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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.

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@SteveH posted:

@Madockawando Thank you for posting this article.  Very Informative to someone like me who recently joined the forum and didn't know many of the details about Mike Wolfe's career and his struggles.  I definitely have a lot more respect for him after reading this article.

Steve, that is an excellent take away. I came away with the same level of respect for Mike Wolf as well after reading the article

That's a valid point RT. I think that is why I tried to stay away from the details of the case itself and focus on the state of Lionel in the early 1990s and how the competition from MTH did push Lionel to become the innovative and exciting company we have today.  I also found it prophetic statement for this article from 17 years ago predict that the loser of the lawsuit (Lionel) would at last the winner. It's fascinating.

Anybody who's been in the Hobby for sometime knows that Mike Wolfe single-handedly changed the face of O gauge railroading. To say any less would be a disservice to the man because of his diligence foresight and competitive nature we have what we have today. Lionel was going down the tubes and the hobby was going along with it. I'm not a great fan of Mike Wolfe because I think he also caused segregation of the hobby but that's my personal opinion only, but I give him a lot of credit and I always admired the man. He changed the hobby for the better, period.

@E-UNIT-79 posted:

Anybody who's been in the Hobby for sometime knows that Mike Wolfe single-handedly changed the face of O gauge railroading. To say any less would be a disservice to the man because of his diligence foresight and competitive nature we have what we have today. Lionel was going down the tubes and the hobby was going along with it. I'm not a great fan of Mike Wolfe because I think he also caused segregation of the hobby but that's my personal opinion only, but I give him a lot of credit and I always admired the man. He changed the hobby for the better, period.

Some really insightful observations. As you have observed, real life is complex and people and events can not always be easily categorized. However, even if you don't own any MTH trains, you have to admire Mike Wolf's impact to the hobby.

I think it is fair to say that Mike Wolf and Lionel were using each other in the time period when Mike was producing all that Scale product that Lionel was stamping their name on.  Lionel had been doing nothing new and certainly nothing that had any detail that we would expect from the mid 90's forward.  Lionel bought time to try and upgrade their product line.  Mike created a supply chain that put him in position to become the leading force in the transformation of the industry to Scale.

Mike always played hardball.  Whether it was ousting the Williams product line when he was the largest distributor,  developing and marketing the infamous diesel in direct competition with Lionel when he was a Lionel subcontractor or working behind the scenes with Weaver and his Korean connections to develop the 'Weaver' Brass line of steam engines, highly detailed diesels and passenger sets(for that time period) again behind Lionel's back, Mike played to win.

I only know from hearsay that Mike wanted to own Lionel.  But, can you imagine a story line where that was not the dream?

Although I just got back in the hobby in 2012, I did so because of MTH and DCS. Unfortunately, I was orphaned by Commodore with the Amiga and Toshiba with the Thrive. And now I feel the same is happening with MTH/DCS. Fortunately, I’ve only got 2 engines, the TIU and Remote, so I don’t have that much invested, but I’m about to start construction and I’m left wondering if I should bother. Guess when we get home from our vacation in Georgia I’ll do some soul searching and make a decision. I’m already not happy with the space I have, so the demise of MTH is just another reason to reconsider moving forward. Still, I give Mike credit for what he’s done for the hobby. I don’t know the history between him and Lionel, but it looks to me like there might not be an O Scale hobby if not for MTH. And the road forward seems very unclear.

Mike provided competition to Lionel, who stepped up their game. In the final analysis, "Lionel" as a brand carried more weight. Mike was one-man show, who could only do so much. He was good for the hobby. Mark

I am sure you did not mean to overlook the team that Mike built and brought along with him.  Had it not been for the team it could not have happened and without Mike it would not have happened.

I too give Mike a lot of credit for moving the O gauge/O scale market forward. When I entered the hobby in 1997 Lionel was run by people that didn’t understand the market and relied on the hallmark and legacy of the Lionel brand. Offerings were minimal - not the variety or volume Mike was producing. Enter Dick Maddox and it was game on. Lionel held onto some ‘traditional’ product, but started offering scale products- and some novel animated accessories. Then came the whole lawsuit debacle - Lionel vs., K-Line vs., MTH vs. - I think the potential was there to ‘derail’ the O gauge market. It did shake up the hobby and shake out a few manufacturers  

I was surprised when it was announced MTH would cease production and eventually close  Even more surprised Atlas acquired some MTH tooling  

I think a great time capsule is looking through past OGR editions (and the ‘other magazine’) to truly see the evolution of the hobby to date.

