Tom,
I believe Kingsbridge Private Equity Fund is not into the equation anymore. The creditors, somehow, either they get paid or get a haircut, would have some sort of underwriting of the shares of the company, so, they could exercise to an extend some management rights.
Dave,
your comments are valid. Activities not producing significant profits should be eliminated, and/or sold. Does anybody has any idea of how is the percentage breakdown of the sales w.r.t. HO/1/Z/Trix/LGB ???

Akis

Tom,
thanks for the numbers and info.
Akis

I had some numbers from German syndicates around the years 2006/2007......showing something very different from yours . I don't think there were major changes in terms of market shares since this period, surely not in the direction of a growing market....
I'm wondering how having 50% of German Market , of BENELUX + Northern europe market excepted Norwege.....could lead to have 13% of world wide Train Model market....(knowing that the 2 main national markets of the world are USA and Germany...)

(Only Switzerland & Austria could be taken into consideration. France = peanuts, Spain = peanuts, Italy = peanuts.....Japan & Great Britain were the unknow of my data...)? Are your numbers taking into account "all scale + all countries in the world "...is there some new emergent MRR national markets in this world ?....

There is a American range in Z Guage

Here are the figures from the insolvency plan.

MRR market 2008 by country in mio. Euro based on dealer prices.

Country; Market size; Märklin share
US; 240; 1 %
DE; 186; 50 %
JP; 77; 1 %
UK; 30; 2 %
AT; 16; 16 %
NL; 15; 65 %
FR; 13; 20 %
CH; 11; 44 %
BE/LU; 8; 39 %
CN; 3; 1 %

The countries listed here cover 2/3 of the global MRR market (about 300 mio. Euro not listed).

Looking at Tom's figures, about market sizes and Märklin share per country, one can realize where are the sales weakness of the Company. I would have put all Company's effort to increase penetration in the biggest market of the world, i.e. in the US market. For a company like Marklin, to have such non-existing presence in the US market, is problematic. So, if what Nev is saying about Z scale in the US is true, then I do not think that Maerklin is thinking of shrinking the Z scale products, but in the contrary, we might see more Z products ( and also HO products) targeting the American market.
Akis

Märklin's share in the German 3-rail market is 90 %. So they can grow 11 % if they kick Roco, Fleischmann, Brawa, Piko, Hornby and the rest out of the German AC market (assuming the German AC market will not shrink further in the next few years).
There's not much room to grow.
There's no competion in the 3-rail track market, but Piko offers many cheap 3-rail Hobby locos while RoFl regularly have special AC offers and AC clearance sales.
RoFl claim to be the innovation leader (a title formerly claimed by Märklin) with digitally controlled doors and high-tech smoke generators.

A quote from the insolvency plan:
"Unter dem Dach der attraktiven Marke Märklin lassen sich sowohl in den europäischen als auch in den überseeischen Ländern entsprechende 2-Leiter-Produkte einführen, wenn die erforderlichen Investitionen in den Markt getätigt werden."

Hand-optimized google translation:
"Under the umbrella of the attractive brand Märklin 2-rail products can be introduced in both the European and overseas countries, if the necessary investments are made in the market."

Giving up the name Trix in favour of the name Märklin could be a bad move on the German 2-rail market, but could help overseas.
There is "Liliput by Bachmann", why not "Trix by Märklin"?

We have to face it: there are more 3-railers switching to 2-rail than vice versa.
Therefore there should be 3-rail starter sets with competitive prices. This year there are no Märklin starter sets in the food stores in Germany; Pluta writes that those companies would not make deals with a company under insolvency (they request three year warranty from the manufacturer, so they only contract manufacturers with a 3-year perspective). That's another reason to get Märklin out of insolvency.
Starter sets for people who currently have no MRR: for old men to buy from themselfs and for old men to buy for their grand-children (and some will be bought by not-so-old men for their children).

Some say Primex should come back. Primex is known by less than 10 % of Germans, Trix is known by less than 40 % of Germans, Märklin is known by more than 80 % of Germans.

