Lutz quoted

Thanks for that clarification.
As pointed out here, quite a few US airlines have been in and out of insolvency for the last 25 years, and continued business as usual. It is up to the appointed manager/s to ensure money is not wasted, and is protected from spurious or untimely claims by creditors.

regards
Kimball

The many posts above are interesting but somewhat contradictory. But of course much of it is opinion or speculation.

However, it does look like M is in trouble and may be in the European version of Chapter 11 bankruptcy. In which case it will be able to stay in business, for now, and try to reorganize itself. If things get worse, then it's parts will be sold off to the highest bidder and then go out of business. We all hope it doesn't come to that.

Naturally, some others will try to take over M's customers with 3 rail versions of their own lines. That's good business on their part if they do.

In the meantime watch the prices soar on eBay. Glad I stocked up when they were on sale 2 years ago. Now I can see that they needed the cash from that sale in the worst way. Hope for the best and also hope that they will be around next year.

Cheers, Bob

Well, today I went to my dealer and bought a 39120, 39641 and 39011 .

Beside my previous preorder for 2009 items, this is my support to M and my dealer. These 3 were on my wish list since they came out, so I just fulfilled it .

Information from Deutsche Welle in English, easy reading.
http://www.dw-world.de/dw/article/0,,4002019,00.html

regards
Kimball

Mmmmm, yes... BTW, the 39641 just died on me. Sound still sings, but it doesn't move, even after a decoder reset. It was running normally and then ran away at full speed and then quit.

Well, back to the dealer with it.

The employees learned this morning that the company has declared bankruptcy and requested that the Town of Goeppingen appoint a Administrator to oversee the proceedings. I don't think that the employees got paid. One of the TV networks was interviewing people leaving the factory and they all looked and sounded pretty negative.



This is probably true. Although the Spielwarenmesse doesn't open up until tomorrow, employees of the company probably were already there setting up the display and they may have been called back to Goeppingen. Both Lutz and I had quoted from the Article in the Stuttgarter Zeitung that stated that the Administration of Maerklin would not attend the Messe.
It was reported today that Maerklin will be at the Messe tomorrow when the Fair officially opens.



There is nothing that we can do right now. We have to wait for them to try to come up with a revitalization plan. Kingsbridge has been conducting a restructuring plan since taking over the company in 2006. The problem is that the bank(s) have stated that they no longer have confidence in that plan and they will not lend Maerklin any more money (extend the credit line). As a matter of fact, they want to call in the 50 million currently owed, which is what placed Maerklin Holdings in bankruptcy.

Minimizing the issue gives people false hope. Some (if not most) employees haven't been paid their salaries for January. I don't know where employee salaries rate in the scale of debt of an insolvent company in Swabia/Germany.

In North America, we speak of terms like secured creditor, unsecured creditor and the like. The secured creditor is guaranteed to recoup at least a portion of sums owed and takes priority. The unsecured creditor is last in line and most often gets screwed.

Some people have been discussing buying some models/track in order to help the company. This will help the local dealer, but considering that the items (in stock) have already previously been paid for (by the dealer), the only way that a purchase is going to help Maerklin is if the dealer uses the freed up inventory space and cashflow to purchase more Maerklin items. As a former buyer for a hobby shop, I would be very cautious sending money to a company in financial trouble and would insist on COD subject to inspection and approval.

I make these posts to inform members who might not have access to all of the information in German, French and other languages that I receive, and to discuss the situation in general terms without causing a panic and depressing everybody. I have tried to present constructive suggestions as to how some of the issues can be hopefully overcome and none of it is done out of Schadenfreude as I am as sad as anybody else can be at the moment.

That being said, I have been topping up my collection over the past few years with the awareness that model trains are no longer quite as popular as they were a quarter century ago.

