More problems in China....

[warbonnetuk]

Hi All

 

Got one of my regular newletters from Pacific Western Rail Systems this morning which contained the following little story around their latest product release. Obvioulsy this is onlt one side of the story but it in keeping with recent release delays and quality control issues that have effected some more recent models e.g. Athearn SD70ACe and IM GEVO's

Dan Spalding

Dear HO Modelers:

 

About 20 months ago we announced the second run of our new Hawker Siddeley 4 Bay Cylindrical Hoppers with what is referred to as the "Heritage" paint schemes. They are late, and we would like to give you a status update.

 

Many of you are aware a major manufacturer in China, Sanda Kan, was taken over by a large toy manufacturing company about 2 years ago. Fourteen months ago they decided to drop most of their customers because they could not effectively manage their existing customer base. They reduced the number of manufacturers they produce products for from approximately 200 to 20 companies.

 

At the time Sanda Kan promised its existing customers (including us) that they would complete all work in progress. During the past 18 months, we have been working diligently to get all the relevant information necessary for the 10 different paint schemes to Sanda Kan to enable them to produce accurate models. As you can imagine, it has been a big undertaking.

However, by December 2010, we locked down all the colors and shades for the 10 paint schemes, as well as the car configurations. Between late January and early February the factories in China shut down for their New Year holiday for about 3 weeks. In March we were asked to travel to Hong Kong and China to visually inspect the shipment. After carefully inspecting samples of the 12,000 cars (6,000 HO Scale and 6,000 N Scale), we rejected them all.

 

When we designed the mold for the Hawker Siddeley Cylindrical car, we actually designed the car with 15 different structural variations. Why? Because there are 15 different ways the cars were actually built. One major variation was the grain outlet gates. There are two major types; Toggle Lock and Spiral Cog. Both versions of the Green Saskatchewan Cars (CN and CP) use Toggle Lock gates. But for this second release many of the cars are equipped with the alternate gate.

 

The first set of samples we received had problems with the Spiral Cog grain gates. Essentially, none of the cars were at the level of quality we had contracted for or that we had seen on our previous run of the green Saskatchewan cars. We had expected this second group of cars to meet or exceed the quality you have come to expect from our products. There was no way we would release products to our customers that were improperly built, with incorrect parts, improper printing or omissions of text on the cars.

 

Sanda Kan suggested that we "take the cars as is" because " it might take a long time to redo them". We rejected that idea because it didn't matter how long it took to redo the cars, we were not releasing a poor quality product to our customers. Period!

 

Since April, cars have been coming and going from China as we review, correct, review and correct the errors until the cars were finally up to par. All of the cars are now correct and we have given China the green light to proceed with production and shipping.

 

Over the coming days we will publish news releases with images of all the final production cars. We expect shipment from China to commence shortly.

 

As a reminder, we have done just 50 sets of each scale as well as 50 each of the special cars. So if you like what you see, (and you will!) don't wait too long to order as the sets will go fast.

 

Thank you for your patience and we hope you enjoy the cars.

 

[Oldddudders]

Rejecting a whole shipment of models is a brave step, but it is probably this insistence upon fidelity that pushes the Chinese towards fewer, bigger customers, since what they lose on the rejected model A they make back on the successful acceptance of models B - Z etc, and there is room for more negotiation. No-one wins here, but certainly the customer is getting what he bargained for, albeit a bit late.

 

I'm not sure how you'd do it, but I think this tale is of interest to anyone in the RTR market, and needs a wider audience than just this Group. Understanding our suppliers' problems is a good way of reducing the flak they sometimes get.

[warbonnetuk]

I fully agree in that I'd take a delay in delivery in order to ensure that a product is as prototypically accurate as possible and is properly enginerred. Full marks for PWRS for disclosing the reasons for the delay

 

Referring back to the Athearn SD70ACe, from other internet groups I'm on there was a considerable amount of measured negative feedback around poor build quality esp on the drive train on the first production run. Whether it's a coincidence but the Athearn website has recently been updated to show that the second run of ACe's and also the DC Dash 2' have had their due dates pushed back to Dec. The web discussions I have seen (Disclaimer: Lies, d*m lies and web chat groups ) have put this down to Athearn's concern over quality issues in China. I guess is debatable whether customer complains have spurred Athearn onto action but if modellers are getting short changed on a fairly major purchase (£180 for a sound fitted loco) then I'd defend the right to raise these.

 

That said there is no excuse for some of the rude, pointless namecalling that does occue on some forums not as enlighted as ours!

 

Dan Spalding

[34theletterbetweenB&D]

... Fourteen months ago they [sanda Kan] decided to drop most of their customers because they could not effectively manage their existing customer base. They reduced the number of manufacturers they produce products for from approximately 200 to 20 companies ...

That's the really interesting aspect, because if true that's circa 180 businesses potentially on the look out for a replacement outfit to perform their outsourced manufacturing. This particular operator doesn't explicitly mention whether they were one of the 'dropped', and if so what alternative outsourcing strategy they have; but my take would be they wouldn't mention this factor unless it had affected them.

 

It also makes clearer why Hornby moved ahead with placing some of its' manufacturing outside Sanda Kan. They were big enough not to be 'dropped' (at least this time around) but better to be prepared, and also to remind the supplier that there is no exclusivity in 'dropping'.

[trisonic]

The orders from Atlas and Athearn probably dwarf every other distributer including Bachmann themselves...........

 

Best, Pete.

