A large manufacturer of model railroad products in China has closed. The closure will be felt throughout the hobby, as explained by Jason Shron of Rapido Trains below. It will also adversely affect thousands of Chinese, who lost their jobs.
Here is Jason's message, sent out today:
A large Chinese supplier of model trains closed down today. This factory employed 3,000 people and was a major producer for North American manufacturers.
This is the second large supplier to shut their doors in two years. It will no doubt contribute to delays across the industry as that factory's clients try and move their production to other, overworked factories.
The reality is that model railroad price increases (averaging 10%-25%) have not kept pace with cost increases in China, and it is often difficult for the Chinese suppliers to stay in business while meeting the demanded price point from their major North American clients.
Our industry is currently tied to Chinese production, as southern China has developed the special skill set required to produce model trains. Bringing the manufacturing back to North America would cost even more, and there are no reliable model train factories set up yet in places like India.
So I think we're looking at tough times ahead in our industry: more delays and even larger price increases. At some point many modellers will say "that's it - this hobby is too expensive!" and leave. With lower sales, the prices will increase more. So this could be the beginning of an escalating negative spiral.
So far, Rapido has largely been spared from most major cost increases, but I have been warned that our costs are going up soon as well. That being said, we are looking at ways to avoid getting caught up in that negative spiral and keep our quality high and prices competitive. I will keep you guys informed of our progress.
3,000 people in China have just lost their jobs a week before Chinese New Year. Not a good day.