I was curious about how much money/profit model railroad companies like Bachmann,Atlas,Athearn,Walters,etc make and how many they employ.Does anyone have any ballpark figures on this…thank you in advance.
Unless they are publicly traded companies listed on a stock exchange their records are private.
The ones you listed imo are private companies.
Bob
I’ll bet there’s a whole lot less profit than you’d think, considering some of the excessive expectations that some customers often express on the internet. I believe all 4 you name are privately held, so there isn’t necessarily the sort of public reporting that publicly-held companies are required to make.Most other companies are smaller, so even less likely to have public reports available.
Atlas and Athearn are relatively small, as they contract out production. Wathers is a full-line distributor, so has warehouse staff and others that the other companies don’t support, even though much of its house brand items are built under contract. Bachmann USA is one small part of the Kader conglomerate – few staff in the US, but it’s part of a much larger global conglomerate. Most likely, it’s the largest in terms of employment, but I’m uncertain whether they do all their own manufacturing or contract out part of it.
Most model railroad manufacturers are, as noted above, private companies, and indeed some are not even corporations. From time to time info becomes known about private companies and their revenues, assets, and income, such as if they are offering debt instruments. Sometimes investment firms that fund acquisitions publish data from which size can be gleaned. I have not seen any data but I suspect Walthers paid a pretty penny for LifeLike. I have never seen an estimate as to a dollar amount.
A Wikipedia entry about MTH (Mike’s Train House as we used to know it) talks about annual revenues in the $30 to $40 million range. I suspect that figure is known mainly due to the litigation (and the discovery that goes along with litigation) that MTH has either commenced or encountered. Litigation makes all manner of private date public.
Dave Nelson
Hi Willy6,
As the other have mentioned, private companies are not required (an usually don’t) reveal their financial info. However, Bachmann is actually part of a larger company that is publicly traded. Kader Holdings Ltd. is a Hong Kong based company that manufacturers all sorts of toys. Kader’s 2011 annual investor report is available HERE. It’s pretty dry reading, but there is some interesting info if you dig into the details. The overall company posted a loss of almost $30 million US for 2011 on $162 million US in sales. That was a tough result following a much better 2010 with an $11 million US profit on $200 million in sales. Most of the disappointing 2011 results were due to some major paper losses on the real estate the company owns in Hong Kong and mainland China. More worrisome was the 20% drop in overall revenue and a roughly 10% increase in labor costs. In the body of the report it is mentioned that the model train segment was stronger than toys in general, but no specific numbers are given.
The one exception to the privacy of private companies is when they enter bankruptcy protection. Two of the more famous train manufacturers have gone through bankruptcy in the last decade. Lionel entered bankruptcy in 2004 after they and co-defendant Korea Brass lost their intellectual property theft case to MTH. Lionel operated in bankruptcy for three years until the case was finally settled. During that time Lionel was required to file financial reports with the US Bankruptcy Court in New York. As I recall, Lionel’s profits ranged from $2 million down to a $750,000 loss on 65 to 70 million dollars in sales. The other major train name to go through bankruptcy is Marklin. Here’s a LINK to a summary article abo
Dave,
Great summary, I’d forgotten that Kader was public, as I now remember the discussion it sparked at the time. Must be getting old or something…[*-)]
Yes, the business is as much a labor of love as it is for profit. Look through old MRs and you notice the number of outfits that have gone out like a bad lightbulb, but which obviously had some capital invested to get as far as they did. Most people in it could take their funds and invest them elsewhere for a higher return. The best way to make a small fortune in this business is to start with a large fortune is what I’ve heard a number of times. I’ve never been that fortunate myself, but if I did, I wouldn’t expect a business like this to make me rich, otherwise I’d probably be disappointed.
But I’d sure have fun doing it.[:D]
But aren’t their D&B ratings publicly accessible? That might give you a better clue as to financial health, as a collateral bit of information. Generally, if the financial prospects of the model railroad hobby were more enticing, there might be more new players; but it appears otherwise, given consolidations, buyouts and such. Cedarwoodron
Does it matter?
I would wish that all of the companies would make major dollar profits. Profits, after all are the only reason for running a company. With profits you can expand your business, hire more employees, expand your product line and attract more customers, and you can provide better service to your customers.
Without profits, your company disappears and leaves creditors holding the bag.