After reading the 'INC.' article and further reflection the well-known proverb "Necessity is the mother of Invention" comes to mind; Mike Wolf realizing from the outset that there was a market for more detailed, higher quality scale O gauge product and Lionel - as a result of Mike's growing market share and successful court case - eventually realizing that they must 'step up to the plate' if they wanted to remain in business.

Unfortunately, as the article points out, the 'saturation' of O gauge product by the various manufacturers which existed at the time turned out to be detrimental to the assorted companies; notwithstanding that competition is generally regarded as good by hobbyists for several reasons including variety, innovative features and quality to name a few.  That said, with fewer O gauge manufacturers today now the feeling among many hobbyists seems to be that the latter will be compromised.

Only time will tell.

Lots of water over the dam to be sure. But Lionel was not static in the early to mid 1990s.  While Mike Wolf was touting the greatness of PS1, a devalued product from what QSI was offering, in terms of user friendliness, reliability and capabilities, Richard Kughn and Neil Young were developing TMCC and Railsounds, which make PS1 look pretty limited and unfriendly by comparison.  PS1 was a major kludge, in my view, having owned a few. PS1 had the infamous internal battery which could lead to significant problems, utilized the even less fun multiple button pushes and levers to control functions/sounds, and then some locos had chips that went south when certain conditions were met.  Makes the quality problems of the 2020s look pretty good by comparison.

So it wasn't all brilliance and industry leadership at MTH and laziness and complacency at Lionel.  Turns out Neil Young and Richard Kughn were every bit the innovators as Mike Wolf, but they get little credit due to the hero worship going on in the hobby.  And lest we forget, Weaver, Right of Way and Williams had pioneered large brass scale steam locomotives long before Mike Wolf finished college.  Wolf refined, expanded and main streamed their ideas, but the leaders of these companies deserve some credit for their efforts.

MTH made a huge impact no doubt, but give some credit to Andy Edleman and others at MTH who brought great common sense, restraint and leadership to the company along with Mike Wolf.  And the simple fact is that when it came to control, sound, couplers, etc. Lionel did some leading of their own.

Last edited by Landsteiner
@Landsteiner posted:

Lots of water over the dam to be sure. But Lionel was not static in the early to mid 1990s.  While Mike Wolf was touting the greatness of PS1, a devalued product from what QSI was offering, in terms of user friendliness, reliability and capabilities, Richard Kughn and Neil Young were developing TMCC and Railsounds, which make PS1 look pretty limited and unfriendly by comparison.  PS1 was a major kludge, in my view, having owned a few. PS1 had the infamous internal battery which could lead to significant problems, utilized the even less fun multiple button pushes and levers to control functions/sounds, and then some locos had chips that went south when certain conditions were met.  Makes the quality problems of the 2020s look pretty good by comparison.

So it wasn't all brilliance and industry leadership at MTH and laziness and complacency at Lionel.  Turns out Neil Young and Richard Kughn were every bit the innovators as Mike Wolf, but they get little credit due to the hero worship going on in the hobby.  And lest we forget, Weaver, Right of Way and Williams had pioneered large brass scale steam locomotives long before Mike Wolf finished college.  Wolf refined, expanded and main streamed their ideas, but the leaders of these companies deserve some credit for their efforts.

MTH made a huge impact no doubt, but give some credit to Andy Edleman and others at MTH who brought great common sense, restraint and leadership to the company along with Mike Wolf.  And the simple fact is that when it came to control, sound, couplers, etc. Lionel did some leading of their own.

I don't know how important timelines are, but Mike in cooperation with Nicolas Smith Trains had taken over Williams' Brass production by the mid 80's absorbing the entire production and Mike spearheading refinements to the line.  By 1987 Mike was producing most if not all of Lionel's Scale line and their prewar offerings.

