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Latest Announcements by Manufacturers!

Problems in China from Jason - Rapido Trains

Problems in China : The Inside Story

If there is a common theme throughout this newsletter it is that "stuff has been delayed." We are not the only ones. Most model train manufacturers have experienced production delays, and here is why.

In January I broke the news on the CanModelTrains forum that another large model train factory in China had shut down, forcing 3000 people out of work. Whatever your beliefs may be about globalization, nobody wants to hear that 3000 people lost their jobs just before a big family holiday. This was just the latest event in the ongoing saga of manufacturing model trains in China .

A couple of years ago, Sanda Kan was purchased by Kader Holdings (the Chinese company that owns Bachmann Trains). Sanda Kan was the largest supplier of model trains in the world, and most of the trains made by North American and European manufacturers came out of Sanda Kan 's many factories in Guangdong province, China .

After initially telling their clients that nothing would change, Kader decided to dump the vast majority of their customers. Suddenly, about 50 model train companies around the world had no factory to produce their models. As you can expect, a form of panic ensued as everyone was scrambling to find a supplier. Our industry is what you could call "cash poor." We manufacturers make money, and then invest it in new tooling. That means that for all but the biggest manufacturers, a delay in production can cause serious cash flow problems as we don't have piles of cash lying around.

The result of Sanda Kan booting out their customers is that the existing model train factories found themselves with an onslaught of new clients desperate to get their models back into production. These clients also needed to start new projects to ensure that they don't run out of cash in the long term. No model train factory was, or is, anywhere near the size of Sanda Kan. The demand outstripped the supply - by a huge margin.

The industry is still recovering from the eviction of Sanda Kan 's clients. The January closure of one of the largest remaining suppliers in the industry will only add to our collective problems. This closure was caused in large part by the fact 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 due to very high start up costs and higher overhead, 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.

Jason, Rapido Trains

ATLAS "O" January 2012

Atlas "O" has merged with Atlas Model Railroad Co.

Atlas has purchased O Scale Cornerstone structure tooling from Walthers.

 

Athearn   February 2012

Athearn has announced their will be delays in the Production of the Regular Athearn line of  product and Roundhouse products, do to  a factory shut down in China.  Tooling is being moved to another factory and the good news is the Athearn Geneses is produced in a different factory and will continue with new product as planned. 

 

LGB Germany news from http://www.gartenbahnprofi.de/28229/home.html, posted May 12, 2007

David Buffington, owner of LGB USA who is closely related to the former owners of LGB Germany, has offered 7.5 Million Euro to the Credit holding companies for the Purchase of LGB Germany.  It was felt that they wanted to keep the owner ship in Germany in order to save the jobs for the One Hundred Thirty Employee's that worked for LGB.  However with the Christmas Clock ticking, time is critical and LGB would suffer if product was not available this Christmas.   Marklin has offered 9 Million Euro and Peco has also looked at the acquisition of LGB. 

 

Sixth Circuit denies the MTH application for a rehearing of appeal April 20, 2007. 

Statement from Jerry Calabrese, CEO Lionel.  Yesterday, the Sixth Circuit Court of Appeals, in Cincinnati, reaffirmed its earlier decision, in favor of Lionel, to vacate the MTH judgment.  In short, MTH had asked the court to rehear Lionelís successful appeal, and the court rejected its request, effectively putting to bed the lawsuit Lionel lost in 2004, that began this long and costly process.  Unfortunately, that doesnít mean that the legal battles between Lionel and MTH are over.  MTH is free to ask for a new trial, and while we hope that the mediation process in which we are now engaged will lead to a settlement, weíre also prepared to do whatever we need to do to prevail.  Thanks again to all of our fans and supporters for your continued support.

