I saw a link to the old "Train Wreck" article and I decided to give it a to re-read. https://www.inc.com/magazine/20050201/mth.html
Two things really stood out that almost twenty years later I found startling and prophetic:
- The first thing is the state of Lionel back in the early 1990s. To quote: "An internal memo noted: "Prior to Wellspring's purchase of Lionel, the company had not invested substantially in new tooling, and had no ability to do so. The company had no internal electronics ability, inadequate vendors for major components, and an understaffed engineering department. As a result, Lionel was saddled with an aging and unreliable product line at a time when competitors were improving their offerings."
My comment: Lionel was running on fumes and nostalgia back then. I really think that the hobby would have petered out from lack of interest years ago if Lionel continued to run its business that way. We do owe a lot to Mike Wolf and MTH for starting the process that returned innovation and enthusiasm to the O gauge hobby. As Jim Bunte says of Mike Wolf in the article: "But he [Mike Wolf] has a lot of fans. A lot of people love the fact that he pushed the product in a scalelike direction, dragging Lionel away from its kind of toylike past. They like the innovation that Mike brought. And a lot of these guys are underdog worshippers. They like the underdog kicking the big guy in the nuts."
Now for the is the prophetic observation in the same article: "Where this will end isn't clear. MTH is Lionel's largest unsecured creditor -- and will have a say in any reorganization. There is a chance that Wolf really will come to own Lionel, or at least rights to the trademark. But there are other scenarios, some of which involve the loser of a devastating trade-secrets judgment outlasting the winner. Lionel is pressing for a reversal or downsizing of the jury verdict -- and could, of course, prevail on appeal."
My comment: so it has come to pass that the looser of the lawsuit (Lionel) is on the verge of outlasting the winner of the lawsuit (MTH). How did this happen? There is a lot of history between the time this article was written and today but it is interesting to note the impact that competition from a revised Lionel had on MTH in the early years after the turn of the century: "These days, MTH's 120,000-square-foot building, which once received and processed nearly 200 container loads of trains made in South Korea and China annually, is unloading two-thirds as many. From a high of 127 employees, MTH is down to 57. Unoccupied desks make some departments look like ghost towns. Nobody has gotten a raise or a bonus in four years. Wolf says he's cut his own salary from $195,000 to $35,000 a year and has sold off much of his personal train collection. Sales are down to about half their peak from five years ago, as demand in the O-scale market has shrunk. Blame the economy, but also blame overproduction fostered by the poisonous competition between MTH and Lionel. MTH made a five-figure profit in 2003. The expectation for 2004? "We're going to lose six figures," says Wolf."
My comment: Wow... This has been and continues to be a fascinating chapter of the history of the O gauge hobby.
