# Trouble in China



## curlyp (Sep 4, 2009)

This was posted by the CEO of Rapido trains on another forum
I wonder if it will impact any large scale companies


Jan 13, 2012 Important News in China
Hi all, a large Chinese supplier of model trains closed down today. This
factory employed 3000 people and was a major producer for North American
manufacturers.

This is the second large supplier to shut their doors in two years. It
will no doubt contribute to delays across the industry as that factory's
clients try and move their production to other, overworked factories.

The reality is that model railroad price increases (averaging 10%-25%)
have not kept pace with cost increases in China, and it is often
difficult for the Chinese suppliers to stay in business while meeting
the demanded price point from their major North American clients.

Our industry is currently tied to Chinese production, as southern China
has developed the special skill set required to produce model trains.
Bringing the manufacturing back to North America would cost even more,
and there are no reliable model train factories set up yet in places
like India. So I think we're looking at tough times ahead in our
industry: more delays and even larger price increases. At some point
many modellers will say "that's it â€“ this hobby is too expensive!" and
leave. With lower sales, the prices will increase more. So this could be
the beginning of an escalating negative spiral.

So far, Rapido has largely been spared from most major cost increases,
but I have been warned that our costs are going up soon as well. That
being said, we are looking at ways to avoid getting caught up in that
negative spiral and keep our quality high and prices competitive. I will 
keep you guys informed of our progress. . . . -Jason


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## Greg Elmassian (Jan 3, 2008)

Don't despair, I'm in another scale (Z) that "lost" Sanda Kan, and they (Micro Trains) found another manufacturer just fine. 

I'd be happy to spend 10% more and get trains with wires soldered right, assembled right, and frankly would pay 20% more to have the money stay in the USA. 

There's plenty of countries than can and DO manufacture trains other than China. 

This was just a matter of time, as the unusual conditions that allowed China to undercut everyone are going away. The people of China are demanding better living conditions and wages, and more power to them! 

Regards, Greg


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## Randy Stone (Jan 2, 2008)

Just as Japan priced them selves out of the market, China is doing the same. 

Next up, Africa. 

Or maybe the USA if our economy keeps going down the toilet at the rate it's going.


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## krs (Feb 29, 2008)

Posted By Greg Elmassian on 15 Jan 2012 12:46 PM 
Don't despair, I'm in another scale (Z) that "lost" Sanda Kan, and they (Micro Trains) found another manufacturer just fine. 

I'd be happy to spend 10% more and get trains with wires soldered right, assembled right, and frankly would pay 20% more to have the money stay in the USA. 

There's plenty of countries than can and DO manufacture trains other than China. 

This was just a matter of time, as the unusual conditions that allowed China to undercut everyone are going away. The people of China are demanding better living conditions and wages, and more power to them! 

Regards, Greg 
I agree with Greg.
USA Trains had experienced ridiculous delays, 2 to 3, even 4 years, in trying to bring product to market.
They switched to a different supplier in China a short while ago and suddenly product that had been delayed for years is becoming available.


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## work4fil (Jan 4, 2008)

I agree with both Randy and Greg. Too bad greed and avarice caught on like wild fire in China. Than again, can the eceosphere survive the profit motive? 

Always 

Fil


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## Ray Dunakin (Jan 6, 2008)

Yeah, those greedy Chinese should be satisfied working for $3 a day so we can have cheap toys!


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## wchasr (Jan 2, 2008)

Well looking at another industry...the company I work for makes products for a sister company that is not whole tied into sellign American made if it suits the need BUT in teh last few years we've outperformed the overseas manuafacturers not just in ability to produce but in speed to production including manufacturing tooling (plastic molds as well as metal diesets for blanking) and producing a much better & consistent product. I "think" that it would be possible at this point for train munufacturers to start looking at American production again but maybe I'm mistaken? 

Chas


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## Mike Reilley (Jan 2, 2008)

My son just moved his production BACK to the US from China...and is now exporting his product from the USA as well as selling it here. This decision came about because of quality control issues and rising costs in China...but it comes with some risk. That risk is related to mold making. Folks that make molds are called tool makers...and from a practical standpoint, there are VERY few left in the US. Tool makers generally work for companies that do injection molding...and since most of that industry has moved to China, there are few tool makers still working in the US. They've moved onto other jobs.

