UPDATE ON LGB - October 11, 2006
Note: If you don't have any LGB(r) brand trains, this article may not interest you much, but a good percentage of our readers DO own LGB products, so we thought this would be of interest.
Those of you who have been garden railroading for a while know that LGB(r) trains have always been important to our hobby. It's not an overstatement to say that when the Ernst Paul Lehmann (EPL) company invented LGB trains, they invented the kind of garden railroading that is practiced by the vast majority of garden railroaders around the world today. Yet, like all hobby-related industries, they were hurt by the economic turnarounds of the early 21st century.
In September, 2006 financial problems at EPL were dramatically brought to light in a series of events and announcements.
- EPL/LGB sold its North American marketing wing LGBoA to a newly formed North American corporation.
- A financial company that assumed control over EPL's debt began taking steps to shut down the business. This included freezing bank accounts and making certain that EPL couldn't use the money it made from the sale of LGBoA to bolster its cash flow. It also meant that LGB's factories would be closed during what is ordinarily the busiest and most profitable time of the year. (To some observers, this showed that the creditor had no interest in the survival of EPL/LGB as a company.)
- EPL sought protection from its creditors through German bankruptcy laws (similar to the laws used by Chrysler and other major U.S. companies in the past that allow a company to "buy time" until it makes the changes it needs to get "back on its feet").
- The German courts appointed a legal administrator to oversee the bankruptcy proceedings. The new administrator, Dr. Steffen Goede, promised to get the company and its factories operating again as soon as possible.
The Good News
Dr. Goede has negotiated with five separated financial institutions to provide new loans that will see EPL/LGB through the Christmas season, at least. That means that the factories are open and that the company's employees will stay employed for now. Also, if you have some product backordered, you have a good chance of receiving it. Throughout garden railroading circles, there is a call to buy LGB now, especially to buy anything you were planning on buying and kept putting off. The hope seems to be that if EPL/LGB reestablishes a decent cash flow, the company won't have to be make such drastic changes as some financial analysts foresee. The longterm "good news" is that, whatever else happens, LGB trains will continue to be produced and serviced.
The Bad News
Although it is all but certain that the brand will go forward, it is far from certain that the EPL company will go forward in anything resembling its present form. Several companies, including hobby companies and investment firms, have stepped forward to negotiate for a piece of EPL/LGB's future. Considering that only a few weeks ago it looked like an unsympathetic creditor was going to "slice and dice," these new "suitors" could be considered "white knights." However in exchange for any "bailout," they will want a high degree of control over LGB's operations. That could significantly reduce the role of the Richter family, who have guided the company's quality and customer service goals for decades. I have already heard from LGB fans and collectors who were upset that the Richter family's direct involvement with the company might be reduced, so I know that many folks will be disappointed if that sense of one big "extended family" is lost in the coming months or years. Still, the future for LGB train-lovers is not nearly as bleak as it seemed to be on September 18, 2006.
What Does the Future Hold?
No one can be 100% certain about the future. But here are some very educated guesses, based on 30-some years of observing the industry (and I've seldom been wrong.)
- The hobby of garden railroading will continue to grow. No other supplier could possibly "fill the gap" if LGB went away tomorrow, but many fine products are available, and we've seen that it only takes one good product, such as the original LGB Stainz locomotive (shown above) and starter set, to get folks excited about the possibilities for their own back yards.
- Whoever ends up "holding the reins" of LGB, it is virtually certain that they will do all that is in their power to uphold the integrity of the brand - that is, they will continue to maintain quality and effective customer service. So don't be afraid to buy LGB trains to run - parts and service will be available for a very long time.
- Any LGB trains you own now or buy before significant changes in the company will retain their value. If, after all the dust has settled, there is any noticeable difference (say product number or box color) between LGB's current offerings and its offerings for 2007 and beyond, the LGB products you own or buy now will almost certainly increase in value. So don't be afraid to buy LGB trains to collect, especially if you can get them for a good price - if anything, values will improve.
Update for 2016
Soon after I wrote that blog, LGB was purchased by Maerklin, one of Europe's largest toy and model train companies. Soon after, Maerklin went out of business.
After some time in "suspended animation," LGB is now owned by a company formerly best known for cheap plastic "educational" toys, mostly made in China. However, the new owners seem to have begun production again, starting with the small starter sets that got LGB off the ground in the first place. Manufacturing was migrating to Europe, the last time I checked, though it will not probably ever be in Germany again .
What Do LGB Trains Offer a Non-LGB User?
So you're wondering if this might be a good time to buy an LGB train. I'd like to talk about some of the reasons you might consider it. However, I need a couple of disclamers first.
- At the moment, neither Family Garden Trains or its affiliated sites link directly to any pages selling LGB trains, so we can't get them for you, and we won't make any money if you buy LGB products after seeing this article.
- LGB trains fill a number of niches, but not all of them. If you're a die-hard modern US standard gauge user who couldn't imagine putting anything that looks European, Old-timey, or even Narrow Gauge on your tracks at any time, you may have trouble finding LGB products that look right with your existing setup. (I'm almost in this category myself, but I do have some LGB products that I run on the days I am in a "narrow gauge" frame of mind.) On the other hand you don't have enough room to run that Big Boy around your Christmas tree, but an LGB starter set would fit just fine, and make a nice change, at that.
Okay, enough disclaimers. What are some reasons that you might want to think about making an LGB purchase in the coming months?
To summarize, in the words of LGB's own German web site:
- LGB products are notorious for their reliability. I recently attended several garden railroad "open houses" in the greater Columbus area, and I was surprised to see the LGB Mogul (shown below) running on most of the railroads (several railroads, like the railroad in the title photo, ran more than one). This included railroads whose owners also have many locomotives from other manufacturers. Why? Because on a day these hobbyists wanted something that could run for hours unattended, they got our their LGB.
- LGB offers a compatible upgrade to Bachmann Big Hauler trains. Don't get me wrong, I like Bachmann trains, and their starter sets are ideal for people who want realistic, but inexpensive, North American-style trains. But once you handle LGB trains, you'll realize that they are just plain sturdier. If you already have a bunch of Bachmann trains, you don't need to retire them; they're totally compatible with LGB. But if you'd like to add a locomotive that just doesn't know when to quit, put some LGB on your railroad.
- LGB almost certainly offers something you've never tried before. European Narrow gauge, Old-Western, Alaskan, traction, cog - the list goes on and on. Some folks find that "getting out of your comfort zone" with a new, quality model can stimulate interest and ideas, and maybe a "branch line" elsewhere on the property.
Eine Ellok f?hrt nicht ohne Strom, eine Dampflok nicht ohne Kohle und die LGB f?hrt nur mit vielen Bestellungen. . . . Unsere Mitarbeiter . . . werden es Ihnen danken. Bestellen Sie JETZT. Ziehen Sie Weihnachten etwas nach vorne, damit wir Ihre W?nsche auch noch rechtzeitig erf?llen k?nnen !
Or, roughly translated (I think):
An electric locomotive can't operate without current, a steam locomotive can't operate without coal, and LGB can't operate without out a supply of orders. Our coworkers . . . will thank you. Order now. Get your Christmas shopping done a little early this year, so we can be sure to supply what you want in time for the holidays.
Whatever happens, LGB operators and collectors should continue to enjoy quality products and services for many years to come. Enjoy your trains, and especially enjoy any time you have with your family in the coming weeks.
Best of luck,
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