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Drop in value of pound suspends Protoype HST


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Just been reading about the Rapido decision to suspend manufacture of the Prototype HST and I wondered if someone could explain why

"..Due to the drop of the value of the pound and its continuing instability.."

would mean that

"..we feel that the Prototype HST model is not financially viable at present."

I just don't understand it. Does a drop in the value of the pound make goods more expensive to manufacture in other countries? 

It seems of late that anything and everything is being blamed on Brexit, yet nothing's really changed and I doubt anything will change for some time, if at all. Isn't it all just a case of over-reaction or is there something in it that I should very concerned about? I remember the day of the referendum and into the early hours of the morning when it became apparent which way the vote had gone and immediately there was panic in the big 'City' with everyone disposing of Sterling as it's value plummeted. What was all that about? As far as I could see, without panic there would have been no plummet?

Now I have no interest in politics and financial institutions but when it comes to suspending the manufacture of a model train I think we all need to sit up and take notice. :wink:

What exactly does the statement above mean? Is it simply that if the project went ahead then the cost to manufacture would be the same but the resulting cost to the model purchaser in the UK, due the drop in value of the pound, would have to be increased? Or does it mean something altogether different? 

Is Brexit a justifiable reason or a convenient excuse?

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I am not an arguer of politics either Mick. It's a bit like football or religion where nobody will listen to an opposing arguement. What I see is that Britain at the moment is an unstable proposition as nobody knows where we will be in two or three years time. That's what causes the volatility in the market, and a  reluctance of investors to invest. Had the vote been to remain in Europe, nothing would have changed. Something that gets right up my nose living in Sunderland, is that seemingly sensible political journalists, blame Sunderland for the Brexit vote. Sunderland was the first to declare in favour of Brexit, but that wasn't announced until well after the polls had closed. How does that make Sunderland responsible for a Brexit vote? The biggest problem is that everyone that matters are still not discussing properly our terms of exit. This must be a Parliament decision rather than just a Government one, so why did it take a Yank to take the case to the Supreme Court to achieve it. There aren't many politicians who were in favour of Brexit, so apart from still being in denial about it, they don't really know what to do.

Just my personal opinion of course-----no argument incited or offence meant.

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Rapdio are a Canadian business building trains in China to sell in the UK. I assume they are looking at all the projects they have on at the moment and doing a risk assessment. Their assessment of the Prototype HST will have shown them that the risk factors are simply too high and that the chances of them making a loss are considerable.

The question is what are the risks?

  • As they say. The drop in the pound is going to make their product more expensive in UK shops, which will make it harder to sell (I'll come back to that).
  • Manufacturing costs in china are rising quickly, they will have to pay more to have them made.
  • Nobody, and I mean absolutely nobody, knows what trade tariffs will be in 3 years time, that's instability that they talk of.
  • Read any Model Railway forum, including this one, and lots of members are complaining about the high price of new models and how they won't be buying these expensive products.

If you and I, their market, go online and say we won't buy models that cost £xx.xx then it will scare manufactures off.  

A brexit vote was always going to make imported goods more expensive, this was made very clear before the vote and as a nation we voted for it. The argument is that it will bring manufacturing back to the UK. Personally I don't think it will, I can't see Hornby taking back control of their supply chain and building everything in Margate, but I wish they would. That said it would probably mean they went bust, but I think they are going to do that anyway!

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Perhaps the decision by Rapido is nothing to do with Brexit at all.

The Doomsday Clock was recently shifted to two-and-a-half-minutes to midnight with the body responsible for the clock warning ".the probability of global catastrophe is very high, and the actions needed to reduce the risks of disaster must be taken very soon." 

Now a drop in the value of the pound I can live with but quite rightly, the imminent threat of global catastrophe would have me taking my little train home too!

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  • 1 month later...

The problem really goes back to all the major players shuting up shop and moving production lock stock and barrel to a then cheapo China. Trouble is China dont want them now that they have more lucrative contracts comming in as is shown with all the production delays. 

Perhaps someone will take the plunge and bring prodution back home, the skills are here it just the start up costs. Yes the costs may be higher but the talk is already of a £200 loco in the near future. 

Rapido are playing the numbers game, in the long term they know they can sell every model they produce but dont want to have large amount of stock sitting in the warehouse waiting to go.

Over time l see more models being commisioned by the major retailers filling the gaps of less commercal models.

Whatever model railways will never be a cheap hobby again, if it ever was.

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Personally I suspect the prototype HST would not have generated the sales required anyway.

The increases in costs  to the UK purchaser both through brexit and I remember reading the Chinese government ordered a 20% per year increase  in factory workers wages for 5 years will not have helped.

Many things, not just model railways became cheap over the last 20 years, see the rise of pound shops and Primark.  As China gets expensive, companies will move production elsewhere, but finding stable countries, that are cheaper will get harder and harder. Once no more can be found prices Will rise. 

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