All Aboard Model train leader Märklin picks up speed

Märklin, a 159-year-old family company that was in bankruptcy less than a decade ago, now has so many orders it can’t keep up. Is model railroading in vogue again?


Quelle: dpa
Let's go for a ride.

(Source: dpa)

The model train industry has been in decline for decades, but right now Märklin, the European market leader for model trains, can’t keep up with demand.

In Göppingen, its headquarters near Stuttgart, Märklin is competing for skilled labor with Daimler and other auto suppliers. In Györ in Hungary, Audi has been stepping up production, leaving Märklin with no applicants for open positions.

Only about 300 specialty stores still sell model train products in Germany. The train tracks that used to be set up in so many post-war basements have long since been packed away in attics, forgotten for shinier things. But Märklin still claims every two of three model trains sold in Germany. “Märklin is probably as well recognized as Coke,” says Hal Miller, the managing editor at Model Railroader, a magazine based in Wisconsin.

The individual trains cost hundreds of euros a piece and can sit in display cases for months, which is a hard sell for retailers who can move many Lego sets a day. But the tide is turning on model trains. “Kids want classic toys more than anything,” says Steffen Kahnt of Germany’s Toy Retailers Association.

With its handmade, high-quality products, “Märklin has a long, long history and is one of the core companies in model railroading worldwide,” Miller says.

Märklin was founded in 1859 by Theodor Friedrich Wilhelm Märklin, producing dollhouse kitchens at first. It expanded its offerings to model carousels and ships. In 1888, brothers Eugen and Karl Märklin took over the business and expanded it, acquiring tin toy maker Ludwig Lutz in 1891. That same year the company revealed its first model train, and over the next few years toy trains powered by clockwork became its primary product. Märklin’s innovations became industry standards. In the late 1800s, they came up with the concept of gauges, the standard widths of tracks that enable intercompatibility for manufacturers. In 1971 Märklin pioneered the Z scale, 1:220 trains that can be deployed in very small spaces.

But amid declining interest in the new millennium, the company was sold to Kingsbridge Capital in 2006 and declared bankruptcy in 2009. The company exited bankruptcy in 2010 with 400 fewer employees.

In 2013, father and son Michael and Florian Sieber, of the Simba Dickie Group, bought the company. Simba Dickie is known for turning around toy brands that have seen better days. It employs 3,000 people worldwide and owns 20 toy brands, including Smoby, Schuco and Noris.

Quelle: dpa
Florian Sieber and one of his trains.

(Source: dpa)

Florian Sieber has been Märklin’s conductor for the past five years, modernizing factories in Germany and the Czech Republic and creating marketing initiatives like a trade-in bonus on broken trains and free replacements for old tracks. The strategy, including buying TV ads for the first time in decades, is to reactivate lapsed collectors while recruiting a new generation of model train fanatics with entry-level products suitable for children.

In the 2016 to 2017 fiscal year, Märklin reported €108 million in sales with the bulk of it in its core train business; in its heyday, it could count on €150 million annually. But Florian Sieber has made Märklin profitable again, and the father and son see their involvement as a long-term investment. Simba Dickie Group spun off Märklin and its 1,200 employees, but Florian Sieber remains a managing director.

Train fans trade rumors on message boards about how much of Märklin’s rolling stock is produced in China. The investment firm that bought Märklin in 2006 closed the German production facility and moved the model train making to China, Heise reports, but discrepancies in quality led the company to reboot with more automated production in Germany and the Czech Republic after its bankruptcy.

Märklin trains might be more expensive than other products, but the collectability and resale value are also higher, Miller says. Model railroading is an incremental hobby, so although an entire layout with tracks, trains, a control system and scenery might cost a few thousand euro, those costs are distributed over months or even years. The price point makes Märklin mostly an adult brand, one children may look upon but not touch. 

But the passengers will have to get younger if the model train industry is to survive. The National Model Railroad Association had about 18,000 members worldwide as of 2017, and the average age of its members has climbed to 64 from 39 a few decades ago. Model railroading could be the quintessential Baby Boomer hobby — in fact, Rod Stewart reportedly always books two hotel rooms when he travels; one for himself and one for his model trains.

Handelsblatt's Joachim Hofer covers southern Germany for Handelsblatt. Grace Dobush is an editor with Handelsblatt Today. To contact the authors: [email protected], [email protected]