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Industry News - February 2009

Published: January 12, 2009
No stay for lead limit enforcement
The Consumer Product Safety Commission (CPSC) has been inundated recently by requests for emergency stay of the effective date of lead limits as delineated by the Consumer Product Safety Improvement Act (CPSIA). The National Association of Manufacturers (NAM CPSC Coalition) has been looking for a 185-day stay to give Congress and the CPSC time to finalize rules concerning the lead ban.

In response to petitions, the CPSC's Acting Chairman Nancy Nord wrote that serious issues have come to the CPSC's attention, including inventory being pulled from store shelves because compliance with the CPSIA cannot be confirmed; retailers asking distributors to take product back unless compliance testing data can be confirmed; and the potential rescission of credit lines secured by inventory, possibly causing "widespread financial disruption."

In addition, her agency cannot issue a stay of the act. According to Nord's release, Congress was very clear "in setting out a regime that applies to all children's products in commerce regardless of exposure or actual risk." It limited the nature of the exclusions and exemptions, and made strict rules concerning the nature of the CPSC's discretion in enforcing the law after Feb. 10. "The agency cannot alter or amend the statute," the statement concludes, only Congressional action can.

Currently, the stay for testing and certification requirements of the law gives small store and manufacturers some relief of that front. However, the stay does not offer refuge to shops from the enforcement portion of the CPSIA, which limits the amount of lead and phthlates in children's products, effective Feb. 10.

However, on Feb. 6, the CPSC released rules clarifications, stating that children's products made from natural products that the commission recognizes that rarely, if ever, contain lead, an ordinary children's book printed after 1985 or dyed or undyed textiles, not including leather, vinyl or PVC, and non-metallic thread in children's apparel will not be penalized. Further, inaccessible components that may contain lead will not be bound be the new lead limits. An interim rule, effective Feb. 10, will establish alternative lead limits for "certain electronic devices," in an attempt to prevent precipitous removal of those products from store shelves.

Märklin declares bankruptcy
German model railroad manufacturer Märklin has declared bankruptcy, the company announced Wednesday. The filing comes after the company was unable to persuade a pair of banks to extend a $64 million credit line that expired last Friday.

According to the German business Web site Handelsblatt.com, the filing should allow Märklin to continue operations. "We are determined to restructure our traditional company … using the instruments of German insolvency law and establish it permanently in the market," Märklin executive Dietmar Mundil said in a statement.

Märklin teetered on the edge of bankruptcy three years ago before being purchased in 1996 by the Kingsbridge Capital investment firm. In 2008, the train manufacturer reported sales of $165 million.

Märklin's deal with Landesbank Baden-Wuerttemberg and Kreissparkasse Goeppingen for a 50 million euro ($64.2 million) credit line expired January 30. As a result, the company was unable to pay its workers their January wages.

The company is celebrating its 150th anniversary this year, with special celebrations occurring at Nuremberg's Spielwarenmesse Toy Fair, happening now. Sources say Märklin's upper management has not made an appearance at the show.

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New rules for lead in toys delayed
According to the Wall Street Journal, federal regualtors, under heavy jpressure from manufacturers, have postponed certain testing requirements for lead and other toxic substances in toys and children's products for one year.

However, unless Congress passes legislation to the contrary, retailers and manufacturers still won't be allowed to sell products that don't comply with the tougher standards enumerated in the Consumer Product Safety Improvement Act (CPSIA), which go into effect Feb. 10.

The stay allows manufacturers to delay what could be costly product testing for levels of lead, limited to 600 ppm under the new rules, and phthalates, liimited to 1,000 ppm.

The Toy Industry Association (TIA) complained that the new regulations would put small manufacturers out of business. Consumer groups argue that unless products are tested, the new rules are meaningless. And independent groups continue to find toys on store shelves that do not meet current standards.

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Chris Chianelli
R/C and TV personality passes away
Radio Control expert, Chris Chianelli, one of the most visible faces in the hobby industry, died at his home in New Fairfield, Conn., on Jan. 20, at the age of 55.

