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Menards is a $10B/year company, they could easily afford MTH.

But, as you say, would they really want to? 

My guess is no.  I wouldn't be surprised that when John Menard passes, the train line will be discontinued.

Rusty

Exactly.  There's no way Menard's is going to buy MTH.  Does anyone think they're going to deal with warranty repairs on locomotives?  Forget it.

This discussion reminds me of Shark Tank.  I have a personal experience with Shark Tank in my industry.

Think of Menards as like one of the sharks.  If he looks at MTH, the questions John Menard would have is, "How does this fit with what I am doing?  Can I make it better?"

The fact that Menards has an army of retail stores matters.  Add the fact that they are already entrenched in toy train products raises eyebrows.  Sprinkle in a little pepper of passion John Menards has for O gauge.  

Correct me if I am wrong but the cars and buildings Menards is selling come from Chinese factories.  I know that the flashing "neon" signs technology Menards got from Miller Engineering (though not as nice).   Menards has been aggressive on this front. 

Hmm...  does Premier stuff fit in?  Maybe not.  But Railking 0-31 definitely does.  Especially if it draws people into to buy home improvement products which it does for me.  

On the other hand, my local hobby shop says that MTH employees have already been running the business and they will continue to do so.  Makes sense.

MTH, it seems, will live on....  

I'm just sayin'....

MTH's strength and niche has always been its very large variety of scale and semi-scale models. While I am hoping some business savvy person takes over MTH, at the very least, MTH would go on like K-Line has, with Lionel acquiring some of the dyes/molds for Premier steamers and electrics and outfit them with Legacy. It's just a matter of cost - since Lionel can design their own models over time.

Legacy Triplex, Hiawatha F7 Hudson, H10 Consolidation, are a few that come to mind. MTH made some really nice models over the years, and in some cases, they still set the bar with detail and accuracy, even over Lionel's current scale models (in some but not all cases).

"There's no way Menard's is going to buy MTH. "

I think it's 99.9% likely that if a deal with Menard's were in the works, this announcement would never have taken place.  It's likely going to be the existing employees carrying on in some fashion,  or the deep blue sea,  given the announcement that has been made.  Any other potential purchaser would almost certainly have seen the announcement as damaging the value of the brand, in my opinion.  We'll just have to wait and see how it plays out, but it's not looking promising unless some deal can be struck for the existing staff to continue the firm, and even that looks kind of shaky at present.  You don't announce the closing of the business unless you mean it, or are trying to put pressure on someone(s).

I also don't understand the comparison between Menard's and Railking equipment.  Menard's makes budget minded traditional sized stock.  They are not the quality of Railking at all.  They are fine for the price point, but same item to same item, the RK is 2.5 times the Menard's price.  Most of the Railking has much more detail as well.  The quality of the buildings not even close.  The Menard's stuff up close is not that great, its flaws really can come out.

What's to say Menard's would even be a good steward of the MTH brand?  Nothing about Menard's strikes me as an MTH match other than they both make O Scale trains.

Menards is a $10-billion-a-year big-box home improvement chain spread over 15 states. The train line exists solely because of the passion of John Menard, who is 80 years old.

Could Menards Inc. afford to buy MTH? Easily. Will it? No way.

The amount of profit generated by MTH or any of the toy train makers is minuscule in comparison to Menards’ operations and requires extensive design, production and quality control steps that frankly make it unattractive to any mass market company.

Could John Menard alone afford to buy MTH? Very likely. Will he? Very unlikely.

While John looks great for 80 and certainly likes to keep working, I sincerely doubt he is interested in taking on a company with the amount of detailed management that MTH would require at this point in his life. And as a renowned business leader, he knows very well how challenging the current O gauge hobby market can be, which is why he focused on a niche idea of traditional trains and fun buildings to satisfy a particular group of hobbyists, and even then merely as a sideline for the company he founded. The headaches involved on scale hobbyists demanding absolute scale fidelity right down to a specific road name? That doesn’t seem to be his thing.

If you were asked 10 years ago about the possibility of Menards building o gauge track, cars and buildings today, what would you say?  Probably not no.  But "heck no!"

Lots of good points about the difference between Menard's grade and MTH grade, especially if you dare to think about them making engines some day  (heck no!"??).  But buying a company and actually running it (i.e. John Menards) are two different things.  MTH as an investment?

MTH has the people in place.  What Menards does for our hobby is it introduces it to a lot of new people.  That's pretty powerful.  And they currently stock Lionel starter sets for the long holiday season.  Remember, too, that Menards depends on Lionel/MTH to run their low priced cars and track. 

