Fine Art Models Update
Posted: Fri Jan 30, 2009 4:46 pm
I got this in my email today 
Its just a general email.
I figured it was time for an update to all those who have supported Fine Art Models over the past twenty years. What a ride it has been and as hard as it is to believe under the present circumstances, it continues. We just swap one problem for another it seems.
In my previous marketing business I was paid very well for advising companies where the market was going. In the past five years I could only sit here and try to figure out what I was looking at. I knew it wasn’t good, but I had never seen it before in my lifetime. I made adjustments in the business to prepare for what I thought would be a crash in the world economies and while I was right about the crash, I never thought it would be this bad. But as strange as it may sound, this has increased interest in our models.
So where are we in the world of model building today. Let’s just discuss them one at a time.
Trains:
The train market is “dead”. The demand for trains is truly generational and those who lived in the train era are the previous generation and with their passing so goes the demand for high quality train models. Yet…..the secondary market for our trains is through the roof with demand. This is due to our protection of the price, quality and truly limited editions. My original formula for success was 100% correct. Yet, the demand for new models is not strong enough to warrant a half million dollars in tooling for a new locomotive model. Some have said “go to China” and my response is “never!” I could never achieve the level of quality we have today and this is not about price. If the next model can’t be better than the last then walk away…..that’s what I have done.
Having said all this, I’m confident in saying that during our train-building era we built the finest American and European train models and those benchmarks remain for the rest of my life.
Automobiles:
The automobile market is very small and yet, we could sell everything we produced. I set our builder up in business and over the past ten years he has lived a dream as an artist, doing what he wanted at the level he wanted and making more money than he ever dreamed. Yet, during this period of greed in the world over the past ten years he fell victim to it and tried to sell a model to one of my customers behind my back. I caught both of them and the rest is history. I walked away from both of them….I don’t need to have anyone compromise my values. So I doubt we will ever produce automobile models again.
Military:
We produced our military items in Latvia. We had a team of six people who were extremely talented and loved what they were doing…….until Latvia decided to join the European Union and become Euros. And you ask…”What happened?” Well…..at the risk of offending our European customers (many agree with me) the expansion of the EU has been nothing more than colonialism without the obligation of colonialism. Western European companies came into Latvia and bought anything worth buying for a fraction of its value. Then they told the farmers they didn’t have to bring goods to markets because there was a French company that would fill the shelves with western made goods. The Brits said we’ll build you gas stations and sell you gas, and the Germans said we’ll put clothes on all your shelves. But no one said “we’ll give you jobs to earn the money to buy these goods.” So what happened? The standard of living rose marginally and after that, no one could afford what was on the shelves. So the western EU members said, “well, then come to the U.K., France, Germany etc. and take our “high paying jobs” (by Latvian standards) (low paying by western European standards). And five of our six people took those jobs so their families could afford to live in the country where they were born.
You ask, “why didn’t I pay them more?” We were selling the military items at our cost of production. If we raised the price the market would disappear and the result would be the same.
When Latvia succeeded from the Soviet Union they had a population of 2.7 million. Today it is below 2.1 million and decreasing at an annual rate of 2.2%. They have lost more than 20% of their population. Add to this the highest inflation rate in the EU of 17% last year with unemployment at 14% and you have a disaster. Now here we are trying to build world-class models with a deflated dollar with their economy tied to the Euro. This is not fun……
And as I write this update there is a new dynamic playing out and that is the decline in the economies in Western Europe. Now all those jobs for Eastern Europeans are drying up and many of the people we lost to those jobs are returning to Latvia. We are finding that they are willing to work just in the hope they can get paid. Some of these people have families and did what they had to do to survive. Because of their skill and willingness to come back under these circumstances, I will try to take them on and feel I have a way to do it and I will explain below.
Ships:
We continue to build ship models although we have lost half our work force. The reason we are still in business is because we have several master craftsmen who are retired. They don’t want to move to another country for better wages and their families are grown and on their own. Our quality in terms of detail is actually increasing and we have been able to hold pricing at the current level. If the dollar would get stronger then this would help dramatically, but who knows where the dollar is going at this point. If it gets stronger it will be because other currencies are getting weaker and not because our dollar is any stronger.