I have many ideas on how to reinvigorate the hobby. These include brand related train games for computers, models of subways, commuter trains and similar for markets where classic trains are no longer as much of a draw as they used to be. I would also compete with the rest of the industry and expand to make full scale detailed models like Roco, LSM and ACME in addition to the basic 1:100 models.
Maerklin cannot expect that everybody will have the space to go from R1 to R9, but a 30cm coach on R4 or R5 looks better than a 1:100 coach on R1. The reluctance by the older modellers is that their layouts are already set up or they don't want to spend more money on new track. I would propose a trade-up or some other promotion to make the larger radii more appealing to the core members.

All these are things that Maerklin could have done in the last 25 years to more actively compete with other rising elements in the model train industry, and could have positioned the company in a far better position to survive the current crisis than they are in today.

As far as Maerklin not addressing the North American modeller. Maerklin is a European Model Train Company. It is the number one manufacturer of European prototype train models in the world and likely also the world's largest.
It would have been nice to have a wider selection of Maerklin Loks and cars for N. American prototypes. Yes, this probably is true, but the number of Maerklin modellers modelling exclusively N. American prototypes is 1% or less. Maerklin made the odd US Model mostly for European modellers who wanted something exotic for their layouts, like the "Northlander". It was never their plan to become a manufacturer of US models. It is too bad that no other manufacturer ever got into the business of making American prototype models for the 3 Rail AC market. That would have been a very interesting development.

Getting back to the current mess, I wonder how much was paid out in consultant fees and internal transfers to Kingsbridge and Goldman Sachs in the past few years and how much that amount affected the reticence of the banks to allow the company to continue rebuilding itself.

That being said, we will wait and see what happens in the next few weeks as the insolvency procedure is worked out.

Regards

Mike C

I quite agree with your ideas, Mike. However, I don't understand why Märklin cannot manufacture both 1:87 and 1:97? Why should they be mutually excluding? Did Märklin go bankrupcy because of the INOX coaches? I bought the INOX coaches from Märklin instead of buying it from another maker. Märklin could have cover a larger market by manufacturing items that the competition sold with success.

When someone have more information on what is said in this press conference, please let us know.

/Torbjörn

PS
I don't know if Kingsbridge and co will be able to hold on to Märklin also in the future. I'm lost in the legal details.
But I agree with what was written in "Spiegel On-Line":

...Märklin wird nicht untergehen." Entscheidend sei aber, dass künftige Inhaber "Herzblut" mitbrächten. Man wünsche sich Unternehmer, nicht Kapitalgesellschaften.

I was glad that Kingsbridge "saved" Märklin in 2006. But a lot of strange things have happened since. Maybe the "infrastructure" of Märklin is stronger today than three years ago, but financially it's obviously much worse. It would have been good if the consultants had been payed a percentage of the improvement in financial result instead of per hour. (Turnover 2007 126 million euros, consultant fees 13 million euros. The figure for the consultant fees has been mentioned in several places. Are they true or not - probably, but who knows...)

/Torbjörn

Buying items that M* have on stock which the dealer doesn't have will help directly.
Ordering new items will also help M* coz full order books do help when negotiating with banks about credit lines.
You're right that buying stuff the dealer has on stock will only help M* if the dealer orders new items from M* - so if you wanna help M* then order stuff that is not on stock!!!

The financial risk is with the dealer.
Your risk is that a new future Märklin company may not fulfil warranty claims for items sold by the current Märklin company. I do hope this will not happen.

IMHO some people are lumping together various situations , different problems ( hope it is a correct expression ,I'm not sure . if not : sorry)

IE : those who translate "1:100 lenght" = basic coach. I'm suspecting them of doing a mixture between the items of their chilhood & the recent reproductions .

The items of their chilhood had 1:100 scaled lenght + were toyish & really basically reproduced in terms of paint , accuracy , with no details..., etc , etc...
The current models have 1:100 scaled lenght BUT are finely reproduced with accuracy & details & nice painting , good colors etc....
Those from yesterday were really basic.
Those from today are not basic !

In other way : it is not because of a 1:100 scaled lenght that you have to "call" them "basic coaches" .[:o)]

( Under different aspects , sometimes I even find "1:100 reducing of the lenght" a more sophisticated process ( idea ) than trying to reproduce the exact scaled lenght without trying any interpretation or adaptation to circumstances....That's my opinion only)

It is ludicrous to think that M* problems are because they do not produce 1:87 coaches or not enough detailed models.

