Chinese factory closed....could have serious repercussions everywhere

Post content passed on from the NMRA egroup, that could be very serious indeed:Athearn As one of the oldest brands in the model railroad industry, Athearn has close ties with most major railroad model manufacturers. Unfortunately, from time to time a supplier may be unable meet their obligations, and despite their best efforts be required to discontinue business. We are saddened by the recent loss of one of our close manufacturing partners, and their several hundred workers that have now received their pay but lost their jobs. We believe our remaining manufacturing partners, our relationships with them, and our combined capacity will certainly allow us to meet all future market requirements. However, during the short term we do expect some product delivery dates to slip, so please stay tuned to our Facebook site while we do our best to keep everyone up to date on this very fluid situation. We do expect to deliver our Genesis DDA40X, Genesis Bay-Window Caboose, our next run of SD70ACe/SD70M-2s, and several other products in the first half of 2012, in addition to making some VERY exciting new product announcements in the coming weeks ahead.----- Original Message -----From: Terry WynneTo: NMRABR (NMRABR)Sent: Friday, January 13, 2012 4:40 PMSubject: [NMRABR] FW: [CanModelTrains] Important News in ChinaA bit more information from Canada which may be of interest to those awaiting models being made in China.TerryFrom: CanModelTrains@yahoogroups.com [mailto:CanModelTrains@yahoogroups.com] On Behalf Of j_shronSent: 13 January 2012 14:18To: CanModelTrains@yahoogroups.comSubject: [CanModelTrains] Important News in China/ p>Hi all,A large Chinese supplier of model trains closed down today. This factory employed 3000 people and was a major producer for North American manufacturers.This is the second large supplier to shut their doors in two years. It will no doubt contribute to delays across the industry as that factory's clients try and move their production to other, overworked factories.The reality is that model railroad price increases (averaging 10%-25%) have not kept pace with cost increases in China, and it is often difficult for the Chinese suppliers to stay in business while meeting the demanded price point from their major North American clients. Our industry is currently tied to Chinese production, as southern China has developed the special skill set required to produce model trains. Bringing the manufacturing back to North America would cost even more, and there are no reliable model train factor ies set up yet in places like India. So I think we're looking at tough times ahead in our industry: more delays and even larger price increases. At some point many modellers will say "that's it - this hobby is too expensive!" and leave. With lower sales, the prices will increase more. So this could be the beginning of an escalating negative spiral. So far, Rapido has largely been spared from most major cost increases, but I have been warned that our costs are going up soon as well. That being said, we are looking at ways to avoid getting caught up in that negative spiral and keep our quality high and prices competitive. I will keep you guys informed of our progress.3000 people in China have just lost their jobs a week before Chinese New Year. Not a good day.

 

I understand the company is "Creative Master Ltd", based in Kowloon, (not to be confused with other similar sounding companies) they have in the past made models for Hornby, Roco and Fleischmann.

They are but one OEM in Dongguan, supplying to their subsidiaries and others (there are several factories making for "middle men" in China / Hong Kong as well as direct sales etc).

I wouldn't panic, it may cause delays as distributors and suppliers change to other factories, but I doubt anything is lost forever.