Friday, January 02, 2009

Seismic Events

Well, the Lionel/MTH Story is breaking on the internet and I think everyone should be excited/ecstatic about it. Why? Well, it indicates a cessation of hostilities between the two companies; they can get innovating vs. litigating. That's a great thing, not just a good thing. More money should go to R&D, less to legal fees and court costs.

Second and just as important; it means standard gauge and prewar trains are still on the minds of both companies. It's funny, I've had several manufacturers at shows tell me that there is no new news in prewar toy trains. All of the new and exciting stuff is in the amazing high rail gear coming out coupled with the electronics that has become pervasive in the hobby. Yet here we are, two of the largest train manufacturers in our country doing something great and teaming up to make products from yesteryear. And it is likely they will be great products as well.

There is news in great prewar trains and they will continue to get even better in 2009 and 2010. Over 100 years past their introduction and the innovation hasn't stopped. Here's the whole press release:

From Jerry Calabrese:

Wed Dec 31, 2008 12:02 pm (PST)
From Jerry Calabrese:
Yesterday, an electric charge rippled through the model train boards when someone managed to find a draft of a press release on the M.T.H. web site that was not otherwise available to the public, and post it on OGR. And while the timing was off by a week or so, the facts are correct.
Since the news leaked yesterday afternoon that Lionel is going to license M.T.H. to use its name on historical tinplate Standard and O Gauge model trains and accessories, a lot of questions have been raised, and I've heard everything from, "Wow, great for the hobby," to "Wow, say it ain't so." I understand that the idea of Lionel and M.T.H. working cooperatively, so soon after settling our long and bitter lawsuit, is a shock to a lot of people, especially those who became so personally invested in that conflict.

I can only say that the model train hobby isn't about lawsuits or personal enmity, it's about exciting products, the fellowship of enjoying them, and ultimately, it's about making sure that our hobby is stable and strong. I'm sure I can speak for Mike Wolf, when I say that the best way to repair the damage that was done to our hobby as a result of those hostilities is for our two companies to do exactly that.

Before anyone starts singing Kumbaya, or wondering what happens on the color spectrum when you mix Orange, Blue and Purple, I'd like to issue a reality check and answer some of those questions that were raised:

Lionel and M.T.H. are two, entirely separate companies with entirely different business models and destinies. We fiercely compete, and will continue to fiercely compete, in the core, O gauge segment of the model railroad hobby, especially in the arena of high end engines and Operating Systems. However, our interests do not conflict, to any great extent, in other gauges and markets. Both companies are equally committed to making great trains and, where we do compete, both companies are equally committed to convincing hobbyists that they do so better than the other. And none of that will change.

The agreement between Lionel and M.T.H. is a conventional and straightforward, multi year license, in which Lionel will be paid a royalty on each tinplate train that is sold. As an acknowledged and acclaimed maker of tinplate trains and accessories, M.T.H. will now be able to do so using the historical and authentic Lionel and American Flyer badging that made them historical and authentic in the first place. While M.T.H. will be solely responsible for manufacturing the new line, Lionel will work with M.T.H. to select the trains that will be made over the next few years, and will do whatever it can to help make them the success they deserve to be.

Yesterday, before the thread that broke the news was taken down, in response to a post that expressed strong negative feelings, someone quoted the great, old Nick Lowe song, 'What's So Funny About Peace Love and Understanding?' I can only add that we live on a very small planet and we participate in an even smaller hobby. And while I don't anticipate that M.T.H. and Lionel will begin exchanging Valentine's Day cards, it's not too much to work on items one and three.
Below you'll find the press release, as it was intended to be released next week.
Happy New Year.

Jerry Calabrese


Wed Dec 31, 2008 12:06 pm (PST)
New York City, NY, Dec. 31, 2008 -- Lionel Electric Trains announced today that it has entered into a multi-year licensing agreement with M.T.H. Electric Trains, in which the Columbia, MD, model train maker will create a new line of tinplate Lionel Standard and O gauge products. The license will also include tinplate Standard and O gauge offerings for American Flyer, which has been part of Lionel since its acquisition in 1967.

Using its extensive collection of tinplate tooling, M.T.H. plans to issue new versions of Lionel and American Flyer classic tinplate trains and accessories that were originally released between 1900 and 1942. These products will be packaged in all-new boxes with iconic Lionel and American Flyer advertising images and logos from the prewar tinplate era. Promotion of new tinplate Lionel and American Flyer products will begin in early 2009, with full-color catalogs. A Web site, dedicated to the new product line, will also offer product videos, sound clips and other information not available in print catalogs.

"I'm very pleased that M.T.H. and Lionel will be working together on this new Lionel and American Flyer tinplate line," said Jerry Calabrese, Lionel CEO. Calabrese went on to say, "In times as difficult and challenging as these, I hope it's reassuring to all model train fans that both our companies will be joining forces to write a productive new chapter in our hobby's history. There is no better way to express our mutual belief and commitment to the future of model railroading than for Lionel and M.T.H. to collaborate on something as imaginative and exciting as these new Tinplate products.

"This collaboration builds on what we've accomplished with our Tinplate Traditions line over the past three decades," noted M.T.H. President Mike Wolf. "It is no secret to those who know me that Lionel's history has inspired me since my youth." Wolf went on to say, "By working together, our two companies will be able to offer products that even more faithfully evoke the beauty and artistry of the toys that Lionel and American Flyer turned out in the prewar years, as well as make those trains available to a wider audience.

Wolf added, "Putting aside the differences our firms have had over the years, Jerry and I have always recognized how much synergy exists between Lionel and M.T.H. Together we sat down and worked out this agreement with the express goal of expanding on both firms' longstanding commitments to grow our hobby."

Based in New York City, Lionel has been making model trains and accessories since 1900. It is one of the world's leading model train companies, and among the most widely recognized brands in America.

Based in Columbia, Maryland, M.T.H. Electric Trains is a seasoned model train manufacturer with a long history of innovation. In little more than a quarter century, M.T.H. has created an appealing multi-gauge product line.


Anonymous said...

I'd like to know how this might affect the "new" products like the Hiawatha, Commodore, and others in the development pipeline? Could be wonderful. Only downside, what will the Mike-bashers say now?

Anonymous said...

Thought I'd add -- while I'm interested in "new" Standard Gauge, I would also like MTH to did deeper into the past and do some earlier pieces. How about a layout of all Gauge One IVES clockwork? Just to My Taste!

Dave Farquhar said...

I agree this is a good thing. Now MTH can market to those who won't buy a repro unless it has the original manufacturer's name on it. So they can gain market share by enlarging this niche market.

And now Lionel is in the game without the expense of developing all that tooling. Lionel can't afford to compete head-on with MTH. With this agreement, they have virtually nothing to lose and everything to gain.