News Concerning Marklin's Future

whatlep

whatlep

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The November 23rd issue of Stuttgarter Zeitung contains an interview with Michael Pluta, Marklin's insolvency administrator. The full, German language text is here:
http://www.stuttgarter-zeitung.de/stz/page/2285081_0_2147_-interview-mit-maerklins-insolvenzverwalter-der-preis-ist-das-interessanteste-.html

Key points for me are:

1) The hoped-for investment for any bidder for Marklin is now 60-70 million Euros, down from the 100 million quoted previously.
2) Deliveries from China are expressly stated to be an issue due to unreliability.
3) Pluta sees the current Marklin marketplace as an issue, due to the age of most consumers and the short production runs involved (quoted as 1000-20000 items). Any investor will need to be prepared for a long-haul to realise returns (20 years is quoted). Additionally, he notes that Marklin must be able to deliver to market more quickly than previously and have much tighter cost estimating (and thereby profit forecasts).

Any Centralista with 60 million Euros should contact Mr. Pluta directly, though 10% commission to my Mallet fund would be received with considerable enthusiasm. :thumbup:
 
<p>Some thoughts, just my opinion, so take with a grain of salt

<em>1) The hoped-for investment for any bidder for Marklin is now 60-70 million Euros, down from the 100 million quoted previously.
</em>
Loss of market value due to the worldwide recession?

<em>2) Deliveries from China are expressly stated to be an issue due to unreliability.
</em>
Thats actually kinda surprising, as EPL had already fairly established production facilities there, did they have to move the equipment to another factory?

<em>3) Pluta sees the current Marklin marketplace as an issue, due to the age of most consumers and the short production runs involved (quoted as 1000-20000 items). Any investor will need to be prepared for a long-haul to realise returns (20 years is quoted). Additionally, he notes that Marklin must be able to deliver to market more quickly than previously and have much tighter cost estimating (and thereby profit forecasts).</em>

This has always been Marklins short coming IMHO, they were always a pricey beautique brand with limited accessibility outside of Europe. North America is where the biggest potential market always has been, yet we've been virtually ignored by Marklin since before EPLs demise. Now they appear to be doing the same with LGB. The limited supply could be due to the combined effects of all the above mentioned forces but we still have seen nothing concrete this side of the Atlantic. LGBoA was a large part of EPL, its too bad MArklin didnt see the same potential when they took over but then, alot of other things were going on as well.</p><p>To me this is very worrisome news, not alot of investors are willing to sit for 20 years waiting for a return, I sure hope the next buyer doesnt just decide its cheaper to just liquidate both companies, dont think it couldn't happen. Thats the way the real business market works these days.</p>
 
I'm sure Pluta knows more about these things than me but I would have sold LGB seperately to Marklin. Other than both brands do model railways and both are German they have nothing in common.

I see Marklin as an old fashioned underdog in the model railway world. LGB was the premier garden railway brand before it went bust the first time but it has to be recognised that the competition has moved on since then and is still moving forward while the administrators allow the LGB brand to stagnate.

German management hasn't come out very well in this. They seem very stuck in their ways and totally unaware that the world is moving on without them.

Also that auction which will push lots of cheaper items into the market place won't do the short term prospects for the owners of LGB any good at all in the short term.
 
Chris M - 25/11/2009 7:58 AM



German management hasn't come out very well in this. They seem very stuck in their ways and totally unaware that the world is moving on without them.
Click to expand...

That's not just a problem in the model railway world. Germany has had it too easy for too long - should I say, had had it easy.

One reaon that they're keen on increasing the powers of the EU. If they can stifle other nations' industrial outputs down to their level, they don't have to go through the pain of increasing their efficiency, and all the upheaval of disturbing very comfortable working practices. Hence all the human rights, minimum wage, maximum hours etc etc etc
 
I can't see anyone stumping up that sort of money to "save" Marklin.

Selling LGB to someone with a decent route to market would be best and leave Marklin products seperate as a H0 gauge manufacturer.

More than likely Hornby would buy up the H0 side of Marklin, but unlikely they would enter the G Scale market with the purchase of the LGB side of the business.

So it still remains to be seen as to what will happen to the LGB side of Marklin for the future years, especially if the chinese production route is proving problematic already.

It is true that other manufacturers are covering ground whilst Marklin stumble over shipping out tired models. LGB may be the cream of the crop when it comes to quality and reliability, but other options are now becoming available through Piko and Accucraft and possibly Lilliput in 2010 that consumers will spend their money on now instead of waiting for LGB (Marklin) to catch up again.
 
Rhinochugger - 25/11/2009 10:18 AM

Chris M - 25/11/2009 7:58 AM



German management hasn't come out very well in this. They seem very stuck in their ways and totally unaware that the world is moving on without them.
Click to expand...

That's not just a problem in the model railway world. Germany has had it too easy for too long - should I say, had had it easy.

One reaon that they're keen on increasing the powers of the EU. If they can stifle other nations' industrial outputs down to their level, they don't have to go through the pain of increasing their efficiency, and all the upheaval of disturbing very comfortable working practices. Hence all the human rights, minimum wage, maximum hours etc etc etc
Click to expand...

I am not sure where you are coming from. The minimum wage has nothing to do with the EU, the European Convention on Human Rights was drafted by British lawyers in the 1950s, and real wages in Germany have actually stagnated in real terms over the last decade or so due to voluntary wage restraints by the unions. Hence, German productivity has actually risen.
 
Marklin have made the headlines again in Germany this week due to a rather unusual industrial dispute. It appears that the residual workers in Goppingen have objected to the activities of their own Works Council (i.e. the workers' representatives) who have also been openly criticised by Marklin's current management.

The source (in German) is here:
http://www.handelsblatt.com/unternehmen/industrie/modellbahn-drama-maerklin-chef-beschimpft-betriebsrat-als-totengraeber;2490280

As a comment, it seems remarkable and very encouraging for enthusiasts that the workforce are willing to perform unpaid overtime to help out the company.
 
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