This is an article by HJ Neumann from his blog "IIm Online Nachrichten" that HJ Neumann wrote in September of 2006, just right after LGB declared bankruptcy. This is a pretty long article, no pictures. The bankruptcy fact ripped right into HJ Neumann's heart - having been a staunch, seriously devoted, lifelong fan of all things LGB. In this article HJ Neumann poured his heart out. YT wants to share his thoughts back then on the occurenec of the event 13 years ago this week.
This is Part 2
The next question that needs to be asked is: how to proceed? For now an insolvency counselor (similar to a bankruptcy judge in USA) has taken over the executive board.With that delivery to dealers will start again. It is the cardinal task of the insolvency counselor to secure daily business and continue until a buyer has been found. Or - if none is found- to sell off any assets left to satisfy creditors.
The damage that has been done to the brand "LGB" by that! What is going to happen to the employees? What's going to happen to the dealers, the suppliers and their employees? Who can be found to take over LGB? An investor alone will not do. There has to be a new leadership team. Just remember when POLA was taken over by FALLER. All hell broke lose inside the company and until today the brand didn't really recover. And LGB is somehow bound to stay at their manufacturing site Saganer Street. You can't just remove all the machinery and reassemble somewhere else...
Here's the opinion of one insider: exchange the complete top management. Then choose the best from the leftover employees, invite the 50 best (biggest in sales volume) dealers to Nuremberg and present them right then and there with a new product program and a new concept. Then start the whole business again, slowly but surely. With this simple concept may be an investor would be willing to supply the needed funds. But he needs to be found first...
LGB itself had this to say:
"The ERNST PAUL LEHMANN PATENT WORKS (EPL) in Nuremberg, manufacturer of the world-renowned Lehmann Big Train is part of the traditional Nuremberg toy industry. The family owned business celebrated its 125th anniversary in July of 2006. Since March 2005 LGB is in serious restructuring. Due to the ongoing negative development of sales within the model train industry the measures to control costs which had started in 2002 already had to be drastically intensified.The 150 employees supported the restructuring process by sacrificing their wages.Due to the close bond to the production location Nuremberg and the high standard of quality manufactured here EPL gave up manufacturing in the Czech Republic. Safeguarding the jobs in Nuremberg had priority. In spite of these positive parameters the creditors locked the bank accounts on 09/01/2006 and prohibited any product sales. Sales projections and supply-and delivery schedule are according to plan for the business year 2006. Also, the loss producing American subsidiary LGBoA was sold to an US entity with contractual agreements to proceed with the operative partnership long term. Despite of considerable liquidity flowing into the accounts due to the sale they stayed locked.
The banks kept pressuring the owners (of EPL) who had guaranteed the loans personally to a point where the owners decided to declare bankruptcy, as of today. Interested investors now have access to EPL. With this, the owners opine, the tradition of the 125 years old world renowned company can continue and the delivery of the New Items Program which is highly anticipated by customers is secured."
YT likes to stress that the article is the opinion of HJ Neumann and the last paragraph ("LGB itself had this to say:") is a statement by LGB itself. HJ Neumann is and was a very loyal LGB customer, editor and author of LGB Gauge II News and member of a local, very big LGB club. During his career as editor he did a lot of interviews with the LGB top management. However, some information was not available to him relating to LGB: Financial structuring of the company for instance, banking policies, bookkeeping practices, asset management, maybe shady transfers, things along that line. Please take this into consideration in regard to his opinion here.
As to the statement LGB gave in September 2006: YT is stunned that China activities weren't mentioned. LGB had transferred major portions of production since 2000 at least. Oh and please this one: on the day the employees accepted their wage sacrifices, Johannes Richter presented his just bought $ 100,000.00 car in LGB red to the stunned LGB workforce by doing doughnuts in the factory parking lot................
And last: Since 2011 and with SIMBA-DICKIE GROUP Germany taking over Marklin, LGB and others better times were ahead. Today LGB under the SIMBA-DICKIE leadership is a shining example of Gauge II model trains bringing back a lot of the old LGB glamour. The program is good, the locomotive-model variety serves the German market as well as the US market. Customers on both sides 'of the pond' are flocking back to LGB for years now and new dealer stores (some online) spring up in the USA to offer LGB again.
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