Midwestern Model Works

Money does not have to change hands to have a confirmed reservation. It is do all the time.  Stephen

My fake-o numbers were predicated on a hundred deposits of a grand each.  If that is not the case, then Erik has to borrow $100K to get started - either that, or the Chinese manufacturers will bill him on delivery?

That is of course assuming the $140K number was for powered units, and Eric already has the power sections.

And when it comes time to ante up and they say: "I've changed my mind." ??????

You have more faith in people than I.

Simon

It was said in one of the responses above that the bodies were to be made in Korea.

Simon

Okay. Korea.  Slightly more expensive, but more experienced. 

In Limey's defense, I admit to a total lack of understanding when it comes to businesses and profit.  I remember multiplying ticket prices x number of seats in our airliner, then adding fuel and crew costs, and scratching my head - a loser, but we made it up on volume.  Same with this - I think high end O Scale is not a viable business, because of the low volume and very high prices.  Since I am obviously wrong about the airline business, surely I am wrong about this.  Cannot wait to see the definitive SD-45.  Too bad Henry Bultmann and Eric did not meet and collaborate.

Simon Winter: I personally do not konw of any dealers who ask for deposits up front and sit on custome'rs money. Some models are not made for years if not at all. I would never give any dealer a deposit! The Train store in Canadian took deposits and went out of business and left numerous OMI customers high and dry without models and loss of deposits. Any dealer who ask for deposits, people should turn around and RUN! If People changing their ninds or their situations changes is part of doing business. Dealers who take deposits should financially not be in business and not trusted.   Stephen

Bob,  I'm NOT busting your chops here, but I would like to hear a more detailed explanation of the "volume" thing. Considering the number of airlines that have gone in the tank, it ain't all peachy keen in the Airline industry. If you are losing  X$$$$ per customer, seems like the more customers the more loss, regardless of volume. Not sure what the government dictates here, but I think they put some railroads out of business mandating passenger service, but I am definitely NOT an expert.

Simon

Naveen got it - it is a joke!  That nice guy in Texas who would give the talks about fixing gearboxes - his joke was quantity discounts.  Buy one at a very high price, buy a hundred at a discount, etc.  He would have the gear supplier back a truck up to his workshop and shovel parts until the supplier owed him money!

Yes, I have heard that the airline industry overall since the Wright Brothers has lost money, period.  I personally survived four bankruptcies as a pilot, and lost thousands of dollars investing in my career airline.

I met Eric at OSW, and was impressed with his work.  I wish him the best.  Like the airplane joke - "You know how to make a small fortune in the _______business?"

Stephen,   What I'm thinking is a nominal figure to keep out those who are blowing hot air, as in: "I want it, I want it.......oooooh I have to actually pay for it......No Thanks! It's a two way street and unsavory customers are just as odious as unsavory dealers. Toss in the overseas builder and it becomes even more complicated.

The whole idea of brass is a bit of a crap shoot for all involved. A lot of what you get depends on the builder, and you don't always know who that is and quality can vary pretty widely throughout a run. Some of the stuff I have seen makes me wonder if either the Importer or Builder has ever seen a picture of the prototype.

As for myself, I sort of like to see what I'm, getting before I plunk down my money (at least if it is a sizable amount) regardless of what it is I am buying.

I always think of Pecos John Smith: "If you want to make a small fortune importing brass, start with a large one."

Simon

I was busy composing my post thus hadn't seen yours, but we are on the same track, no pun intended!

Simon

I am light years away from being an investment expert, but I made it a practice of NOT investing solely in my Employer's business, as in the old idea of don't put all your eggs in one basket. As part of my 401K, I had a certain portion I had to keep in the form of company stock, but I dumped it as soon as I was able, and it ultimately proved to be a wise move.

As for investment advisers, I always called my own shots, not that I was remotely close to being a financial wizard, but I always figured that the guy doing the advising was primarily working for himself and me secondarily, and if I lost, it was my problem and not his. I don't knock the concept if you can get an adviser you really TRUST.

Simon

Overland started the trend with their last run of modern diesels,selling direct and taking up front deposits and payments before completion and shipment of models to customers.[that worked out so well for them they they have opted to no longer import O scale] Division Point has now decided to use the same format for their RS-3s, it will be interesting to see if those models get made. MMW is making the right move by doing the same thing and the project will only move forward if a sufficient number of those "confirmed reservations" come up with the deposit when asked to, I do not believe Eric is willing to front too much of the project himself[a good lession from Henrys original project.a quality model that did not sell well and left CLW in a financial position they never really recovered from]. Unfortunately deposits entail some risk another well known importer has taken a lot of heat for the lateness of some of his projects although he has ultimately delivered. Key alone seems to have a loyal and reliable base of dealers and customers for his product,but we are talking very limited custom runs to a very small base of collectors/modelers.JMO

Thinking you are meaning Car & Locomotive Shop there, not CLW.

What intrigues me a bit is how some of this stuff continues to be imported.

For example a high end importer has recently announced that the UP Big Boy has been moved center stage to be the next piece produced.

That narrows the appeal down to UP modelers and fans of HUGE steam.

Considering all the other times the BB has been done and guessing a price well North of 5K is there that much of an audience out there? Beats me!

Simon

Yes Henrys business was called C@LS, I believe the restoration of the real UP bigboy may be driving that importer. A check of his website indicated he sold out all his Challengers[100] but for the 5K to 5.5K price they were a superb model, bear in mind Key is pushing 7K+ for the SP cab forward, only 40 are being produced [and all sold out I believe] He is now pushing the Bigboy project. This engine was also being proposed by Kohs & Co [battle of the ultimate detailed Bigboys] make the project limited enough and it becomes a must have for the true collector.

There was a program about Royal Caribbean Cruise lines a few years ago and at the end of a cruise they did a cost analysis and found that after all the capex and opex were accounted for the company made about $150.  So the cruise was considered successful financially.  They said that generally the difference between a cruise in the black and one in the red as how much alcohol was sold.

So today is small business saturday.  So have a meal at a local small business restaurant then go to your local LHS and be thankful folks like Erik take those risks to bring us the things they do.  None of them will ever become millionaires doing what they do.

Just stay away from McDonalds and Wally World for one day... if you can.

I resemble that remark.  I won't go near a Wal Mart.

I also agree with Simon - never invest in your employer, at least not very much.  One very sharp co-pilot told me he had invested in Southwest stock.  We were at the time a direct competitor, so I figured that he was maybe not very loyal.  His stock split three ways, he became a millionaire, and my stock went to zero.  We both get to brag that we are American Airlines, retired, but we somehow missed out on the AA retirement bucks.

Yes - it is truly great that our high end importers have a small but well-heeled customer base.  I do not know how Key does it, but it is clear that Key can sell anything it brings in.  It is just as clear that this end of the business is extremely risky, and new entrants will need customer deposits.  No venture capitalist will touch this stuff.

When I worked at Apple you could either have a self directed 401K or a choice of funds.  The only rule was no Apple stock in either.  For Apple stock there was the ESPP.  But in 2002 I bought 400 shares of Apple at $12 and after two splits I really didn't need anymore.