers you can bet Walthers won't sell LL to Horizon.

And we all know who are going to be the losers in THAT pissing match!

fl@liner

No, I don't think we all do. Why don't you tell us? Froggy,

Us, the consumers. Fewer choices.When a manufacturer is its own distributor to retail outlets, there are fewer reasons to discount the wholesale price. And when the manufacturer is also its own retailer (at least in part), it has the option of undercutting the other retailers (not so bad for us, bad for mom-and-pop), or undersupplying the retailers (bad for us). In either case, if the local or internet retailers are forced out of business, or at least into not carrying the manufacturers product lines, we consumers are left with a single supplier who can sell for whatever they wish.

So far, neither Horizon nor Walters has shown a particular propensity to become deep discounters. I can still get products more cheaply from internet trains, discount trains (online), or from The Train Shop (in Santa Clara, CA) at better prices than directly from H or W.

Ed

in article snipped-for-privacy@news.east.earthlink.net, Froggy @ thepond..com at Froggy @ thepond..com wrote on 7/17/05 7:52 AM:

This is true, but it really doesn't answer Fl@tl>>>

Now, I don't necessarily think that the consumer will be a loser, except that we might have to pay higher prices for our toys. Maybe, maybe not. Little guys can't compete with each other in the market place by using price. They don't have enough margin. Witness that no brass importer has ever got into a price war with another importer at equal levels of quality. Yeah, you could get brass for less, but it was also a good deal less brass too; meaning lower quality, less detailing etc. It was the same in the plastic market too. Now we have two "big boys" running their respective shows who DO have the capability of offering top-notch product AND of competing with each other. Add to that Bowser and Atlas, who have both shown that they are capable of playing well in that field, and the consumer actually has a greater opportunity (statistically anyway) to get what he wants; more so now than back in the day when Athearn was the "Cock-o-the-walk", and you ran Athearn or you didn't run. This competition at this higher level may mean that we will have greater opportunity to get engines and cars that previously could only be had at the whim of a brass importer and at outrageous prices.

Now, let's take a moment to look at prices. Back in the day, when an Athearn locomotive cost US$10, that represented a day's wages for me. Today, I can get a better model for a lot less than a day's wages. Oh sure, I'd like to be able to buy my toys for $10, but in order to do that I'd have to go back to making $10 - 12 a day. I'll pass on that offer. So then, in the end, things don't really change all that much, and they aren't so bad as we try to make them seem sometimes. Do you want to pay a bit more for what you want, or not have any opportunity at all to get what you want?

How "bout it?

Froggy,

I'm not in particular disagreement with you, Froggy. Inflation adjusted, prices are better than ever for mass market stuff; and the semi-mass market stuff (genesys, Proto2K, etc.) are better products than you could even buy

20 years ago without going brass (which doesn't usually run all that well, anyway!).

My point is than when manufacturers become their own distributors, it is possible that by cutting out the middleman for the retailer (online or local), prices might go down and all the retailers will buy at the same wholesale price; it it is equally likely that the manufacturers may decide that they want that end use price for themselves rather than just the wholesale price, and cut off retailers, or charge them higher wholesale prices. Time will tell.

All that said, I despise the distributor model almost everywhere. Walmart (in part) gets to charge lower prices by being their own wholesaler and buying directly from manufacturers, and using their volume buying to force discounts; they then run their own just-in-time distribution scheme.

For hobby shops, that middle-man-less scheme doesn't work because it is too costly for manufacturers, so they just sell to a few distributors who then deal with smaller retailers. With us down to one distributor (Horizon or Walther at it may be) for each manufacturer, the system is ripe for gaming if so desired.

We'll see. Fortunately, none of this stuff is essential goods like electricity. But if the lower end pricing goes up, it may keep newcomers from entering the hobby. I'm already well stocked, so I'm not rushing out to be 50 new boxcars.

Ed

in article snipped-for-privacy@news.east.earthlink.net, Froggy @ thepond..com at Froggy @ thepond..com wrote on 7/17/05 1:07 PM:

Froggy @ the pond..com wrote: [...] we will have greater opportunity to get engines and cars

Most models were offered after some careful polling of potential customers, and a pretty firm market for at about 80% or so of the projected production run. That's still the case. A brass importer wants to have presold a fair number of models before they'll commit to making them, and many production runs these days are on the order of a hundred or so units, sometimes considerably fewer. This is really a form of custom building.

If you think brass was (and is?) offered at "outrageous prices", you're forgetting the economics of mostly hand-built production in small batches. The alternative would mean tooling for a plastic kit, and the mfr would have to sell around 100,000 units to recoup his investment. IOW, he'd have to produce a model for which there was strong demand, and produce it year after year. Which is exactly what Irv Athearn did, and why he didn't bring out a new model every six months. (He made a few mistakes, though: do you recall the Pacific, offered with rubber band drive? Gear drive would have meant additional tooling, which would have raised the cost. IMO, Irv goofed: we were _ready_ for a good quality plastic + die cast kit with a reliable Athearn drive.)

