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Industry News - January 2010

Published: December 3, 2009

Starlight teams up with Hobbytyme

Starlight Model Rockets, Grovertown, Ind., has added Hobbytyme, East Hartford, Conn., to its family of dealers and distributors.

In addition, Starlight is starting to take orders for its Zippy model rocket kit for National Model Rocket Day (May 1). More information is available at the Starlight's Web site or from its distributors: Ace Hobby, Hobbytyme, Hobby X, Red Arrow and Stevens International.

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CHA adopts social media

Social media is more than a fad, says Steve Berger, president and CEO of the Craft & Hobby Association. "It's a fundamental shift in how we communicate with our members and the world," he added.

With that in mind, the CHA has established itself at a number of popular social sites. For example, its Facebook page serves as a primary tool, along with the Web site, to communicate with consumers about craft projects and the CHA Craft SuperShow consumer event.

The CHA's members-only LinkedIn group allows participants to share ideas, find others with common interests and network. CHA's Flickr and YouTube accounts will include free images and videos from CHA shows and other craft-related events and interviews.

At its Twitter location, the CHA will share news and updates.

In addition, the CHA has created a blog. The blog is a real-time source of association and industry information. Contributors will include CHA executive staff and managers.

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RC2 to pay $1.25 million penalty

RC2 of Oakbrook, Ill., maker of Thomas & Friends Wooden Railway toys has agreed to pay a $1.25 million civil penalty for selling toys that allegedly exceeded federal lead limits.

In May 2007, RC2 reported that more than two dozen of its Thomas & Friends Wooden Railway toys had lead levels in excess of the regulatory 0.06% lead (by weight) limit in paint or surface coatings. Consumer Product Safety Commission (CPSC) staff alleged that RC2, along with a wholly-owned subsidiary Learning Curves Brands, imported and distributed the toys knowing that the paint was beyond legal lead limits.

According to a press release, CPSC staff believed that the toys "created a risk of lead poisoning and adverse health effects to children," and that RC2 didn't do enough to ensure the toys complied with the lead paint ban.

The toys in question were recalled in June 2007.

The Consumer Product Safety Improvement Act (CPSIA) of 2008 reduced the regulatory lead limit to 0.009% on Aug. 14, 2009.

While agreeing to the settlement, RC2 denies that it knowingly violated federal law. - Tim Kidwell

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Gwen Mueller

Mueller named new train chief at Horizon

Paula "Gwen" Mueller has been named director of Horizon Hobby's proprietary model railroad division, which includes Athearn, Roundhouse and McHenry brands.

She is a consumer packaged goods executive, with experience in the product development, marketing, sourcing and sales in the tools, automotive after-market, toys, juvenile products and sporting goods industries. Most recently, she had been doing some consulting for Horizon and said she was surprised and excited when they offered her the job as director.

"I have a natural affinity for trains anyway," she says. "I really fall in love with things." She said she's been very familiar with Horizon for some time as her sister also works there.

Mueller brings global marketing and manufacturing experience to the position after working for companies like AMF, Hedstrom and Alltrade. But ultimately, what she's tasked to do is simple: "My job is to help people have fun with trains."

One of the areas she says shows a lot of promise for growth right now is N scale, but she says she's committed to making all the company's customers happy and finding more, no matter what the scale. She says she's also anxious to promote the model railroading hobby in general.

Mueller is a 1981 graduate of the University of Illinois at Urbana-Champaign.

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Schuco die-cast models win awards

Schuco received three awards at the annual "Model of the Year" event hosted by the German magazine Modell Fahrzeug, a publication that covers the die-cast industry. The magazine presented the 2009 awards Nov. 30 in a ceremony at the Porsche Museum in Stuttgart.

The Schuco 1:10 model of the 1954 NSU Max received first place for motorcycle models. The Schuco 1:43 Mercedes-Benz LS 1620 heavy truck tractor received first place for 1:43 commercial vehicles. The 1:18 die-cast, radio-control Schucotronic 2.4 GHz Porsche 356 and VW minibus model (pictured) received the Innovation Award.

Modell Fahrzeug organizes the awards but opens each category to readers' votes.

Silvergate Distributors is the exclusive North American importer and distributor of Schuco models, including the Schabak airliners and Distler historic figures.

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Top 10 Stories of 2009

Let's face it: 2009 has been a year of survival for the hobby industry, just as it has for many other businesses. While Washington says the recession is over, everyone outside the Beltway is saying, "It is?"

The economy is but one of the stories that has affected the hobby industry in 2009. It's been a busy year, with some good, some bad, and some ugly. So without further ado, here are this year's Top 10 stories, not necessarily ranked in order of relevance:

1. The economy: Not that this needs a lot of reporting, because we're all living through it. The economic slowdown late 2008 became a full-fledged recession in 2009, with small retail bearing the brunt of consumers' diminished spending habits.