[dibber25]

The orders from Atlas and Athearn probably dwarf every other distributer including Bachmann themselves...........

 

Best, Pete.

 

Yes, but its interesting that the latest limited edition batch of Athearn P42s in VIA livery being advertised by George's Trains (I've just ordered one) appears to be under 150 examples. In the UK you can't get limited runs below 500 from Bachmann or 1,000 from Hornby.

[AndrewC]

One thing that wasn't mentioned in the newsletter (I get it as well. PWRS send out way too much fluff) is the company that bought out Sanda Kan was Kader, the parent company of Bachmann. The cynic in me wonders if this chopping of other companies is Kader's way of influencing their market share. The more reasoned 'me' thinks its more likely to consolidate and increase reliability of their own production.

 

Another thing that's becoming a recurring theme from China is the quality control. The Chinese are becoming victims of their own success. Reports in business magazines suggest they are having trouble retaining workers, many of which are returning to rural areas as the cities are getting too expensive. The constant turnover of staff is leading to reduced training and more quality control issues. Rapido in their early days had a lot of difficulty with the assembly of their coaches.

 

Dibber: Are the Athearn paint schemes being done by the factory or by a sub-contractor I wonder? I believe they did this with the original Amtrak phase v scheme they produced but sold under Walthers. (silver/black boxed)

[trisonic]

In response to Chris' #6 post.

That is interesting, however I can only guess that a high annual volume overall means that the manufacturer has agreed to lower individual orders on "limited" runs (themselves limited annually).

 

 

My experience in Compact Disc Production suggests 500 is a minimum new release order for a minority interest product (think obscure Classical music) and 250 as a re-order because they are also getting an equivalent of a nice large production order for the next Pink Floyd album - that's how it worked for us anyway in the far east...........however to complicate the matter further we would also do small runs of 150 units with different label artwork for different territories so long as the total came to greater than their minimum order. That would be directly comparable to different liveries on essentially the same piece of product (same design, same production run - only complicated by the printing).

 

Does that make sense? I know it is impossible to make direct comparisons but manufacturers will indeed bend over backwards to assist someone who has guarenteed a very large annual minimum order figure. Such big customers allow them to budget close to fact for a fiscal year.

 

It's a thought anyway.

 

Best, Pete.

[Ozexpatriate]

Many of you are aware a major manufacturer in China, Sanda Kan, was taken over by a large toy manufacturing company about 2 years ago. Fourteen months ago they decided to drop most of their customers because they could not effectively manage their existing customer base. They reduced the number of manufacturers they produce products for from approximately 200 to 20 companies.

 

At the time Sanda Kan promised its existing customers (including us) that they would complete all work in progress. During the past 18 months, we have been working diligently to get all the relevant information necessary for the 10 different paint schemes to Sanda Kan to enable them to produce accurate models. As you can imagine, it has been a big undertaking.

The quality problems described in this thread remind me of the reversed tender frames on the Hornby T9s and the saga of Tintagel Castle.

 

The orders from Atlas and Athearn probably dwarf every other distributer including Bachmann themselves...........

I'm not sure that Sanda Kan make anything for the Bachmann (US) or Bachmann Branch Line brands. That's done in other Kader factories. I understand they do manufacture models for Walthers though, and I presume this includes the LifeLike and Proto 2000 lines, though I don't really know this.

 

... the company that bought out Sanda Kan was Kader, the parent company of Bachmann. The cynic in me wonders if this chopping of other companies is Kader's way of influencing their market share. The more reasoned 'me' thinks its more likely to consolidate and increase reliability of their own production.

I think the more reasoned 'you' is quite correct here. Remember that Sanda Kan failed financially and Kader was the white knight who rescued their business. Sanda Kan grew too quickly and took on too many customers and too many projects, leading to quality problems and delivery delays and ultimately the company's failure.

 

There are hints about what Sanda Kan is doing to restructure their business - like installing product lifecycle management solutions - that Hornby have talked about in their annual financial reports.

 

We have discussed the Sanda Kan move to consolidate their customer base around their most important customers in the Hornby's Delivery Schedule thread. Linked in that thread, Eureka, the Australian company that made a magnificent Garratt, described how they didn't make the cut in Sanda Kan's reduced customer list.

[CraigZ]

Yes, but its interesting that the latest limited edition batch of Athearn P42s in VIA livery being advertised by George's Trains (I've just ordered one) appears to be under 150 examples. In the UK you can't get limited runs below 500 from Bachmann or 1,000 from Hornby.

 

Intermountain told us at Cocoa Beach (back in January) that their upcoming production run of Seaboard Air Line FTs was less than 70 of each road number...they're doing 4 different A/B sets. The only difference between each should be the road number...but that's still less than 300 in the run. Of course it's "just" paint on an existing shell, but the shells must be assembled per SAL prototype (no dynamic brakes, might have steam gen vents and stacks on B units or parts removed perhaps).

 

A lot of us are waiting for other companies to realize what Kadee knows - models can be manufactured in the US, be state of the art, and be competitively priced...

[signalmaintainer]

A lot of us are waiting for other companies to realize what Kadee knows - models can be manufactured in the US, be state of the art, and be competitively priced...

 

Yes, indeed! And if U.S. hobby manufacturers keep dancing with the devil, shouldn't they expect to pay his piper for the tune?

 

So perhaps it's time for modelers to cease waiting and vote with our money. Perhaps I need to cancel the order for my Bachmann Johnson 3F and purchase a British-made kit instead. I think I will. I can purchase Parkside Dundas kits as well.