So, while it could be economically feasible to move production of GRR stock back to the US, it would be difficult to get the molds made. My son, the same son, runs a prototyping company now which prints 3D parts...and molds. The newer machines he has now print in 1/10,000" layers...so detailed parts are really possible to print. He sees that business line as one that eases the shortage of the tool makers...but you still need tool makers to make the final injection plastic molds. Those can't be printed...yet.


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## wchasr (Jan 2, 2008)

Mike, 
We are lucky to have a great Tool & Die maintenance shop in house and a nearby tool shop that builds our new molds for us. Maybe in California that industry has died but there are some cottage industries surviving still. 
Currently we manufacture parts in Stainless steel (Blanked and Laser cut) carbon steel (Blanked & Laser cut). We injection mold parts in a few different types of plastic. We also manufacture parts in Red Oak. Oh yes we also do some forging in Stainless Steel too! We have built a good share of the machinery to process these products on our own and purchased what we needed. Some we have bought used and adapted to our processes or bought new from Germany as needed. We maintain almost all of our machines in house. We do all this in NY state which is arguably one of the most difficult states to manufacture ANY product in. A good share of our vendors however are in Pennsylvania as well as aorund the country. Even trying to find the hardware that is American made is difficult but not impossible. It could be done. Model trains could be built here, but not likely at a 20% premium. closer to a 100% premium. BUT when you consider that the same Aristocraft cars we were buying under the REA name brand 20 years ago for $20 to $40 are now selling new in the $80 range...It seems to me that is already at 100% premium.


Chas


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## norman (Jan 6, 2008)

Hi Mike: 

The USA can always immigrate tool and die makers from Japan, Germany, China, etc. 

What would the USA do if they entered into a long term full scale war like the Second World War where their entire domestic mfg would have to be dedicated to war production? Fortunately, I don't think that the World will ever see a war like that again. Where are the present USA armaments made today? Must be in the USA. 

The NASA rocket program was built with German engineers recruited by the US Gov't from post war Nazi Germany, before the Russians picked them up! The USA can always import skilled labour and use these skilled labourers as college teachers to teach the machinist trade again. 

Remember the 1950's and 1960's as to what household items cost? Fast forward to today when fridges and stoves are very inexpensive. Foreign made. Extremely advanced electronic items are now at give away pricing. 

As for China one example is Accucraft. Their previous price structure was an incredible bargain. Way underpriced. The new pricing not so much. But of course far less than domestic production. 

However, the price point of all the large scale items is moving to the point where one has to think twice about buying these new items. 

O S Engines of Japan priiced themselves out of the North American market is another example. 

Folks, what is the future of large scale? Hobbyists simply moving back to H.O. scale? 


Norman


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## vsmith (Jan 2, 2008)

Folks, what is the future of large scale? Hobbyists simply moving back to H.O. scale? 



Norman, not bloody likely, have you priced HO lately? WOW! Sure theirs still affordable stuff, even in LS its still possible to shoestring it, but based on whats been going on in the last decade, prices are going only one way, up, and faster that anyone expected. 

The result in HO has been, less items produced, less investment in new items, and beyond the bread and butter items offered, many new items offered have to virtually pre-sold BEFORE any actual manufacturing begins, and what IS produced is almost always a limited production, sometimes in only hundreds of units, so it sells out very quickly, and at a price that reflects total production costs $$$. 

I suspect this will be the model is LS, it already is in some respects, Bmann's learned its lessons and now limits production on new models offered. Aristo has cancelled alot of items based on (supposed) lack of interest, all the other manufactures are also in a holding pattern waiting to see when the next shoe will drop. I dont know where else in the world they could go that has the same factory capacity, skilled workers and cheap as dirt wages. Once China gets smart and starts demanding real living wages, who knows what effect that will have on world markets. I still think alot (ALOT) of production could move back to Japan, Taiwan, Korea or even the North American continent (Canada, Mexico or even the USA).


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## wchasr (Jan 2, 2008)

Norman, 
I was never truly "into" HO scale trains...sure I had some as a kid but it was secondary to other hobbies, Slot cars for one, Legos for two, outdoor activities after that. In college got into RC cars & Boats and until I got married the two main hobbies were Large scale trains and the RC stuff. The RC stuff is now long gone after the second marriage and now kids and my available hobby time is VERY limited. My available indoor space is even more so. I know locally there has been a push to train kids as machinists in the lcoal BOCES Vo/tech school. I do not think we are dead in the water BUT we are in trouble. 

Chas


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