Marklin's future survival
I wonder if Marklin will survive the current economic situation? Whilst it has survived thus far on a loyal fullowing, I hear that things are not going well currently. It is difficult to imagine why Hornby would invest in a rescue deal and it is not clear what other investors might be interested. Perhaps the sale of Trix might generate some working capital but I suspect that it would be difficult to sell of the current Trix business as a going concern because most of the manufacture shares moulds and tooling with Marklin. Am I being too pessimistic here?

Hi David, Sadly I think there is an even money chance of you being right. I started with Marklin in 1960 and although adding DC to my layouts in the early 1980's, I continued to buy Marklin products new until the late 1990's. The fact is, and I don't know if any other long term Marklin modellers feel like this, that I have for some time now had a mild version of an ' in love-fallen out of love' feeling about the firm. The 'in love' part is because Marklin was such an integral part of my childhood and youth, and all those reliable old locos are still running, long after other things in life have passed by. They are very much old friends and there would never have been a connection between model railways and I without them. The 'fallen out of love' emotion comes from a common reason why love affairs end - the feeling of betrayal. Marklin led a high-tech revolution that caused other European manufacturers to "up the ante" or look prehistoric. For those who could afford the changes to DCC, the new models with high propulsion adjustable motors etc. - this was good. For those of us who had been loyal Marklin customers for decades and who had large fleets of locos the cost of conversion was too much (to give you an idea, the cost of converting one Marklin loco to DCC in the late 1980's in Australia was the same dollar amount as a brand new Hornby 'Castle' or 'Grange' at today's prices!). Unlike Hornby or Bachmann, who gave you the option of buying DC or DCC versions of their locos - Marklin didn't. You either went DCC or you were left behind, feeling as much as a relic as your trusty old analogue locos. They even stopped making conventional transformers for the Australian power supply. They did introduce some cheap starter sets in DCC, but they were little use to the long term hobbyist. Of course Fleischmann and Roco responded by 'upping' their technology. No complaints there, except I still find new Fleischmann unaffordable, while Roco are now producing a number of locos in straight DC at reasonable prices, so they have won me back. If I were into 'Dispolokos', 'Hercules', 'Taurus' and BR 185's, Marklin have come back with some good priced locos. I'm not interested in these, but it's conceivable that a lot of younger modellers are as these locos are precisely what they will see on the prototype - so that may have been a good marketing move. I think the really important issue here is that Marklin, Fleischmann, Roco and the others (except Piko) all read the economy horribly wrong. If one thinks chronologically, at the same time the German economy was deteriorating after unification, the model railway manufacturers were indulging in a battle for high tech supremacy (the "you build a big house next door - I'll build mine bigger" philosophy). Maybe they felt they had to, not to be left behind in the eyes of younger, computer minded modellers. But it was exactly the wrong time to be innovative at the cost of much higher prices and of alienating your traditional support base through closing down analogue products - instead of providing a choice like Hornby and Bachmann. In other words the competition was all about technology at the expense of everything (and everyone) else. Then there was the investment on numerous limited edition models (again unaffordable to most). It was most annoying to read the Nurnberg review in CM and see that most of Marklin's new products were one year limited editions (at obviously high prices). Yet this continued on under a management that apparently could not see that it was a marketing approach totally unsuited to a worsening economy. So over a decade after unification had affected the German economy negatively (it was not like the firms were caught out in a 1929 style overnight disaster), this 'exclusive' (in both senses of the word) policy of seemingly ignoring economic conditions continued - and there was only one way the manufacturers could go. To be honest, I think that is where the gloom started in European modelling - and when it started disappearing here in Australia as a choice (despite good models of local prototypes occurring out here, English and American prototype modelling remains strong). One wonders how many traditional Marklin modellers, like me, stopped buying Marklin new, and how much that cost them. If the supposed demographic measurement of railway modellers being generally an ageing bunch is true - I expect they lost quite a few. Hornby and Bachmann were aware and in touch with their customer base enough to offer choice at reasonable prices. Roco is once again and good luck to them. If Marklin start offering Era I to Era IV locos at reasonable prices again (DCC or not) I may start buying their items new again, instead of the second hand items I pick up very occasionally now. So really it is up to Marklin. In the U.K. their new distributors will certainly have to do a lot, as one has to say that Gaugemaster certainly did everything possible to promote the brand well (double page colour ads in CM etc.). Unfortunately, if one goes to the Marklin website at present and looks at addresses for "Insider Clubs", the only countries without distributor web sites or email addresses are Hungary, Poland, South Africa - and the U.K.! I understand The Hobby Company have had a lot of experience as U.K. distributors of the former Lima (pre Hornby International) and ViTrains and they certainly did that well - so let's hope they give Marklin at least the same strong exposure as Gaugemaster did. Best wishes, ( a now exhausted) Richard

I think we should differentiate between the brand name and the company. I certainly don't think that the brand name is likely to disappear in the forseeable future. The organisation, on the other hand, needs to pay off a large debt. Whether they manage that on their own, or end up shedding that burden via receivership, like several other brand names, remains to be seen.

Alan, the brand name is one of the assetts of the company, together with tooling, premises and people. I could see the brand name being sold by a receiver to generate cash to pay the other creditors, however the survival of the brand name by this route is probably not of great interest to the existing modellers except as an item of nostalgia as it would probably end up attached to some totally different toy line of Chinese made construction kits or similar. I think the key issue is the viability in today's economic climate of Marklin in its current form.

