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Greatest Hits: Toy Trains
Investment On Rails: An article in the New York Times suggests that the Lionel over-and-under set - a notoriously unpopular 1960 offering featuring O-gauge trains running on trestles above a matching HO train set - may now be worth $100,000. A popular price guide from 12 years ago lists a value of $9,500 for the same set. That's a pretty fantastic rate of return - far above any U.S. stock index. (hat tip - Kris Sundberg, posted 6/10/05)
At The Movies: 'The Polar Express' cost $170 million to produce and $125 million for marketing, and characterized its late 2004 opening weekend as "significantly below industry expectations." The movie grossed $23.5 million in its first weekend, well behind the $51 million notched by 'The Incredibles' in its second weekend. $295 million for a train flick!! And my wife thinks I spend a lot of money on my O-gauge trains!
Derailed: Toy train maker Lionel filed for bankruptcy (again) in late 2004 because it couldn't pay a $40.8 million judgment after a court found it guilty of obtaining stolen drawings and plans from the subcontractor of competitor, MTH Electric Trains. The judge also ordered Lionel to stop selling 20 different products. Lionel listed $55 million in debts, including $30 million to what appears to be a South Korean subcontractor, and assets of $42 million. "Lionel's own misconduct in stealing a competitor's trade secrets has led to its downfall," said a lawyer for MTH. "Good businessmen do not operate the way Lionel did." Mike Wolf, owner of MTH, said his company had been hurt badly by the Lionel piracy, leading the company to cut the jobs of more than half of its staff over the past four years. MTH's revenue declined from $60 million to $30 million.
 Otto Vondrak of Railroad.net writes, "Apparently this bankruptcy is only one issue affecting (Lionel) right now. Hoping to cash in on the publicity connected with the new Warner Bros. animated movie The Polar Express, Lionel is releasing a set based on the trains illustrated in the movie. While pre-sale response has been terrific, there are now doubts as to whether Lionel can meet production demands and have sets delivered in time for the holidays. What's more, many orders are being turned away because it is feared demand cannot be met. Lionel is missing out on a huge opportunity to capitalize on nostalgia and reintroduce a generation of young people to the hobby of model trains."
I'm not an expert on the toy train market but I find it hard to believe that stolen drawings alone could cause such a precipitous drop in sales for MTH. Or any substantial sales increase for Lionel. From various visits to hobby shops, my impression is that MTH outsells Lionel. And MTH has expanded its line even more in its just-issued 2005 catalog. MTH is entering the HO train market as well and will begin offering product by Spring 2005.
Maybe the sales drop is because the entire O-gauge train market is collapsing. Interest in toy trains dwindled in the 1970s but picked up again when many baby boomers began collecting train sets again as deep-pocketed adults during the 1980s. "A lot of our business is baby boom men basically rekindling their memories. That could be a problem, as far as those guys going away," said Andy Edelman, vice president for marketing at MTH Electric Trains. As far as I can tell, toy train manufacturers have failed to draw post-boomer adults into the hobby. Maybe now that pre-boomers and boomers are getting older and downsizing, they are buying fewer trains. Or have already purchased everything they want.
This same phenomenon happened in the collectible model car market. In the 1980s and early 1990s, small companies were producing limited-edition, expensive models of automobiles in 1:43 scale. Described as "Hummels for guys," models were mostly of cars from 1935-1965. Brooklin, Western Models, SMTS and Mini-Marque - all based in England - dominated the market. Later, Franklin Mint and Matchbox got in the game, adding expensive little models to their line. Then the market got saturated - people had bought every model they wanted and their display cases were full. Matchbox Collectibles disappeared, Franklin Mint downsized and many of the smaller producers either closed or became shadows of their former selves. A large number of retailers that sold such models shuttered their premises. (Ironically, Brooklin's founder, John Hall, considered by some to be the 'father' of the collectible model car business, started his venture in the late 1970s to make some nice-looking vehicles suitable for his friends' Lionel train layouts.)
