Rapido News Volume 36 - ©2012 Rapido Trains Inc.

Dear Rapido Customer,

As I am writing this, I have just heard the news that VIA train 92 derailed in Burlington, Ontario. Three VIA engineers - Ken Simmonds, Peter Snarr and Patrick Robinson - lost their lives in the accident, and many more were injured, including kids. We think nothing of it when our models jump the tracks, but please take a moment and think about the men and women who keep the real trains running, and the responsibilities and risks that come with their jobs. Our thoughts and prayers go out to the families of the deceased and we hope for a speedy recovery for those who were hurt.




NEW New Haven SMOKERS

We are delighted to be able to announce our latest Osgood Bradley coach style: the New Haven "Smoker" Coach.

New Haven's Osgood Bradley Lightweight coaches #8500-8529 were unique. Each of these 10-window coaches included a separate smoking section at one end of the car for the use of passengers who chose to "light up" in those less health-conscious times!

To help clear the air a special ventilation system was installed over the smoker's lounge with a unique, large vent on the roof above. We have already tooled a new interior, roof hatch and vent. All cars also include full underbody detail, "Easy-Peasy" lighting, free rolling trucks, separate grab irons and details and accurate paint and lettering. Sorry, stale cigar and cigarette smell is not included.

Paint scheme variations are:

• New Haven: Hunter Green (partial skirts)
• New Haven: Pullman Green (partial skirts)
• New Haven: #401 Green (partial skirts)
• New Haven: McGinnis (partial skirts)
• New Haven: McGinnis (naughty)
  (sorry - I meant "no skirts")
• Undecorated

MSRP is only $79.95 each. Considering the competition's barely-detailed cars go for around the same price as our super-detailed cars, this is a bargain. All cars will be produced to order, so be sure to get your reservations in right away! Reservation deadline - 16 June 2012. Delivery is end of this year.

New Haven Osgood Bradley Coach: McGinnis Scheme

NEW RUN of New Haven and B&M 10-Window Coaches

When we announced the first run of Osgood Bradley 10-Window Coaches, a lot of New Haven and B&M modellers decided to take a "wait and see" approach. Well they "waited," and then they "saw" on other people's layouts but they couldn't find any for themselves! Because we make our models to order, the first run of Osgood Bradleys was sold out by the time a lot of people saw the cars in action!

We have a special affinity for New Haven and Boston & Maine modellers, so we are delighted to announce a new run of these babies. The new run will include new numbers and new skirting/lettering variations. Several car numbers are available for each paint scheme variation.

New Haven Osgood Bradley Coach: Hunter Green with partial skirts and low "NEW HAVEN"

Paint scheme variations are:

• New Haven: Hunter Green (full skirts)
• New Haven: Hunter Green (partial skirts, as in the photo above)
• New Haven: Pullman Green (partial skirts)
• New Haven: #401 Green (naughty)
• New Haven: McGinnis (partial skirts)
• Boston & Maine: Maroon (naughty)
• Undecorated

MSRP for these is also $79.95 each. And, like the smokers, the reservation deadline is 16 June 2012. Please reserve our New Haven and B&M cars with your dealer today!

A Cotton Belt Deluxe Coach in the Daylight scheme Photo courtesy the SPH&TS Collection.

"Deluxe" Osgood Bradley Production Delay

After all this good Osgood Bradley news, I have some bad Osgood Bradley news. We have to delay production of the Deluxe versions of the cars until 2013. Please note that these cars are NOT being cancelled. We are making them... but later.

The decision to delay these cars is entirely economic in nature. The tooling costs are very high to do the new style, requiring several new molds, but the orders are still pretty low. We will tool up the new car style early next year and do a final marketing push to try and build up the orders and actually make money on the project. Right now the project is not profitable.

Kansas City Southern "Deluxe" Osgood Bradley Coach

Like the LRC locomotive, this is a project we are committed to making even if it isn't profitable, but of course we would prefer that it was. The roadnames affected are:

• Kansas City Southern
• Seaboard
• St. Louis Southwestern (Green)
• St. Louis Southwestern (Daylight)
• Southern Pacific (Green)
• Southern Pacific (2-Tone Gray)
• Southern Pacific (Sunset)
• Painted, Unlettered (Green)
• Undecorated

The Deluxe Coaches will be available in three-packs or as single cars however, we now recognize this is not what most modellers want and we plan to stay away from three-packs for most of our future passenger car releases.

If you want to see these sooner, please reserve them in advance with your dealer.

Yes, our stuff was on this ship.

Shipment Woes and Latest Deliveries

We had a couple of sleepless nights earlier this month when we discovered that the photo above was, actually, of our ship. We had a container filled with Super Continental Line passenger cars on this very boat! The Cosco Yokohama hit some very bad weather and 29 containers fell overboard. In addition, as you can see in the photo, many more were damaged.

