Why do Lionel trains have three rails? After all, real trains usually have two. This unrealistic feature is a legitimate drawback for Lionel and other makes of O gauge trains, but the decision made sense at the time.
Lionel is an iconic American brand, and I often hear people refer to it as a made-in-the-USA company. But it’s been a long time since that’s been where Lionel trains are made. Or at least the majority.
It turns out Lionel has a bit of a history with that.
In the 1950s, Marx and Lionel took turns being the biggest toy company in the world, largely riding on the popularity of O gauge trains. Neither company particularly liked the other, but both owed some degree of their success to being compatible with one another. Because of their interoperability, the two makes of trains are frequently compared and contrasted even today.
In the 1970s and early 1980s when Lionel was part of General Mills, one cost-cutting measure they took was to attach trucks to car bodies with a plastic doohickey. It’s not really a rivet, but more like a clip, and it doesn’t exactly hold the trucks steady.
Removing them isn’t difficult but the method may not be immediately obvious. And sometimes these Lionel cars really did use rivets. I can explain how to remove those as well.
In the 1950s and 1960s, it was possible to walk into Sears and see an Allstate electric train on the same shelf as Lionel and American Flyer. These trains are still somewhat common today. That leads to some further questions.
Yes, it’s Allstate, as in the insurance company. What did they have to do with electric trains?
I just spent some time explaining some of the terminology that goes along with Lionel and other O gauge and O scale trains. That made me think maybe a definition of some terms might prove useful to somebody. So here’s an O scale glossary.
It was all over the various news sites, but Lionel, the train maker, filed Chapter 11 yesterday.
A lot of the news stories got a lot of details wrong.This is the first time Lionel, LLC has filed for bankruptcy. The original Lionel Corporation, which is the company that made the trains your dad’s and grandfather’s friends had, if not the trains they had, in all likelihood, filed bankruptcy three times. The first time was in 1935, when the Great Depression had wiped out most of Lionel’s competitors and the aristocratic J. Lionel Cowen kept on making trains for millionaires’ kids when there weren’t any millionaires left.
Lionel emerged from bankruptcy with a two-pronged approach. On the low end, they started selling $1 windup handcars featuring cartoon characters like Mickey and Minnie Mouse. Today’s hirailers do everything they can to argue that Disney didn’t save their beloved Lionel, but at the very least it made a significant contribution.
Lionel also started paying more attention to hobbyists, making diecast trains that were modeled after real trains, rather than hiring Italian designers to design elaborate, ornate, and some would say gaudy toys that looked like trains. Hirailers say this was what saved Lionel. Whatever.
At any rate, Lionel emerged from bankruptcy and survived the Depression, something only one of its other competitors from the 1920s managed to do. That competitor was Hafner. Heard of it? Probably not. Hafner made cheap windups. Attractive windups, but basically forgotten today. The American Flyer brand name endured, but only because the Coleman family gave it to A.C. Gilbert, of Erector construction toy fame, in exchange for a royalty against future sales. There was also that upstart Louis Marx, who actually made money during the Depression and used some of that money to buy a toy train line, but that’s another story.
Toy production of almost all kinds stopped during World War II because the metal and the production capacity was needed for the war effort. Those who couldn’t make war munitions and other such things made things like bottlecaps. Lionel made nautical equipment. They sold a paper foldup train one Christmas because they were still allowed to do that, but it required the patience of a saint and the coordination of a surgeon to assemble, and once assembled, it served only as a reminder of what kids wanted in the ’30s but the parents couldn’t afford and now that the parents could afford it, it was next to impossible to get (unless you happened to live in New York City and knew about Madison Hardware, which, again, is another story).
So the pent-up demand for toys exploded after the war, and toy trains became a huge fad, giving Lionel, Gilbert, and Marx a license to print money until about 1956, after which the general public decided slot cars would be the next big fad and the people who really liked trains decided they wanted to go to HO scale because they were a lot cheaper, a lot more realistic, and in some cases took up less space.
