Its time to start thinking inside the box

Okay, let me begin by apologising for the headline pun, but it was difcult to resist.
In fact, the thrust of this article is that the diecast manufacturers need to start thinking, in the parlance of business strategists, outside the box. We are, at times, in awe of what the diecast companies manufacture. Their 1:18
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models, in particular, are often incredibly impressive, with more detail and separate components than youll nd in a thousand pound chronograph watch. One might suggest that the manufacturers have done a terric job in keeping, for many years at least, the prices of their models down to an affordable level. But the times they are a-changin and the stability in

prices and supply that we saw in the nineties and the early years of the new decade are behind us. And frankly those years wont be seen again. We are now, we would suggest, at what is sometimes termed by physicists and social observers alike, at a tipping point. Not to put too ne a point on it, the diecast business as we know it is dying. Its not going to disappear
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As measured by the price of a 1:18 F1 car, the cost of diecast has gone up by some 125% over the last six years. By contrast, ination over that period has risen by 20%, meaning that our models have gone up by more than six times the rate of in ation! This might just have some bearing on falling sales.
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This is Beijing today; theres barely a rickshaw in sight. No longer can China be looked upon as an underdeveloped economy desperate for any work that the west is prepared to throw its way. The east/west dynamic has changed forever and so it shouldnt surprise us that our model cars have become so expensive.

overnight, but making high quality, technically advanced and detailed replicas at affordable prices, is simply unsustainable in the medium to long term. The reasons are well known to those who follow the model world. Basically, almost every manufacturer has its replicas made in China, a country that has been the workshop of the world for many decades. When China was largely a peasant economy, its costs were low. But these days China is a modern, industrial powerhouse. The country is not without its economic problems but, over the last 10 years, its growth has been phenomenal. I think I read somewhere that China now has more millionaires than the rest of the world combined. And central Beijing is like a 21st

century updating of the glitzy parts of London, Paris and New York. Chinese workers now rightly demand proper wages. They wont work 25 to a room in the basement of a sweatshop. They want weekends off, annual holidays and all the

China is no longer purely an agricultural economy. Chinese workers now expect to enjoy the working conditions and rights that the west has enjoyed for many decades.

advantages and perks we have become used to in the west. This clearly affects the cost of manufacturing all kinds of products including, of course, our beloved model cars, especially in the larger scales, where the hundreds of separate actions and processes all have to be completed by hand. To this one can add the impact of rising commodity prices, the increased cost of shipping and Chinese ination that is, right now, rampant. All of this helps to explain why our models are getting more expensive; indeed too expensive for many collectors. But theres another, more structural problem. By nding employment elsewhere, the workers in China can now earn more than they do in the factories that make our replicas.
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This is amply demonstrated every year at Chinese New Year. Historically, the factories used by the manufacturers are in the south of the country. At New Year, which falls sometime after our New Year, workers have returned home for a few weeks to visit their families, returning to their jobs after the holidays are over. But increasingly, they are not coming back. One well-known factory that makes diecast replicas for a number of manufacturers lost over 1000 workers this year! That leaves an enormous hole in even the largest of operations.

The problem is that you cant replace these workers with people taken off the street. It takes months to replace the missing staff and then several more months to train them to be able to assemble our complex and detailed replicas. By the time the factories are back up to speed with a fully conversant and technically capable labour pool, the next New Year is just around the corner! This means that, in any year, the factories are only at full capacity for six months at best. And it is this that partly accounts for the appallingly

The output of the diecast industry has slowed down incredibly in the last six to nine months. We see far fewer releases in a week than we used to.

