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Marklin under pressure

7145 Views 23 Replies 8 Participants Last post by  Dennis David
I found out from another forum the major reason for our complaints. The below is translated from a newspaper article which was translated using bablefish.

Maerklin is heavily at pressure. The conversions
break away, customers criticize unsatisfactory
delivery behavior, and the banks send a
management consultation from Munich to the
Goeppingern into the house. Of Soenke Iwersen No
horror number, which is not still undercut. When
the management and the work council of Maerklin
negotiated one year ago about the basis for an
occupation safeguard contract, managing director
Paul Adams put a number on the table: 130 million
euro. That, said the managing director, is the
most unfavorable case, which lowest conceivable
conversion, with which Maerklin must be
nevertheless survivable however. In order to
ensure this, the model course manufacturer
diminished 342 places in production in
Goeppingen. Work council and trade union agreed,
because 130 million euro sounded expressed 2004
as pessimistic prognosis. That changed. "our
expectations will not arrive probably", say Adam.
Which expectations are this, he does not say.
Maerklin publishes no more reference numbers for
two years. 2003 did not lie the conversion with
164 million euro, over 2004 are anything
well-known. After information of the Stuttgart
newspaper the production target was not reached
by 145 million euro. For 2005 a repeated
break-down is approaching. The past horror
conception seems thereby after today's conditions
almost as a dream goal. "130 million would be an
enormous achievement", say a leading employee. A
conversion of 115 million euro seems realistic -
that would be opposite 2003 a break-down of 30
per cent. In addition, Adam denies this number,
calls no different one. On a workshop meeting the
managing director announced, one must about a
dismantling from 70 to 80 further places think,
if the situation did not improve. This is to
happen however without notices. The Beschaeftigu
ngssicherungsvertrag, which runs until 2010, is
to be maintained. Still 720 coworkers are active
in Goeppingen. As reason for the crisis the
Adam's bad surrounding field constitutes. The toy
industry stagnated, the customers bend rather to
saving as for consuming and also the coalition
contract is unsuitable to set the business in
motion. Whether all this can be however reason of
enough for such violent recessions in sales as
with Maerklin is doubted, in the industry.
"hauptproblem of Maerklin is the stupidity in
planning", says Ingrid bitter, the business guide
of model railway pupil in Stuttgart. "from
January to May 2005 important tracks were not
available. That cannot be done simply." Bitterly,
sold, recently the central station in such a way
specified station received for 30 years the model
courses from Maerklin. The controller was
announced in February 2004, which shifted supply
since then for various reasons. "the customers
are annoyed, if they come into the shop and do
not find, what it in the catalogs see", say
Norbert Sawinski, a dealer in Frankfurt. "I got
the whole summer no novelties from Maerklin
supplied. And then the people save the money
evenly not, separate spend it on other things."
The question remains whether Maerklin is strong
enough, in order to free itself from the crisis.
Between 2001 and 2003 the result was altogether
about 2.5 million euro. However the personnel
reduction 2004 cost 13 million euro. The business
banks of the model course manufacturer are so
alarmed that they sent the Munich management
consultation Wieselhuber & partner after
Goeppingen, in order to analyze Maerklin. The
first result: Maerklin is classified as
reorganization worthy and as reorganizationable.
She suggests which reorganization steps, the
management consultation did not want to say
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This was from German newspaper,i use translated germany to english using bablefish.This is not 100% translated at all.
Put the original German up and I'll have a go at translating it.
Basically what it seems to say is that the profits being generated by Marklin are very small relative to the cost of restructuring the business. The banks are supporting Marklin at the moment suggesting Marklin are heavily in debt with further restructuring planned. And German customers are keeping their hands in their pockets and not spending money on Marklin product so sales are around 30% below forecasts.

Marklin sales are predicted to be around €115-130m (say £80m). To put this into context it is almost double the sales of the Hornby Group for 2004/05 which includes Scalextric.

This seems like a reasonable precis.

This reminds me of the situation Meccano were in during the early 1960's.