In 2009 we have only twelve production slots available for a specific ship model. The remaining capacity is taken with orders. I do believe that there will be many ship models we will never produce again regardless of the fact that the edition is not sold out. We just don’t have the capacity.
As for new ship models, I very much want to do the Battleship Roma. There is much interest in this model and we have 100% of the information needed to do it. I don’t have the spare capital to invest in tooling at this time. If we are able to build the model it will sell for $15,500 and it will have the most detail of any ship we have built to date. You can see the pilot model on our web site. If there are ten customers willing to provide a deposit of $5,000 now then we would have the other half of the tooling money and I would deliver their Roma model in 2010 at a total price of $11,500 which is our projected cost not including the base and case. If you are interested then please give me a call. Right now I have six customers agreeable to this approach. I could introduce a new ship each year with this approach and I would do so. But I will only accept ten customers under these conditions.
We’ll continue with the production of existing models and aside from orders already booked; we can build twelve additional models. Just call us and we’ll be happy to take your order.
Because of some key craftsmen willing to return we will continue with the development of our 1:96 scale Bismarck. We plan to build three of these masterpieces and have the first one completed by July of this year. I have several people who have expressed interest in the model so if you are one of them then give me a call and I’ll be happy to discuss it with you. Just as our 1:48 scale Fletcher has set the standard for that scale, so too will our 1:96 Bismarck set the standard for this scale. This is very exciting news given the obstacles we are facing in the economy today.
Airplanes:
Our airplane models are built in Kiev, Ukraine and if you think Latvia has had problems, you can’t imagine how bad it is in Ukraine. They can’t take the “high” paying jobs in Western Europe and thus, they are stuck between the Soviet Union and Europe. Perhaps you saw on the news that Russia shut off the natural gas flow to Ukraine for failure to pay. And here we are building world-class airplanes models with no equal in the world today. Why? Because I invested almost four years developing the process to build aluminum airplane models that will still be relevant two hundred years from now and I won’t walk away from these craftsmen as long as they want to continue. To do so would mean the death of a great art form and isn’t it art that adds the most enjoyment to life? I think so. I’d like to introduce our next model, the MK1 Spitfire, but it would take more than $100,000 in tooling to do so. The problem is that inflation in Ukraine is even greater than in Latvia so it takes more weak dollars to deal with the problem. We continue to produce the Corsair, Mustang and Me109.
So that’s the present state of Fine Art Models. Having said all this I continue to be amazed by the strength of our models in the marketplace. We have had two of our largest orders in the past six months and both came from customers who pulled their money from the markets and were looking for quality investments that would not depreciate. This is the ultimate compliment for our art and how we protect a customer’s investment in it. Attached is a current inventory list and if you see anything that interests you please feel free to call us….we’ll be pleased to talk to you. And if you don’t see anything feel free to call anyway.
Here’s hoping 2009 is better, but I rather think we have to make our luck this year rather than wait for it.
Best Regards,
Gary Kohs
CURRENT INVENTORY LIST
Item Description Available
AUTOMOBILES
Alfa Monza 1
Bugatti Brescia 1
Bugatti Motor 2
Bugatti Royale Motors 2
Bugatti 35 1
Bugatti 35A 1
Bugatti 37 1
Bugatti 37A 1
Bugatti 43 1
SHIPS
Alabama 1
Bismarck 2
C-Class Freighter 2
Emden 2
Endurance 2
Intrepid 1
Yorktown 1
Fletcher 2
Nicholas 1
Nicholas 1:48 1
Flush Deck Destroyer USS Ward 3
Hood 2
Olympia 1
PT Boat - Gray 1
Ronis 1
Concordia Sloop 2
Subchaser 2
Tirpitz 1
Tugboat 1
Victory Ship 1
MILITARY
WLA - Army 1
WLA - Navy 1
TRAINS
B6sb Switcher 2
Big Boy 1
Bucyrus Erie Crane 6
John Bull 3
PRR M1A 1
S 3/6 Locomotive 1
NYC 20th Century Limited Lounge Car 2
NYC 20th Century Limited Observation Car 2
PRR Lounge Car 2
PRR Observation Car 2
AIRPLANES
Corsair 1
Corsair Engine 1
Fokker 1
Me109 1
P-51 Mustang 1
Merlin Engine - Mustang 1
Me109 Engine 1
Its just a general email.