Chianelli was best known as a TV personality and host of DIY Network's "Radio Control Hobbies," "Workin' on the Railroad" and "Robot Rivals." He had recently been the host of "The Radio Control Show" on Air Age Media Web sites.

For the last 25 years, he had been a contributor to Air Age's R/C magazines, and continued as editor at large for Model Airplane News. He had also written for Hobby Merchandiser and worked as creative director for Megatech International. Megatech marketed a line of R/C aircraft with Chianelli's name and visored caricature on them.

He is survived by his wife, Julia.

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Jack Lynch
Bachmann hires new communications manager
Jack Lynch has joined Bachmann Industries, Inc. as the new communications manager.

His background includes more than 25 years of product development and management experience in the toy and hobby industry. He worked as a design engineer with Product Dynamics Ltd, product development director at MTH Electric Trains and marketing manager for LGB of America.

Jack is a native of the Philadelphia suburbs and attended college at George Mason University in Fairfax, Va.

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Hobbico cuts 37 positions
According to The Champaign, Ill. News-Gazette.com, Hobbico cut 37 part- and full-time positions in December as a result of the economic downturn. The company, owner of Great Planes Model Distributors, Revell and Tower Hobbies, also said it planned to reduce seasonal help too.

In related news, Revell Vice President of Marketing Mike Brezette has been let go from the company. He said his departure is due to the economy, and added he'd like to stay in the hobby industry, but hasn't ruled out any options.

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Air Age combines magazines
Radio-control publisher Air Age Media has announced it's integrating its magazine "Radio Control Helicopter" with "Model Airplane News." In addition, the company's "RC Car Action" title will become the "editorial platform for all things land and sea" and will now incorporate the content of "Radio Control Boat Modeler." The changes will be reflected in the May issues of "RC Car Action" and "Model Airplane News."

Air Age CEO Louis DeFrancesco said in a release, "The tricks to staying strong in tough economic conditions are welcoming change, recognizing opportunities and remaining nimble."

Air Age Media publishes a full line of products including books, DVDs, digital editions and special issues. It also has 12 websites.

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Lionel licenses standard gauge, Flyer products to MTH
Lionel Electric Trains has announced it has entered into a multi-year licensing agreement with MTH. Electric Trains in which MTH will create a new line of tinplate Lionel Standard and O gauge products. The license will also include tinplate Standard and O gauge offerings for American Flyer, which has been part of Lionel since its acquisition in 1967.

Using its extensive collection of tinplate tooling, MTH. plans to issue new versions of Lionel and American Flyer classic tinplate trains and accessories originally released between 1900 and 1942. These products will be packaged in all-new boxes with Lionel and American Flyer advertising images and logos from the prewar tinplate era. Promotion of new tinplate Lionel and American Flyer products will begin early this year with full-color catalogs. A Web site, dedicated to the new product line, will also offer product videos, sound clips and other information not available in print catalogs.

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MRC distributing Profiline models
MRC has announced it will offer scale model aircraft kits manufactured by Profiline in the Czech Republic. According to a company release, the models are easy to assemble and highly detailed. They include comprehensive painting instructions and decal sheets.

The first Profiline offerings are two 1:72 scale sailplanes: the Let L-13 (Item No. 547002) and L-13A Blanik (547001) Each has a $19.98 MSRP. These kits will be available in about two weeks. More will be offered soon. For more information on Profiline, contact Ed Sexton.

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Over 40,000 attend Philadelphia World's Greatest Hobby Show
The World's Greatest Hobby on Tour opened the new Greater Philadelphia Expo Center January 3-4 with possibly the largest crowd ever to attend a model train show in the U.S.

On Saturday 24,690 people attended the show, overwhelming the infrastructure of the 120,000 square-foot venue and surrounding area, according to show chairman Dave Swanson. Local radio reported a 5-mile traffic backup on the route to the show in the northwestern suburbs; patrons reported delays of two hours or more to exit the interstate. Sunday's attendance was 15,562, for a weekend total of 40,152 people.