Even when we weren't sure if we would be able to pay our bills in the spring due to a lost shipment, we were able to find some humour in it. My wife came to me with the following announcement: "Dear customer. We have some good news and some bad news. The good news is that your container was unloaded on January 23rd. The bad news is that the vessel docked on January 25th."

Thankfully, our container was nicely buried in the middle of the ship and it survived intact. The last of the Super Continental Line 6-4-6 Sleepers and Grill-Parlors have just left our warehouse and will be arriving in stores soon:

• Erie
• Great Northern
• Gulf, Mobile and Ohio
• Milwaukee Road
• New York Central
• Northern Pacific
• Undecorated

Here are some pretty pictures of the new cars.

Post-war 6-4-6 Sleeper decorated for Erie

Pullman-Standard Grill-Parlor decorated for Great Northern

Pullman-Standard Grill-Parlor decorated for Gulf, Mobile & Ohio

Post-war 6-4-6 Sleeper decorated for Milwaukee Road

Pullman-Standard Grill-Parlor decorated for New York Central

Post-war 6-4-6 Sleeper decorated for Northern Pacific

A few of The Canadian passenger cars in the pad printing shop

The Canadian and FP9A Production Update

It's finally happening. We're just a few weeks away from the delivery of the first Canadians and FP9As. The schedule right now is for the first shipment to leave the factory in the last week of March or first week of April. This shipment will include Canadian set 210001 (Maroon Block) and VIA Rail Canada FP9A locomotives.

Coach Interiors - Note the individually-moulded seats with antimacassars!

We've received production samples of all the passenger cars, and they are fantastic. We received pre-production samples of the locomotives, and they are perfect in terms of assembly and mechanism, but there were some minor adjustments needed to the paint masks to give the quality of decoration that we require. These have been fixed. I'm pleased to let you know that we've managed to make the roof-mounted searchlight on the CP units operational. So this baby has working number boards, head lights, rear light, green and white class lights, and a roof-mounted gyra. And all of these lights are individually controlled in DCC. Not bad!

Latest CP FP9A Sample We still need to fix the beaver herald and both ends of the striping.

Check out the operating roof light!

The current Canadian and FP9A production schedule is as follows. Dates shown are when the items will leave the factory. This schedule is of course tentative because our factory follows the legal code of a certain Mr. Murphy. Also, the CN FP9As may be swapped, with the noodle scheme arriving first and the 1954 scheme arriving second. It depends on how many headaches we have with these paint schemes - they are both a pain in the noggin.

• Late March/Early April: Canadian set 210001; VIA FP9A
• Late April: Canadian set 210002
• Late May: Canadian set 210003; CN (1954) FP9A
• Late June: Canadian set 210006
• Late July: CN (Noodle) FP9A
• Late August: Canadian sets 210004, 210005, 210007
• September: ACR and Conway Scenic FP9A

Everything Else Production Update

Like most other model train manufacturers, we have been hit with major delays in China. Scroll down to read all about this in Problems in China: The Inside Story at the end of this email. This has been compounded by the fact that production of The Canadian and FP9A is currently taking up most of our factory's capacity right now - it is the biggest project we or the factory has ever undertaken.

To give you an idea of the amount of work involved, we counted more than 4000 parts in each Canadian. And many of the parts are tiny. We have had one entire assembly line doing nothing but cutting parts from sprues and sanding the bits of sprues off since November. They aren't finished yet. I'm not kidding. Below is a picture of our parts warehouse taken back in November. Every box you see in the photo contains parts from The Canadian's passenger cars. When this photo was taken, the locomotive parts hadn't been injected yet.


The result of this is that basically all of our other projects have had to be pushed back. I apologize for these frustrating delays. If it's frustrating for you, you can imagine how it is for us. We base all of our cash flow projections on promised delivery dates from the factory and when products are shipped a year late it makes running a business very, very difficult. To add to my frustrations, Bill keeps whining about needing meat reefers for his layout and keeps wanting to know why all my VIA equipment keeps getting priority. This is getting very tiresome.

The following are ready for production but are delayed by The Canadian and FP9A:

The order deadlines for the items below have officially passed, however as you probably know they are not ready yet. Click on any item to visit the relevant web page. If it says "Order Desk Open" it means we have not yet injected the parts so you can still increase your order with your dealer.

• HO Osgood Bradleys - LIRR (both schemes), BAR, PC
• N scale Dayniters - CN, VIA - ORDER DESK OPEN
• HO Meat Reefer - All Schemes - ORDER DESK OPEN
• HO Wide Vision Caboose - CP and CSX - ORDER DESK OPEN
• HO and N Detail Parts - ORDER DESK ALWAYS OPEN

Provided we can finish production of The Canadian and FP9A on schedule, all of the above products will leave the factory by the end of this year.

The following are in tooling and are delayed by the situation in China:

Click on any item to visit the relevant web page. We don't have a delivery date for these yet. I will give an update in Rapido News as soon as we get some positive progress from the factory.