I like model trains and am partial to MTH. I own several of their products and have found them to be very well-made. MTH is disliked by some Lionel collectors because of its aggressive marketing and legal tactics. And owner Mike Wolf is very outspoken. But MTH is widely credited with bringing innovations into a hobby that had changed very little since the 1950s. The company also introduced a high-quality budget line, RailKing, forcing competitors to lower prices. Never a mere knock-off house, MTH produced items not done by others including the Aerotrain, PCC streamlined trolley cars, New York subway/elevated trains and, coming in 2005, a replica of the Leland-Detroit monorail set of the 1930s. I wish MTH well and hope that the toy train industry survives and recovers.
Money Train: Union Pacific has sued model train manufacturers in an attempt to collect royalties for every railroad name in its portfolio, including many long-gone roadnames, like the Denver & Rio Grande and the Missouri-Kansas-Texas (Katy Line). UP has already filed suit against Lionel (O-gauge) and Athern (HO-gauge), causing much ill will toward Union Pacific from train hobbyists. UP admits that the royalty payments will not cover UP's costs of administration and enforcement. This stupid move is further proof that there are too many corporate lawyers with not enough to do.
'Playing With Trains: A Passion Beyond Scale' is a book by Sam Posey. My friend and fellow car/train nut Ray from Pennsylvania sent me a copy. I wanted to like it. The title is great and Sam Posey is a legendary car guy - a former Indianapolis and Grand Prix driver turned Emmy-winning ABC sportscaster. He likes trains. And he's about my age. The book is about his love of model trains, beginning with the Lionel sets he had as a child and culminating in his 16-year task of recreating the Colorado Midland Railway in HO scale. Posey estimates that he spent 6,000 hours building the layout. This does not include the professionals he engaged to help build his dream.
The first half of the book is about the layout itself. The second half includes visits to other modeler's layouts, a horrible train trip to Florida on Amtrak and conversations with a train wholesaler and a magazine publisher. While Posey is a good writer and clearly conveys his love of model trains, I found the second half far less engaging than the first part of the book. It's almost as though his editor said, "Sam, you need more pages." I also found his initial quest to get information about HO trains to be somewhat naive and lame, especially for a worldly businessman. But, for me, the biggest problem with the book is that there are no photos of trains or layouts. In this case, each picture would be truly worth a thousand words.
I have a set of six videos from TM Video featuring O-gauge model layouts. Each layout featured included an interview with the modeler in which he described his goals, dreams and techniques in model railroading. I found these most interesting and helpful. I got many ideas for my own layout which I built in 2000. Other firms produce videos for other scales, including HO. To me, such videos are a thousand times more useful and entertaining than this book. Sorry, Sam.
A Cradle To Rock: As a youngster, I enjoyed playing with Lionel trains during the Christmas holidays. My trains ran on a train 'platform' built by my dad. In early post-WWII Philadelphia, it was common for neighborhood dads to compete with one another to build the largest, or most spectacular model train layout for their sons to enjoy. These layouts had landscaping, mountains, tunnels, buildings and operating accessories such as crossing gates, coal car dumpers and the like
As a college student, I spent part of Christmas break one year helping to construct a large, Lionel layout in a friend's basement. Over the years, I built several layouts first for my younger brother, later for my children.
In 2000, I put together a large, three-level train layout for use at Christmastime because my grandson is a train fan. The layout is on casters and is moved from garage storage into the living room using ramps. Once in place, it must be rotated 90 degrees. Since the layout weighs several hundred pounds, this is not an easy task. (In 2003, I didn't put it up because of a back injury.) In the summer of 2004, I designed a cradle consisting of two 'rockers' (fabricated from 1/4-inch thick steel plate) connected with wood cross braces. In early November, we brought the train platform inside and used the new cradle to rotate it. It worked spectacularly and we are now out of the weightlifting business.
HO-Scale Birth Control: Marklin, a 145-year-old German maker of model trains, is packing a condom alongside a blue, HO-scale freight car emblazoned with the name of Blausiegel, a German condom maker. The model boxcar and condom, which retail for $35, are packaged in a sleek, brushed-metal container the size of a cigar box. The packaging offers no instructions on placing the railroad car on a track but does have illustrated instructions on using the condom. Important Disclaimer: There are no condoms or condom ads on my train layout.
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