The retail hobby business fared fairly well through the first quarter of 2009, with dealers tightening their inventories and consumers still buying. Many dealers reported a slowdown in the late spring which continued through the summer. Also reported was a shift away from high-ticket items to accessories and items at lower price points. Several retailers have reported the holiday season to be off to a slow start, but are hopeful sales will rally closer to Christmas.

2. China slowdown: Problems with China's toy industry have been brewing since 2007 when it was hit by a massive recall. Add in changes in labor laws, increased environmental scrutiny, and compound it all with the global economic downturn. The result has been closed factories and delays in deliveries of new products. Production backups at firms like model railroad manufacturer Sanda Kan has been especially vexing for U.S. manufacturers. Also playing a role in the unpredictability of when a new product will be available is the overseas shipping industry, another business hard-hit by the economy.

3. Consumer Product Safety Improvement Act (CPSIA): Signed into law in August 2008, the law went into effect in February, 2009, catching many companies flat-footed and making them scramble to meet its mandates. Intended to prevent the problems that caused the massive toy recalls of 2007, it set new lead and other chemical testing and documentation requirements on toys and products consumers - primarily children 12 and younger - might come into contact with.

Many companies in the hobby industry were forced to relabel products to skirt the age requirements of the new law. In the broader toy industry, many items, including apparel, bedding and books could not be sold and had to be destroyed. Numerous small companies have gone out of business. One poll put the cost of the CPSIA at $2 billion to the toy industry.

Ironically, the large toy companies whose recalled products brought about the law suffered least. Almost a year later, there are still reports of toys sneaking onto store shelves that don't meet the law's requirements.

4. Märklin insolvency: Talk about bad timing: on the eve of the Nuremberg Spielwarenmesse Toy Fair that was largely going to be a 150th birthday party for Märklin, the German train manufacturer-which also owns LGB - declared bankruptcy. The unfortunate event cast a pall over the show, but receiver Michael Pluta did make an appearance to answer questions.

In the bigger picture, new product development for the company has slowed, as have exports of Märklin and LGB products to North America market. Perhaps the most visible impact has been on the U.S. large-scale segment.

After putting together a reorganization plan, potential buyers have been identified and and the sale of the company could happen this spring.

5. More German insolvencies: Märklin wasn't the only German model railroad manufacturer to reorganize in 2009. Fleischmann also entered bankruptcy and is in the process of restructuring. Another casualty of the economy and slumping European train sales has been building and scenery manufacturer Faller, which, like the other companies, has seen a significant portion of its workforce slashed to stay alive.

6. Hobby trade shows: It was a mixed bag in 2009, with the economy playing the biggest role in the drop in attendance. Retailer numbers were reported up 10% at the National Retail Hobby Store Association's Table Top Expo in Las Vegas, however, exhibitors were down. After selling out of booth space early for the 2008 iHobby Expo, 2009 saw about 25 fewer exhibitors, with dealer attendance comparable to the previous year. The bright spot? iHobby Expo drew more than 20,000 consumers, eclipsing 2008's numbers by more than 5,000.

7. Train shows doing well: The January World's Greatest Hobby show in Philadelphia in drew possibly the largest crowd ever to attend a model train show in the U.S.: just over 40,000 in two days. Almost 25,000 attended the first day, causing a 5-mile backup on the route to the show.

The WGH shows continue to average about 25,000 people per event. Additionally, individual shows like Trainfest in Milwaukee continue strong. This year's event in the Brew City drew more than 21,000. Model railroading is dying? Hardly.

8. This is a story that's going to be making news for some time to come. The late summer brought rumblings the massive e-tailer was looking to expand its hobby offerings; the fall brought confirmation from the company itself: Among the hobbies represented are coin collecting, die-cast, hobby tools, models, radio control, rockets, science, sports trading cards, stamp collecting, games and model railroading.

9. R/C explores new marketing channels: There is no denying that R/C, overall, has been down for the last year. As hobbyists held on to dollars, R/C companies looked to utilize their marketing dollars outside the traditional hobby channels to reach a wider audience.

One of the biggest players in this movement was Traxxas, which not only penned a deal with Pep Boys to sell products in its stores, but also landed top billing for the Off-Road Championship series. A coalition of respected names in R/C, which includes Tamiya, Kyosho and HPI Racing, formed the R/C Motorsport Experience and exhibited at the Toyota Grand Prix in Long Beach, Calif., this past year. That show alone exposed the R/C hobby to 180,000 visitors over three days. Only time will tell whether this new marketing approach will build a broader R/C audience.

10. Fantasy leads plastic model resurgence: According to manufacturers, distributors and retailers, plastic models have been selling well even with a recession on. What has been a surprise is the banner year that fantasy and sci-fi plastic models have had.

Moebius Models, building on its Aurora repops, has made licensing agreements with Marvel Comics, DC, and Universal Studios, and is producing kits as fast as it can. Meanwhile, Round 2 is rereleasing many old Polar Lights kits and making new molds for its Star Trek license. Even Revell has thrown its hat into the ring, repopping its own classic Aurora monsters and Babylon 5 kits, along with continuing its partnership with the Star Wars franchise.

