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| To respond to this month's Editorial, send comments to: Editorial@modelrailroadnews.com |
| Looking at the Athearn/Horizon situation | |
| When Horizon Hobbies purchased Athearn, they bought into the family, so to speak. When I first emerged as a writer and editor in model railroading, I was reminded by one and all how small and familial our hobby is. Put it another way, even the giants of model railroading aren’t so big. So to hear that Uncle Irv’s legacy has been traded like a stack of baseball cards sounds somewhat jarring to us. Because the model railroad industry is so small, I actually have had the pleasure of meeting any number of executives in the business, including Tim Geddes. He and his family took over in the dark days following Irv Athearn’s passing. During Tim’s tenure as president, the company has grown and prospered. Obviously, he had to borrow money to purchase Athearn, and that means he has been answering to and paying back these creditors. As hobbyists, we often forget that our suppliers are real businesses who need to turn a profit, whose owners and employees want a new car or to send their kids to college, just like the rest of us. Thus, we need to advance some understanding if the Geddes family would like to owe money to someone a bit more simpatico with the model industry. This also gives the Compton, California company an opportunity to streamline some of their operations, allowing them to focus more on designing and building products while letting others concentrate on sales and distribution. We watched the chaos that emerged when UP swallowed SP and almost choked on it. No matter how smoothly everyone would like the transition to be, glitches will happen. Horizon is a businessman’s business, which is why they had money to invest in one of their suppliers. Horizon is a known entity and is well-liked by many suppliers and dealers across the country. There are some hobby shops which can’t make the minimum order or don’t keep their payments current. Will these shops be able to survive without Athearn products? What about mail order firms? The word I hear is that many MO outfits function as part of genuine hobby shops, so they will be fine. This change of distribution may impact basement-and-trailer guys, however. More than a few folks have asked what happens inside the venerable Walthers Catalog? At the time of this writing, if anyone knows, they aren’t saying. Items are generally in the Walthers book because that company distributes them. If Horizon is the lone distributor of Athearn, it stands to reason that you will no longer find Athearn products in the Walthers pages. But nothing is set in stone right now. As the transition takes place, Athearn will be placing every item they make into containers to ship toward Horizon’s loading docks. It is just possible that they may have a glut of product at Horizon, in part because old Athearn distributors and dealers are no longer handling them and because Horizon has not yet brought a full network of dealers on line. Will Horizon reach over and turn down the faucet, absorb the surplus into warehouses for later release, or dump some surplus into the gray market? If the slowing of distribution hits the bottom line, will Horizon react by raising prices, absorbing the initial loss while maintaining prices, or lower prices to stimulate the market? These are questions for which we don’t currently have answers. At this point, I’m not sure that anyone knows how it will all shake out. The forums are filled with opinions, some based upon hope, others on despair. Discussions with longtime observers suggests that whatever changes take place will be nominal across the board. Some hobby shops will be hit hard while others will roll along as usual. Economically, raising prices while the distribution is in some distress could have a disastrous impact upon the brand, so Horizon and Athearn will tread lightly on the price issue, at least for the next several months. Neither company can last long unless they move the merchandise, and that is a fact you can take to the bank. I have presided over the Letters column for a couple of years and have noted many missives expressing concern over the future of model railroading. No matter how much we want it to stay the same, the hobby is either going to shrink or grow. The “World’s Greatest Hobby” campaign is designed to grow the hobby through new modelers. When the businesses which supply the main components of the hobby get larger and reach out to new markets, that also helps us to grow. So for all the worries and concerns surrounding Horizon’s acquisition of Athearn, there is also plenty of room for hope. |
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John Sipple, Editor |
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| To respond to this month's Editorial, send comments to: Editorial@modelrailroadnews.com | |
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