So currently, Menards introduces people to trains with value prices and cool buildings and then... hands those consumers over to the "real" train companies, where the big money is spent.  Seems a little short sighted to me.  Isn't the reason for starter sets with minimal margins to get people hooked?  And then they got you... for years, spending big money.

But then, like has been mentioned, maybe John Menard is just having fun and is good with allowing people to Save Big Money on the limited items in his train line.

 

 

@IRON HORSE posted:
................................

So currently, Menards introduces people to trains with value prices and cool buildings and then... hands those consumers over to the "real" train companies, where the big money is spent.  Seems a little short sighted to me.  Isn't the reason for starter sets with minimal margins to get people hooked?  And then they got you... for years, spending big money.................

I think I've heard more than one dealer suggest the better bang for the buck in terms of profit is the selling of a bunch of starter sets to the general public vs the $2K+ engines to a few die hards.  Maybe I heard wrong.

So Menard's might not be short sighted and may just well be doing exactly what does make sense.  Especially since they don't have to deal with detail oriented (talking the high end rivet counters here, no offense meant to same ) consumers who demand nearly every detail be correct. 

If they are in the decent profit segment and can continue to do so, "turning away" from us train addicts who need the higher end gizmos may not really be turning away from anything they need to deal with, since this is just a side thing for them.

They seem to have found their niche and are most likely doing OK with it, though only Menard's knows for sure how much money that make from it.  As mentioned many times, it's mostly due to the big boss being a train guy himself.

But yeah, Mike's still retiring. (to keep slightly on topic)

-Dave

@IRON HORSE posted:

So currently, Menards introduces people to trains with value prices and cool buildings and then... hands those consumers over to the "real" train companies, where the big money is spent.  Seems a little short sighted to me.  Isn't the reason for starter sets with minimal margins to get people hooked?  And then they got you... for years, spending big money.

Unfortunately, everyone that buys or receives a starter set doesn't become interested in the hobby.  If they did, the sale of MTH would have easily had a buyer waiting in the wings.

Rusty

@Dave45681 posted:

I think I've heard more than one dealer suggest the better bang for the buck in terms of profit is the selling of a bunch of starter sets to the general public vs the $2K+ engines to a few die hards.  Maybe I heard wrong.

You probably heard right. From what I understand, starter sets are Lionel's bread and butter, with those sales far exceeding sales of high-dollar engines. I suppose the advent of LionChief products with their features and price point has only increased this. 

Last edited by breezinup
@Landsteiner posted:

"There's no way Menard's is going to buy MTH. "

I think it's 99.9% likely that if a deal with Menard's were in the works, this announcement would never have taken place.  It's likely going to be the existing employees carrying on in some fashion,  or the deep blue sea,  given the announcement that has been made.  Any other potential purchaser would almost certainly have seen the announcement as damaging the value of the brand, in my opinion.  We'll just have to wait and see how it plays out, but it's not looking promising unless some deal can be struck for the existing staff to continue the firm, and even that looks kind of shaky at present.  You don't announce the closing of the business unless you mean it, or are trying to put pressure on someone(s).

Another factor that probably will affect a potential re-start of MTH is the amount of time that passes before a buyer steps in. The longer the delay, the more difficult (and therefore costly) it will be for a potential purchaser. Relationships with suppliers may have deteriorated, supply chains will evaporate, employees who were involved in all the steps required to plan products and coordinate production will no longer be in place, etc. etc. MTH as it's presently constituted will lose its value as a going concern.

Apparently MTH also had just opened its new plant for production of steam engines, and the first engines from this facility had just hit the market. If that factory has been disposed of, or is about to be, that would be another significant reduction in  MTH's value, as well as a major impediment to any hopes of restarting production.

Last edited by breezinup

The biggest issue I see?  Parts for existing product!  As for the new catalog, who in their right mind will order a complex electronic product when support is vanishing???

If DCS is supported by someone that's good.

 

If not maybe they could open source it. (PCBs, Firmware, ...). Backing out the schematics from the PCBs would be such a pain, and who knows what to do with the programmable parts. Thinking about having to do that makes me not like trains anymore.

Haven't seen you around lately Adrian.  

@Adrian! posted:

If DCS is supported by someone that's good.

The preferred route as long as it doesn't get prohibitively expensive with the new company.

@Adrian! posted:
If not maybe they could open source it. (PCBs, Firmware, ...). Backing out the schematics from the PCBs would be such a pain, and who knows what to do with the programmable parts. Thinking about having to do that makes me not like trains anymore.

