The biggest, and arguably finest, European model railroad company, Roco, will tomorrow file for bankruptcy (see the German language news release over on the Atlas Forum). They cite a progressive decline in interest in model trains in Germany as the cause but it would seem this very decline stems from Roco’s spiraling MSRPs in recent years, which shut out many hobbyists. Sound familiar?
Which major American company will be the first to follow in Roco’s footsteps?
CNJ831
Just shows the companies with the best products aren’t necessarily the ones who thrive. Anyone who’s seen their LocMaus or other DCC controls knows what good DCC interfaces should look like
…Roco?
rising cost of the hobby?
bring back the kit lokie
oh man , that’s not good news . condolences to all the european prototype modelers out there [:(]
What does “file for bankruptcy” mean in Germany? As we’ve seen with a number of airlines in the US, it’s often used here to give a company in debt trouble a chance to recover without being torn apart by creditors.
Hopefully it won’t mean the same thing that it does here. The workers loose their pensions and benefits and the CEO gets a $50 millon golden parachute. I’m so sick of seeing our companies do that.
Hopefully they’ll be able to stay in bussiness.
But who will manufature Life-Like’s Heritage American steam line now?
[#ditto]
Aggro,
We steam fans are in trouble here. Those Roco drives were sweet…
i wish i could say this supprises me but it dosent. their stuff saw simply too expensive. £200 for a steam loco is too much. it dosent matter how detailed it is or how well it runs. even i cant justify spending £200 on a single loco.
i understand marklin are in trouble too. this dosent supprise me as marklin and roco are practically bed fellows anyway.
they didnt make the da***o china when they should have.
i understand this to be a reorganisational bancruptcy. marklin has just sold their newest and most high tech factory because it simply wasnt being used.
i predict this will be the start of a major overhaul of the industry in europe.
Fleishmann wont be far behind. again simply because even amoungst serious modellers there isnt much of a market for £200+ locos.
i dont think hornby are in a position for a takeover of roco as they are still dealing with lima and i dont think they have the capital.
Kader/bachmann might think about it but their might be some compitition issues with their lilliput range clashing with roco in the euro market.
Peter Morgan
UK
The Rivarossi Group went through similar financial maneuvers over the last four years
and now we are waiting for Hornby -pic re-productions.
lima’s difficulties were more to do with the massive manufacturing costs. roco was a very well run factory that relied very heavily on automation and should not have been subjected to the same financial conditions as lima.
Peter
the lima moulds are being sorted. it shouldnt be long now.,
Anytime a company cannot pay it’s people and make a profit doing something that we all enjoy in the hobby is a sad day.
Most European model train manufacturers are in trouble not becaus of ‘decline of interest’ but essentially because their production costs have gone up and so have their prices. A Roco or a Trix costs twice (maybe more) what you would pay for a Kato or Atlas. Hornby which took over a few companies will move their production to China where labor costs are cheaper. Atlas and others have also taken that road too to avoid out pricing their products.
Cliff
“Which major American company will be the first to follow in Roco’s footsteps?”
If we are lucky, it will be Botchmann!!!
[quote]
Originally posted by pedromorgan
i wish i could say this supprises me but it dosent. their stuff saw simply too expensive. £200 for a steam loco is too much. it dosent matter how detailed it is or how well it runs. even i cant justify spending £200 on a single loco.
i understand marklin are in trouble too. this dosent supprise me as marklin and roco are practically bed fellows anyway.
they didnt make the da***o china when they should have.
{/quote)
Peter - Something to appreciate is that in the States the list price of BLI, Tower 55, Precision, and other hightech steamers are already the equivalent sum of a Roco engine…and their detail level is no where near what Roco models offered! Roco highend stuff was truly plastic brass.
As to escaping to China for cost-cutting, I’ve got to say that I’ve yet to see one hobby manufacturer go overseas and as a result cut or even stabilize their prices. Every company from the States who has done this has introduced far, far more expensive models than they were offering previously. In fact, model pricing following these overseas moves has increased in the past decade more than it had in the previous 20-25 years! Quality has improved, yes, but not enough to justify anything up to a quadrupling of prices. To me there seems to be a big question about current profit margins involved here. This is especially true when one sees how deeply discounted some of these items become after the initial feeding frenzy at MSRP ends.
It might also be interesting to compare business practices in the past with what goes on in boardrooms today. When Lionel virtually went under in the 1930’s, JCL and the other execs took an 80%+ cut in salary just to keep the company going. Do you think any big execs do that today…just check CNN!
CNJ831
That’s depressing news - I read about it this morning at www.mremag.demon.co.uk but wasn’t sure until I heard it in other places too. Roco have been doing sterling work showing how DCC isn’t solely the preserve of the rich (their DCC start set goes for around $200 and contains a very good loco, a lok-maus, the transformers etc, a loop of track and a couple of cars). They really deserved to do well. I wonder if they and other manufacturers may be discovering that they can no longer charge a premium and claim “German/Austrian build quality” as the reason for this - just because BMW, Mercedes et al do it it’s not necessarily going to work with model trains.
Am I the only one that ever praises Bachmann around here? It seems like it at times…
Bankruptcy (or “Insolvenz” in German) means that a company declares in court that it is no longer able to pay its creditors. A specialized bankruptcy lawyer comes in and evaluates how much is left to pay off the crooks err… banks and miscellaneous others the company owns money. A deal can be negotiated that says that everybody waives some of their claims, so the company can go on with its business. Should such an agreement not be reached, the insolvency lawyer would try to sell off all that is left, stocks, factory, company cars, all, (deduct his fee), pay preferred lawyers such as pension funds and health insurance, the IRS and the outstanding wages first - IF there is enough money - and then - IF there is still enough left - divide the rest up and hand some of the small change out to every debtor. This is how it works in Germany, although it won´t be very much different in Austria where Roco is from.
Roco´s models were imho fine, but their pricing got out of hand over here. On some rolling stock, there was an increase in prices of 10% annually without any alterations or mdifications to the models.
I wonder what Athearn Genesis will put into their fine SD70MACs in the future - these were driven by the Roco 5-pole motor, one of the finsest motors around.
Oh, but ROCO moved on to Croatia quite a while ago to cut costs, and it is rumored that some of the stuff was made in China… [V]