J. Lionel Cowen decided to retire in 1959 and sold out his share of the company to his grand-nephew. He didn’t mention this to his son, who was only on board because Dad wanted him to be anyway, so he sold his shares too, while they were still worth something. Ray Cohn sought to diversify and make the trains less expensive by using more plastic and less metal, but at best he only slowed the bleeding. By 1967 A. C. Gilbert was being liquidated. Cohn bought the American Flyer brand name and tooling but didn’t have the money to do anything else with it. Later that year, Lionel Corporation filed bankruptcy itself.
Two years later, Lionel decided its chances were better selling toys rather than making them. It sold its train line to General Mills, the cereal people, who also had some toy companies. Lionel opened a chain of toy stores on the east coast, and for a time was the second largest toy store chain in the United States, behind the behemoth Toys R Us.
General Mills kept the Lionel train flame alive, selling O and HO trains branded with the Lionel name throughout the 1970s and early 1980s. In 1979, it even located the old American Flyer tooling and brought those trains back as well. But in the early 1980s it tried to move manufacturing the Mexico, which angered a lot of Lionel fans. It reversed the move, but started looking for a buyer, shuffling the company around within itself and then palming it off to Kenner Parker, and then, in 1986, a Lionel collector who had made his fortune selling real estate in Detroit bought the company and started operating it as Lionel Trains Inc.
Back to Lionel Corporation. Remember them? In 1991, Lionel Corporation found its toy store chain just couldn’t compete with Toys R Us’ economies of scale, and filed for bankruptcy. Starting in 1993, it liquidated. It sold the trademarks to Richard Kughn, the owner of Lionel Trains.
Kughn sold controlling interest in Lionel Trains in 1996 to Wellspring and Associates, a holding company. Rock star Neil Young also purchased a 20 percent share. The new company was called Lionel LLC.
In the late 1990s, Lionel LLC started using Asian subcontractors more and more. Its biggest competitor (and former partner) MTH Electric Trains had been doing the same thing, and undercutting Lionel in price. By 2001, Lionel was manufacturing none of its own trains, and even outsourcing the design of some of them.
In 2000, MTH sued Lionel for misappropriation of trade secrets. A designer who had worked for MTH’s subcontractor did work for Lionel’s subcontractor as well, and the result was what some call an uncanny similarity between some of Lionel’s and MTH’s locomotives. Not having seen them myself–just like many of the people who call the similarity uncanny, no doubt–I don’t know. What I do know is that MTH and Lionel have had bad blood since the early 1990s, and that Lionel’s executives and financial backers conduct themselves in a much more professional manner in public than their MTH counterparts. That may or may not say something.
At any rate, the jurors who saw the evidence agreed with MTH and awarded it $40.8 million, which was more than MTH had sought. Then, on November 1, a judge upheld the jury’s findings and ordered Lionel to stop production of certain locomotives. Lionel then filed bankruptcy two weeks later. Looking over the filing, it’s easy to see why. They have $43 million in assets. They have substantial debt–including $30 million to what appears to be a South Korean subcontractor, not a financial institution like some news reports are saying.
MTH owner Mike Wolf and his buddy, Washington D.C. trash hauling magnate Tony Lash are hopping mad and accusing Lionel of trying to dodge justice by hiding behind Chapter 11. Considering the amount essentially amounts to the corporate death penalty, one would expect them to do whatever they can to appeal. It’s silly to expect a company to not want to stay in business.
In case you haven’t figured it out, my sympathies lie with Lionel. But it’s more out of a dislike of MTH than a love for Lionel, which has basically reduced itself to an importer. It farms out design and manufacturing to the lowest bidder, slaps its name on it, prices it for trial lawyers and heart surgeons, and wonders why nobody buys its stuff.
But MTH is the Rambus of the train industry. Or SCO. Take your pick. Starting in the 1970s, train enthusiasts started using electronics to control them. Eventually these efforts got combined and led to the creation of an open industry standard called Digital Command Control (DCC). Every major maker of HO and N scale trains uses it, and has been using it for years. MTH came along, and while it was developing its own proprietary train control standard called Digital Command System (DCS), patented some elements of DCC. Then it started suing selected companies who made use of DCC.
