Plastic Model Railroad Items, Future Availibilty

[beiland]

I've thought a little about this potential problem over the past several months, particularly considering the very significant dependence we have created on the many products that are now being supplied by the Chinese manufacturers. Do we know that this great proliferation of quality plastic models is going to continue to be available, and at the fairly reasonable prices it has been at for a number of years. I'm betting that things are going to change, and not in the most positive manner for the train modeler.

Here is an interesting note included in the latest newsletter from Peach Creek Shops in Laruel MD.

"Last month I made a few comments about the demise of Sandakan, which were only partially correct. My thanks to Don Thompson of S Helper Service for providing a bit more info on the subject.

The root of the problem is production facilities and materials in China. Did you know that one of the major causes of the bankruptcy of Sandakan (one of the biggest injection molding companies in China that services the model railroad industry) wasn't lack of orders or poor management; it was the failure of the supply system. Sanakan couldn't get good styrene pellets!"



Dear Peach Creek,

One of our customers forwarded your website to us and I think the statement below (above) is not quite accurate nor does it fully go into the problems at SK. In our opinion the main reason SK has been having problems was their purchase by the Asian division of JP Morgan. Their supply problem was can be traced to them having to pay the loan payments for their purchase, instead of paying their suppliers. Eventually, many of their suppliers quit selling to them. They ran out of new ones who would give them credit. K-Line and Lionel going bankrupt did not help either as they both owed SK millions of dollars.

I could go on for a book, here, but the management team installed by the new owner did not help things. Did you know they had a strike in China? Not to mention all of the quality engineers that were either let go or quit due to the direction the management team was taking this at one time wonderful company.

Best regards,
Don Thompson
S Helper Service Inc.
Using SK since 1994

 

[UP2CSX]

I don't think is either an issue limited to China or a long-term issue for model railroaders. SK, like LGB, simply got in over their heads when it came to credit and expansion. Combine that with the world-wide recession, the problems of JPMorgan itself, and the fact that SK was selling to shaky outfits like K-Line and Lionel on credit, and you have the recipe for disaster. China is a gigantic economy and other businesses will step in to fill the void left by SK. As soon as demand recovers to normal levels for discretionary items like model railroad products, you'll see a lot more companies stepping into the arena. Companies like Horizon Hobbies and Walthers have not been acquiring other distressed model companies at fire sale prices because they're dopes. They know that their investment will be paid back many times over in the coming decade.