Rivarossi (1:87) went belly up.
Lima went belly up.
Roco (1:87) had a few close calls and restructuring.

Their solution? get cheap manufacturing in China.

No matter what, there is a substantial quality difference between a M* loco and a Roco or Rivarossi. I have many of them and love them but I have to handle them with much more care. After ten years running on my lay-out I am sure the m* will survive fine.

The problem is that in a recession "luxury" hobby goods as M* take a hit, especially if the main manufacturing facilities are in Germany.

The solution is not easy and painfull. Either they will become an "atelier" manufacturer (such as fulgurex, lemaco or, to a certain extent HAG), with very high quality and limited production or they will have to follow-up and set-up shop in the far east for more competitive pricing.

I did spend a huge amount of money on the hobby since when I started eight years ago. Luckily my finances allowed that (plus I don't waste money on necessities such as beer, booze and babes )but now I also have other financial strains and, at least for two years, I plan to slow down considerably.

Sure, there were marketing and management mistakes but, let's face it, the overall economy is hitting everyone. I would not be suprised if M* is not the only one in this situation.

That's a problem with China Currency and labour cost rise as Hornby/Bachmann price rise by about 15% this year.

Some more reading on the subject:

http://www.swr.de/nachrichten/b...466952/kmqip5/index.html

http://www.spiegel.de/wirtschaft/0,1518,605756,00.html

A quote from the first text:
Seine erste Maßnahme im Unternehmen beschrieb der Jurist mit den Worten: "Alle Berater raus." Schon damit spare Märklin einen knapp zweistelligen Millionenbetrag im Jahr, das sei fast die Hälfte des Jahresverlustes. "Da tränen einem die Augen", sagte Pluta zur Anzahl der bei Märklin tätigen Berater.

Two quotes from the second text:
Der Rechtsanwalt erklärte nun, sein Ziel sei es, einen Investor zu finden, der möglichst viele Arbeitsplätze dauerhaft erhalten und die traditionsreiche Firma "wieder zur vollen Blüte bringen" wolle. "Ich sehe eine Zukunft für das Unternehmen", sagte Pluta.

Auch am bisherigen Eigentümer, dem Finanzinvestor Kingsbridge, übte Pluta deutliche Kritik. Die Insolvenz könne eine Art "Befreiung" sein. Bei Kingsbridge habe das "Herzblut" gefehlt. "Keiner sagt: Schade, dass die weg sind."


/Torbjörn

"All advisors/consultants will have to leave. There has been too many."

"They are looking for a new owner with lots of money."

"It's good for Märklin that the days with Kingsbridge is over."

Or something like that...

/Torbjörn

Thanks Lutz!

/Torbjörn

From my position , as a customer , I don't find there is an "excessive variety of products" in Ho scale ....
They must keep on launching their own dgital system , to preserve the strong brand image . As a three rails manufacturer , they have to keep on offering all which is concerned by the 3 rails specificity .
The image of "Marklin 3 rails" must be associated with the image of the avaibility of a complete range of first quality items : that's why we choose 3 rails !

Am I wrong to assume that the vast majority of us models HO? are the Z and 1 gauge lines actually profitable for M*? I would not be upset if they could survive by selling off those two.

What about Trix N line of products?

Thank you for the report Lutz!
I agree with your hopes for the new owner Torbjörn!

Märklin will fix this!

Nowadays it is more likely to say that Märklin has a BIG name. But not particularly a GOOD name anymore since their recent years of ratling products. [B)]

Things are going to CHANGE. No we can't.........................do anything about that.

However, the brand name Märklin shall continue for sure, although no one knows what kind of products will finally end up in the boxes carrying that great brand. That is the only worry, actually. [V]

John

Thanks for the updates Lutz.

Thanks for the reports Lutz and Torbj�rn. I'm sure that there are some very good people already inside Marklin who know what should be done, so a good move on Mr Pluta's part to get rid of the consultant's.

What would your take be on that Lutz?