WGH on Tour is a model railroad show designed to introduce the general public to the hobby in an exciting, family oriented atmosphere. The Philadelphia area show featured more than 20 operating model railroads, retailers offering everything needed to run a model railroad and representatives from the leading manufacturers.

Show Chairman Dave Swanson said, "The amazing attendance of this show proves there is still a tremendous interest in model trains. "While we try to prepare for large crowds by having wide aisles and a large amount of
staff, we were totally stunned by the Saturday attendance," he added.

The World's Greatest Hobby on Tour has now sponsored 20 shows and has had over 500,000 people attend. The remaining 2009 destinations for the show are Nashville, Tenn.; San Antonio, Texas; Cleveland, Ohio; and Seattle-Tacoma, Wash.

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CPSIA rules clarifications
As of Feb. 10, 2009, lead content in toys and other products intended for children 12 and under will be required to have a lead content that does not exceed 600 parts per million (ppm), as required by the Consumer Product Safety Improvement Act, 180 days after its enactment in Aug. 14, 2008. This restriction will drop to 300 ppm on Aug. 14, 2009. There is a provision in the CPSIA that the lead limit drop to 100 ppm in 2011, if technology makes such a level feasible.

In December, the Toy Industry Association (TIA), in conjunction with a number of other industry organizations, submitted a petition to the Consumer Product Safety Commission, asking for rules clarifications regarding testing and implementation of the rules as set forth in the CPSIA. The main concern is that the act requires duplicative testing and that rules enforcement is both uneven and confusing, which could adversely affect companies, especially mid- and small-size operations, with large and unnecessary bills for testing and labeling.

After the petition, the CPSC has proposed exclusions from the lead testing that includes natural fibers such as silk and cotton, certain precious and semiprecious gemstones, wood, and other natural materials, including feathers and untreated leather.

Another memorandum before the CPSC would allow companies to either request a determination that a specific material or product does not exceed the lead content limits or allow an exemption under the CPSIA should the levels exceed current limits.

The hope behind both of these rules changes is to reduce the costs to companies associated with testing.

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Accurate Miniature's 2009 Economic Stimulus Plan
Accurate Miniatures, maker of plastic model kits, has implemented a new marketing plan to help both consumers and retailers. Consumers who purchase three Accurate Miniatures "yellow box" kits (excluding 1:100 scale) should clip the UPC codes and send them, along with the original receipts, mailing address and a $5 check or money order, to Accurate Miniatures. Once received, Accurate Miniatures will send the customer a 1:48-scale kit valued at $26 or more, free.

Customers can send the UPC codes and receipts to:

Accurate Miniatures 2009 Kit Promotion
PO Box 535
Harrisburg, NC 28075

This promotion ends March 20, 2009.

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John Ward
GAMA has new ED
After an extensive search and hiring process, John Ward was hired as the Game Manufacturer Association's (GAMA) new executive director.

"John is the strong, insightful, and experienced leader that both GAMA and our industry need," said Rick Loomis, president of the GAMA board. "This is a critical time. That's why the board approached the search process with so much patience and diligence. We're very pleased with this outcome. "

"I'm excited about the opportunities ahead," Ward said, "and ready to work with every level of our industry to overcome the challenges we all face."

Ward replaces Anthony Gallela, who worked with GAMA for the last seven years. Gallela joined GAMA as the events and volunteer coordinator, and then rose to operations director before being promoted to executive director in 2004. Gallela announced his departure from GAMA in September to become the vice president of sales and marketing for Bucephalus Games.

Ward holds a master's degree in public administration with an emphasis in fiscal and policy management. His bachelor's degree is in criminology, with both degrees from Ohio University.

Professionally, Ward has extensive experience in the military and in state government. Ward is a retired Army officer with over 23 years of combined service in the military police and engineer corps. His military experience has provided him opportunities to deploy to Europe, Central America, Korea, and the Persian Gulf for the first Gulf War.

