Full Steam Ahead
Posted on 08. May, 2010 by editor in Business News
Barwell-based Bachmann (Europe) plc is an iconic brand, manufacturing high quality model railways and accessories for the European market and worldwide through its parent company The Kader Group. AMANDA WOOLLEY (BEM) went face to face with managing director GRAHAM HUBBARD.
Hubbard has always had an affinity with railways, he wanted to be an engine driver when he was younger and he had his first model railway when he was eight. Instead though he found himself following a career in engineering and having completed his apprenticeship in Leicester, he moved to ondon for three years before returning o Leicester to the 600 Group, where he orked until 1987, as a works manager nd latterly as a chief design engineer. It was during this time that he set up is own business sourcing and selling model railways, which eventually led to him being headhunted by The Kader Group to set up their European operations under the Bachmann brand.
The Group is now the largest, by volume, manufacturer of model railways in the world, with offices in Europe, the Far East, where all manufacturing takes place, and the US. Bachmann (Europe) plc celebrated its 20th year anniversary in 2009 and according to Hubbard, the past two decades have seen the company expand significantly through organic and acquisition growth.
He confirmed: “We bought the Austrian owned Liliput brand in 1992, which allowed the business to set up a German office to oversee growth in this market. Latterly, we purchased the well known Dorset-based Graham Farish brand, which was a significant purchase for the business. More recently, we purchased a major Chinese model manufacturing company, Sanda Kan whilst the Group has also extended its reach across the Atlantic, manufacturing for a number of American model railway manufacturers. The only way to expand a business these days is through acquisition. It’s allowed Bachmann, through its parent, to become a significant global player, selling to pretty much every country in the world.
“We manufacture solely in China, yet on account of the nature of our products all our research and development is done close to market origins.
“The cost of production would be far greater in the respective markets, so it makes sense to do all the production from a central hub in China. “One of the reasons we purchased Liliput was because it was a European brand, likewise we have Bachmann China, which is based in Shanghai, which produces locomotives for the Chinese market. “In addition to our own brand names, we manufacture for around 103 other brands, including well known names in the Australian and Japanese market. In fact, the only market we don’t manufacture for is South America, as trains aren’t really a big market there.
“We’re known for producing high quality models, everything from n-scale, right the way through to garden gauge. Certainly in Europe, we’re a one stop shop.
“Our base in Barwell undertakes the research and development on the British prototypes and we have a similar team in Germany and across our other global sites. Each market is completely different, so it needs to be looked at
individually.
“Our business isn’t like a lot of others; it’s not cut throat! There is competition, but it’s not the same as in other industries. Everybody knows each other and there are many complimentary products across different manufacturers.
“We always looking to evolve our product lines, we’ve just manufactured the City of Truro locomotive on behalf of the National Railway Museum and our big launch this year is Thomas the Tank g-scale. The latter is a big boy’s toy, although honestly our products cater for the adult market, rather than the toy market, purely because of the intricate nature of the models.
“We showed the g-gauge Thomas the Tank range for the first time in Germany and already it’s been really well received. I’m not sure how, if at all, the products will affect our bottom line as it’s a relatively small part of our production, but it’s likely to be a popular range.
“The City of Truro locomotive has been produced as part of an exclusive agreement with the National Railway Museum in York. It won’t be available mainstream, only from the Museum and already 2,500 units have sold. We’ve worked with the NRM on a number of locomotives, the first being The Deltic. It’s part of their strategy to enable the national collection to go forward and is a vital source of income for them, given that the Museum doesn’t charge admission.”
Commenting on how the management decides on new products, Hubbard explained: “We have an executive committee of six within the business. Ideas are put forward and discussed between the board, based on gaps in the market and opportunities that present themselves. The licensing side of things can be very complex and whilst privatisation of the railways has given us greater opportunities to produce different models and expand our modern locomotive collection, it’s a very fluid market. One things for sure the current livery of modern locomotives means that the products are now much more colourful and appealing to a wider customer base.
“There are a number of challenges that present themselves to a business such as ours; one of the biggest is trying to appeal to a wider audience; to get more youngsters involved. We have to compete with the interactive nature of electronic media, which means we have to evolve if we want to survive. I think this will be a big challenge in the next ten to fifteen years. We’ve already introduced digital locomotives with sound, which is helping to enhance the business, but what we really need is for someone to produce some software which allows the creation of a virtual reality railway. Once this happens it has the potential to bring more people to the hobby. These types of innovations will allow the business to keep ahead of the competition. It’s the same for any business that aims to evolve and continue to produce better products for its customers.
