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Has Hornby announced low sales or poor outlook this week. Shares are down 22p today or 9.91% and down at only £2 a share. They where nearly £2.50 before Xmas.

That's a heck of dip for a day's trade if no bad information has been published or announced.

FTSE was up today.
 

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I heard a report on Monday evening on the state of the European Toy industry. It said that 80% of Europe's toys were made in China. Personally that doesn't bother me, but it was reported negatively as though it was a bad thing and that Europeans were loosing control of their manufacturing.

Also analysts are going on about the bad Christmas sales and how it should affect shares, i.e. shares should go down to reflect this.



Looking at the graph and comparing Hornby to the Leisure goods sector, you see there is a little correction going on to bring it back into line with the sector. Perhaps their price was just a little over-inflated.
 

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QUOTE (Doug @ 9 Jan 2008, 10:24) <{POST_SNAPBACK}>It said that 80% of Europe's toys were made in China. Personally that doesn't bother me, but it was reported negatively as though it was a bad thing and that Europeans were loosing control of their manufacturing.

I think it should bother everyone in europe - it's very short sighted & very well to think individually about the cheaper goods, but long term with the drain of resources (i.e. money) going east................................

I've said it before & I'll say it again - "I personally (modellers hat on, traders hat off) would rather pay a little more for goods to be manufactured closer to home".

A question that I have asked before - & this is an open invitation for any manufacture to answer ;

If locomotive "A" is made in China & retails for £100 & gives you a reasonable profit, how much more would the same locomotive cost, made in the EU & give you the same reasonable profit be ?

Hornby will of course know exactly how much, Bachmann may not.
 

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That's a good point, but not one I think the manufacturers could easily answer. Its my understanding that at least some of the factories in China produce runs of a model, there by once the run is finished they can go on to create other products for other manufacturers, that way the main manufacturer (Hornby Bachmann etc) do not have to pay the full brunt of running the factory.

Also, with changes to working laws (minimum wage etc) and increase in production prices (cost of buildings, cost of oil / electricity to run said building) you would only be able to hazard a very vague guess, and very vaguely it would be considerable more than China!

Who knows, these developments have only happened in the last 30 years or so, as the Chinese economy takes off production prices will increase and in another 30 years we might be going round a full circle and find it viable to create in Europe again.
 

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Its not just the item cost which will be way, way less than 50% of close to home production when labour and and all production costs are taken into account.

Most importantly, lead times are less, design, tooling and capital equipment for production in Asia are state of the art. The effect of this is immense and seen in the quality of current offerings...

"Skilled" staff for all the pre-production and prototyping work are also way cheaper PLUS new and tooling and design costs are also considerably lower than in EU, USA, UK AU or any "western" country. As these increase it'll shift again...India, Vietnam..wherever, but probably not to Europe or the west...

Its not that the Western companies can't do it locally - Of course they can - but most of them can't afford to do it, and if they did the rate of new offerings would drop to a trickle and the cost would soar - and we'd get less for more $$$.

Look at Electronics and other industries... its a pattern thats happened time and time again over the years.

Richard
 

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I have one concern that has bothered me for sometime with the loss of manufacturing to China.
What happens if they close there borders and become a closed soceity as has happened throughout history?

David
 

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QUOTE (adecoaches26point4 @ 9 Jan 2008, 16:31) <{POST_SNAPBACK}>I have one concern that has bothered me for sometime with the loss of manufacturing to China.
What happens if they close there borders and become a closed soceity as has happened throughout history?

David


Then a very odd situation would occur, they would shoot themselves in the foot as their entire exports would stop nosediving their recovering economy, and no doubt a black market of smuggled models would develop,

I can imagine the next James Bond, sneaking over the border in a driving lorry covered in hay, hiding the illicit goods of Class 50's with matching coaches!!!
 

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QUOTE (zedbob @ 9 Jan 2008, 13:40) <{POST_SNAPBACK}>That's a good point, but not one I think the manufacturers could easily answer.

As I said before, maybe Bachmann may not know, but Hornby of course do, after all they used to manufacture in the UK & their recent aquisitions in Europe - Hornby must know - probably down to the penny, otherwise why move production to China ? - Hornby may have failings in some areas but money is not one of them (at least not nowadays).
 

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QUOTE (adecoaches26point4 @ 9 Jan 2008, 16:31) <{POST_SNAPBACK}>What happens if they close there borders and become a closed soceity as has happened throughout history?

David


This is something that concerns me too - but most people do not seem to care at all, as long as they get their goods at the right price.
 

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I just checked, as of 17:00 they are trading at 209.50.

A slight increase since yesterday.

Regards
 

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I would think it is mostly a reaction to Marks & Spenser's poor trading report for Q3. This indicates that consumer buying is slowing down. Any company associated with retailing, either as final seller or producer will have been marked down at the start of trading whilst the dealers waited to see what happened next. A more interesting statistic would be how many shares were actually traded today. If it was higher than average then there definitely some poor sentiment. If not then it was just a reaction which will work itself out over time.

David
 

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QUOTE (dwb @ 9 Jan 2008, 17:58) <{POST_SNAPBACK}>I would think it is mostly a reaction to Marks & Spenser's poor trading report for Q3. This indicates that consumer buying is slowing down. Any company associated with retailing, either as final seller or producer will have been marked down at the start of trading whilst the dealers waited to see what happened next. A more interesting statistic would be how many shares were actually traded today. If it was higher than average then there definitely some poor sentiment. If not then it was just a reaction which will work itself out over time.

David

David,

I think your assessment is spot on. Having just announced their 2008 programme in such confident fashion, with plenty of evidence to suggest a high level of investment, I can't see the market being concerned about Hornby's ability to deliver. As you say, it is a reflection of current retail sector performance and a lack of confidence in general. It will sort itself out soon as the gloomy Christmas trading forecasts haven't turned out to be as bad as first thought.

Black 5 Man.
 

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It is also possible that the current credit squeeze is having an effect, along with low wage rises.

Regards
 

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The recent sharp dip in share price for retailing groups has been explicitly linked to the 2% decrease in like-for-like sales figures from M&S for the Christmas period. I expect Hornby have simply been caught up in that.

Regards,

Dan
 

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Exactly the same economic concerns were expressed over the transfer of much toy and other small consumer items manufacture to Japan from the 1950's onwards. Guys, this is how economic development works, as the Chinese economy grows and develops, the low cost manufacturing will move to India, then on to Africa, until the whole world is economically developed; and everybody gets the access to education, health care and the chance to make a decent living in the way the West has enjoyed the last 50 years. Anticipated to be a 200 year process, we will be long dead by the time it is complete.

Energy to do it will run out fairly soon. If the process runs on track look out for a 'Manhattan project' scale (hopefully global co-development) project to make fusion energy a reality. The prospect of this 'Golden Path' appears feasible, if we can collectively bury the hatchet and agree to all get rich together...
 

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QUOTE (34C @ 12 Jan 2008, 06:57) <{POST_SNAPBACK}>the low cost manufacturing will move to India,

According to Frank Martin in that interview Airfix are going to be manufactured there. So it looks like it's starting already.
 
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