The models we buy these days are incredibly detailed. They can only be put together and nished by highly skilled workers. Finding the kind of people who can do this work is not easy. Nor is it cheap.
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low level of new releases we have seen in recent months. In past years, we have been used to seeing between 30 and 50 new replicas arrive on our shelves just about every week of the year. In the rst half of 2011, there have been weeks where the number has been close to single gures. This industry, as we know it, cant survive with such low levels of production. Manufacturers will disappear. Distributors will go out of business and retailers will close their doors for good. Were not harbingers of doom here. And were not suggesting that all this heralds the end of civilisation as we

know it, but we probably need to accept that nothing lasts forever and that the diecast world will never be the same again. Once upon a time, collectors acquired lead soldiers and created battle eld scenes in their living rooms. Tin plate cars and aeroplanes came and went. White metal gave automobile enthusiasts access to hitherto unseen levels of detail and accuracy. And, in turn, white metal died when diecast came along. So now, we have to ask ourselves, is it time for diecast to be replaced by the next affordable technology? Of course, we dont know. But we do know that, in the years ahead, the shape of this business is going to have to be very different to the picture we see today.

The diecast companies are going to have to evolve if they want to survive. If they dont change theyll end up as dead as the legendary Dodo.

The question that poses itself is what can the manufacturer do to survive? Its a serious question because it is clear that some wont. And as we have suggested in previous issues

of Diecast Monthly, those who appear strong today wont necessarily be so in the future, whilst some of todays niche players may well become the giants of tomorrow. Meanwhile those who put their heads into the sand and go about their business the way they always have done, because that brought them success in the past, will risk becoming the modern day equivalents of the dinosaurs and dodos we see displayed in the Natural History Museum. So what can the manufacturer do? The rst and most basic imperative is to understand what customers want. Diecast manufacturing can no longer be the preserve of amateur enthusiasts, pursuing their own particular fascinations.

Nothing in life stays the same. Lead soldiers came and went. As did clockwork toys, tin-plate cars, boats and aeroplanes. Is time up for diecast?
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Weve got nothing against Bentleys. They must be great cars or all those second division footballers and ageing rock stars wouldnt buy them. But frankly, the Mulsanne is not the kind of car that many model collectors would want to acquire.

If you produce models that collectors dont want to buy, you might as well pack it all in today, buy a villa by the sea and retire. And weve already warned the manufacturers against relying too much on the Audis, BMWs and Mercedes of this world. Its tempting to do business with these multi-nationals. They commit to large quantities and pay their bills on time, but when it no longer suits them, the automotive manufacturers will bring the gravy train to a sudden halt without a second thought. Ask the owners of any small brand that has done business with one of the supermarket chains. Its great whilst it lasts, but when the tap is turned off the shock can bring even the most successful medium sized business to its knees.
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And for some manufacturers we suspect that the day of reckoning is not that far off. The big car companies like to have models in the cabinets of their steel and glass showrooms; replicas of the real cars that sit on their polished marble oors, but once the price of an average 1:18 replica breaks through 100, or a 1:43 through 50, the writing is on the wall. The diecast manufacturers are also going to have to be less parochial than they have been. In the future, a Japanese maker will have to make more than just Japanese cars, German makers will need to look beyond an

Audi, BMW and Mercedes, and French companies wont get away with just making Citroens, Peugeots and Renaults. And thats because no single country will allow a manufacturer to hit the minimum order quantities that are being demanded by the factories. We live in a global village and, to ourish, a manufacturer will need to look at the entire world market in order to work out what to manufacture. Obviously, this demands a certain level of sophistication in marketing terms and, as weve suggested in the past, thats not the strong suit of most diecast companies. But the diecast companies are going to have to do more than just choose better subjects; they are going to have to radically review and, in our view change, the nature of the product they make. And thats because they need to bring prices down,

Diecast companies are going to have to look beyond their national borders in order to survive. A French company making French models wont, in the future, stand a chance of hitting the minimum order quantities required by their factories.

No longer is resin the poor cousin of diecast. 10 years ago it was, but these days a 1:43 resin F1 car is probably better quality and more detailed than an equivalent metal one. The Spark car is on the right.

or at the very least stop them from continually rising. They need to make their models simpler to manufacture so that less skilled labour is required to put them together. And they need to be able to get them into the market faster because, quite honestly, nobody wants a 2011 racing car in 2014. They want it in 2011. But anybody, you might say, can be a critic. Its easy to complain and nd fault in others and in other businesses. So do we have any ideas? Well, yes we do. Theyre not necessarily new ideas. In the past they might have been brushed aside, but that kind of attitude will take some companies to the wall, so it might be time to pin the old ears back and listen!

