Chinese Manufacturer Closes: Update

An update on the Chinese factory closing: One report indicates that one of the companies caught in the closing is Athearn. If that’s true, it could mean delays as that company seeks to find a new source for models—not to mention trying to get its hands on products that are already made, but not shipped out of the now-closed factory.

Closure to bring production back home?

One common thread on the forums where this closure is being discussed is the hope that rising costs in China will prompt model railroad manufacturers to bring manufacturing back to North America.

On the Canadian Model Trains forum on Yahoo!, Rapido Trains founder and president Jason Shron discounts that notion. According to Jason, it will never be economical for economical for manufacturers to bring production back home.

“For tooling and injection, the costs are not that different,” he says. “The issue is assembly and decorating. To do this here will increase the price by a factor of two or three. Who is willing to pay $100 per freight car so it has a ‘Made in Canada’ label?”

Return of kits?

Another common thread is that maybe this will herald the end of manufacturers making mostly ready-to-run in China, and a return to kits.

Says Jason: “If people want kits, then manufacturers will supply them. If I thought I could cover my costs, pay my overheads, and have 15% left over for profit by making kits, then I would make them tomorrow.”

But, he goes on to say, “here are some cold, hard numbers. Our new meat reefer has sold very well. We have offered a fully undecorated kit, an undecorated but assembled car, and a painted and assembled but unlettered version that will require one evening of decal application—an easy job.

“The combined sales of all three of those kit or kit-type items equal EIGHT PERCENT of our total sales of meat reefers.”

If modelers want to keep retail prices really down, the only option is an undecorated kit, he says. “Basically inject the parts, stick them in a box, and send them to customers. But not many people want that.”

Adds Bill Schneider, formerly of Branchline Trains, and now on staff at Rapido: “The issue of kits vs. RTR comes up regularly on numerous lists and always seems to start a heated debate. [But] in today's market rolling stock kits just don't sell enough to make them worthwhile producing in large numbers, and certainly would not survive as a stand-alone project.

"The demand from the hobby market (shops and consumers) for highly detailed kits that take more than three minutes to assemble is just not there. If we (Rapido) had to rely on kit sales without an RTR option in today's market then I think that I would quickly be out looking for work!”