(As you can see I'm not a great consultant fan, most of them charge you an arm and a leg to tell you what you already know!)

The 1:100 coaches were first available from Rowa then Roco and later adopted by Lima, Rivarossi, Jouef and so on...



Maerklin moved to 1:100 (26.4 to 27cm) in the 1980s.
They adopted the 1:93 a few years back to compete with Fleischmann.
There are some modellers who oppose this and want M to keep making the 1:100. I suppose this is the same segment that still wants M Track and R1 curves.



As I stated, the most money is to be made by competing in the most segments of the market, which means satisfying both the 1:100 and 1:87 fans. It cannot be a choice of one or the other, but an overall comprehensive strategy to compete for the largest potential market share.



That is your right. No one is stopping you, but you may want to act now.



Now, who does that??????????????

In 2006, Maerklin made a decision to go into 1:93, the scale used by Fleischmann for most of it's modern passenger coaches. At the same time, Trix also went into 1:87. I guess that the idea was that M would compete with FL for the toy train market and Trix would compete with Roco for the scale hobby market.

I guess that somebody at M determined that 1:93 was the max length that could handle R1, so that helped guide the decision. It did not, however, do anything to bring back customers who had gone 1:87 with larger radii curves. The M 1:93 coaches in some ways have less detail than some of the older 1:100 models, and cannot compete with the multicolour interiors and fine detail of many of the exact scale models.

So, as I stated, they pissed off the 1:100 and 1:110 crowd by going to 1:93 and they alienated the 1:87ers by going basic on the details.
As I have said many times, this is not the only reason for the problems, but it is an indication of the mindset that got the company into trouble.

I would have given the customers the choice of basic models (1:100 with unibody interior details) and 1:87 models with multicoloured interiors and fine details. I would have assumed that R1 and R2 modellers would be happy with 1:100 and those modellers who had R4 and R5 would jump at the possibility of exact scale coaches by M.

I already said that IMHO it was a big mistake not to make at least R3 and R4 in M Track to help build the customer migration from the shorter coaches to the longer ones.

It was never one thing, but a combination of bad choices and poor fiscal management

Regards

Mike C

I give full credit to Maerklin for coming up with the offcentre pivot point for the coach bogies. This enables a 1:100 coach to handle a R1 curve with minimized overhang. The same feature can also be found on the newer 1:93 and 1:100 items.

What I do not understand is why M decided to make some models 1:93 and others 1:87. For example, the Mistral 69s and the Swiss Lightsteel coaches are 1:87 while the UIC-X and Gottardo are all 1:93.
For those who are a little more prototypical, this makes it very hard to combine, for example, DB and FS UIC coaches with SBB LS restaurant and coaches.

As I have already stated, the interior details of the new 1:93 coaches are in many cases worse than some of the 24 and 27cm coaches that came out years before.

By "basic" I do not mean cheap. I merely imply that this is the lowest level of quality in the range of products.
the more detailed models, similar to Roco's Exclusiv or Platinum would include multicoloured interior details, hand rails, accurate footsteps, possibly sprung buffers, etc. Look at LS Models DB UIC Coaches (ie 46132) to get an inspiration. Then compare it to a 43941, a 4292 and to a 4111. You will quickly see what I mean. If you want, add a Roco 44746 and compare it as well.

The revenue from a deluxe series of 1:87 coaches would have brought M lots of revenue. Traditionally Maerklin has been one of the simplest brands in which to install lighting, etc, so this would have attracted a lot of customers back to the brand.

I am sure that there are many other things that M could have done in the past few years that could have changed it's path.

Regards,

Mike C

Yep, I'll go with that as well !

Keep us informed Lutz. And thanks. M's problem is presently due to the world economic meltdown, lack of available credit and higher labor costs, generally not their offerings.

The solution is consolidation of their train line and elimination of some others. A streamlining is needed to stay in business during hard economic times. That's true for any business. That may mean more production in China where possible.

Of course, the mistakes of management, duly outlined above, have had an overall effect also. Better informed executives schooled in the hobby will help. We all hope they can work it out.

Cheers, Bob