The bottom line is folks if you had £100,000 to invest would you buy shares in Marklin right now?

Or would you buy £100,000 of Marklin product?

Interesting and paradoxical question.

Now I am not a Marklin fanatic although I can understand the pain that Marklin fanatics might be going through right now. I understand that Lionel fanatics went through pain a year or two ago when they went into chapter 11 and Jouef fanatics went through pain when they moved production out of France. The truth is though all this happens when fanatics are not buying enough product. Its all very well talking about it but why are you not buying?

Happy modelling
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Very interesting.

With Roco also having a rough time, the only company i have not heard about is (and i know i am going to spell this wrong!) Fleishmann.

I cannot understand why marklin has continued to persist with theat is effectivle 3 rail trains. i know it is very popular over there but they should be leading the way not dragging behind. as long as they stick with the 3 rail they are onto a looser from the start.
Their Trix stuff is nice (same shell with a 2 rail mechanism) but i cant justify paying their prices.

It is interesting to compare them to hornby. I think marklin are genuinly having a tough time. I think Hornby are just being daft with their assets and are actually quite well off.

I have read about marklin for sale.

Only in German text.
Marklin for sale rumours not confirmed or denied according to the report.

There is talk of Marklin having about €60m of debt on its books but this can vary dependent on seasonal fortunes.

The largest creditor is the Baden-Württemberg Bank who is owed €20-25m.

Marklin blame the games console market, cheap competition from the far east and a declining toy market for its declining fortunes.

The restructuring is going well according to Marklin.

That is reasonable interpretation and summary of the report.

Happy modelling
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Yes and a buyer would not necessarily be a bad thing.
Dennis. You clearly have your finger on the pulse when it comes to the USA. How are Marklin doing there?

Are their products as expensive in the USA as they are in Europe?

And who buys their product in the USA?

They do American outline. It should also be remembered that Marklin own Trix and so Marklin do offer a 2 rail alternative.

Hornby Dublo offered a choice of 2 rail and 3 rail for a few years as they did not want to upset 3 rail traditionalists but it was a disadvantage for them and it has to be a disadvantage for Marklin.

When the factory in Liverpool was finally closed there was more three rail stuff sitting on the shelf in the storeroom than anything else. Hattons bought it all at bargain basement prices and it took them 10 years to clear it.

So does anybody in the USA actually lock themselves into Marklin 3 rail?

Companies do not survive on sentiment alone and they do sometimes have to upset people to move on.

They should ditch 3 rail in my view and that is likely to be the first thing any new buyer would do. To be totally blunt their range is too big. They should cut the range in half. Focus on what is profitable. Trim development costs for 2-3 years and maybe even stop exporting to America and the UK. These are tough decisions to make but if they continue to defer these tough decisions they will not be with us for much longer.

Any potential buyers will be looking very hard at the level of debt and the stock in the storeroom. I suspect buyers will only appear when the liquidator moves in.

Look at Lima for example.

What do you think?

Lets open this up to everybody...

Have you been buying any Marklin stuff recently?

Or has any member of Model Rail Forum being buying Marklin stuff?

We talk about how good Marklin are but are they seeing your cash?

Talk is cheap. Companies do not survive on talk.

If you have not being purchasing Marklin stuff why not?

Happy modelling
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To answer my own question I have not been buying Marklin stuff as my interest is in UK outline. They do not do anything that interests me. And the gauge is wrong. Marklin do HO and not OO. And if they did do something that interested me in the right gauge their prices are way over what I am used to paying so there would need to be an adjustment in this area also. Simple as that.

If Heljan can do something for the British market so can Marklin.

And its absolutely hopeless to say that Marklin stuff lasts forever and that the prices reflect this quality. So does Hornby stuff and Bachmann stuff if you look after it properly. And if it does last forever then Marklin are indeed in big trouble as buyers will be buying Marklin stuff that looks as new for half the money secondhand!

All I can say is good luck to our German modelling friends. May they continue to enjoy the quality German railroading models.