Märklin could grow on the UK market, too. Did they make any UK models after the Warship loco?
Is the TGV part of the plan to grow in Europe? I hope it works.
Maybe they should follow this forum: they have fans in OZ, NZ, and Africa. Maybe they should keep an eye on these markets (and listen to the woes of unhappy Insider Club members).

Hi Tom. Marklin will not break into the UK market. This would require new tooling for UK outline models and coaches and wagons (hundreds of them) They have no cash for this. UK model rail folk will not pay Marklin prices. UK dealers no longer stock the product at any reasonable level and have no intention of doing so.
Marklin could however do good business here selling German and Swiss outline if they supported dealers and reduced their price to the dealers to allow them to compete.
Marklin folk like me just buy from Germany but there are not many of us. The last model rail show I was at did not even have one overseas layout.
I have no idea what the state of Brawa is but they produce some great stuff (prices way beyond Marklin)but I presume they sell OK as they are still going and producing nice new items. I can buy here in the UK at almost the same price as in Germany which I cant with Marklin.
The other problem here is model shops will not deal with a firm which has gone bust and will not pay up front. This means they need an agent in the UK who takes a profit thus increasing the price.
Hornby are of course a different gauge (OO) and they sell well in the UK where younger folk are buyers as their product is available in large stores as well as model shops.
There is a big difference in people like us who love the Marklin brand and others who just enjoy running a model railway. I am happy to buy from Germany where most just want to visit a shop and see what they are buying and get advise. With Marklin this is not possible in the UK.
If Marklin wants to make new models for other countries where is the cash coming from?
I am aware that folk on the forum like to talk up Marklin as I do regarding their product etc but when it comes to the Marklin firm itself then that is a different matter .. you dont go bust by being well run and doing the right thing .. so now must be the time for change and a new future for the firm.


dave

Re: Breaking into other markets

There are quite a few challenges..

First, success possibility of Marklin is hugely dependant on the popularity of modelling of European railways as opposed to what is locally preferred. Despite strong local market for Marklins like here in NZ; the majority market is dominated by GB brands (Bachmann, Hornby, etc). This is probably the same case with the US market too. Marketing Marklin equals to marketing European railroad modelling at the same time. And people will choose between 2-rail and 3-rail; most likely that they'll choose 2-rail.
Potentially, when you start talking 2-rail, inevitably you start losing market to Fl-Ro, or the cheaper Piko.

Two, pricing and availability - as argued above. The cheapest European online dealer price (ex-VAT) for Marklin products are still premium compared to off-the-shelf price of many popular local brand.
Markets outside Europe in general are skeptical about paying the money that European brands are demanding... not when the local competition are China-made, plastic, cheap, and analogue; which at the same time also getting better.
Add the local dealer's price and you probably have a super premium product for the really top end of H0 market.

Third, again I'll argue packaging of Marklins. While great for beginners, rigid packaging (we think we know what is best for you) doesn't work when you start collecting.
Local skeptics will ask,
'Why would an MRR manufacturer decide for me what each and certain model should have sound/feature or not?'
'Why would an MRR manufacturer force to use an MFX decoder that I don't really want?'
'Why can't I choose for myself whether to ran digital or analogue?'

To sum up:
.... you need to buy European
.... you're telling the market you make the best model
(even if more expensive and 3-rail)
.... then you have to convince everyone to buy digital
.... and that your digital system is the best there is in the market.

Those are a few marketing problems packaged carefully in one box. You are facing different competition at every stage.

Another issue:

Trix 2-rail or Markin 3-rail: The not so simple life..

Now Marklin's drive to lead the way (in Digital, innovation, whatever) had inadverently opened a widening gap in what is demanded / expected in DC and AC market respectively.

As a result, though on the paper Trix looks to be the easy way to expand into the DC market; it is now growingly become a strain for marketing and development cost.