With all the interaction of the PS/3 stuff, that's a can of worms that a forklift couldn't move!

@breezinup posted:

Apparently MTH also had just opened its new plant for production of steam engines, and the first engines from this facility had just hit the market. If that factory has been disposed of, or is about to be, that would be another significant reduction in  MTH's value, as well as a major impediment to any hopes of restarting production.

Incidentally, I saw this on the Mr. Muffin's Trains site just in the last couple weeks, where they mentioned that some steam engines they'd just gotten in and had for sale were the first to come out of MTH's new factory. Thinking about this a little, why would MW proceed with a new factory while he reportedly had been trying unsuccessfully for a year to find a buyer for the company?  I can't see how this makes any sense, unless there was something else going on.

@breezinup posted:

Incidentally, I saw this on the Mr. Muffin's Trains site just in the last couple weeks, where they mentioned that some steam engines they'd just gotten in and had for sale were the first to come out of MTH's new factory. Thinking about this a little, why would MW proceed with a new factory while he reportedly had been trying unsuccessfully for a year to find a buyer for the company?  I can't see how this makes any sense, unless there was something else going on.

It is conceivable that he opened a new factory because it was in the works long before he decided to close down or put MTH up for sale. Perhaps he was hoping it would be part of a package deal if he could have sold MTH.  It seems most likely that as others have stated MTH was for sale for sometime now with no takers, hence the close out plan.

It is conceivable that he opened a new factory because it was in the works long before he decided to close down or put MTH up for sale. Perhaps he was hoping it would be part of a package deal if he could have sold MTH.  It seems most likely that as others have stated MTH was for sale for sometime now with no takers, hence the close out plan.

Those are logical explanations. There was a comment, however (don't remember now who made it, but someone close to the manufacturering end), that it was fairly well known in the industry that MW had been trying to sell the company for quite a while (I think it was a year, perhaps a little more, don't remember for sure, but I remember being surprised that this had been going on for so long). If that's correct, proceeding with the development of a new factory (even if arrangements were already well underway) when there had been little interest expressed from any prospective purchaser, seems illogical.

Maybe the information was incorrect, but the alternative would be that MW decided to sell the company on a fairly immediate basis without spending the time to properly market it, and knowing there was a good chance that all the money that had been spent building a new factory would be thrown away. 

It's all a matter of timing when trying to insert an element of logic here - how long had arrangements for the factory been in process, how long had MTH been on the market, etc. However, if production had just started since the beginning of the year (given that the engines just showed up at dealers a few weeks ago), it's hard to understand why MW didn't cease development of the new factory unless he made an extremely quick decision to pull the plug on MTH.

Last edited by breezinup

Wow, page 20, many opinions, many solutions, many predictions, many positive thoughts, many negative thoughts, Timing, MTH introducing the new 2020 volume 2 catalog with Cheers and Good Wishes, buy now, there’s going to be a 1 year warranty for parts and labor on our new products, however, I’m saying goodbye to my business ( referring to Mike Wolf) and I’m retiring. That’s how I’ve read the news from Mr. Muffins, a really large distributor of MTH trains. A very large and diversified hobby store that I’ve personally visited in 2018 just before the LCCA Convention in Chicago.  I believe our imaginations have created 20 pages of simple solutions to keeping his products alive. All I can say, Time will Tell All. I wish his employees the best, and hope Mike has a fun retirement, it’s going to be interesting to see what develops from this manufacturer closing his doors so soon, 40 years is not really a long time as compared to Lionel, Atlas O, Scenic Express, Charles Ro, Grzyboski’s, OGR, Kalmbach Publishing, TM Videos, etc., on and on, and although there may be less model railroaders, it’s a Global Hobby. I just hope that Lionel and other manufacturers will keep coming out with nice scale models for us us to purchase. It’s a really fun hobby, with lots of fine folks. Happy Railroading 

Last edited by leapinlarry
@leapinlarry posted:

Wow, page 20, many opinions, many solutions, many predictions, many positive thoughts, many negative thoughts, Timing, MTH introducing the new 2020 volume 2 catalog with Cheers and Good Wishes, buy now, there’s going to be a 1 year warranty for parts and labor on our new products, however, I’m saying goodbye to my business and I’m retiring. That’s how I’ve read the news from Mr. Muffins, a really large distributor of MTH trains. A very large and diversified hobby store that I’ve personally visited in 2018 just before the LCCA Convention in Chicago.  I believe our imaginations have created 20 pages of simple solutions to keeping his products alive. All I can say, Time will Tell All. I wish his employees the best, and hope Mike has a fun retirement, it’s going to be interesting to see what develops from this manufacturer closing his doors so soon, 40 years is not really a long time as compared to Lionel, Atlas O, Scenic Express, Charles Ro, Grzyboski’s, OGR, Kalmbach Publishing, TM Videos, etc., on and on, and although there may be less model railroaders, it’s a Global Hobby. I just hope that Lionel and other manufacturers will keep coming out with nice scale models for us us to purchase. It’s a really fun hobby, with lots of fine folks. Happy Railroading 

I’m confused a bit. Are you saying that Mr Muffin has announced his retirement too?

@breezinup posted:

Those are logical explanations. There was a comment, however (don't remember now who made it, but someone close to the manufacturering end), that it was fairly well known in the industry that MW had been trying to sell the company for quite a while (I think it was a year, perhaps a little more, don't remember for sure, but I remember being surprised that this had been going on for so long). If that's correct, proceeding with the development of a new factory (even if arrangements were already well underway) when there had been little interest expressed from any prospective purchaser, seems illogical.

Logic seldom has anything to do with it.  It's all about the Benjamins. 

A Telcom equipment manufacturer (here in the USA) company I worked for had purchased a smaller company in another state with the "latest and greatest" technology.  The section in the home office I worked with was assigned work with them.  A couple of months later, the whole project was scrapped and the entire division in both locations (including myself,) were laid off in the first of several layoffs.

The mortal remains of the company is now a shadow of its former self, they buy someone else's equipment and slap their name on it.

If Mike is unable to sell the company, either separately or as a whole, it's better just to let it go.  He'll probably get a good tax break writing off the loss.

Rusty

Madockawando, no sir, Mr. Muffins owns a great hobby store in Atlanta Indiana, and has a daily mailing, emailing, of sales and he sent the news about MTH closing their doors. Mr. Muffins is in the retail business and not retiring. Forgive me if it sounded like I was talking about him retiring. Mike Wolf is the fellow owning MTH, that’s retiring. It’s going to be an interesting story once it all unwinds when we attend York and the real truth becomes known. Now, it’s sort of a mystery. I wish everyone a happy life. Happy Railroading 

@leapinlarry posted:

Madockawando, no sir, Mr. Muffins owns a great hobby store in Atlanta Indiana, and has a daily mailing, emailing, of sales and he sent the news about MTH closing their doors. Mr. Muffins is in the retail business and not retiring. Forgive me if it sounded like I was talking about him retiring. Mike Wolf is the fellow owning MTH, that’s retiring. It’s going to be an interesting story once it all unwinds when we attend York and the real truth becomes known. Now, it’s sort of a mystery. I wish everyone a happy life. Happy Railroading 

Thank you for clearing that up! 

Don’t you think that Mike has planned this for a long time?   I’m sure he tried to find a buyer.   There is none out there.   MTH is worth a fortune.  Who right now would invest all those resources in a hobby that is already over saturated with trains.    This is not the same era as 1986 when Lionel was looking for a buyer and Mr Kughn came along   Keep in mind Kughn  already loved the company and was collector   In this uncertain climate investments are very unstable 

 

 

 

@Vinny26 posted:

Don’t you think that Mike has planned this for a long time?   I’m sure he tried to find a buyer.   There is none out there.   MTH is worth a fortune.  Who right now would invest all those resources in a hobby that is already over saturated with trains.    This is not the same era as 1986 when Lionel was looking for a buyer and Mr Kughn came along   Keep in mind Kughn  already loved the company and was collector   In this uncertain climate investments are very unstable 

 

 

 

Something is only worth what someone is willing to pay for it. When you say MTH is worth a fortune, it could be that if you look at the tooling and the factory they own and the intellectual property and the current sales it is worth on the books X millions/hundreds of millions, but in the end it comes down to what someone is willing to pay for it. Sometimes companies buy the assets of another company to introduce it into their product line, sometimes they buy the assets of another company for other reasons, perhaps for patents the company owns, perhaps simply for the name (for example, Japanese companies bought the names of famous clock/watch companies like Elgin, Ingraham and the like, and turned out cheap watches/clocks with those names on them.  If no one wants to buy a company, in the end that means it isn't worth a fortune, it means it has no value in terms of being an ongoing business, at least not in the eyes of those who could buy it.  Obviously after so many pages of discussion about this we come back to one fundamental point, at this point the only thing we know is that a)Mike plans to walk away next year b)DCS will be supported in some fashion and c)as of this writing, there is no white knight out there to buy the business. 