And what are the odds on Fleischmann taking over Marklin in the next 3-5 years and the Marklin name being consigned to history? In the way that Triang took over Hornby Dublo?

Happy modelling

PS One final thought from me. In terms of engineering you can pick up a Hornby Live Steam Loco for less money than a number of the Marklin locomotives. Which has the more interesting engineering?
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QUOTE the gauge is wrong. Marklin do HO and not OO.
I think you mean 'scale'.
'Gauge' refers specifically to the distance between rails and, as has often been discussed, the gauge of 16.5mm is identical for both HO and OO. Neither the scale nor the gauge is 'wrong'.

With regard to three rail operation.
I don't like 3-rail myself, but it does enable certain advantages over 2-rail - most notably the simplification of return loops. With 3-rail, the problem simply disappears. I would also add that it's pointless to compare Hornby's ancient 3-rail track with Marklin's neat stud contact system, which is far superior and very unobtrusive.

I am not sure what the current situation is, but for many years, Marklin had their 2-rail Hamo range as an alternative to their 3-rail. Trix made locos in both 2-rail and 3-rail versions - I don't know if that is still the case. I believe that Fleischmann have also provided 3-rail versions of some of their 2-rail locos and perhaps still do. So the 3-rail situation is nowhere near as as cut and dried as has been stated.

I agree that the prices for both Marklin and Trix seem excessive.
One of the company's major underlying problems seems to be over staffing, which is reflected in their efforts to reduce this substantial cost by redundancies. But naturally that is stronglyly resisted by their staff, who have built up rather enviable conditions in a country that has traditionally cared well for its work force.

QUOTE Lets open this up to everybody...
Have you been buying any Marklin stuff recently?
etc etc . . .
Sorry, no, this is simply not sensible.
It's quite clear that Continental modelling is in a minority both in this forum and in UK as a whole. So one must wonder why someone, who has regularly stated having no interest whatever in Continental modelling, then proposes to 'open it up' by asking such an inappropriate question . . . and then going ahead to answer it themselves.
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It is a wholly appropriate question because a number of the Model Rail Forum members express the sentiment that it would be a pity if Marklin go under yet the bottom line is do those same members buy Marklin product. The same can be said of the views about Roco and again whilst support is shown for the company we simply don't seem to buy the product!

I cannot be accused of being a hypocrite because my own stance is clear. And I do genuinely want to hear from any forum member who has bought a Marklin product!

I have but secondhand only and only when I see Marklin product for sale of the century prices! I do agree its fine quality. It runs on Hornby Dublo 3 rail track but even so it has this silly 14V AC system totally out of synch with the real world and making things even more complicated and costly for Marklin!

The only reason Fleischmann do 3 rail product is to capture Marklin customers. They would not do it otherwise. Fleischmann don't actually produce a 3 rail track system.

Trix now only make 2 rail and apart from this the products are identical to Marklin. Marklin use Trix to capture Fleischmann customers!

What a tangled web!

Happy modelling
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One of the biggest headaches marklin customers are suffering is the stop - start release or not of the new Central Station digital controller. This has proved to be a PR disaster and resulted in them having to manufacture further runs of the now discontinued version - and we still haven't got a release date for the new version....

Sorry Gary, I will say this once more and then we should leave it.

It isn't sensible or appropriate to ask forum members if they have been "buying any Marklin" when the answer is so very obvious to all our readers. I would venture to suggest that in our tiny community, we may well have NO Marklin enthusiasts whatever. So the question is pointless and just sounds sarcastic.

You speak from and encourage a British is best view (in spite of the fact that most of it is actually Chinese). This is an International Forum and we would be best advised to avoid any political leanings altogether, if we want to remain an International community and I would hope that we do.

Quite separately, you say

"The only reason Fleischmann do 3 rail product is to capture Marklin customers"

So making 3-rail is quite clearly a viable operation for Fleischmann or they would not be wasting their time and money doing it, or are they stupid too?