Take the Sinus motor technology. Ground breaking concept... if used with digital, ran perfectly...
But because much of DC is still largely analogue, the best of Marklin's technology got the cold shoulder response in the DC market. This forces Marklin to re-tool their Trix lineup to use can motors.

DC market is also not primarily driven by archetypical Marklinist-concept such as metal body, motor in the boiler (for steamers), and typically shuns and mocks those "noisy Marklin motors" (DCM)..
They don't mind plastic body, so long as they're super-detailed. They don't mind weaker pulling power, so long as the motor is quiet, smooth, & cheap. Above all, to hell with OEM decoders...

As a result, Marklin was starting to build DC-specific models for Trix. Had the bangkruptcy not happened, Trix would have been greatly expanded now with the new s3/6 w/motor in tender and 1/87-scale length ICE-1. Other models would have certain to follow after that...

But in all, it would've been a costly exercise for the company.

OTOH; Roco, Fleischmann, Piko, HAG takes universal concepts that had already gained wider acceptance in the DC market, and kept it honest. They're offering DC-styled package like 1/87-scale length coaches, super detailed model, etc - in short, demand of these (if any) had never been fulfilled anyway by Marklin.

They played it safe; staying loyal to their base DC analogue customers.. while taking potshots with digital innovations to annoy Marklin.

Then Marklin tried the other way, making models that fit both.. like this year's BR110, Re4/4 I, or the new TGV. Now a portion of Marklin customers hit back... 'why didn't they put SDS into those models? They'd certainly ran better.'
So it's a dilemma that only Marklin has to face...

In other words, it's cheaper and easier to be a primarily DC-company that offers 3-rail product, rather than Marklin selling DC items under Trix. Other companies know that they're not going to dominate 3-rail; just selling enough to make it worthwile...

Yes, we all loved Marklin down in this forum. But there is a greater market outside Marklin 3-rail out there that still need convincing that Marklin products are great/superior/whatever...

Which one would Marklin use (as asked above)? Trix or Marklin? 2-rail or 3-rail?
2-rail means a great deal of compromise with other markets - while still trying to be distinctive.
3-rail may mean being too different, too rigid, maybe even unprototypical (look at those wipers!)

I didn't think of such an approach.

But Märklin could e. g. make a model of Class 66 which is in use by many European companies.

Sure, Märklin is for the "Continental" MRR fan and they can't change this in reasonable time. Some British models could be the icing on the cake for British MRR fans interested in continental rail roads (a Class 66 with full sound, bells and whistles would be nice to show to grand-children and visitors who are not interested in Prussian steamers).
(Mehano's Class 66 sounds great, so Märklin must not make the mistake of releasing a Class 66 with the Ludmilla sound project. Too often the delivered models didn't match the announcements. The uproar of disappointed customers is bad for the reputation and for next year's pre-orders.)

They have some Trix models in stock not yet marketed by Märklin: E 19.0, detailed BR 185, full-length RAm, ...
IMHO Märklin should offer a Hobby-185 and a detailed 185 at the same time, but they must find a way to communicate this to the customers.
I'm not sure if the RAm should come. I bet the E 19.0 will come ...

Many 2-railers loudly and proudly announce that they only buy full-length coaches. But maybe they're just the tip of the ice cube. Roco still makes 1:100 coaches, Fleischmann used to make 28.2 cm coaches.
So I presume there is a market for shortened 2-rail coaches. No chance to become market leader if you only serve a niche market - but serving a niche market without development costs can still increase profitability and total market share.

GREAT NEWS !!! Märklin out of insolvency !!!

As far as I understand (please verify the translation), the Company is repaying 33 millions out of the total 93 millions euro debt to the creditors, and also with some debt to equity conversion, the new owners now are: Kreissparkasse Göppingen, Landesbank Baden-Württemberg, and Goldman Sachs.
Can somebody with better German verify please ???

http://www.tagesanzeiger...en-Banken/story/29200694

It seems like the banks are taking over the ownership in exchange for the debts. It is not an ideal situation, since the banks sooner or later will be selling the company again. It is not the core business for any bank to own a model railroad manufacturer, but the brand Märklin is still strong, and no banker wants to be the bad guy who ends such a legendary company.

