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Hobbico Chapter 11 Bankruptcy Filing

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  • Member since
    July, 2011
  • From: Armpit of NY
Hobbico Chapter 11 Bankruptcy Filing
Posted by MJames70 on Wednesday, January 10, 2018 6:46 PM

This news hit the business wires today, and FSM has a small piece on it as well. Hobbico, the major US hobby product distributor, has filed for Chapter 11 bankruptcy protection today. This allows a company a chance to reorganize, and satify its creditors it can continue in business. If not aware, they are the owners of Revell/Monogram, among others. So it makes one wonder what the short and long term fate of those brands might be. From the news articles I've read, their asset to debt ratio is pretty poor. Seems like they're in tough shape,  much as Hornby is with Airfix in the UK. Something to keep an eye on...

http://www.finescale.com/online-extras/shows-events/2018/01/hobbico-files-for-chapter-11

  • Member since
    July, 2014
  • From: Meridian, ID
Posted by modelcrazy on Wednesday, January 10, 2018 6:57 PM

That's not good, don't they also run Tower Hobbies and Great Planes?

ON THE BENCH

1/72 Hasegawa FW-190D9
1/35 Trumpeter PT-76B

In Que

1/700 Tamiya Scharnhorst

Completing a kit is like cutting the head off a Hydra. Two more replace it in the stash.

  • Member since
    July, 2011
  • From: Armpit of NY
Posted by MJames70 on Wednesday, January 10, 2018 7:02 PM

Yes, this is the company that was formed out of Great Planes and Tower. Here is one of the local newspaper's take on it - it sounds even more dire Sadhttp://www.news-gazette.com/news/local/2018-01-10/hobbico-files-bankruptcy-layoffs-next.html

 

 

  • Member since
    July, 2004
  • From: Sunny So. Cal... The OC
Posted by stikpusher on Wednesday, January 10, 2018 7:13 PM

That does sound good at all...

 

F is for FIRE, That burns down the whole town!

U is for URANIUM... BOMBS!

N is for NO SURVIVORS...

       - Plankton

LSM

 

  • Member since
    July, 2013
Posted by modelmaker66 on Wednesday, January 10, 2018 10:23 PM

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

  • Member since
    January, 2013
Posted by BlackSheepTwoOneFour on Wednesday, January 10, 2018 10:46 PM

That ^^^^^

  • Member since
    September, 2012
Posted by GMorrison on Wednesday, January 10, 2018 11:25 PM

modelmaker66

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

 

modelmaker66

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

 

That's completely untrue. They have kitted some of the most affordable and well made kits on the market, either through Revell USA or Revell of Germany.

Examples would take pages, but the new M48 is as good as anything else on the market.

  • Member since
    September, 2012
Posted by GMorrison on Wednesday, January 10, 2018 11:34 PM

Oh, and a new Flower Class Corvette, this time in 1/144.

That kit is a real gem, nothing like it.

  • Member since
    July, 2004
  • From: Sunny So. Cal... The OC
Posted by stikpusher on Wednesday, January 10, 2018 11:51 PM

And all the 1/48 bombers... or Century Series...  1/72 U-Boat and Gato... who else does a 1/48 Ventura? That’s affordable? 

Everything that they make and is also made in Asia costs twice as much at least and most of those are riddled with basic shape errors or very problematic to build. 

Not good...

 

F is for FIRE, That burns down the whole town!

U is for URANIUM... BOMBS!

N is for NO SURVIVORS...

       - Plankton

LSM

 

  • Member since
    December, 2013
  • From: Orlando Florida
Posted by route62 on Wednesday, January 10, 2018 11:51 PM

If they are not able to come out of bankruptcy and get their feet back on the ground, the brands, production assets and the like are way to valuable to just disappear.  The company and/or the assets would just be bought by another large company.  Monogram/Revell and anything else of value from hobbico are not going anywhere.

Bankruptcy can mean many things.  It may not be bad or slow sales.  It may be bad and greedy management doing a poor job of managing cash flow.  More bankruptcies are due to idiots at the top of big companies that have missed managed the cash and run the company too thin.

  • Member since
    September, 2012
Posted by GMorrison on Thursday, January 11, 2018 12:02 AM

Actually more bankruptcies are due to not being able to keep borrowing cash. In this case I would suspect that the Hobbieco buy had a refinance that just didn't work with the banks.

It's a little known fact that most businesses that start, end in failure.