• N Cafe-Bar-Lounge and 10-5 Sleeper
• N CN Pte-St-Charles caboose
• HO CN Pte-St-Charles caboose

HO scale LRC Locomotive Update

HO SCALE LRC LOCOMOTIVE

The tooling for our LRC Locomotive has been ready since 2009. But, as I have said in previous newsletters, the orders for this engine are extremely low. We've accepted that we will lose money on this project, and we will make it anyway.... but only after The Canadian and the FP9A have all been delivered. We have to focus our efforts on the profitable projects before the unprofitable ones.

That being said, later this year we will do another marketing push on these locomotives and introduce some new locomotive numbers. That will hopefully drive up the orders. A couple of people have suggested that we should bring out the LRC first because we announced it first. Unfortunately, the economic realities of running a business do not allow us to follow that philosophy. Please be patient. You and I will both have our LRC Locomotives in late 2012 or early 2013.

Speaking of the LRC, I'm happy to report that we almost got the Toronto Railway Historical Association's real LRC #6917 started in November, but the weather turned cold on us. We will get back to work on her in the spring and we should have her chugging around VIA's maintenance centre by the summer time.

GMD-1s 1915 and 1906 lead a local train into Toronto, 1968. The passengers must be really toasty in there. This three-car train has three steam generators! Photo courtesy Mike Schafer.

Did Somebody Say GMD-1????

Yes, we are indeed doing the GMD-1 in HO scale. We will release more information about this project later this year when we have our first test samples. That is all I can tell you at the moment, except for the fact that steel is being cut...

If you haven't yet watched our GMD-1 YouTube video, it's worth taking a look. We've had almost 7000 views in just two months. Hey - more than 12 views in the model railroad industry means this video has "gone viral." We are a niche hobby, after all! Click on the image below to watch.

C-Liner Project Cancelled

Unfortunately I have to announce a project cancellation. The LIRR and NH C-Liner project has officially been scrapped. The reason was two-fold. We were unable to get access to the trucks and gear towers from the original release, and the orders were too low to justify tooling these up from scratch.

For those of you who were looking forward to this project, please accept my sincerest apologies. Bill had expressed reservations when we started this project but I decided to go with my gut. My gut was wrong. There was not enough demand for these engines.

Problems in China: The Inside Story

If there is a common theme throughout this newsletter it is that "stuff has been delayed." We are not the only ones. Most model train manufacturers have experienced production delays, and here is why.

In January I broke the news on the CanModelTrains forum that another large model train factory in China had shut down, forcing 3000 people out of work. Whatever your beliefs may be about globalization, nobody wants to hear that 3000 people lost their jobs just before a big family holiday. This was just the latest event in the ongoing saga of manufacturing model trains in China.

A couple of years ago, Sanda Kan was purchased by Kader Holdings (the Chinese company that owns Bachmann Trains). Sanda Kan was the largest supplier of model trains in the world, and most of the trains made by North American and European manufacturers came out of Sanda Kan's many factories in Guangdong province, China.

After initially telling their clients that nothing would change, Kader decided to dump the vast majority of their customers. Suddenly, about 50 model train companies around the world had no factory to produce their models. As you can expect, a form of panic ensued as everyone was scrambling to find a supplier. Our industry is what you could call "cash poor." We manufacturers make money, and then invest it in new tooling. That means that for all but the biggest manufacturers, a delay in production can cause serious cash flow problems as we don't have piles of cash lying around.

The result of Sanda Kan booting out their customers is that the existing model train factories found themselves with an onslaught of new clients desperate to get their models back into production. These clients also needed to start new projects to ensure that they don't run out of cash in the long term. No model train factory was, or is, anywhere near the size of Sanda Kan. The demand outstripped the supply - by a huge margin.

The industry is still recovering from the eviction of Sanda Kan's clients. The January closure of one of the largest remaining suppliers in the industry will only add to our collective problems. This closure was caused in large part by the fact that model railroad price increases (averaging 10%-25%) have not kept pace with cost increases in China, and it is often difficult for the Chinese suppliers to stay in business while meeting the demanded price point from their major North American clients.

Our industry is currently tied to Chinese production, as southern China has developed the special skill set required to produce model trains. Bringing the manufacturing back to North America would cost even more due to very high start up costs and higher overhead, and there are no reliable model train factories set up yet in places like India. So I think we're looking at tough times ahead in our industry: more delays and even larger price increases.

Rapido has largely been insulated against these major price increases. But, as you can see from this newsletter, we have not been insulated from the major production delays in China. Rest assured that we are not taking these challenges lying down. We are working on a plan to significantly speed up our production in 2013, and I will be able to tell you more about these ventures later this year. Stay tuned.



Well that's all for this newsletter. I actually had to edit out three entire sections because I came to the realization that you have better things to do than spend all day reading this newsletter. Thank you to all four of you who have actually stayed with me to the end. The last time I mentioned my parents and how they never read my newsletters, they didn't notice. So here's my second attempt - thanks in advance to my parents on the off chance that they are still reading.

Talk to you soon!

All best wishes,

Jason

Jason Shron
President
Rapido Trains Inc.