J. Lionel Cowen was a ruthless businessman and made a lot of enemies, but he had ethics and was proud of them. Not that that’s relevant because the Lionel he founded went out of business in the 1990s and has no direct connection to Lionel, LLC, as much as Lionel, LLC tries to make it look otherwise.
I’d like to see Lionel, LLC survive but I won’t lose sleep over it. Anyone can contract with Asian firms to design and manufacture trains, and to slap the Lionel name on it, all you need is the trademark. If someone other than Lionel, LLC ends up owning that trademark, I don’t see that it makes one iota of difference.
Unless that person happens to be Mike Wolf.
But Mike Wolf isn’t going to steal my hobby away from me. I buy mostly old stuff anyway. Why should I let the Rambus of Trains ruin my fun?
Toy trains are a funny thing. Vintage Lionel trains are almost a status symbol, and their value has almost taken a mythical quality. Marx, on the other hand, was the working class brand in the 1950s, the company that had something for you no matter how much you had available to spend.
For the most part, today’s prices reflect that. Lionels are expensive and Marxes are cheap.
Sort of.If you read the various pages on the Web, that’s certainly the impression you get. But for whatever reason, Marx prices seem to be rising. Search on eBay and you see inflated prices. Maybe the secret’s out.
Let’s get a disclaimer out of the way. I don’t recommend toy trains as an investment. Yes, vintage trains are almost certain to hold their value. Yes, many will increase in value. But their values tend to be more unpredictable than stocks, and certainly less proven. This is true of all collectibles. Your investment money needs to go to the bank or the stock market. Spend entertainment money on collectibles. They’ll retain more of their value, on average, than CDs and DVDs will, and they’re almost certainly worth more than empty beer cans or movie ticket stubs.
End disclaimer. For whatever reason, Marx isn’t the value that it used to be. Maybe it’s because Marx made so much other stuff and has a large collector following, causing Marx prices to rise along with the values of its other toys because of its appeal outside of train fans.
So where do you go for a bargain these days?
Throughout the 1950s and 1960s, Lionel made starter sets. Unlike their higher-priced items, these didn’t have operating couplers, and sometimes they were made of cheaper plastics. In 1969, Lionel Corporation went bankrupt and sold its tooling and licensed its name to General Mills, whose subsidiary Model Products Corporation manufactured and marketed Lionel trains. MPC cut a few more corners, and the trains manufactured by MPC from 1969 until the mid-1980s are cheaper still.
They do have a collector following, but the following is much less than that of Lionel of other eras, or Marx, or anything else for that matter. And the prices reflect that.
I bought a box of junk this weekend for $35. Inside was a figure-8 of slot car track, some pieces of old slot cars, a few random pieces of Lionel track, and a Lionel Scout set from the 1962-1966 time period. Included was a Lionel 2-4-2 steam locomotive (model number 242, appropriately) and corresponding tender, a flatcar, a hopper, a gondola, and a plain red unlettered caboose.
While the writers in the train magazines dismiss Lionel’s cheap Scout locomotives as junk, I’ve found them reliable and, additionally, they’re more tolerant of bad track than the more expensive offerings. I can see how they’re more difficult to fix, and maybe they don’t hold up as well when they’re run for hours at a time, but when they’re worth between $10 and $15 I don’t see much room for complaint, either. If the motor dies in a few years, buy another locomotive and keep the old one for parts. Maybe you’ll find a deal on a mechanically sound Scout with a bad body.
As for the cars, they have a bit more plastic shine than I’d like. But at $5-$10 a pop, why complain? K-Line sells new box cars for $10, but you can’t get new freight cars for much less than $20. Given the choice between a $20 K-Line or Industrial Rail hopper or a $5 Lionel hopper from the ’60s or ’70s, I’ll take the Lionel every time. The Lionel isn’t going to decrease in value. The others will. The Lionel may not hold the track as well, but that $15 savings will more than pay for some upgraded trucks (wheel sets) if it needs them.
Meanwhile, the equivalent Marx hopper will probably cost you $12.
Don’t get me wrong. I won’t pass up a nice Marx, but if I’m looking for cheap cars to pad out a long train, Lionel’s offerings from its darkest hours are the better bet.