There is one company out there that seems to be bucking the trend and which has avoided the malaise that is generally aficting the industry. And that company is Spark. When Spark rst came along it was laughed at by many. Resin was seen as a fringe product, and their models were written off as little more than built-up kits. Diecast companies looked down their noses at resin. In those days, prices were higher

than those for the equivalent metal model and the quality was seen as inferior. Well that was then and this is now. These days, resin is seen as, if anything, more desirable and collectible than diecast. The prices are on a par with diecast and our Leigh, the most fanatical and knowledgeable diecast collector this planet has ever seen, thinks that Sparks 1:43s are now better quality and more detailed than their traditional diecast cousins.

Resin, we think, represents the future of motorsport models and thats because resin is so much faster to get into the market, and most collectors want a 2011 replica this season, not next year, or the year after that!
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And as I write this, on a plane ight in mid April, Spark has just announced that it will be releasing its rst 2011 F1 cars by the middle of the year. Quite honestly, diecast manufacturers simply cant compete with this. Well be bold and make a claim. The future of F1, and indeed motorsport subjects in general, is in resin. Diecast cannot match resin on speed to market, and thats the all important factor in this sector. The other drum weve been banging on for a number of years is the benet of closed bodyshells on 1:18 replicas. Weve often raised this with diecast manufacturers and have been scoffed at but, funnily enough, its another principle that has been embraced by Spark, and nobody scoffs at their 1:18s. So, lets go back in time and look at how we got to where we are today.

Since the 1960s, and models like Corgis James Bond car, the race has been on to cram ever more detail into our collectibles. Is it now out of control we ask?

Im no anorak-wearing diecast historian, but I remember early Dinky cars and the like which had no opening doors, boots and bonnets. They had no engines, no steering and no suspension. And then people like Corgi came along (I dont know if they were the rst) and suddenly every model had opening parts. Heck, if it was a James Bond car, you had ring rockets, revolving number plates, an ejector seat, and a pop up bullet proof shield.

In the early days we were happy with simple models that did little more than replicate the body shapes of the cars we coveted. Perhaps its time for the manufacturers to simplify the models they off er.
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The race was on, and ever since it has been a ght to see who can provide the highest levels of intricacy and detail. Today we talk about hand-laced spoked wheels, photo-etched mesh grilles, real leather seats, working seat belts, opening glove boxes, luggage in the boot and so on. Its all horribly impressive stuff, but did anyone ever ask collectors if this is what they wanted? More pertinently, did they ever ask collectors if they were happy to pay the prices that are required to deliver these levels of detail? I think not. Instead, what we nd is that manufacturers have gone down this road because technology has allowed them to. They have become involved in an expensive game of one-upmanship that we, as collectors, are paying for.

The problem is that, increasingly, collectors dont want to pay for these renements that, in truth, they never demanded. What we have witnessed, and are witnessing, is a game of egos. Who can make the most detailed models and whose brand can get away with charging the most for it? Well, respectfully, the answer to the rst part of that question is that anybody these days can make a great quality model: Minichamps, AUTOart, Mattel, TrueScale, CMC, Kyosho and so on. Well done boys, youre all winners. But it is the second part of the question that is more important and more telling. What were seeing is that collectors are increasingly refusing to pay 100 for a standard 1:18 replica, 150 for a premium grade model, or 200 for a super premium grade number. In fact, we think that the manufacturers dont realise just how poorly some of their models are selling. And thats because heavy discounting on the internet is disguising the problem. But you cant sustain a business model when it is based on part-time vendors and school kids selling replicas from their bedrooms at no margin in order to make beer money.

What were seeing is that collectors simply wont pay the prices that are being demanded for models these days. Which explains why so many model shops are disappearing from our streets.

My point is this; the models we sell are too ornate, too intricate, too detailed and too complex, and therefore too expensive, for the audience that wants to collect them. Yes, I accept that there will always be people who want more and who are prepared to pay ridiculous prices to get the best. But the problem is that there arent enough of these people and thats

why collectors are deserting this hobby, and thats why so many manufacturers, distributors and retailers are suffering right now. So, back to my main point. Keep things simple, I suggest, and give us models without opening doors and other unnecessary fripperies.