I've had mine 30 years now, and it's taken a much bigger toll than I would have signed on for if I'd known.

So they've taken a shot at a lot of new issues. I hope that Revell of Germany keeps going. They've been a great source now for a while. The $$ just sucks against foreign currency, so maybe they can buy the rest of the company.

  • Member since
    September, 2012
Posted by GMorrison on Thursday, January 11, 2018 12:20 AM

stikpusher

And all the 1/48 bombers... or Century Series...  1/72 U-Boat and Gato... who else does a 1/48 Ventura? That’s affordable? 

Everything that they make and is also made in Asia costs twice as much at least and most of those are riddled with basic shape errors or very problematic to build. 

Not good...

 

stikpusher

And all the 1/48 bombers... or Century Series...  1/72 U-Boat and Gato... who else does a 1/48 Ventura? That’s affordable? 

Everything that they make and is also made in Asia costs twice as much at least and most of those are riddled with basic shape errors or very problematic to build. 

Not good...

 

The C-17. Ever jump out of one, silk man? 

 https://www.youtube.com/watch?v=R-2puqqmycM

  • Member since
    April, 2013
Posted by KnightTemplar5150 on Thursday, January 11, 2018 12:44 AM

At the end of the day, it's not just the Revell-Monogram line that is jeopardized by the Chapter 11 action. Hobbico has a long list of proprietary brands that span the gamut of the hobby industry from all types of R/C to Estes rockets and general hobby tools. In addition, they are the exclusive US importer for the Italeri line and have also imported a good deal of the Hasegawa stock. There is a great deal at stake for all manner of hobbies if the company folds, not just us scale modelers.

Even more tragic is this move threatens the loss of over 300 jobs. If the company has to resort to lay-offs to stay afloat long enough to reorganize, those employees are not only out of work, but their personal stock in the company will depreciate greatly at a catastrophic rate. The news is that individual employee owned stocks worth over $27,000 last year have currently fallen in value to around $5,000, which leaves those employees without much in terms of a retirement fund or a financial cushion until they can find new jobs. The longer this drags out, the less those stocks will be worth.

The company reports $10-50 million in assets against liabilities of $100 to $500 million in liabilities to upwards of 300 different creditors. You don't need to be an accountant to understand just how long a road the company has to go just to remain solvent enough to stay in business.

This may hurt our hobby, but it directly impacts the lives of those who make it possible for us in ways many of us will not appreciate until it's gone.

  • Member since
    September, 2012
Posted by GMorrison on Thursday, January 11, 2018 12:54 AM

Wow thats a horrible debt load.

Usually a judge in a 11 will settle the employees out if they live in a state with decent labor laws. Mine for example but not in my experience.

Peanuts compared to the lending banks.

  • Member since
    July, 2013
Posted by modelmaker66 on Thursday, January 11, 2018 1:10 AM

KnightTemplar5150

At the end of the day, it's not just the Revell-Monogram line that is jeopardized by the Chapter 11 action. Hobbico has a long list of proprietary brands that span the gamut of the hobby industry from all types of R/C to Estes rockets and general hobby tools. In addition, they are the exclusive US importer for the Italeri line and have also imported a good deal of the Hasegawa stock. There is a great deal at stake for all manner of hobbies if the company folds, not just us scale modelers.

Even more tragic is this move threatens the loss of over 300 jobs. If the company has to resort to lay-offs to stay afloat long enough to reorganize, those employees are not only out of work, but their personal stock in the company will depreciate greatly at a catastrophic rate. The news is that individual employee owned stocks worth over $27,000 last year have currently fallen in value to around $5,000, which leaves those employees without much in terms of a retirement fund or a financial cushion until they can find new jobs. The longer this drags out, the less those stocks will be worth.

The company reports $10-50 million in assets against liabilities of $100 to $500 million in liabilities to upwards of 300 different creditors. You don't need to be an accountant to understand just how long a road the company has to go just to remain solvent enough to stay in business.

This may hurt our hobby, but it directly impacts the lives of those who make it possible for us in ways many of us will not appreciate until it's gone.

 

I did not take the human cost into account and that is tragic. I pray they all survive this ok.

