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DT
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Another shock for model railway fans: After the recent sale of Märklin to British investors now the German company LGB has filed for bankruptcy - the worlds leading manufacturer of garden railway products has announced it's insolvency today. 150 jobs are in danger of being lost at it's Nuremberg site.

Apparantly the factory gates were closed this morning as workers arrived for work.

LBG released the following info:

Ernst Paul Lehmann Patentwerk today announced that it was taking strong, immediate steps to prevent a hostile takeover of the family firm. Those steps include legal moves that should enable Lehmann to continue providing its quality products and services around the world.

"We do not believe that a hostile takeover financed by international bankers is in the best interests of our employees, representatives, retailers and consumers," said Rolf Richter, Managing General Partner of Ernst Paul Lehmann Patentwerk. "Lehmann has been operating profitably, despite the severe problems in the model train industry, and we believe our family atmosphere is a very important reason for our success."

To preserve that family involvement, Lehmann has taken the legal step of asking the German courts for protection from its financing banks. "We feared that the largest of our financing banks, an international bank forced upon us after the dissolution of our local bank, sold its loans to Lehmann to a third party without our knowledge," said Richter. Richter also emphasized that these moves will enable it to ship product and provide services during the crucial holiday sales season. "We are going to ship a large volume of popular standard items, like track, and exciting new items," said Johannes Richter, Managing General Partner and production manager of Ernst Paul Lehmann Patentwerk.

About LGB:

In 1968, Wolfgang and Eberhard Richter created something unique: LGB, the world's first model railroad for indoors and outdoors. Today, LGB still stands alone, far above conventional toy trains:

LGB is big. The letters "LGB" stand for "Lehmann Gross Bahn" or "Lehmann's Big Train." LGB trains are G-scale - four times larger than conventional HO-scale trains. LGB trains are easy to put on the track, even for kids. Details on LGB trains are big enough to see and strong enough to withstand frequent handling. But you can fit a full circle of LGB track in space less than 1.3 meters (51 inches) wide.

LGB celebrated it's 125 existance in July earlier this year.
 

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DT
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LGB of America Responds to Lehmann Announcement

From LGBoA:

Ernst Paul Lehmann Patentwerk today announced that it was taking moves to prevent a hostile takeover of the family firm. In response, Tony Castellano, Chief Operating Officer of LGB of America, said, "We are pleased that our friends at Lehmann have moved aggressively to protect the company, and we are also pleased because these steps will insure that we have the LGB products our customers want for the important holiday season."

And What of LGBoA:

At the beginning of September, Ernst Paul Lehmann Patentwerk, parent firm of LGB, transferred ownership of LGB of America to a new firm, U.S.-based G45.

It is highly probable that the sale of LGBoA was a quick sale aimed at generating cash to keep the head of the ailing company above water. Perhaps this has held off creditors and prevented foreclosure. LGB will seek to find a creditor or buyer that is willing to manage the old debt and hopefully allow the company to continue to make trains. Unfortunately this state of affairs will limit investment in the company and future plans for new models may have to take a back seat for a while.
 

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I read a report that 30,000 turned up for their 125th birthday party bash in Nuremburg from all over the world. That's a lot of support.

David
 

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From yesterday's Financial Times:

Family businesses outperform rivals

By Gordon Smith

Published: September 19 2006 03:00 | Last updated: September 19 2006 03:00

Fresh evidence of the strength of family-run businesses emerged yesterday as a report showed those on the Stock Exchange outperformed their listed rivals without dynastic links by 40 per cent in the last six years.

The conclusion is one of the main findings of a study into the performance of family-owned businesses on the stock market and comes at a time when these businesses face greater scrutiny.


So it's not (in the UK anyway) the fact that these firms are family owned. Where does LGB manufacture? - in Germany or in China?
 

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Another very sad turn and an amazing contrast with our own dear Hornby. I started off out of doors with LGB but must admit I've bought more Bachmann since as it's so much cheaper. The model railway business in Germany must be going through really hard times. The press releases half read like the "family" (aka the shareholders who've run the business into the ground) are doing their best to protect themselves rather than their employees and customers. If there's the basis of a viable ongoing business let someone else take it over - the current management have failed.
 

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DT
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Discussion Starter · #11 ·
A family business could be a good thing - at least for the first generation or two.

The directors are held together by a strong bond. Not unbreakable unfortunately, but they have more than a casual acquaintance.

The trouble is that after a hundred years, the family grows and cousins and people for 2nd marriages come into the picture. This throws out the original bond that perhaps existed and allowing complications to enter.

As it is a family association, quite often all the family has to have a say. In the case of Märklin, there were 22 signatories. That's way too much for a modern company that needs to make decisions fast and efficiently.

What happens to family run businesses as they get on a bit is they become slow, unefficient and don't react to the modern needs of the company.

Difficult for a family business to relinquish power, but if they don't they risk the possibility of a slow death.
 

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Its looks like whatever happens there will still be an LGB as there is somebody expressing an interest.

I wonder how comfortable the new owners of Marklin are now that they have had a chance to examine Marklin first hand?


There were definitely a number of surprises for Hornby after the Lima purchase.

Maybe the Germans are a touch more organised than the Italians!


I suspect this ownership merrygoround has not yet run out of steam.

Happy modelling
Gary
 

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Speaking as a "garden railway modeller" as well as "indoors HO" I don't (& a lot of G!/LGB people) don't worry too much about scale.

At the moment I am running an LGB DB outline diesel pulling some Bachmann "Spur 1" hoppers - somehow the scale difference does not seem to notice outside so much.

Personally, I am more concerned about the outcome for the people who work for LGB. Whenever companies get into trouble no-one seem to bother about the people it really effects - these are often smallish companies with a small very loyal workforce.
 

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QUOTE Personally, I am more concerned about the outcome for the people who work for LGB. Whenever companies get into trouble no-one seem to bother about the people it really effects - these are often smallish companies with a small very loyal workforce.

Good point, and once the skills are gone it is hard to train new people to do them if the company ever gets resurected.
 

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It seems likely that LGB will start trading again next week - albeit while in administration, rather like American Chapter 11 bankrupts can. This is the most civilised way of dealing with companies in administration and allows the workforce to be retained. Unfortunately the "relaxation" of the UK's bankruptcy laws has lead to a record number being filed in the last twelve months....


60134
 
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