In 1990 it was Mike who was behind Weaver's development of the Brass engine line and the related diesels and passenger sets with Franks Roundhouse and Weaver fronting the effort.  The catalogs and related advertising was done in house at MTH.  It was Mike's ongoing relationship with Samhongsa that gave us some of the best quality product that we had seen in the toy train market.

Everyone involved deserves credit for moving the hobby forward.  Some more than others.  Even we deserve a great deal of credit that I don't think we get.  If Lionel was doing 80 Mil, MTH 60 Mil and others back down the line adding to the annual expenditures, you and I over the last 30 years have spent a whole lot of money for toys that appear to lose value faster than new cars.

@Landsteiner posted:

Lots of water over the dam to be sure. But Lionel was not static in the early to mid 1990s.  While Mike Wolf was touting the greatness of PS1, a devalued product from what QSI was offering, in terms of user friendliness, reliability and capabilities, Richard Kughn and Neil Young were developing TMCC and Railsounds, which make PS1 look pretty limited and unfriendly by comparison.  PS1 was a major kludge, in my view, having owned a few. PS1 had the infamous internal battery which could lead to significant problems, utilized the even less fun multiple button pushes and levers to control functions/sounds, and then some locos had chips that went south when certain conditions were met.  Makes the quality problems of the 2020s look pretty good by comparison.

So it wasn't all brilliance and industry leadership at MTH and laziness and complacency at Lionel.  Turns out Neil Young and Richard Kughn were every bit the innovators as Mike Wolf, but they get little credit due to the hero worship going on in the hobby.  And lest we forget, Weaver, Right of Way and Williams had pioneered large brass scale steam locomotives long before Mike Wolf finished college.  Wolf refined, expanded and main streamed their ideas, but the leaders of these companies deserve some credit for their efforts.

MTH made a huge impact no doubt, but give some credit to Andy Edleman and others at MTH who brought great common sense, restraint and leadership to the company along with Mike Wolf.  And the simple fact is that when it came to control, sound, couplers, etc. Lionel did some leading of their own.

Umm. Dont forget itvwas Jerry Williams that hired Mike Wolf and later Andy E and Rich F. To assemble those Standard guage trains of the 1970's. Later Jerry sold the Standard Guage line to Mike Wolf.

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

My comment: .... 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.

Don't equate Mike's salary with wealth creation. They are totally different. And think about the size of Mike's collection. At some point storage alone becomes a problem. If you ever went to Tony Lash's layout you would certainly understand that.

Gerry

At the time I was still working part-time selling trains at a local hobby shop.  The true hobbyist customers knew M-T-H, their quality, and especially their smoke units.   In spite of this, more than half of them remained loyal to Lionel because Lionel was "their hobby".

Everyone else who came in knew only Lionel, American Flyer, and perhaps Tyco from the 70's.

From a pure marketing standpoint, the Lionel name still outweighed the M-T-H quality and innovation.  I predicted at the time that if Lionel ever got their act together, all things being equal, the blue and orange box would always outsell the purple.  It was just that ingrained in people's minds from their childhood.

When I spoke with customers, they would speak of M-T-H trains in terms of detail, smoke, prototypical fidelity.  But when they spoke of Lionel trains, it was always in emotional terms... smells, rumbles, the joy of the little man in the milk car, dad, grand dad, falling asleep under the tree with the train whizzing by... very difficult for a new brand to capture that.

Jon

I came back to the hobby around 1995 and the most informative "time capsule" for me is the back issues of the hobby's magazines and company catalogs...which I am still culling through from issues dating from the late 1980s just to make room in my office, literally stacks piled on the floor. Great interviews with the respective leaders, the advertisements, product reviews, pros and cons of various technological features, etc. What I recall most is that Mike Wolf established an overseas connection with S. Korean company(s) early on, and this was the major game changer for the hobby as a whole.


- 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.

As a consumer at that time (albeit a young one), I never felt that Lionel was "on nostalgia and fumes" until after Kughn sold it. Lionel of the early '90s was steadily evolving toward more realism, and each year brought at least one product involving some measure of new tooling. Not to mention many new paint schemes--real railroad paint schemes for the most part--on older products.

By contrast, I remember the first years of Lionel, LLC as saccharine-sweet with nostalgia and light on innovation. The flood of new products did not appear until production moved to Asia between 1999-2001. In other words, my memory has Lionel taking a step backward, not forward, in the years immediately following the sale. Which is what usually happens after a company is sold, it seems.