 I am not affiliated with RC or other areas of Hobbico. I am sure that there are other qualified distributers to pick up Hasegawa and Italeri, and yes Revell Germany has made great prodcts in the last 10 years. I was not referencing them. I meant that Revell and Monogram have not even really tried to bring out much in new plastic since Monogram merged with them years ago. It's only re releases or licence products. They may have been in better shape if they tried to innovate. The debt load is brutal though! Maybe the rc portion of Hobbico is what has generated the debt. That stuff is really expensive. I know the local Hobby Town lives almost exclusively on RC and airsoft, Kits don't really do much.

  • Member since
    July, 2008
  • From: Albany, NY
Posted by jeffpez on Thursday, January 11, 2018 7:55 AM

Bankruptcy means the stockholders, the real owners of the company, are at the very end of the line to receive any assets. In other words, the stock is now valueless so any employee who had an ESOP now has nothing. If the company emerges from bankruptcy new stock will be issued which won't help the current owners. Sad all around.

  • Member since
    July, 2003
  • From: Cincinnati, Ohio
Posted by ridleusmc on Thursday, January 11, 2018 8:29 AM

https://www.indeed.com/cmp/Hobbico/reviews

I found this interesting.  The more recent reviews were the most critical.  I hope those who are working there can maintain their positions and don't suffer any further monetary loss.  

  • Member since
    November, 2009
  • From: Twin Cities of Minnesota
Posted by Don Stauffer on Thursday, January 11, 2018 8:56 AM

modelmaker66

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

 

Not all of us feel that way.  I, and a number of my friends, really like the new stuff they have been putting out for the last three or four years- not  the repops but the new mold stuff.  They are now producing great molding with fine detail, at great prices.

Their KK Midget racing car was a real gem, but I think the subject was not of enough appeal for it to have much success.  Their 1:48 Stearman is a beautiful kit at a super-low price.  Their casting of the cabane struts solves the old biplane dilemma of how to attach the upper wing while keeping it parallel to the bottom.  I have not seen it yet, but the talk is their new 1:32 P-51D is a really great kit.

 

Don Stauffer in Minnesota

  • Member since
    December, 2003
  • From: 37deg 40.13' N 95deg 29.10'W
Posted by scottrc on Thursday, January 11, 2018 9:04 AM

I am heavy into RC and had seen a huge decline over the past two years in the Great Planes/ TopFlight/ Tower line.  RC was the largest segment and the bulk of market income for Hobbico, but they seemed to refuse to adjust to complete with a bunch of new, low cost retailers in the market.  HobbyKing has eaten Hobbico's lunch in the drone market, where I can buy a battery for $11.99 from HK, where Hobbico wanted $33 for the same type of battery. Horizon and a new, family owned player, Motion RC, made ready made foam RC much more affordable than Hobbico's FlyZone line.  Traditional RC, which is kit building, was negleted by Hobbico for a number of years ago and those customers, whome I was one of, felt alienated and formed a market has been taken over by a new cottage industry of kit cutters and suppliers.  

The story of Hobbico is almost identical to Kmart/Sears, another huge retailer that is predicted to be extict by the end of the year because they didn't timely adjust their business model to compete with Wamart, Amazon, Costco, and IKEA.  

 

  • Member since
    January, 2013
Posted by BlackSheepTwoOneFour on Thursday, January 11, 2018 9:17 AM

Maybe the RC department is the root of all their problems. Granted RC is expensive and a very expensive hobby to boot. If they simply parted ways with all things RC, they might just be saving face in the long run.

  • Member since
    December, 2003
  • From: 37deg 40.13' N 95deg 29.10'W
Posted by scottrc on Thursday, January 11, 2018 10:12 AM

Yup, I think RC is the root, but I would disagree that is very expensive.  Over the past few years, I have observed that my plastic model hobby has been at par, if not surpassed the cost of my RC hobby.  I used to build a plastic kit for a few dollars, now, I have invested more on a plastic model than a RC kit.  

Another problem for Hobbico is that they also arrived in the Plastic model market way too late.  They could not complete with Tamiya/MRC, Trumpeter with the purchase of Revell, and then compete against dozens of highly established distributors that we are loyal to in trying to sell their models and supplies.  

  • Member since
    September, 2017
  • From: HTX
Posted by Kien on Thursday, January 11, 2018 10:33 AM

modelmaker66

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

 

I looked under the "our brands" page on the Hobbico website, and among the kit producers there was Italeri, Hasegawa, Revell, Revell of Germany, and Monogram. Does this mean that Hobbico owns these kit producers? and that if they are out of business then there will be no Hasegawa etc... or just that they won't be imported to the US? 