The economics of brass locos (each model affordable by a few hundred or so modellers) worked as long as wages in Japan were low, then when those rose to comfortable levels, production was moved to Korea. Now that CAD/CAM has made tool and die making much, much cheaper, it's economical to produce relatively small runs of plastic locos, on the order of ten thousand or less. But note: As China corners the market on these products, its potential competitors in Europe and America are going bankrupt. This means that the machine tools and more importantly the skills to use them are being lost. As Chinese wages start to rise, you'll see the prices of plastic rise, too. Oops, don't look now, but that's already happening.

Agreed, it's a point I've made many times. In real money (the money I earn, not the money the economists gabble about with their understated inflation rates), our toys are cheaper than they were when I bought my first brass loco (2nd hand, and I still have it.) When you consider the improvement in quality, even of train-set quality rolling stock, they are a real bargain.

BTW, brass has turned out to be a bad investment, selling for maybe 2 to

5 times its original price, whereas it should be selling 10 to 15 times that price just to maintain its value (keep pace with inflation.)

Well, according to what I've subsequently heard, Froggy is right. August 15th is the date.

Some more thoughts on this:

Similarity to the Athearn/Horizon deal: Well, it is a major distributor buying out a major manufacturer. But Walthers is already the biggest model RR distributor, while Horizon was a minor player. (Yes, I know they are bigger overall than Walthers. But they still only distribute a relatively small number of RR lines. Prior to Athearn/MDC, there was no real reason for a trains-only shop to buy from Horizon.)

The immediate effect will be much smaller, since most shops carrying trains will already have a Walthers account. You won't have a number of shops dropping the line or getting shut out, as happened with Athearn/MDC.

Wholesale price: Who's the low-cost distributor of Life-Like? Surprise, surprise, it's Walthers. (At least for 5-star dealers.) I don't expect this to change.

Retail price: Some of the larger dealers are able to buy Life-Like at distributor prices. This will probably stop. In the short term, expect some really low prices, as distributors dump Life-Like. In the long term, most of the really deep discount LL prices will probably go away. Expect street price to settle around 20% to 30% off list.

Availability: This should help availability on regular production-run items some, since inventory levels will be easier to control. But on limited-run items, your dealer will only have one place to go, and once they're gone, that's it.

Who's next: Who knows? But not Bachmann. I doubt anyone in the business has the money to buy them. Atlas is a good bet if someone has the money, and rumor has it Woodland Scenics. Bowser seems unlikely, the current management seems interested in running the business. Kato seems really unlikely, but Intermountain seems like a good candidate, too.

Peter King in NY

They're not that big of a player in the model railroad market, but the owner of Con-Cor is planning to retire in about two years. So he would probably be very willing to sell.

snipped-for-privacy@prodigy.net wrote in news:1121687568.736287.307400 @o13g2000cwo.googlegroups.com:

Kato has its own problems - in its home market (Japan) it's being relegated to doing 'me-too' releases, following on the announcements of the other manufacturers ... maybe they would do better to concentrate on the US market :)

I think Con-Cor and IHC are in the same situation. Both have long-time owners who must be close to retirement. Both pretty much rely on others for development and manufacturing. And both produce a lot of non-prototype stuff that's maginal to poor. The question is will they simply dry up and blow away before they're purchased?

Con-Cor does have some desirable stuff, but their vehicles are already shared with Herpa and Promotex. Promotex could fill the void if Con-Cor exits. Their buildings have been swapped around between various manufacturers for years. I can't imagine anyone would want their engines or cars. (Except the Goose, maybe.)

I agree they probably will be for sale eventually. Sthe hard part will be finding a buyer.

Peter King in NY

Not at all. The implication being that the hobbyist and the LHS are going to feel the brunt in availability and lack of discounting in the short term. Over the long haul, the whole hobby will probably suffer when the biggies price me and others out of the hobby. Of course, all of this could drive the hobby into an exclusively"cottage industry" where everything you get for the layout has to be ordered from the manufacturer. Just think of all the more time we can use as an excuse for not working on the layout!

fl@liner

So we all go back to this hobby's roots - scratchbuilding what we want/need. Buying RTR is just an excuse for laziness.

Rick, I don't know about you, but I can do a credible job on a plastic kit, but wood? ... disaster! I'm not asking for stone knives but I don't want to shop for a loco or boxcar like I have to do for my next new car.

If I'm given the choice of kit/rtr, I'll always go with the kit. It saves me a couple of bucks, and I get the pride of a job well-done (however small that may be).

fl@liner