Obviously, the split with Mike hurt Lionel. But this internal memo is less about how important Mike was, and more about Wellspring puffing themselves up.

And Lionel had internal challenges too... including their Neil Young inspired cling to the open-frame Universal (Pul-Mor) motors, and the time and energy spent on the Odyssey motor, while Mike was pumping out perfectly acceptable models with off-the-shelf DC CAN motors in them.  The money could be spent on tooling.

My greatest regret of the last 25 years and the lawsuit is not that production went off-shore... it is when production went from South Korea to China.

Jon

nickaix - Further to your comments above, for a variety of reasons many hobbyists feel that if it hadn't been for Richard Kughn's purchase (rescue) of Lionel in the 80s the company wouldn't have lasted into the 90s.  Plus, when you think of it, Richard was just doing then what Mike is doing now - retiring; although Richard was far older than Mike presently is, and one can appreciate Dick's desire - at his age - wanting to liquidate his assets.

We will never know, but I have always felt if Lionel and MTH tried to work with each other instead of against each other, the hobby would have come out a lot better. If they could have worked on a control system that would have run each other's systems or rather just one system, as I would probably have considered buying MTH engines, I already had TMCC and was not willing to go and purchase another system. I enjoy MTH freight/passenger cars and some of their accessories. I still wonder how it might have worked with each other instead of fight with each other. For some reason, I feel it would have helped each other.

Lionel is pursuing the correct strategy for today by constantly introducing new technology. This is essential to attract younger modelers. The LionChief product line and its variations is an example of what it takes to survive in this ever changing marketplace. Although interoperability between different systems sounds neat, it is difficult to achieve and has questionable impact overall.

@E-UNIT-79 posted:

Anybody who's been in the Hobby for sometime knows that Mike Wolfe single-handedly changed the face of O gauge railroading. To say any less would be a disservice to the man because of his diligence foresight and competitive nature we have what we have today.

I disagree.  Maury D. Klein helped change the landscape of O gauge railroading also.  Although his company, MDK Inc.  initially offered only track and plastic accessories under the K-Line brand, it wasn't long before they started offering cheap freight cars and later engines.  Yes, the quality was low compared to Lionel, but K-Line took steps to improve the quality in all of their products.  In time, K-Line's offerings in the market raised the bar for quality and value at a lower price compared to Lionel's products.  Not only did they improve the quality by adding separate pieces like brake wheels, under-carriage detailing, and ladders, but their prices were consistently lower across the board.  K-Line introduced StreamLighting and fully-detailed interiors for their passenger cars.  K-Line also started to produce scale-sized & scale-detailed products as the company grew.  Even their K-Line Collectors Club offered good values.  They had low club dues that at first offered as premiums two high-quality freight cars w/die-cast trucks for a low price in addition to a subscription to their newsletter, "The K-Line Connection".  K-Line even produced two distinct types of track designs, Super "K" & SuperSnap, that many O gauge enthusiasts still like and prefer over other brands due to their look and versatility.

All of the products K-Line released impacted the market beginning in the 1970s and continuing into the early 2000s.  Both Lionel AND MTH felt it and they had to deal with the additional challenges over the years.

I'm not negating anything Mike and his company did, but I think it's unfair to make it seem he was the only one issuing innovative products.

@KOOLjock1 posted:

And Lionel had internal challenges too... including their Neil Young inspired cling to the open-frame Universal (Pul-Mor) motors, and the time and energy spent on the Odyssey motor, while Mike was pumping out perfectly acceptable models with off-the-shelf DC CAN motors in them.  The money could be spent on tooling.

My greatest regret of the last 25 years and the lawsuit is not that production went off-shore... it is when production went from South Korea to China.

Jon

Yes, I don't think it was a wise decision for any company to set up production in China.