The end of the article says that a major task now is to attract children to the MRR hobby again. Märklin certainly has tried this before, but I hope they don't forget about the financially stronger grandpas as well!

....you recently have change the USA number, did you ? (300 to 240 ?)

The Pluta document reads 240 for USA and I didn't change it (IIRC).
The European market is listed with 300.

In some way, I hope Hr Pluta will continue to run it with the blessing from the banks for a while... He seems to understand the business of little trains...

Webmaster
The banks will not only keep Mr. Pluta, but they will also ...pray for him, in order to get their money back !!! I personally think that Pluta's achievement is magnificent, and nobody could predict such an outcome at the beginning of 2009. His restructuring plan has worked very well and very quick, and produced positive financial results which in turn, has restored completely the confidence among the lenders. The accepted haircut by almost 65% proves this point. The banks which are now shareholders might also get payments through dividents if profits are coming back in the balance sheet.

Akis

A few observations:

1) I haven't a clue as to what I'm talking about. :)

2) Marklin has only 50% of the German Market?? I thought is was close to a capitol offense to run anything other than Marklin in German homes??

3)Given C-Track and other Marklin innovatoins, there needs to be more effort done my Marklin and Marklin fans in the USA to promote Marklin here.

4) Going through my 35 year old brochures, some advertising being "The Greatest Train Shop in New York City", it's sad to see the decline of the hobby in the general NYC area.

5) How much do they want for 'Marklin'?? Could we all here pony enough $$ to buy the entire company?? The upside: We get to be Ultimate Marklin Insiders....any trains we want and the coolest layouts on the planet :)

6) Yeah, a $600+ (US) locomotive is WAY to expensive to attract new folks into the hobby. But, I have seen $230 starter sets....and that is VERY competitive with Playstation, et al.

Just my ramblings,
Paul

Hi,
Sorry to be a damp squib (Australian slang), but this topic was meant to be informative based on known facts, not a platform for opinions or speculation.

Mike said in first post:


There is surely another topic, that can allow for speculation on the future, and the invariable advice for Marklin that springs from it.

regards
Kimball

A co-working today told me his son wanted an electric train for Christmas. He was floored by the request. A request for an electric train is almost unheard of nowdays. Very sad.

Here is official press release:

Insolvency proceedings of Gebr. Märklin & Cie. GmbH

Creditors‘ meeting approves of insolvency plan.

Thanks to the past 2 years’ good business, creditors receive immediate 33 mn €
payment


Göppingen, Germany, December 21, 2010. Out of all creditors with voting power, 99.8
percent have voted in favor of the insolvency plan at today’s creditors‘ meeting.
Abstentions were 0 percent. 0.2 percent voted against the approval.

The insolvency administrator Michael Pluta expects the plan to be set into effect as of
Jan 01, 2011. After today’s approval by the creditors, the only thing left required is the
approval by the financial authorities and by the city of Göppingen.

In the scope of this payment, the unsecured creditors receive approx. 10 percent of their
claims immediately. The plan also provides a 100 percent coverage of the remaining
claims if the company can be successfully sold. Pluta says that successful business
over the coming years will also provide a good and appropriate sales price for the
company. All stakeholders agree the investor process to be continued without any
pressure for selling.

Pluta emphasizes that this payment also includes the full severance scheme costs for
the employees who have left the company in 2009 and 2010.