Ward also has over 20 years of government service in the criminal justice field, most recently in the juvenile system as the state of Ohio's Bureau chief of parole and then bureau chief of community facilities. In this last role, he supervised 12 small correctional facilities and managed revenue generation for Ohio's juvenile corrections agency, as well as working with 12 governing boards in a variety of endeavors.

Ward is also a small business owner, running his own martial arts studio for more than 16 years. His part-time business/hobby gives him first-hand knowledge of the challenges facing small businesses.

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Gen Con to emerge from Chapter 11
According to announcement from Gen Con LLC over the weekend, the U.S. Bankruptcy Court of Western Washington has okayed the company's plan of reorganization and approved the company's rejection of a hostile takeover bid.

"This is bright day for us," said Adrian Swartout, Gen Con's CEO. "The entire team is looking forward to 2009 and continuing our growth as a stronger, more focused company."

Since filing for bankruptcy protection in February of 2008, Gen Con has significantly reduced its expenses and increased its cash position. The company's cash flow is positive and prospects are said to be looking up. A three-member advisory committee will assist the company and its board, and Peter Adkison will retain ownership.

Gen Con Indy 2009 is scheduled for Aug. 13-16 in Indianapolis.

Earlier this year, a group calling itself the Gen Con Acquisition Group attempted a hostile takeover of Gen Con. Anthony Gallela, former executive director at the Game Manufacturers Association (GAMA) and vice president of marketing for Bucephalus Games, was part of the group attempting to acquire Gen Con LLC.

We don't know at this time whether or not the acquision group is still trying to purchase Gen Con, but as for the time being, Peter Adkison will remain the corporation's sole owner.

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Revell Exits NASCAR license
In an announcement on its Web site, Revell said it will not be issuing a kit of the NASCAR Car of Tomorrow (COT), and will discontinue all sales of NASCAR plastic kits by Feb. 28, 2009.

Revell cited licensing costs as the main reason for ceasing production of NASCAR kits.

"Despite our best efforts to secure reasonable licensing terms for NASCAR model kits in general, and the Car of Tomorrow in particular, we have been unable to develop a program that allows us to market the product at a viable price point," the announcement read.

Mike Brezette, Revell's vice president of marketing, said that exiting the NASCAR license was hopefully a unique situation. "We have no plans at this time to exit other licenses," he said.

As for NASCAR, sponsorships are in short supply, and it faces slipping ad revenues. Twelve of NASCAR's 42 drivers do not currently have sponsors for 2009, and NASCAR recently laid off 1,000 workers. According to "Advertising Age," a news and business Web site, NASCAR has watched its track attendance suffer for three consecutive years and was down 9% from last season.

Revell still has some NASCAR models in stock. Contact your distributor for details.

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Nuremberg Toy Fair celebrates 60th; HMA will have booth
Nuremberg, Germany's annual Spielwarenmesse International Toy Fair will be February 5-10. The event, which has become the largest of its kind in the world, celebrates its 60th anniversary this year.

In addition to the numerous U.S.-based companies that exhibit at the show, the Hobby Manufacturers Association has secured booth space in Hall 7. In the booth will be representatives from some member companies handing out their company catalogs, exhibiting products and distributing other promotional materials. HMA staff will assist members in the space with hospitality and appointments.

HMA is handling decoration of the booth, shipment of materials, and manning the space during the fair.

Participating in the pavilion are: Aristo-Craft Trains, Atlas Model Railroad Co., Green Light, Maplegate Media, Merlin Glow Plugs, Nine Eagles RC, Soundtraxx/Blackstone Models, The Coach Yard, Xuron, Woodland Scenics and Phoenix Toys & Hobbies.

"If this is a success, we hope to have a larger space for more companies in 2010," HMA Executive Director Pat Koziol said.

Several events are planned to mark the toy fair's birthday. One will be 6 p.m., Feb. 6, at the CCN Ost Congress Centre and will include shows on three floors of the building, bar and lounge areas, game areas and other entertainment. Advance registration is not necessary and admission is free.