@bigkid posted:

Something is only worth what someone is willing to pay for it. When you say MTH is worth a fortune, it could be that if you look at the tooling and the factory they own and the intellectual property and the current sales it is worth on the books X millions/hundreds of millions, but in the end it comes down to what someone is willing to pay for it. Sometimes companies buy the assets of another company to introduce it into their product line, sometimes they buy the assets of another company for other reasons, perhaps for patents the company owns, perhaps simply for the name (for example, Japanese companies bought the names of famous clock/watch companies like Elgin, Ingraham and the like, and turned out cheap watches/clocks with those names on them.  If no one wants to buy a company, in the end that means it isn't worth a fortune, it means it has no value in terms of being an ongoing business, at least not in the eyes of those who could buy it.  Obviously after so many pages of discussion about this we come back to one fundamental point, at this point the only thing we knowis that a)Mike plans to walk away next year b)DCS will be supported in some fashion and c)as of this writing, there is no white knight out there to buy the business. 

 

@Vinny26 posted:

Don’t you think that Mike has planned this for a long time?   I’m sure he tried to find a buyer.   There is none out there.   MTH is worth a fortune.  Who right now would invest all those resources in a hobby that is already over saturated with trains.    This is not the same era as 1986 when Lionel was looking for a buyer and Mr Kughn came along   Keep in mind Kughn  already loved the company and was collector   In this uncertain climate investments are very unstable 

 

 

 

Vinny:

If MTH were actually "worth a fortune," I think it is likely that some company or ownership group would have bought it or may still buy it. The question, however, is how potential buyers would value MTH. Having been involved in a number of M&A deals over the years, there are many components to that analysis. If the goal were to continue to run MTH as a going concern, and assuming the due diligence process went smoothly around the review of the assets/liabilities and profits/loss statements, and tax returns, etc., anticipated short and long term profit margins would be the key issue that would make or break the deal. Nobody is going to buy a business that they project is going to be losing money or operating on extremely thin profit margins.

Pat 

@bigkid posted:

Something is only worth what someone is willing to pay for it. When you say MTH is worth a fortune, it could be that if you look at the tooling and the factory they own and the intellectual property and the current sales it is worth on the books X millions/hundreds of millions, but in the end it comes down to what someone is willing to pay for it. Sometimes companies buy the assets of another company to introduce it into their product line, sometimes they buy the assets of another company for other reasons, perhaps for patents the company owns, perhaps simply for the name (for example, Japanese companies bought the names of famous clock/watch companies like Elgin, Ingraham and the like, and turned out cheap watches/clocks with those names on them.  If no one wants to buy a company, in the end that means it isn't worth a fortune, it means it has no value in terms of being an ongoing business, at least not in the eyes of those who could buy it.  Obviously after so many pages of discussion about this we come back to one fundamental point, at this point the only thing we know is that a)Mike plans to walk away next year b)DCS will be supported in some fashion and c)as of this writing, there is no white knight out there to buy the business. 

As The New York Times reported a few months ago, a company that made expensive ventilators bought up a smaller company that was working on a cheaper medical ventilator, then shut down the smaller company. Competitor eliminated!

Likewise, some train manufacturer could do the same with MTH.

In the publishing field, Simon & Schuster bought up several smaller companies (Green Tiger Press, Avery Publishing, others), closed them down, made all their books out of print, took a few titles they wanted and merged them into their own publishing company. This stuff happens All The Time, *sigh*...

As The New York Times reported a few months ago, a company that made expensive ventilators bought up a smaller company that was working on a cheaper medical ventilator, then shut down the smaller company. Competitor eliminated!

Likewise, some train manufacturer could do the same with MTH.

 

That's what Ye Olde Lionel Corporation did way back yonder with Ives. 

Also it was the same reasoning as to why Lionel bought American Flyer in 1967.

Rusty

That's what Ye Olde Lionel Corporation did way back yonder with Ives. 

Also it was the same reasoning as to why Lionel bought American Flyer in 1967.

Rusty

Well, not quite.

Ives went bankrupt very much on their own and, as a consequence, an opportunity for a three way purchase presented itself. Three portions of Ives were purchased out of bankruptcy, respectively, by Lionel, AFMCo. (Coleman), and A. C. Gilbert. A. C. quietly backed Cowen's loan for Lionel's part of the purchase.

Respectfully,

Bob

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