The other important factor in the success of these types of kits has been price. There have always been sci-fi and fantasy model makers, but the kits are often expensive and not widely available except to those in the know. Recent releases have been accessible, priced right, and some are targeted at novices or youngsters, which doesn't hurt.

All of this in the face of increased production and shipping costs is a testament to the resiliency of plastic models. The buying public has proven to be open to products that are new, different and eye-catching.

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Estes rockets
Athearn Genesis FP45
Atlas N-scale SD60
Traxxas Blast
Revell USS Constitution
Lionel O-gauge "The Polar Express" set
E-Flite mCX ultro-micro helicopter
Traxxas Slash, the Product of the Year
Revell RMS Titanic

Best of What's Selling: The Top Products of 2009

Every month, retailers across the U.S. and Canada share information with Model Retailer about their stores' top-selling products. The results are published in the magazine's What's Selling columns.
The products and companies that follow are those that appeared most frequently in the January-December 2009 What's Selling sections. The results have been tallied by the Model Retailer staff, and here are the results:

Product of the Year
For three years, Traxxas has come out on top as a best-seller in R/C. This is no different, except the reigning king, the T-Maxx has been dethroned by its short-course cousin, the 1:10 Slash. This year has been a banner year for short-course style trucks, and Traxxas has played this one beautifully, sponsoring the Traxxas Off-Road Championship series and offering plenty of licensed products too!

And now the rest, by category:

Model Railroad

HO Scale: Led by products such as its Genesis FP45 and standard SW1500, Athearn was the top vote-getter in the scale. It wasn't just locomotives that got the manufacturer to the top; it was also its now-discontinued Blue Box kits and ready-to-roll cars.

N Scale: Atlas takes top honors in this scale through the combined efforts of its locomotives, rolling stock and track. Motive power like the GP9 and tank cars showed up a number of times over the year. Kato proved a worthy challenger, however.

Other scale: Always strong in the category, Lionel again proved to be the winner with its FasTrack and Polar Express sets, especially at each end of the year. However, Aristo-Craft gave it a run for its money, as its large-scale track and rolling stock made a prominent showing.

Radio Control

Vehicles: Traxxas 1:10 Slash (Product of the Year)

Aircraft: If there was any doubt that E-flite is on top of the micro-heli craze, this should put it to rest. While competitors took a shot at toppling this mighty micro, the mCX was a favorite among consumers, and literally flew off store shelves. This was also the first product that E-flite offered as either Ready-to-Fly with a 4-channel controller included, or as Bind-N-Fly, allowing customers to use their own DSM2 compatible radios.

Boats: It must be something in the water, because Traxxas has snagged another win in 2009, with the Blast. Fast and easy to drive, the Blast was solid on fun, and R/C boaters like to know that they are going to have a good time right out of the box.


Vehicles: Of course, Erwin Rommel, the Desert Fox, didn't really speed a dune buggy over the sands of the Sahara, but that's what made this kit so much fun; well, that, and the bleached skeletons included with the model. Designer Tom Daniel included some authentic details, including German Afrika Korps colors and a Mercedes engine and front.

Aircraft: Estes has been producing model rocket kits, engines and accessories since 1958. The company's name comes up time after time in Model Retailer's What's Selling survey as a popular mainstay among aircraft products.

Ships: Two Revell models emerged as top-selling products for 2009 in the category of ships. One was a 1:96-scale model of the USS Constitution, a ship that survived fierce battles in the War of 1812. The other was a 1:570-scale replica of the RMS Titanic, which went down on its maiden voyage in 1912 and has been immortalized in films and traveling museum exhibits.

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Former R/C retailer makes movie

Many in the hobby industry are used to seeing radio-controlled cars zip around carpeted tracks at high speed, and the personalities associated with it. The rest of the world isn't, but soon could be because of a new film called "Carpet Racers: A Crash Course."

The feature-length documentary is the brainchild of former Pittsburgh hobby retailer Mike Rooney and director Jay Thames. It covers a year in the life of the men and women who make a living, or try to, racing R/C cars indoors on carpeted tracks.

The venues are familiar to those who follow R/C racing: places like the Snowbird Nationals in Orlando, Fla. and the International Indoor Championships in Las Vegas. Many of the names are familiar too: Barry Baker, Mike Dumas, Jilles Groskamp, Paul Lemieux and Chris Tosolini are the primary racers followed but there are a number of other familiar faces, or voices, like Scotty Ernst.

The movie is a down in the trenches, warts-and-all look at the ups and downs of the racers, their quest to be the best, and the toll it takes on their families while they're on the road. The promotional poster reads, "Welcome to life in the small lane."

Rooney, now the director of media convergence at Empire City Casino at Yonkers Raceway in New York, is the film's executive producer. The movie has played at the Orlando International Film Festival in Florida, the Three Rivers International Film Festival in Pittsburgh, and the Queens International Film Festival in New York. It's also scheduled for the Ventura (Calif.) International Film Festival, the South Africa International Film Festival and the Great Lakes International Film Festival.

Click here to see the trailer.

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