"it has this silly 14V AC system totally out of synch with the real world"

What IS the 'real world'.
You really mean your personal world, as you see it, but the real world is much bigger than that.
While I do not like their system, I believe that in spite of their troubles, Marklin remains the biggest single model rail producer in the real world. So, like or or not, that cannot be summarily dismissed. Sure, Marklin is in a small minority market in UK but they are damned big elsewhere and elsewhere is considerably bigger than little old UK. That cannot, or at least should not, be blindly ignored.
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The real world is everybody else apart from Marklin who use the same international standards.

I do genuinely want to hear the point of view of Marklin users.

No offence but sometimes things have to be said in a certain way to encourage discussion.

We have heard from Marklin why Marklin believe they are suffering. What do Marklin users think?

Does this forum have any?

Happy modelling

PS and this community is not so tiny! As far as UK based English speaking model railway forums go Model Rail Forum is one of the largest communities and certainly one of the fastest growing!
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QUOTE I do genuinely want to hear the point of view of Marklin users.
This might be more persuasive if the derogatory remarks about the product were removed.
Bashing the product ensures that, in the unlikely event of a response from a Marklin enthusiast, it can now only be in the context of argumentative defence.

QUOTE No offence but sometimes things have to be said in a certain way to encourage discussion.
Equally no offence, but this is not that 'certain way'.
A provocative approach doesn't encourage discussion, it provokes dissension.
Constructive discussion needs to be encouraged from a starting position of neutrality, not with disparaging remarks that can only be perceived as offensive to those who hold Marklin dear.
Can anybody else apart from Rail-Rider see any disparaging remarks about Marklin in this thread?

It does seem to be getting a bit personal.

Marklin as a company have had some advice from me in terms of what they need to do to get back on an even keel.

And I have gone on record as saying that as somebody only really interested in UK outline their product has little appeal. However I have also said I do recognise the quality and I do buy Marklin if I see it at prices that are attractive. So at the very least I do have experiance of the Marklin product.

Frankly I am baffled.

Happy modelling
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Let me add a few comments then let's see where this thread goes. First of all I don't know where this idea that Marklin is in any more financial trouble than any other hobby manufacturer, Hornby included. That this is a period of consolidation is beyond dispute but let's not bury Marklin yet, though it seems one or more members would like to.

In the United States Marklin has a very strong following. Many toy stores and hobby shops carry their line if they carry any "foreign" brand. They are viewed somewhat similarly as Mercedes motor cars. Everybody does not buy one but most would love to own an example. I buy Marklin and I am very happy to make the investment.

As far as price goes, how many people have been to Germany as well as China? Well I have and something tells me that their respective pay packets are not quite comparable. That being said, die-cast bodies, custom built motors, advanced electronics and the constant re-engineering of their models comes with a price. I had mentioned that Minitrix is upgrading all of their N-Scale locomotives with specially designed motors that fit in the boilers. This is not an inexpensive proposition. Are Marklin's models over-engineered? Do the Brit's models have a better value/price ratio? That's a question that can only be answered by the individual buyer. I find their prices very reasonable. Which leads me to two conclusions, Hornby products are a great deal and that you are paying way too much for Marklin for some reason. Oh well so much for the EU and free trade.

3-Rail vs 2-Rail is a non issue. Let me repeat that 3-Rail vs 2-Rail is a non issue. Saying that this causes people to be locked into the Marklin brand is like telling me that I'll be locked into a room with Angelina Jolie! Hey guess what, some very happy modelers would not have an issue in either case. Lionel, another brand that some would like to bury is also 3-Rail and this has gone through several buyers. 3-Rail is very popular in the United States by the way.

Totally unrelated except fot the fact that I also collect toy soldiers, Britains, a brand that I very much like was recently purchased. I would not expect them to disappear anytime soon.

I am not aware how large Hornby's worldwide sales are compared to Marklin's but in my travels Marklin seems have the larger market. Well what does this actually mean? Marklin may have some redundancies but they may also be starting at a higher level.
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Oh any any idea that Flesichmann or any other manufacturer thinks that they are going to "Capture" Marklin buyers beyond the ocassional purchase is just plain nuts.
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