 

Union Pacific, M.T.H. Electric Trains Settle Trademark Dispute  (Press Release from MTH)

November 8, 2006 - M.T.H. Electric Trains and Union Pacific Railroad are pleased to announce that they have amicably settled the trademark infringement case that U.P. filed against M.T.H in Omaha, Nebraska federal court.  The settlement benefits both parties, as well the entire model railroad industry.  It allows Union Pacific to continue to protect its intellectual property, and authorizes M.T.H.ís use of Union Pacificís trademarks and paint designs on model train products and accessories.  Union Pacific has also decided to change its trademark-licensing program so that model railroad manufacturers will no longer have to pay a royalty, and will enjoy a perpetual license to use Union Pacific trademarks and paint designs on model railroad products.


In reacting to the end of the yearlong legal battle, M.T.H. recognized the commitment of U.P. to make a change.  ďUP deserves a lot of the credit here,Ē M.T.H.ís founder and President Mike Wolf stressed. "UP's willingness to reconsider its position with regard to model train manufacturers' use of its trademarks allowed a deal to be struck.  UP has long been a friend and a steward of the hobby and this new license reflects that."  

Wolf added that the case was a big drain on M.T.H.ís resources but worth the effort.  ďFor seventy years, Union Pacific and the other railroads have worked with our industry to develop and nurture the model-railroading hobby.  The UP license that had been in effect did not properly reflect that mutually beneficial and rewarding relationship."

 

Bob Turner, Senior Vice President Corporate Relations for Union Pacific, said, "Mike Wolf is to be commended for his commitment to the model railroad industry. His energy and passion helped us find a solution that will better reflect the positive relationship that Union Pacific and the model train industry have enjoyed for many years."

 

QSI claims ESU infringed on there patents! June 14, 2006

QSI (QS Industries) has sued ESU (Electronic Solutions Ulm) for infringing on three of there patents.  Information from Model Retailer/Kalmbach Publishing.

 

Marklin to be sold to an investment firm! June 14, 2006

The Marklin family owners have agreed to sell the company to Kingsbridge Capital Ltd.

 

LIONEL PRESS RELEASE from Jerry Calabrese  June 13, 2006

On June 12, 2006, MTH (Mikes Train House Electric Trains) sued Lionel for alleged infringement of its smoke and speed related patents, seeking unspecified damages and injunctive relief.  MTH also asked the court to preemptively rule that its own trains do not violate four of Lionel's Patents, or to declare Lionel's patents invalid.  Lionel does not believe that it infringes MTH's patents and intends to vigorously contest these claims and defend its patents, which pre-date the MTH patents in question.

 

 

K-Line Announcement from Jerry Calabrese
04/25/2006

Dear Friends,

 

I must confess that I so enjoyed the speculation and armchair lawyering about the future of  K-Line that I almost hate bringing it to an end.  But, as one of my former mothers-in-law used to say, ďAppoint a day and it will come.Ē  After a lot of legal wrangling, the K-Line transaction has finally been concluded.   As of last week, right before York, Lionel took control of all K-Line assets, including its inventory, intellectual property, tooling, and trademarks. 

 

Lionelís deal is with Sanda Kan, K-Lineís principal manufacturer and creditor, who, in turn, worked out its own deal with K-Lineís bankers before we could move forward.  Under the terms of our arrangement, Lionel will control and run the K-Line brand, in all respects, and will have the exclusive right to buy it outright sometime in the near future.

 

Our first step was to take possession of the existing K-Line inventory and move it from its former headquarters in North Carolina.  As of today, thatís just about done.  Our next challenge is to sort through K-Lineís books and records to make sure that everyone who pre-paid for products receives them.  This will take some time, as most of whatís owed to individuals and clubs is not in existing inventory and will have to be manufactured. 

 

As Iíve said before, Lionel is committed to making good on unfulfilled orders.  I anticipate that it will take us at least 60 days to sort out what is owed to whom.  During that time, I cannot stress strongly enough how much we will need your patience and cooperation.  As hard as it may be to control the urge to call us throughout this transition, I would really appreciate it if you will give us a couple of months to figure things out. 

