Hornby's Share price

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.

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.

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

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

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!!!

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.

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.

Yes I agree. I heard about the Marks & Sparks news this afternoon. The trends seem to match up and the market is jittery.