Even though I'm not the biggest fan of Revell, it doesn't mean they are irrelevant. They still make some very affordable kits compared to Tamiya, especially their 1:32 scale aircraft which are a fraction of Tamiya's 1:32. Tamiya being over a 100$, while Revell's are only 30-50$. It would be nice if they stick around. 

Though it'd be a pity if Hasegawa disappeared!

https://www.hobbico.com/brands.php

 

 Youtube Channel:                                                       https://www.youtube.com/channel/UCkcc2P3-PluSdehvVCEKLdw

  • Member since
    November, 2009
  • From: SW Virginia
Posted by Gamera on Thursday, January 11, 2018 10:36 AM

scottrc

I am heavy into RC and had seen a huge decline over the past two years in the Great Planes/ TopFlight/ Tower line.  RC was the largest segment and the bulk of market income for Hobbico, but they seemed to refuse to adjust to complete with a bunch of new, low cost retailers in the market.  HobbyKing has eaten Hobbico's lunch in the drone market, where I can buy a battery for $11.99 from HK, where Hobbico wanted $33 for the same type of battery. Horizon and a new, family owned player, Motion RC, made ready made foam RC much more affordable than Hobbico's FlyZone line.  Traditional RC, which is kit building, was negleted by Hobbico for a number of years ago and those customers, whome I was one of, felt alienated and formed a market has been taken over by a new cottage industry of kit cutters and suppliers.  

The story of Hobbico is almost identical to Kmart/Sears, another huge retailer that is predicted to be extict by the end of the year because they didn't timely adjust their business model to compete with Wamart, Amazon, Costco, and IKEA.  

 

 

Lovely, just lovely. Sounds a lot like the decline and fall of Radio Shack as well. If you want to hear a real horror story about mismanagement and bone-headed decisions read up on how Radio Shack's upper level management got the company into a hole and then decided to just keep digging... 

 

I'd hate to see it, Monogram, Revell, and Estes are part of my childhood. But then again Atari was too and they bankrupted themselvies, split up the company and then sold it off over twenty-five years ago.  

"Fairy tales do not tell children the dragons exist. Children already know that dragons exist. Fairy tales tell children that dragons can be killed." -G.K. Chesterton

 

  • Member since
    January, 2016
  • From: A Galaxy Far, Far Away
Posted by Hunter on Thursday, January 11, 2018 11:01 AM

That is not good news...hopefully they can pull out of this.

Hunter 

      

  • Member since
    September, 2013
  • From: San Antonio, Texas
Posted by Marcus McBean on Thursday, January 11, 2018 12:00 PM

jeffpez

Bankruptcy means the stockholders, the real owners of the company, are at the very end of the line to receive any assets. In other words, the stock is now valueless so any employee who had an ESOP now has nothing. If the company emerges from bankruptcy new stock will be issued which won't help the current owners. Sad all around.

 

 
I know about valueless stock.  I was with MCI/Worldcom when they went bankrupt in 2003.  I have just over $900K in stock and after the bankruptcy, I got a check for $3,500.  Those employees with the ESOP will be lucky of see pennies on the dollar after this is over.
  • Member since
    July, 2004
  • From: Sunny So. Cal... The OC
Posted by stikpusher on Thursday, January 11, 2018 12:05 PM

Don Stauffer

 

 
modelmaker66

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

 

 

 

Not all of us feel that way.  I, and a number of my friends, really like the new stuff they have been putting out for the last three or four years- not  the repops but the new mold stuff.  They are now producing great molding with fine detail, at great prices.

Their KK Midget racing car was a real gem, but I think the subject was not of enough appeal for it to have much success.  Their 1:48 Stearman is a beautiful kit at a super-low price.  Their casting of the cabane struts solves the old biplane dilemma of how to attach the upper wing while keeping it parallel to the bottom.  I have not seen it yet, but the talk is their new 1:32 P-51D is a really great kit.

 

 

Exactly. They may no longer churn out a high number of new mold kits, as they did in the 80’s, but those that they do are great. Revell USA is slow on their new tool stuff, but Revell Germany, they keep cranking out new kits.

I truly feel sad for the employees who will take the hit on this. For us modelers, it’s not life changing. For the employees it is potentially very much so. I suspect that all the model brands will be sold off to the highest bidder. I can not honestly see all those labels disappearing. 