 

One bit of good news is that weíve already managed to get most of the trains that had been stuck in K-Lineís repair department during its bankruptcy fixed and shipped back to their owners.  

 

Once the smoke clears, we plan to re-launch K-Line later this year, in our second catalog.  Because getting the deal done took so long, there will be only a limited line of new products in 2006.  But we plan to make them very special.  Next year, in 2007, we plan to make K-Line a larger part of the Lionel product line, positioning it with our own LionMaster offerings, in our ongoing effort to offer you even more quality mid-priced choices.

 

Finally, Iíd just like to say thanks to all of the people who worked so long and hard to get this deal done.   

 

Best Regards,

Jerry Calabrese

 

 

Jury awards MTH $40.7 million; says Lionel wrongly benefited from stolen "trade secrets"

A federal court jury has awarded MTH Electric Trains, Columbia, Md., more than $40 million in damages after it found Lionel and manufacturing partner Korea Brass unfairly profited from stolen MTH blueprints used in the production of high-end Lionel steam locomotives.

The decision came on June 7 after an 18-day trial in Detroit. Jurors found Chesterfield, Mich.-based Lionel liable of misappropriation of MTH's trade secrets. The exact amount of the award was $40,775,745. The decision came four years and two months after MTH first filed its claim against Lionel and Korea Brass Co. Ltd.

"Despite the wishes of some model railroading enthusiasts that pursuing a lawsuit against Lionel wasn't in the best interest of the hobby, I felt our firm had no choice but to seek justice against those who wronged us," MTH president Mike Wolf said in a press release sent to Kalmbach Publishing Co.'s Classic Toy Trains magazine.

MTH sued Lionel in April 2000, charging that Lionel knew - or should have known - that blueprints used to build the Lionel locomotives had been stolen. MTH said the Korea Brass-built models were created in too brief a time for a company that had no previous experience producing die-cast metal articulated O-gauge locomotives.

The digital blueprints were stolen in 1998 or 1999 from Samhongsa, MTH's former South Korean manufacturing partner, and, according to the lawsuit, were discovered in the hands of a design firm that did sub-contract work for Korea Brass. Four South Koreans were arrested by South Korean authorities and were subsequently convicted, according to the lawsuit.

The jury was asked to determine whether the stolen drawings fit the definition of trade secrets and whether Lionel wrongly profited from the drawings. MTH sought $33 million in damages.

The drawings showed mechanical and electrical subassemblies for O-gauge articulated locomotives and tools and dies to produce those subassemblies, Wolf had told Classic Toy Trains. The drawings were not for complete locomotives. The locomotives involved included MTH's Premier line C&O Allegheny, Union Pacific Big Boy, and Norfolk & Western A-class 2-6-6-4

Message from Model Retailer!

 

BROADWAY LIMITED has posted the below message.

Important Customer Message for DCC users:
Due to threats of litigation by Mike's Train House (MTH), the Regulated Throttle Control and Speed Control features originally offered in BLI locomotives are no longer available at this time. Please note that this has no effect on the sound aspects or basic locomotive control. We believe that the claim by Mike's Train House is unfounded because these control features were developed by QSI and others and have been in use long before Mike's Train House claims to have "invented" them. Neither Broadway Limited Imports, LLC nor QSI believes that the Quantum Sound system infringes any MTH patent. However, until this matter is resolved, Broadway Limited Imports, LLC and QSI want you, the consumer, to be protected from any harassment or interference with your use and enjoyment of the Quantum system. We apologize for any inconvenience this may cause you and trust that you can look forward to years of uninterrupted enjoyment of your BLI locomotives.

 

Union Pacific Licensing Program

The Union Pacific is serious about its licensing program and claims it only costs pennies

on a $10.00 item. You may click here  to review some of the details. 

 

Manufacturers reserve the right to make changes on new announced models!


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