The amount mentioned is available primarily because business operations during the
last two years, since the insolvency proceedings were opened, were constantly positive.
Pluta indicates this is a key requirement for the company’s stable future. Moreover,
stock overheads were sold continuously sold at reasonable price points. Stringent
claims management allowed for a sustainable reduction of uncollected receivables.
Pluta also says it has been helpful that no interest rates had to be paid to the financing
creditors during the insolvency, and that neither corporate income tax nor trade tax had
to be paid because there were corresponding allowances for losses.
According to Pluta, the provisions of the insolvency plan will result in all creditors being
in a far better position than if the company had been broken up; moreover, he stated
that all offers presented in 2009 would have led to a worse quota for the creditors.
Customers and staff Pluta explained that the customers‘ and dealers‘ loyalty, plus the entire Märklin staff’s
commitment, were key factors over the past two years for achieving this result, which
can fairly be called unique. The company now has the chance for continued and good
development, based on the medium-term business planning featured in the insolvency
plan.

Ernst & Young confirm Märklin is fit for the future
Märklin’s medium-term business planning builds on the actual figures for 2010 and
forecasts a continuous average annual growth in turnover of approximately 2.5 percent
over the next years. New business fields have been clearly defined for this purpose as
well. Moreover, these years will see large investments into sales activities, production
and development. These plans were very thoroughly reviewed by an independent
auditing company. Ernst & Young have explicitly and completely confirmed the
feasibility of these plans.

Current situation
With respect to various press releases over the past few days, Pluta also addresses the
company’s current situation. He confirms that the original 2010 turnover plan with 115
mn € will not be achieved; he stresses that the analysis of the reasons for the weak
turnovers has revealed a broad range of insolvency-related causes. This was the
reason why the insolvency plan has been pushed during the recent months. Also, the
known problems with a supplier took some part away from 2010 turnovers.
After these difficulties were identified at an early stage, the company has adjusted their
entire cost structure to the reduced expected turnover in the second half of 2010. The
result of these efforts will be a guaranteed achievement of the originally planned EBIT
result. For 2010, Pluta expects the EBIT to be a good 9 mn €.

Future company structure
Different from the asset deal, which was originally planned to take place if the company
was sold, former Gebr. Märklin & Cie. GmbH will continue to legally exist when the
insolvency plan enters into effect. De jure, the company shall remain under the
supervision of Märklin Holding GmbH; factual owners shall be the creditors until the
company is being sold. The plan is to establish a three-person prudential committee to
support and to monitor the management; members of this board will include a
representative of the creditors as well as Michael Pluta and the hitherto managing
director, Dr. Kurt Seitzinger (as the chairman).

New Märklin will start with off with an equity ratio of almost 30 percent, which refers to a
balance sheet total of approx. 76 million €. This is significantly more than the majority of
medium-sized businesses in Germany have, Pluta says. In this context, Pluta points out
that at the time when insolvency was filed, the company had to state a negative equity
of 46 million €. Therefore, Märklin has managed to improve their equity situation by
approximately 70 million € in less than 2 years, Pluta proudly explains.
Finally, Pluta also states that only very few companies that slipped into insolvency ever
get such a great chance for a new beginning. One consequence of the fact that there is
no new, external owner is that no royalties or payments will have to be made to such an
owner. These amounts can now be fully used to secure the future.
The Märklin employees have clearly understood this chance, expressing so by 100
percent approval for the insolvency plan presented, despite the fact that they will have
to make significant contributions to the restructuring over the next 4 years. For this
purpose, a corresponding collective wage agreement was concluded already in August
this year.

Michael

This is fabulous news and I am so happy that they mentioned their loyal customers of which I am proud to say I am an old one. Not to mention all the $$$$$$ I have spent on their wonderful products in the last 1 1/2 years alone. Cheers,Peter

Keep buying lads, keep buying!

Great news! I am glad to see that Gebr. Märklin & Cie. GmbH is standing on its own two feet.

Thank you Michael for the translation.

Cheers,
Ranjit

Edited by user 06 January 2011 10:48:15(UTC)  | Reason: Not specified

Hello,

Speaking of a bright future, I've heard rumours that Walthers only has another year left on their current US distribution contract. Can anyone confirm or deny this?

If true, I'm caught a number of millon short. It sure would be nice to have a large enough bank account to bid on the privledge of becoming the new distributer. I really can't think a better way to retire from the IT industry