Life on the razor's edge

Never underestimate the importance of credit worthiness whether in your personal affairs or business dealings.

The phrasing in the 3rd paragraph "a position in which we could get back to fill customer needs" is very telling.

Nonetheless, sad to see another model railroad hobby supplier go by the wayside.

And just yesterday...

I was talking at my local MRR club on Model Power outlasting Volmmer... Now I gotta learn of never speaking about MRR suppliers lest I jinx 'em...

Daniel Kramer

Sounds like another major

Sounds like another major event in the banking industry is on the way. Looks like only some things will be financed regardless of the customers credit. I have seen floor plan costs change a lot over the years depending on what the lender was comfortable with. Some products will see continued good rates others will not. Banks do not want money tied up in inventory for long term they want fast turn over if the economy is going to be making big changes. The adjustable rates are the big thing again and short term loans are on the way back. Lots of banks no longer want to lend long term @ fixed rates regardless of ones credit worthiness.

Not sure where model power does business and where it gets it's product but sad to see them go as well. Every time we loose a business we loose more products, and jobs.

Rob in Texas

Banks today

Looks like

we'll all be scratchbuilding models before long if this keeps up. Either that or it's time for the cottage industry in modeling to fill in the gaps with custom build and limited run products.

Bernd

Model Power calls it quits

I'm trying to recall anything they make that I'll miss?  The name to me just brings back old low quality HO RTR cars? Of course being in O scale for so long I might have missed some useful model power stuff?? Who's gonna miss what that they made ??? .DaveB

The elephant in the room...

Interesting how everyone seems to be blaming the banks...

... and ignoring the uniformly poor comparative quality of MP products across the board.

Bachmann stepped up their game some years ago, and has dramatically improved the quality of their offerings, particularly in N scale. MP, on the other hand, was still selling the same stuff that was trash in the 80's and 90's.

I don't see why their failure is a surprise to anyone.

Mantua and Model Power Mini's

I wonder if this is finally the end of Mantua?  I thought their HO scale automobiles were pretty nice and very low cost compared to other brands.  But then I could only have so many blue and white 55 chevy 2 door posts on my layout and it not be conspicuous.

None-the-less it is sad to see another flag fall.

On the brighter side, as mentioned in another post Bachmann has picked up their game and it would seem there is plenty of nice stuff still out and about.

Joe Baldwin

I am... Despite some of their

I am... Despite some of their products are toy-like model power kits are easy and cheap to come by in Brazil, and with some care, even the older ones can become something worth a second (or third) glance. Out of the box most of its kits are suitable for background use, but with some kitbashing and/or with some paint, detail parts and such even the most toy-like building can become a "hero" structure, worth of front of the layout.

And every company has a role in the industry, MDP may not be craftsman worth, but it was a entry level supplier and lots of "chainsaw" layouts would benefit from its products...

A modeller is not born a MMR, you have to learn to become a proficient modeller and good judgment and skills come from mistakes. I'd rather mess up a cheap MDP kit than a lasercut craftsman kit (that I would only get if I order from a overseas supplier, paying a lot for S&H and customs). Craftsman quality requires craftsman skills, not only supplies.

Daniel Kramer

Won't Miss 'Em?

I liked some of their HO vehicles, but that's about it.  A quick perusal of their site (still up as of this writing) shows virtually nothing I'd willingly purchase, although there may be some market still for the Mantua line of steam locomotives.

Much (most? nearly all?) of the product line was train set quality stuff.  Old Varney tooling from the '50s and '60s.  The gimmick-y "metal train" line of extra-heavy cars and an F7.  Re-branded European structure kits.  Things I'd see the hobby shop blowing out on clearance because it didn't sell, or being ignored on swap meet tables.

MP - About Us

http://www.modelpower.com/aboutus.asp

Here you go. It'll tell you what they made.

Didn't know they were located in New York, on Long Island.  Great tax state if you ask me. Our Governor probably helped them along like he's done with so many other bluishness' here in the great Tax State or does Kalifornia get that prize? 

Bernd

Model Power Closing

Some of their vehicles are ok.  Remember, the grade or Jr. high kid starting out interest in the hobby most likely can not afford Kadee, Tangent, Atlas, or their ilk.  I remember getting my feet wet with Model Power, AHM, and even some Tyco.  These entry level suppliers are quite necessary to the hobbyist of tomorrow.  Without this price/quality level only the elite or well-heeled would consider this hobby. 

Bob Bochenek

Question

Does a business have to pay tax on inventory they haven't sold at the end of the year?

Bernd

Does a business have to pay tax on inventory

No, inventory would be a cost of business item. They'd pay taxes on profits made by selling inventory ...DaveB

Bernd's Question

"Does a business have to pay tax on inventory they haven't sold at the end of the year?"