 

F is for FIRE, That burns down the whole town!

U is for URANIUM... BOMBS!

N is for NO SURVIVORS...

       - Plankton

LSM

 

  • Member since
    September, 2016
Posted by Retired In Kalifornia on Thursday, January 11, 2018 12:12 PM

Kien

 

 
modelmaker66

Plenty other fish in the sea. Nothing that cannot be acquired from other mfg. Revell hasn't been meaningful since the 1970's

 

 

 

I looked under the "our brands" page on the Hobbico website, and among the kit producers there was Italeri, Hasegawa, Revell, Revell of Germany, and Monogram. Does this mean that Hobbico owns these kit producers? and that if they are out of business then there will be no Hasegawa etc... or just that they won't be imported to the US? 

Even though I'm not the biggest fan of Revell, it doesn't mean they are irrelevant. They still make some very affordable kits compared to Tamiya, especially their 1:32 scale aircraft which are a fraction of Tamiya's 1:32. Tamiya being over a 100$, while Revell's are only 30-50$. It would be nice if they stick around. 

Though it'd be a pity if Hasegawa disappeared!

https://www.hobbico.com/brands.php

 

 

Italeri is still an Italian company, Hasegawa is still a Japanese company. Don't be surprised if Chinese companies, Mainland and/or Taiwan, were to pick up Hobbico's line of injected molded model brands, wouldn't be surprised if the Japanese or even Italeri were to pick up some, maybe Eastern Europe, Russia, Ukraine, India, Vietnam, Brazil, who knows!

I'm more worred about getting enamel paints, that's what I use mostly. RPM International (originally Republic Powered Metals) publically traded and in good fiscal shape owns Testors, don't know how long they'll market that brand or how long Hornby will be around to market Humbrol.

  • Member since
    July, 2011
  • From: Armpit of NY
Posted by MJames70 on Thursday, January 11, 2018 7:05 PM

Despite the 'rainbows and unicorns' optimism of the Hobbico statement, the news from business pages and local papers is far less optimistic. And Hobbico actively admits they are looking for a buyer. 

That is kind of scary, as one never knows what may happen with a new owner, whether it through sale or bankruptcy. One can hope it is a knowledgeable group, willing to nuture and grow the brands into something viable. But I fear, and I think more likely, is that it would be a group swooping in looking to scoop up a bargain, plunder what they can, and move on when they've made a buck on the remains. 

Regardless of your feelings as to their 'worth' these days, it would be a sad end to an era to see the last major American injection model company disappear into the sunset. 

  • Member since
    September, 2016
Posted by Retired In Kalifornia on Thursday, January 11, 2018 7:27 PM

Its the molds, all about them & associated production material well as brand trademarks & marketing. There are hundreds of them, they need to be cared for even if not put back into production for years.

I consider the molds World Heritage Artifacts though they'd not likely get United Nations status. Am praying very, very hard when shipped away from their current abodes they're well packed & "shock-proofed" knowing what happened to the Aurora molds decades past - Gawd am I shuttering in uncontrolled fear right now!

I don't want the 1950s Revell-S-ers in particular thrown into the "Electric Arc & Orchestra" caldron, never will buy another bread toaster Made In China were the case.

I'd sooner the molds go there - China - intact in vain hope they'd actually used them to produce new kits, have to believe they - the Chinese - would take better care of them than the Sovies did with the non-Axis FROG molds sent there 40 years ago.

  • Member since
    July, 2011
  • From: Armpit of NY
Posted by MJames70 on Thursday, January 11, 2018 7:44 PM

It does make one question the state of the hobby in general, at least in the Western world. While things seem to be chugging along okay in the Far East/Asia, much less so once you hit Western Europe and the US. 

Hornby, owner of Airfix, Humbrol, and many other brands, is in serious trouble in the UK. In many ways Hornby is a UK analouge of Hobbico. Airfix just announced their 2018 releases - a grand total of three new tools. one of them a revision of a last year release (Phantom). All airplanes, too. Zippo if you're a ship, armor, car, scifi, or figure modeler. Not good times there. 

Besides the Hobbico news, Testors has been serious decline in the US as well, dropping product lines and colors, after years of buying up the competition. They have been probably hurt by the rise of 'micro' brands of paint that seem to be everywhere these days. But their response seems to be to just give up, or a general disinterest in the hobby market these days, when they used to be a category leader.

Regardless, it is interesting, if not good, times. 

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