Are hobby prices too high? Well I do remember when Athearn Locomotives were $10.00 each. But of course in those days gasoline was also 31c / gallon, and Pepsi was 10c per can. You get what you pay for. Today’s models have much greater detail, which requires more exquisite tool making by more highly skilled tool makers. Even shipping and distribution is very expensive.
Beyond that your LHS must make money on the product. His mark up needs to be almost 100% on specialty items such as this. He had to earn his living from what you are willing to pay, he must pay rend, and invest in inventory. If he has 100 locomotives in stock then he is not earning interest on that money, and sees no income on his investment until he actually sells the locomotives.
You may complain of prices, but then you do not have to pay those prices. You can build all of your railroad from scratch.
ROAR
Typically a firm only seeks a D&B rating if they intend to open a line of credit or borrow money from other than the local bank, and a relative handful of model railroad firms are probably in that position. And the relevance of all of this to us, the normal modelers, is that like it or not the business world operates mostly on borrowed money and a bank or other lender is going to evaluate a given prospective borrower not just on the strength of its own financials, but on the perceived strength of the industry they are in. So when a Lionel or a Maerklin goes bankrupt that is taken into account when anyone in the industry, including MTH, attempts to borrow money or create a line of credit. it also affects the person who is attempting to start or acquire a hobby shop. It will also affect the interest rate they pay for borrowed moeny and than, in turn, affects the guy attempting to install a Kadee coupler or swap out the wheels in an Accurail truck.
Back in the early 1960s. the advent of slot cars (and the marketing behind those slot cars) created a lot of headlines along the lines of “model trains are dead and have been replaced by slot car racing” that created huge financial issues not just for toy trains but for scale model railroading which was not affected by slot cars one iota in terms of popularity. Not many guys were sitting there thinking “hmm should I buy this $20 Tyco slot car set, or a brass Big Boy?” but the banks didn’t dig deeply enough to know that.
Dave Nelson
BroadwayLion,I wasn’t complaining,I can afford my MR habit,I was just curious about the finacial status of the MR industry giants and also curious how well the major online retailers are doing like MB Klein,Caboose Hobbies,Trainworld,etc.
Well, you’re curious. We’ve discussed that the info isn’t generally available and why. We can speculate all day. If they’re still running ads and answering the phone, they must be doing OK enough.
Maybe if you have a more specific interest, that would be useful. You planning on investing in the industry? Buying up a going business? Looking to produce an item to sell to the industry? Looking to compete right off the bat with the big boys by starting your own outfit?
If we’re just speculating, it would be worth something more than a warm bucket of spit to at least have something to go on to figure out how to satisfy your curiosity.
Of course, if this was going to turn into another one of those threads about how MRR stuff is too expensive because some folks are making too much off the poor consumer, let’s just lock this thread up. Folks have pretty much beat that to death, thank you.
One of the first things investigators do when looking at drug dealers , tax evaders and such is to look at the house they live in, car they drive. The same applies to business leaders. It take’s very little work on the internet to find out a lot about people.
With Google earth you can find their house, see the cars in the driveway and with some simple checks get a good picture of what assets they hold. Look at the place of business on Google earth. The size and condition of the building, cars in the parking lot can give a good picture of the number of employees and so on.
Government websites at all levels have an incredible amount of info on people and business that is available by just a visit. Who owns a company, where it’s registered, assets held etc.
Now the owner of “Bobs locomotives” may have his fingers in many things other than MRR equipment, but that usually shows up pretty quickly once you start looking.
If you want to know how well someone is doing or their business is doing just look at their lifestyle.
Brent[C):-)]
Lion,
I know where you’re coming from, but I beg to differ when you say :
“Are hobby prices too high? Well I do remember when Athearn Locomotives were $10.00 each. But of course in those days gasoline was also 31c / gallon, and Pepsi was 10c per can. You get what you pay for.”
Your spot on when you get what you pay for in this hobby. But when it comes to commodities, its the same gallon of gas that has the same energy in it whether its 31c or $4.50. Only difference is inflation and demand.
Brent,
I would have to disagree that personal lifestyle is an indicator of actual wealth. It could be but often such a lifestyle is supported by a lot of debt. I do know what I am talking about based on 30 years experience as a credit manager. I have to investigate real and percieved wealth regularly and often it is the ones with the lavish lifestyle that are the most in debt.
I also have to investigate corporations and only a few provinces actually list the names of the shareholders when you do a corporate search which can’t be done on the web. You need an account with the various provincial jurisdcitions. We use an agency but only corporations can use their services and only if they are approved to do so.
CN Charlie