Re: Pre-orders, pro or con.


--- In, Anthony Thompson <thompson@...> wrote:
As anyone at Kadee will tell you, they are a coupler company.
That is the core of their business and dominates all other topics.
Trucks are considered secondary, freight cars tertiary. Comparing
their freight car output to InterMountain seems unhelpful to me.
I think the thrust of this thread is the viability of model railroad freight car manufacturing business models based on using, or not using, pre-orders.

I doubt Kadee will chime in with their business model, but I think the point you just made could be very relevant to this discussion. It is possible that a very lucrative coupler business, and perhaps profitable truck business, covers the overhead costs of operating a manufacturing company - both infrastructure wise and marketing and distribution wise, and this has enabled Kadee to fund freight car tooling at a modest level, without requiring pre-orders.

At Cocoa, Intermountain has been very upfront describing their sales volumes, total revenue, and business model (based more and more on pre-orders), but I am not sure anyone else has provided this level of information - nor should we expect any of the manufacturers to do so - it is private and competition sensitive. I am actually a little surprised at what Frank reveals (sales volumes and dollars).

Clearly Intermountain and Kadee have different business models.

Rapido, operating on a yet a third business model, has also been upfront in that I think they only have 4 North American employees? Very lean, and that helps to minimize the overhead.

Economy of scale is still a significant factor in manufacturing - obviously Kadee is able to stay above a minimum sales volume necessary to remain viable as a US manufacturer.

Conversely, Bowser appears to have abandoned new US based HO tooling for US manufacturing - I doubt we will know why - loss of interest, too much overhead, tooling costs too high, etc - or perhaps a perception that the HO "shake-the-box" kit market has shrunk or is saturated? I do not know, but I suspect that the perception at Bowser is that developing new HO freight car tooling without pre-orders is just too risky (I think their last HO tooling was the PRR N8 cabin, which did not reach anticipated sales volumes, likely because the SPF's already had so many N5 and N5c cabins that they opted not to deploy fleets of N8 cabins, but instead bought just a few.)

Accurail continues as perhaps the lone US manufacturer that keeps tooling new injection molded HO freight car kits in the US without pre-orders. Their business model appears to be working.

I am not aware of anyone else doing what Accurail is doing in the US.

I wish it weren't true, but it is. Welcome to 21st century US manufacturing economics - and a shrinking customer base. Modelers whining and threatening to keep their money under the mattress really isn't going to change this, and could be making it worse.

Dave Evans

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