The models produced by the leading diecast companies are simply superb; veritable works of art, but are they too detailed and are there enough people prepared to pay for such exquisite engineering?
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Manufacturers who go down the route of ever greater detailing are just showing off; its not big and its not clever. And increasingly its not making good business sense. The fact is that most collectors dont play with their purchases. They open the doors, bonnet and boot just once. They take a look, marvel at the engineering and then put the model on the shelf to display it. This is where most replicas stay, except for the occasional dusting. We dont steer them around the carpet and very few of us vocalise engine noises. Our models are for displaying and looking at. So what are the essentials? Well, we want stunning surface detail and, of course, in this respect a closed bodyshell is actually superior. The shutlines are perfect and the gaps around the doors and windows are more in proportion than they are when the relevant parts open. Put a Spark 1:18 Porsche next to an AUTOart or a Minichamps, a TrueScale or a CMC Porsche and we think that, visually, the Spark will come out on top. That doesnt mean that Spark is a better model-maker necessarily. It just means that they have fewer things to get
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Were fans of closed bodyshell models like those produced by Spark. We reckon that they look better than traditional diecast bodies. (A Spark replica might currently be expensive but thats only because their models are produced in such tiny quantities).

wrong. They can concentrate on getting the things you can see, to look perfect. We would suggest that collectors still want to see a nice interior in their models, with the right seats, carpeting, dials with numbers and so on. But do you really have to open a door to appreciate

Are collectors really bothered about looking at the engine under the bonnet of a model? If the price were signicantly lower would collectors still be so concerned about such detail?

this? We dont believe so. Just leave the window glass halfway down; that should do it. A detailed engine is surely a must have, it has been put to me. Well, Im not so sure. I know owners of full size classic and exotic cars who never look under the bonnet, so why the obsession to look under the bonnet of a 1:18 replica? It might be suggested that the appeal is in knowing that the engine is there. Which is like the answer Chris Bonington gave when asked why he wanted to climb Mount Everest. But Im not convinced that the same logic can be applied to model cars. The real question, the question that the makers of replicas need to ask, is this. If there are two identical looking models of, say, an Aston Martin Vantage. Both look fabulous, with good lines, detailed wheels, windscreen

The diecast business is in trouble. You dont have to be a genius to realise this. And we cant see any grounds for the situation to improve. Manufacturers who ignore the facts appear like Nero; ddling whilst Rome burns.

wipers, door handles and so on. One is made from metal and one is made from resin. The former has opening parts; the latter doesnt. But, crucially, because the resin model is easier to make, and much cheaper to tool up for, it costs just 70, rather than the 120 of the metal version. Which model would collectors go for? I would estimate that in nine out of ten cases the resin model with the closed bodyshell would outsell the diecast car many times over. And if that assumption is correct, thats the route the manufacturers need to go down. Anyway, thats enough from me. Weve been told to fasten our safety belts as we approach Heathrow and Ive got to put my pad and paper away.

In closing, I have to acknowledge that all I am expressing here is an opinion. And we all know what opinions are like: every ******** has got one! So I dont know and cannot prove that I have got it right, but what I do know is that, at this point in time, the diecast companies have got it wrong. In some cases they are playing their ddles ever louder in an attempt to drown out the noise of Rome burning all around them. The diecast business is in trouble. Every month prices seem to go up. Yet China is not going to get cheaper and if the international community succeeds in getting the Chinese to upwardly revalue its currency, the situation will only get worse.

The factories who make our models are demanding ever larger orders to make the business viable for them, whilst the prices the manufacturers are charging collectors are reducing the quantities that can be sold. In the lm, A Few Good Men, Tom Cruise asked Jack Nicholson if he wanted to know the truth. Well, thats the question wed like to pose to some of the diecast manufacturers. The problem is that, as Jack Nicholson suggested, they almost certainly cant handle the truth!

Wed like to ask whether the manufacturers would like to hear some truths about the diecast business. But we feel its likely that Jack was right: You cant handle the truth!
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