Marklin Bankruptcy

Sad news.
On February 3rd. 2009 Marklin GmbH, the owner of Trix, Marklin, 4MFOR and LGB, declared insolvency after a 50 million Euros loan was denied by the Banks in Germany to the Firm based on concerns about many changes too often in the High Management of the Company among others issues.

Based on this, the Company had no choice than file for what is the equivalent to chapter 11 in USA (Bankruptcy protection).

At just 2 days from the opening of the Nuremberg Toy Fair, this news were like a earthquake shaking the Industry, as many other manufacturers are also concerned on the future of the Industry if Marklin disappears.

Employees have been working without being paid for more than one Month, what also made the things worst as unions are pressuring the management (completely ineffective as we have said in many occasions) to take the measures needed to rescue the Firm from imminent total Bankruptcy.

As we said 3 years ago, repeated 2 years ago and also said past year on each Toy Fair, the Management of Marklin GmbH was inadequate, completely uneducated on Train Businesses and what was worst for us, completely ignorant of Global Markets as they are now.

We have the proof in our hands: The meltdown of the market in USA and the deep recession we are in has not been avoided by the rest of the Globe. It is clear that we started this thing in USA and now, is a Global problem.

So why Marklin did not see that they had to take care of their business in exports to other Countries and have a UNIVERSAL price, same conditions for everyone and avoid having "Distributors" that only make the product more expensive without any need and consequently, makes it more difficult for Dealers to sell it and results in lower sales that are the same than lower purchases to Marklin GmbH and end on this bankruptcy?

Because a President that knows about "perfumes" can not understand about Trains (first of all, perfumes are more focused to women than men when Trains are more focused to men than woman), and one export manager that have no idea where each Country is located, how many people live on each Country nor what is the potential of one of the biggest Markets in Earth, the United Sates of North America and Canada.

This individual is the artisan, along with Fred Gates, the ex-president of Marklin Inc. of this mess in USA and the naming of Walther's trains as their Distributor exclusive in USA for Marklin, Trix, 4Mfor and now LGB.

Well, this year, if Dealers are still forced to buy at Walther's, the markup for Dealers compared against what a German Dealer pays in Germany is an average of 40% higher that guess what, will be passed to our Customers.

Is this fair? Is this something that can solve the problems of Marklin or will deepen them as less purchases based on less sales will occur ?

This is what the management of Marklin has not seen and has never liked to ear from me. That they are wrong keeping Distributors in USA that we do not need and that make those huge margins. (Marklin Inc. was also a marker up on an average of 28%)

Same as those CEO's that have taken money from the bailout Government has given to them to only pay them self huge amount in the million of Dollars as bonuses and parties for the worst performance they never had. (see AIG, see Ford, see GM, see anyone you like, all are the same)

So where we go now? TO HELL

I will keep an eye on the latest news to be posted here, but this posting must stay for history:

Marklin GmbH will not survive if does not take measures logical with the actual market. some of them in my opinion are:

1.-Global Pricing
2.-Stop forcing German Dealers to have a Store in Store: they are Marklin Dealers and NOT furniture show rooms.
3.-Open Factory Direct Purchases for any Dealer that likes to buy direct at the same price than German Dealers.
4.- Close Marklin Inc. A waist of money for nothing. (sooner or later it will happen anyway)
5.- Remove all Distributors around the World if they can not sell at the same price Marklin GmbH does to Germans.
6.- Do not force Dealers and Customers to buy set of tons of cars not needed. Better make one car at the time than sets of 20 or that many "trains" with bunch of cars no body wants.
7.- Forget the "collectability" of any item. Since eBay exists, there is no More "collectibles" so why to produce hot items in short quantity. Make them available as many as Dealers order.
8.- Create new items, do not repeat same item again and again just with a new road number.
10.- Fire all those "consultants": that have proven as we predicted, not to have any idea of anything other than huge bills to Marklin.
11.- Fire Fred Gates as "consultant". We do not need a consultant that did what he did in USA.
12.- Met with your Dealers that are they who knows what people want and how to do it and what can be sold and what don't.
13.- Do not compete against the Dealers selling all your products on line or at your own Stores.
14.- Stop Dealers Sales on eBay. This is hard to control I know it, but can be done if you police a little bet more eBay.
15.- Stop the BS of One Time Run when you know you will make them again and again. See 37993 it was supposed to be only 37990, but them came 37991 and later on 37992. Well now we have 37993 and in the future we will see many more of these if you survive.

16.- CALL ME. yes I have been always the fighter against the Goliaths in the Industry, but at least I have proven that I was not wrong.

(Next two points suggested by Mr. Peter Paul and they seems god points for us, so we publish them.)

17.- Make the Märklin catalogs available on their website as pdf's. Costs them nothing extra, it's fabulous marketing, and most people will buy a paper catalog anyway when it's convenient. I know, they earn a few bucks from selling catalogs, but they lose out on a lot of excitement and collector interest. Much modeling is impulse purchases, but with increasing web ordering rather than local shops, digital information is essential.

18.- improve the Märklin website with USEFUL technical information. List the type of motors (Ac/Dc, shield/clock/anchor) in each loco model so you know what components you can use to upgrade heritage pieces onto a digital lay-out, what is compatible with what (and what not), etc.

Numbers say the truth. Marklin may have had more sales in 2008 but were based in forcing Dealers to buy many sets that are still on the shelves and that will revert in less purchases/orders for new items in 2009. Do you want to bet that orders this years will be less than half?

Do not criticize my English. It is not my mother language. Better tell me where it is wrong to correct it.