I disagree.  Maury D. Klein helped change the landscape of O gauge railroading also.  Although his company, MDK Inc.  initially offered only track and plastic accessories under the K-Line brand, it wasn't long before they started offering cheap freight cars and later engines.  Yes, the quality was low compared to Lionel, but K-Line took steps to improve the quality in all of their products.  In time, K-Line's offerings in the market raised the bar for quality and value at a lower price compared to Lionel's products.  Not only did they improve the quality by adding separate pieces like brake wheels, under-carriage detailing, and ladders, but their prices were consistently lower across the board.  K-Line introduced StreamLighting and fully-detailed interiors for their passenger cars.  K-Line also started to produce scale-sized & scale-detailed products as the company grew.  Even their K-Line Collectors Club offered good values.  They had low club dues that at first offered as premiums two high-quality freight cars w/die-cast trucks for a low price in addition to a subscription to their newsletter, "The K-Line Connection".  K-Line even produced two distinct types of track designs, Super "K" & SuperSnap, that many O gauge enthusiasts still like and prefer over other brands due to their look and versatility.

All of the products K-Line released impacted the market beginning in the 1970s and continuing into the early 2000s.  Both Lionel AND MTH felt it and they had to deal with the additional challenges over the years.

I'm not negating anything Mike and his company did, but I think it's unfair to make it seem he was the only one issuing innovative products.

Up until about six or seven months ago I admit that I paid no attention to K-Line trains.  I bought his book detailing the entire production history up to 1999 I believe.  It made me curious so I started buying some K-Line trains.  It seems to me that K-Line's real strength was in producing introductory train sets.  The ones with company logos appear to be his bread and butter.  I think he owned that market from the late 80's through the mid 2000's.  He, as several before him, made good use of the Kusan dies upgrading them and adding refinements.

K-Line scale passenger cars carry a good rep and a hefty price tag.  The scale freight cars he developed I personally am not that fond of but to each his own.  I thought they did a great job with the 6400 series box cars(kusan).  There were a lot of road names (Lionel could have learned something from them in the postwar period).  Also liked the refinements they made to the Kusan tank car.  

I believe he ultimately produced about 20 scale engines and several more non scale.  Bottom line.  I am not sure it was a good idea to try and move up to scale product where the market was already over populated.

As an aside, my wife has never been interested when I opened up a thousand dollar Williams, Weaver or MTH engine.  "They all look the same".  She is always interested when I open up a $150.00 K-Line set.  She likes the colors and the products pictured.

Opps, sorry, there is an MTH starter set in the last picture.  I put it there to compare quality.  Much better quality but she is correct, by comparison, boring.

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Up until about six or seven months ago I admit that I paid no attention to K-Line trains.  I bought his book detailing the entire production history up to 1999 I believe.  It made me curious so I started buying some K-Line trains.  It seems to me that K-Line's real strength was in producing introductory train sets.  The ones with company logos appear to be his bread and butter.  I think he owned that market from the late 80's through the mid 2000's.  He, as several before him, made good use of the Kusan dies upgrading them and adding refinements.

K-Line scale passenger cars carry a good rep and a hefty price tag.  The scale freight cars he developed I personally am not that fond of but to each his own.  I thought they did a great job with the 6400 series box cars(kusan).  There were a lot of road names (Lionel could have learned something from them in the postwar period).  Also liked the refinements they made to the Kusan tank car.  

I believe he ultimately produced about 20 scale engines and several more non scale.  Bottom line.  I am not sure it was a good idea to try and move up to scale product where the market was already over populated.

As an aside, my wife has never been interested when I opened up a thousand dollar Williams, Weaver or MTH engine.  "They all look the same".  She is always interested when I open up a $150.00 K-Line set.  She likes the colors and the products pictured.

Opps, sorry, there is an MTH starter set in the last picture.  I put it there to compare quality.  Much better quality but she is correct, by comparison, boring.

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Bill, that's an amazing collection.  I see what you mean about the colors.  They make me want to start looking for more of the K-Line offerings than I currently have.  Thanks for posting these pics.

That was a great read, and I learned a few things about Mike and the lawsuits I didn't know. He really was JLC reincarnated. Thanks for sharing the link.

When I was buying new product in the 90s and early 2000s, I was one of those people who Kooljock mentioned. As great as the MTH product was, I couldn't pull myself away from the Lionel name. I had postwar and I just saw myself as a Lionel guy, even if the smoke unit wasn't quite as good.

Now I don't buy any new product- just Lionel from the 1920s-40s.

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