I figured it was time for an update to all those who have supported Fine Art Models over the past twenty years. What a ride it has been and as hard as it is to believe under the present circumstances, it continues. We just swap one problem for another it seems.
In my previous marketing business I was paid very well for advising companies where the market was going. In the past five years I could only sit here and try to figure out what I was looking at. I knew it wasn’t good, but I had never seen it before in my lifetime. I made adjustments in the business to prepare for what I thought would be a crash in the world economies and while I was right about the crash, I never thought it would be this bad. But as strange as it may sound, this has increased interest in our models.
So where are we in the world of model building today. Let’s just discuss them one at a time.
Trains:
The train market is “dead”. The demand for trains is truly generational and those who lived in the train era are the previous generation and with their passing so goes the demand for high quality train models. Yet…..the secondary market for our trains is through the roof with demand. This is due to our protection of the price, quality and truly limited editions. My original formula for success was 100% correct. Yet, the demand for new models is not strong enough to warrant a half million dollars in tooling for a new locomotive model. Some have said “go to China” and my response is “never!” I could never achieve the level of quality we have today and this is not about price. If the next model can’t be better than the last then walk away…..that’s what I have done.
Having said all this, I’m confident in saying that during our train-building era we built the finest American and European train models and those benchmarks remain for the rest of my life.
Automobiles:
The automobile market is very small and yet, we could sell everything we produced. I set our builder up in business and over the past ten years he has lived a dream as an artist, doing what he wanted at the level he wanted and making more money than he ever dreamed. Yet, during this period of greed in the world over the past ten years he fell victim to it and tried to sell a model to one of my customers behind my back. I caught both of them and the rest is history. I walked away from both of them….I don’t need to have anyone compromise my values. So I doubt we will ever produce automobile models again.
Military:
We produced our military items in Latvia. We had a team of six people who were extremely talented and loved what they were doing…….until Latvia decided to join the European Union and become Euros. And you ask…”What happened?” Well…..at the risk of offending our European customers (many agree with me) the expansion of the EU has been nothing more than colonialism without the obligation of colonialism. Western European companies came into Latvia and bought anything worth buying for a fraction of its value. Then they told the farmers they didn’t have to bring goods to markets because there was a French company that would fill the shelves with western made goods. The Brits said we’ll build you gas stations and sell you gas, and the Germans said we’ll put clothes on all your shelves. But no one said “we’ll give you jobs to earn the money to buy these goods.” So what happened? The standard of living rose marginally and after that, no one could afford what was on the shelves. So the western EU members said, “well, then come to the U.K., France, Germany etc. and take our “high paying jobs” (by Latvian standards) (low paying by western European standards). And five of our six people took those jobs so their families could afford to live in the country where they were born.
You ask, “why didn’t I pay them more?” We were selling the military items at our cost of production. If we raised the price the market would disappear and the result would be the same.
When Latvia succeeded from the Soviet Union they had a population of 2.7 million. Today it is below 2.1 million and decreasing at an annual rate of 2.2%. They have lost more than 20% of their population. Add to this the highest inflation rate in the EU of 17% last year with unemployment at 14% and you have a disaster. Now here we are trying to build world-class models with a deflated dollar with their economy tied to the Euro. This is not fun……
And as I write this update there is a new dynamic playing out and that is the decline in the economies in Western Europe. Now all those jobs for Eastern Europeans are drying up and many of the people we lost to those jobs are returning to Latvia. We are finding that they are willing to work just in the hope they can get paid. Some of these people have families and did what they had to do to survive. Because of their skill and willingness to come back under these circumstances, I will try to take them on and feel I have a way to do it and I will explain below.
Ships:
We continue to build ship models although we have lost half our work force. The reason we are still in business is because we have several master craftsmen who are retired. They don’t want to move to another country for better wages and their families are grown and on their own. Our quality in terms of detail is actually increasing and we have been able to hold pricing at the current level. If the dollar would get stronger then this would help dramatically, but who knows where the dollar is going at this point. If it gets stronger it will be because other currencies are getting weaker and not because our dollar is any stronger.
