Never Say Never - Model Train Price Rise

[CNJ999]

A while back there was a thread in which I, in part, touched on the potential for a price increase due to increases proposed between the U.S. and China in their ongoing trade conflict. One poster, seemingly in the know at the time, implied that there would not be any such tariffs imposed on model trains as they are such a limited circulation item. At the time I didn't feel that was likely to be true, but let it drop.

Now, this afternoon, I've received an e-mail directly from Con Cor Trains addressing tariffs that I've reproduced here.


How Will new Trade Tariffs affect Model Trains?

From Jim Conway, Con-Cor Trains:

We already have been asked by a few people if Model Trains will be
affected by the new China Tariff Structure.

While all the dust has not settled as yet, the short answer is YES,
it will raise Model Train retail prices in the USA.

Any shipment that left China after 12:01 AM Sat May 11th will be charged the 25% Duty rate by U.S. Customs when it hits U.S shores. (Shipments already in transit will not be affected.)

For example, if an American importer had a contract with a Chinese factory to make a locomotive for say $100.00 each, U.S. Customs has to be paid another $25.00 before that locomotive is allowed entry into the US. So now that $100.00 loco costs $125.00 to the USA importer.

If the importer already has established his retail price for that locomotive, now its cost has gone up 25% and more than likely the manufacturer will have to adjust his previously advertised price for that model upwards. The profit margins on model trains are not as large as the average model railroader thinks, Importers will not be able to absorb a 25% increase in cost and stay in business.

Bad news? Yes in the short term, but Trump is trying to prove a
the point, and that is the Chinese cannot continue to steal our patents and ideas and use them freely.

We at Con-Cor have had that happen to us the past, we have come up with some good ideas and novel ways to improve models, passed those along to a China Mfg to be used in "our" products, only to see the SAME IDEA turn up in Competitors products made in the same China factory within a few months.

By stealing ideas and innovations and low balling labor cost. China has forced just about all USA mfg of model trains to close over the years. and maybe as many as 1,000 people have lost their jobs at those model train factories.

So now China has a monopoly on the model train market here and has been able to raise its export pricing 30-40% over the past 5 years, while their actual "costs" have only gone up maybe 10% over those same 5 years.

They are doing exactly the same in many other industries.

I have visited China maybe 20 times and have seen the changes over
time, they are very arrogant about stealing and copying other people's ideas.

All the best, please enjoy the summer

Jim Conway

Con-Cor Trains


I guess that it proves once again that hobbyists should never say never in model railroading as disturbing developments seem to pop up at the most unexpected times. Bottom line - anticipate very likely paying considerably more for you locos and rolling stock in coming months than you've been used to.

CNJ999

[Petz]

Most of the USA modelrailroad builders transferred their production to China to save costs and raise their revenue instead doing chinese joint ventures like the german producer Piko sucessfully did; based at the chinese co - owners illegal copies are no theme then cause in this case chinese authorities react very fast.
I´m sure that Trump´s idiotic trade confrontation with China wouid not bring back any of the lost jobs back to the USA cause an american or pure european production (except high tech machines etc..) could not be competitive in the future; so this will develope to a pure future Boomerang for the american economy.
I personally opt out all offers when can be seen that western companies are only labeling chinese origin products and generate an foolish price extra charge from 50 % and more; in this cases i try to buy directly in China cause such mendacious procedures must not be supported by us customers and our wallet is the best wheapon for that purposes !!!

[Backshophoss]

Jason at Rapido has stated it is NOT cost effective to bring back the factories back to N.America,and finding the skilled people needed to
to make the molds and other tooling needed.

[Petz]

That´s what i think too. The Märklin bankruptcy should be a warning example too. Besides other management failures in model developements Märklin thought that their name would be good enough to ground higher prices based at the pure german production but this had not been accepted by the customers. All companies had to use the lower personal costs advantages in Asia or eastern Europe for production and mounting the products.
The customers got not more real income in statistic summaries in the last three decades so most of them had to use their limited budget as effective as possible.

[eolesen]

If 3D printing keeps getting better and better, the business model will eventually shift to selling printable designs. Then, either prices fall or people stop buying pre-made models in the volume they do today...

[Petz]

I think that would only be an alternative for very small series or rare models; also i see the danger of illegal copies included too.

[eolesen]

I was thinking personal use would probably be more appealing than retail production, although it would be interesting to see someone produce on-demand models vs. small/large runs in an assembly line.

Assuming any model built for train simulation (e.g. ORTS, MSTS, Dovetail) was created in a format able to be printed as a 3D model, there's very little that I couldn't produce for my own interests, which are first and second generation diesels. It wouldn't be an option for steam and some of the more intricate models, but I could have an endless supply of E-units and Budd/Pullman coaches, with the only limiting factor being perhaps the powertrain and wheels, both of which can easily be bought today for kitbashing.

This has already happened in the music industry --- I've seen more and more sheet music being printed and sent on demand by music shops vs. sitting on the shelf waiting to be sold. Some universities have dispensed with printed music altogether and gone digital, giving individuals the ability to print to paper (at their own expense) if they want to, but more and more opting to use iPads/tablets instead.

[umtrr-author]

If 3D printing keeps getting better and better, the business model will eventually shift to selling printable designs. Then, either prices fall or people stop buying pre-made models in the volume they do today...

I would suggest that the volume of any individual item being sold is much lower than it was say, 20 years ago. There is more variety from which to choose, for one thing. A simple non-confrontational (I hope!) example is multiple road numbers of a given release.

Even if price increases (and let's leave it at that) don't directly affect model trains, the hobby will be indirectly affected as the price of everything else goes up. There is only so much disposable income to go around.

[Petz]

Even the shrinking market increases the prices based at lower production quantities; you may not forget the much less kids today grew up with a model railroad but with computers and smartphones, so they unfortunately have much less affinity to the hobby than kids living 30 years ago...