A fireworks display is scheduled for the following night. The sparks will fly immediately after the show closes at 6 p.m. The best vantage point for the show will be at the exhibition center park and in front of the entrance to CCN Mitte.

The fireworks display is immediately followed by a birthday party in the Nuremberg city center, featuring music, food and festivities.

Each year, the fair draws approximately 80,000 trade visitors from more than 100 countries. More than 2,600 exhibitors from 60 countries attend the show, displaying 1 million products, some 70,000 of them new.

The fair runs from 9 a.m-6 p.m. daily, except for the final day, when it closes at 5 p.m. For more information, visit www.toyfair.de.

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Lisa Nowak
Testor Corp. hires marketing director
Lisa Nowak has joined The Testor Corporation as director of marketing.
Nowak comes to Testor from MMF Industries, a maker of specialty bank and office supplies, where she served as the director of marketing.

At her new post, Ms. Nowak is responsible for leading all Testor Corp.'s marketing efforts, along with managing marketing personnel; planning, creating and implementing market-expansion strategies; and developing innovative new products.

"We at Testors are entering a new chapter in our 80-year history," Testor President Charlie Leichtweis said in a written statement. The company is expanding into craft and creative play while continuing to support the hobby category.

According to a press release, Nowak's marketing team is tasked to work closely with consumers and retailers to provide exciting and innovative new products across all platforms of Testors product lines - craft, hobby and creative play.

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Kaufeld back at GAMA
John Kaufeld has returned to the Game Manufacturers Association (GAMA) as the association's marketing director. Kaufeld will continue to handle marketing, communications and publicity for GAMA, as he did part-time for the last year, and also pick up new responsibility for sponsorships and booth sales at both the GAMA Trade Show and the Origins Game Fair.

Kaufeld started volunteering with GAMA in 2000, eventually working on both the GAMA Retail Division board and the GAMA board of directors. He worked full-time as GAMA's communications director for almost two years, and returned to those duties part-time in August, 2007.

His hobby game industry experience includes operating two retail stores and designing and publishing a licensed game. He's an active board gamer, with plenty of experience playing role-playing games, miniatures games and collectible card games. Kaufeld is also a long-time freelance writer and author, with articles appearing in major consumer and trade publications, including Model Retailer, over the last 15 years.

In associated news, Matthew Ragsdale, has left GAMA, as the association makes efforts to better utilize its staff. Also, according to people familiar with the situation, the GAMA board has made an offer to its new executive director candidate, who comes to the association from outside the hobby game industry. An announcement should be expected sometime in January.

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SCORE, Visa team up
Sevice Corps of Retired Executives (SCORE) and Visa Inc. have developed new online tools to provide small business owners with ideas and guidance on topics from securing funding to managing cash flow. The Financial Management Workbook provides advice and mentoring to help small-business owners make critical business decisions.

The free workbook offers small-business owners an actionable, easy-to-follow curriculum and information on key areas of concern for small businesses. Topics include efficiently managing cash flow, maximizing income, minimizing expenses and being prepared for business growth. The workbook is available through the Visa Business Network on Facebook at www.visabusinessnetwork.com, the SCORE Web site at www.score.org, and at the 389 SCORE offices nationwide.

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From left to right: Tom Myers, John Habovik and Bob Johnson at the 2008 iHobby Expo.
Thomas E. Myers, 1959-2008
Thomas E. Myers, 49, died on Dec. 18, 2008, after suffering a stroke. Myers was active in the modeling community, a member of the Winston-Salem IPMS, owned his own graphic design company and was Accurate Miniature's art director for the past seven years.

A fan of progressive rock, Tom loved to play bass and was a member of a local band. He also created a Web site dedicated to the 34th Photo Recon Squadron, which was active during World War II and of which Tom's father was a member.

Bob Johnson, a friend and colleague at Accurate Miniatures, characterized Tom as an individual who refused to be a follower.

He is survived by his wife, Jenny, and children, Donna, 13, and John, 10.

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