Hi David, I think that you underestimate the value of the Marklin Brand. Sure outside of Germany it is considered a small brand, but within Germany it is ahuge brand. I don't understand the reference to China? People seem to hammer Marklin about being making some stuff in China, yet it is acceptable that Brawa, Hubner, Hornby and such like make their stuff in China. Cheers John

John, not at all. I think Marklin is a huge brand and will have substantial value. However without the resources and tooling of the company, it will find itself attached to a different toy range. It is probably the single most valuable assett owned by the existing company. My comment on China was meant to indicate that the brand name would likely be bought by some international toy producer who wished to establish a strong European presence by brand name identification.

Hi David, Difficult to say. Marklin is a German brand, and outside of Germany I would think it actually has little value. Sure within the model railway fraternity it is reasonably well known, but its true value is and will be in Germany or of people of German origin. I would think that the single most valuable asset owned by the existing company is the museum collection, but the name is certainly a key ingredient. I think that to say Marklin is in trouble while true, doesn't look very hard at the fundamentals as to its problem. Ultimately it appears to have a debt issue, but is trying to reduce the average age of the people who buy it. Sure there are some very expensive items in the inventory, but there are also some cheap items as well. While the older generation is into steam locomotives, the younger generation has had little if any exposure to them and as such would probably have a better connection to modern trains that historic trains. The bottom end in terms of price is aimed at children. For every 20 children who gets a train set, 1 may take up the hobby agin in their 20-30’s. There are always going to be a small minority like me who models something from before they were born, but I would say in the majority of instances people are in fact going to model what they have seen. Probably a simplification but pertinent as well. Cheers John

John The debt issue is not an accident! It arises because of the way the business was run. The question here is whether it has the ability to service that debt or repay it if the lenders require it. You are certainly correct that the museum models have a significant value and presumably sale through auction of these items will provide some working capital. However we do not have access to enough financial data to assess how significant that would be. Hornby seems to have done a good job in establishing the young customer base which engenders loyalty with them as they age. However again difficult to see this as a short term solution for Marklin. The hypothesis here is that Marklin has severe financial problems which threaten its short term survival. High debt probably prevents further significant investment in tooling for a new product range.

Anyone remember Hornby-Dublo? The market leader in the English-speaking world of model railways in the 30’s –50’s and the brand encompassed Meccano, Dinky Toys and Hornby-Acho. Hornby was conservative, reliable, used metal for the bodies and for every attribute claimed by Maerklin, Hornby got their first. And yet…… Poor management, an over ambitious market strategy brought on by complacency led to losses that pale against Maerklin and yet the banks foreclosed. The only viable asset was the brand* and this was the only asset sought by Tri-ang when the upstart from Margate bought them. Will Maerklin survive? Actually, I do not care one way or the other, the loss of Hornby-Dublo was widely proclaimed as a tragedy for the model railway community but forty years on, their old market has never been more active and Hornby-Dublo is merely a nostalgic memory for old men at swapmeets. Tim *The value of German industrial premises and plant has been falling in real terms for some time. The fact that Maerklin’s plant is capable of producing older models does indicate that it is outdated and is less of an asset than a liability. The pension commitments for a loyal and large workforce must be one of the great negatives for any potential buyer.

While It would be sad if Marklin folded, I buy very little Marklin these days ecept for some collectable stuff (Marklin Magazine wagons and christmas wagons). If they were to fold, the biggest hole in the Market would be the track, it really is the onlything that they make that no-one else does. Ultimately they are not producing what I want to model and I dont just buy for the sake of buying. I know that they have a big loyal following (the Marklinist!) but not being one, it doesn't worry me to much John

Well whilst it would be sad for the entrenched Marklin fans, it might actually be very good news for Roco et al, because it will free up a sizeable market which will buy DC (or DCC) products instead of starting on the AC route.

There may be some people who model in Z or 1 scale who would be sad if Marklin folded. Would the void be filled or simply suck secondary suppliers into oblivion?

If Märklin should fold, the image of the model railway industry will be severely dented. It will become much harder to find anyone prepared to invest. This will have a very big impact on all of us, not only Märklin's customers. I would suggest that there are a couple of reasons why this won't happen in the short term.... 1. They are undergoing a tough cost cutting program which should bring them into line with the economic forecasts. Kingsbridge wants to sell a healthy Märklin at a profit for themselves. 2. Märklin's 150th birthday in 2009 is something all parties, the owners, the staff and customers, will want to celebrate.

Alan We shall see. A tough cost cutting programm is a once only exercise. Depends where costs are being cut and without a detailed look at the business, it is difficult to know. Reducing the overhead may improve profitability if it can be done without significantly affecting efficiency. However cost cutting in the sales/marketing area might be counterproductive, especially when Marklin perhaps needs to internationalise the brand to grow overall market share. The 2009 date is a total irrelevance. As far as those who control the purse strings and potential investors are concerned it is not a major factor. How the existing owners package up the business for sale will be interesting.

Hi David, I think that you underestimate the value of 2009 to Marklin. They can repackage stuff, put it in 150 year boxes and it will sell, over and above any other new items stuff. Look at what they did in 1985 and you will see what I mean. IF and its a big IF they are really cleaver, they will only have a limited number of items, say 6-10 sets and every "Marklin" fan will probably buy at least one of them. Being really cleaver, they should announce them in December 08 and satrt selling them from 1 January. John Will be tempted by minex or DRG outline models only