“We’re very fortunate, in that everything that we do is self financed. It also helps that the business is global, so if one market is depressed, another is usually buoyant. This latest recession has been slightly different of course, as the affect has been felt worldwide, though we’ve found that people haven’t stopped spending on their hobbies and our turnover last year increased by 20 percent,” added Hubbard.
In recognition of the company’s 20th anniversary, Bachmann has produced the Blue Peter locomotive, an A2 class preserved locomotive based at Barrow Hill, and Hubbard revealed that a significant part of the business is producing limited edition and exclusive locomotives that appeal to collectors. One such example is The Tornado, which Bachmann produced 3,500 units of and sold in just over three weeks.
He continued: “New products help to keep things fresh, particularly if there is demand for them. In the current licensing railway scene it can take up to two years to secure a license, yet there’s increased fluidity in the market. It is a challenge, as in addition to the license, it takes a product roughly 18 months from concept to actually hitting the market.
“It’s a very intricate and precise operation to get everything right, expectation are high and whilst there’s pressure to get these lead time down, it’s more important that the product is correct, as mistakes can be very expensive. We take time to create the best product possibly, our moto is ‘it’s the detail that counts’, we used to have it on our packaging. The collectors are the biggest critics.” Bachmann (Europe) plc’s present site in Barwell is home to 42 of its employees, a further eight are employed at the company’s German office. It’s a growing business, which has seen expansion at the site no less than four times. So is there a need for further expansion and does the site offer this opportunity?
“We originally started off with a 3,900 sq ft facility. We’ve just grown and grown. It’s a continuous battle to increase the size of the business in the space that we have. There’s no room to expand at our present location, unless the council allows us? For example, we’ve tried to get permission to install a coach and turn it into a showroom alongside our offices, but up until now we haven’t got permission to place it. The most annoying thing is that they want to scrap the coach and it’s currently sitting at Long Marston. We want to buy it and refurbish it, but it’s up to the local council!
“I can’t see the business moving from our current site in the near future, we’ve expanded sufficiently, so we just need to take better use of the space that we’ve got. Perhaps when I retire in a few years time, the company may think about relocating, but not for the moment, we’re happy where we are.”
On the subject of how the company is yet to move forward, Hubbard revealed: “I intend to be with the company until I retire when I’m 70. I’m 66 now, so there are some issues to sort out in terms of succession. The company is essentially family run, albeit with a Chinese parent. My wife and I started running the company together, and my daughter is now the company secretary. We’ve subsequently built a good, solid management team to drive the business forward. It’s very much a team effort and in my opinion this is where a lot of businesses fall down; the bosses sit too far away from the rest of the company and there’s no team spirit. These relationships are a very important part of Bachmann.
“I’m very positive about the future of the business. Our challenge is to keep ahead of the competition. The only market, as far as we are concerned, that is rather depressed is the German market. It’s been a leading light for many years, but the focus has shifted. For example, Fleischmann and Märklin have both been up for sale over the past couple of years. Fleischmann was sold to an Austrian company, whilst Märklin is still up for sale.
“In terms of our own acquisition strategy, if something came up that was interesting, we’d definitely look at it, though it’s got to be the right business.
“The aim is to realise growth of between 20-25 percent per annum over the next few years. Yet given the economic climate, it will be hard to attain. It’s nice to have ambitions, but in today’s climate, who knows what is around the corner. There are some companies that are surviving on luck alone, which is simply not sustainable in the longer term. It’s not necessarily the management either, I think a lot of the problems have been caused by the banks, although they’ve said the money is available it’s not. We changed banks only last year, after a 12 year relationship with our previous provider, simply because they weren’t very co-operative. I think it’s a major problem for businesses across all sectors. Until the worldwide economy is sorted out, none of us want to make predictions that we cannot fulfill.
“Outside the business, I own a racing car, a TVR Sagaris. I built it myself, although I don’t race anymore, I’m too old! I’m waiting until I retire to build my own garden model railway, I think I’ll have more time then?”
