Since I'm the one John Degnan is referring to re: deciding not to pursue the
SAL B7 boxcar, let me state my position, which mirrors several responses to
his original post.
Unlike many other part-time, "cottage" manufacturers over the years, I am
full-time manufacturer. Accordingly, each project is weighed for its
profitability, market potential, cost vs. reward, and other factors. I am
not in business to "break even". Can't pay the bills that way, for sure. I
may be very small but my business decisions are based on the same principles
as the "big boys".
Since my entrance into S scale with the Southern low side gon, I have been
truly blessed with good sales, great kit suggestions and a lot of support.
While I don't model in S scale, S has, until late 2009, been a positive
business decision for me, particularly the diesels. However, as noted by
several listers, there has been a downward trend for ALL hobbies, not just
S, over the past 2+ years. Griping, growling and blaming Wall Street, the
Middle East turmoil or greedy realtors and banks selling mortgages to people
who could never afford payments does nothing to resolve the situation. It
may make for heated conversation over a beer with your buddies but the
result is still the same: a very slowly recovering economy and a very large
group of unemployed and underemployed workers still remain.
As for S in particular, the average S patron being much older than an HO
counterpart (about 20 years, according to some sources) has had a negative
effect; attrition is a very real factor. The S market is much smaller than
HO or N and is susceptible to bigger changes that would not normally have
much negative impact on larger markets. The fact remains that there are FAR
fewer discretionary dollars floating around now than just 2 years ago. My
HO sales are also down but because that scale is MUCH larger, sales are
still sufficient enough to move forward with new kits. S scale doesn't have
that "robustness".
As John noted, a few years ago, he had 80+ reservations, excluding dealers,
for the SAL round-roofed box. That last time I polled lists for interest, I
got about 60 reservations, including dealers, which was a 50% reduction in
gross profit. My recent polls for the PRR X29D boxcar and C&O/CRR high-side
gon have each resulted in fewer than 30 reservations . including dealers.
That simply is not enough to pursue.
Eventually, the US economy will recover but no one's crystal ball is clear
enough to see when. Until it recovers to at least 75% of what it was in
2008-2009, the S market does not justify my involvement. I'm not willing to
risk REAL dollars on the hope that I'll sell enough kits to make it worth my
while when I need to focus on industrial customers and growing my HO line.
The guys who have to tool up injection molds and run a ton of product in
order to recover their investment are in the same boat but at a MUCH higher
risk level than I am. Either way, new products will not be flowing nearly
as fast as they were just 2-3 years ago.
Jim King
Smoky Mountain Model Works, Inc.
Ph. (828) 777-5619
<www.smokymountainmodelworks.com>
[Non-text portions of this message have been removed]
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