It depends on their location. Some state and local governments impose what is in effect, an inventory tax.  Also, the value of inventory on hand at the end of the year is part of the cost-of-goods sold equation with respect to gross profit and the bottom line, which is subject to income taxes.  Many businesses legitimately chose to "write down" their slow moving or distressed inventory value to reduce tax liability.

-meljr

Inventory Tax

If the government does not charge a tax on inventory, give them time, I'm sure they will. They tax death, so now death and taxes are truly related.

The Model Power line was the last low end model train product line. The step into our hobby may be affected by the greater cost jump. This may contribute to a lower number of new modelers in the future.

Regards, John *********************

It is painful to watch children trying to show off for parents who are engrossed in their cell phones. Children are nostalgic for the 'good old days' when parents used to read to them without the cell phone by their side or watch football games or Disney movies without having the BlackBerry handy. <> Sherry Turkle

Joe almost nailed it

except the letter talks about changes in bank support in 2007 . . . . when things were pretty rosy in the financial world . . . That tells me this is about banks trying to force a model manufacturer into a certain mold (perhaps with market research and perhaps without), and refusing to accept that a business in THIS business could do things differently, remain profitable, meet its financial obligations, and continue to be a good customer for a long time.

Model Power may well have tanked at some point - and if they have been caught as others were in the China kerfuffle of the last several years I can see that bringing them down as well - but this seems like a slow murder to me where short term profits were had at the expense of long-term stability for the banks . . . .

Taxes? I thought you said Texas!!

the great Tax State or does Kalifornia get that prize? 

Oh, I don't know, Bernd. Being grandfathered under California's Proposition 13, the property tax on our house in 2013 was less than $1K on a house worth more than 1/2 a megabuck.  I would say that I couldn't afford to live in another state, but we own property worth less than 1/3 of the value of the old homestead, but with property taxes amounting to more than twice as much. One of my favorite secondary hobbies is listening to Texans and others (but mostly Texans) complain about property taxes.

In any case, I seriously doubt that Model Power's problems were caused by taxes. The issue of taxes didn't ever appear in MP's blurb. As for California, Athearn's located in Long Beach, CA. Last time I looked, they were doing just fine, as is Alpine Models (Suydam at one time) which is located in Artesia, CA, and manufactures its stuff in the US. Accucraft is in Union City, CA. 3rd Rail Division of Sunset is in San Ramon. Alamosa Carshops is in Jamestown (where Railtown 1897 is). BLMA is in Fullerton. If you go here: http://pnr.nmra.org/3div/vendorc.htm , you can find a whole potload of vendors in CA and other, supposedly high tax states as well as (eeewwwwww), Canada, the UK, Germany, etc.

I'm on SS. California is one of those states not taxing it (so's New York). http://taxfoundation.org/blog/monday-map-state-income-taxes-social-security-benefits

Mike

If it was model power

I didnt even stop to look....well unless you like 'playskool' railroading.

No loss.

but it is the sign of the times friends.  get out of debt.  hold silver, (in your hands that is) and look up!

just my $1.59

fritzg

We live in changin' times

I don't know anything about Model Power's particular financial situation but the overall small business loan picture is well known. Like everything in life it is a complicated equation with a lot of influencing factors. One of the largest being the "pendulum swing" of business practices. Our economy went from the pendulum swung too far to one side - free and easy money, to the far other side - scarce money. While the pendulum is beginning to move towards a more neutral position it is still on the scarce side. Add to this, regulations put on banks to temper predatory loaning, minimum capitalization amounts, merging of banks into mega banks, relatively low profitability of small $$ business loans, lower real estate equity (loan securitization), and a host of other factors results in small businesses with less than stellar credit ratings are having a hard time getting loans.

Joe is spot on. Banks are no longer the default goto for temporary money for a small business. By and large they have outgrown the need for making small business loans. The profit is better elsewhere for them. 

Actually Canada...

Canada has one of the lowest corporate tax rates in the industrialized world...

you guys are missing the point....

1. They sell train sets, now the price  for an entry level set has gone up

2. They took the best of Mantua and kept making the Loggers and the Yard Goat that HO steam guys love.

3. They were the ONLY company making a light Mikado, a Pacific, a moderm 4-4-0 and an SP 2-6-0 in N scale

just remember how many of you are still sad of the loss of Grandt line O scale Porters, Bowser HO steam kits, N Scale Rivorrossi steam and Athearn Blue Box locos

listening to Texans and others (but mostly Texans) complain abo

 Haha, Seems like  they complain about everything they can't rope, shoot, or BarBQue? The bad thing about prop 13 is one can't move to a cheaper part of the state and maintain the lower tax so folks get stuck in places that don't fit them anymore. Prop 90 could have been the answer if it had required  every county  to accept transfers. ......DaveB

a light Mikado, a Pacific, a moderm 4-4-0 and an SP 2-6-0 in N s

Well hopefully they'll sell any viable products to another company and we'll still get them? For a couple of lifetimes there'll probably be an adequate supply of model Power on ebay as there  is for Athearn blue box stuff.....DaveB