In 2009 we have only twelve production slots available for a specific ship model. The remaining capacity is taken with orders. I do believe that there will be many ship models we will never produce again regardless of the fact that the edition is not sold out. We just don’t have the capacity.
As for new ship models, I very much want to do the Battleship Roma. There is much interest in this model and we have 100% of the information needed to do it. I don’t have the spare capital to invest in tooling at this time. If we are able to build the model it will sell for $15,500 and it will have the most detail of any ship we have built to date. You can see the pilot model on our web site. If there are ten customers willing to provide a deposit of $5,000 now then we would have the other half of the tooling money and I would deliver their Roma model in 2010 at a total price of $11,500 which is our projected cost not including the base and case. If you are interested then please give me a call. Right now I have six customers agreeable to this approach. I could introduce a new ship each year with this approach and I would do so. But I will only accept ten customers under these conditions.
We’ll continue with the production of existing models and aside from orders already booked; we can build twelve additional models. Just call us and we’ll be happy to take your order.
Because of some key craftsmen willing to return we will continue with the development of our 1:96 scale Bismarck. We plan to build three of these masterpieces and have the first one completed by July of this year. I have several people who have expressed interest in the model so if you are one of them then give me a call and I’ll be happy to discuss it with you. Just as our 1:48 scale Fletcher has set the standard for that scale, so too will our 1:96 Bismarck set the standard for this scale. This is very exciting news given the obstacles we are facing in the economy today.
Airplanes:
Our airplane models are built in Kiev, Ukraine and if you think Latvia has had problems, you can’t imagine how bad it is in Ukraine. They can’t take the “high” paying jobs in Western Europe and thus, they are stuck between the Soviet Union and Europe. Perhaps you saw on the news that Russia shut off the natural gas flow to Ukraine for failure to pay. And here we are building world-class airplanes models with no equal in the world today. Why? Because I invested almost four years developing the process to build aluminum airplane models that will still be relevant two hundred years from now and I won’t walk away from these craftsmen as long as they want to continue. To do so would mean the death of a great art form and isn’t it art that adds the most enjoyment to life? I think so. I’d like to introduce our next model, the MK1 Spitfire, but it would take more than $100,000 in tooling to do so. The problem is that inflation in Ukraine is even greater than in Latvia so it takes more weak dollars to deal with the problem. We continue to produce the Corsair, Mustang and Me109.
So that’s the present state of Fine Art Models. Having said all this I continue to be amazed by the strength of our models in the marketplace. We have had two of our largest orders in the past six months and both came from customers who pulled their money from the markets and were looking for quality investments that would not depreciate. This is the ultimate compliment for our art and how we protect a customer’s investment in it. Attached is a current inventory list and if you see anything that interests you please feel free to call us….we’ll be pleased to talk to you. And if you don’t see anything feel free to call anyway.
Here’s hoping 2009 is better, but I rather think we have to make our luck this year rather than wait for it.
Best Regards,
Gary Kohs
CURRENT INVENTORY LIST
Item Description Available
AUTOMOBILES
Alfa Monza 1
Bugatti Brescia 1
Bugatti Motor 2
Bugatti Royale Motors 2
Bugatti 35 1
Bugatti 35A 1
Bugatti 37 1
Bugatti 37A 1
Bugatti 43 1
SHIPS
Alabama 1
Bismarck 2
C-Class Freighter 2
Emden 2
Endurance 2
Intrepid 1
Yorktown 1
Fletcher 2
Nicholas 1
Nicholas 1:48 1
Flush Deck Destroyer USS Ward 3
Hood 2
Olympia 1
PT Boat - Gray 1
Ronis 1
Concordia Sloop 2
Subchaser 2
Tirpitz 1
Tugboat 1
Victory Ship 1
MILITARY
WLA - Army 1
WLA - Navy 1
TRAINS
B6sb Switcher 2
Big Boy 1
Bucyrus Erie Crane 6
John Bull 3
PRR M1A 1
S 3/6 Locomotive 1
NYC 20th Century Limited Lounge Car 2
NYC 20th Century Limited Observation Car 2
PRR Lounge Car 2
PRR Observation Car 2
AIRPLANES
Corsair 1
Corsair Engine 1
Fokker 1
Me109 1
P-51 Mustang 1
Merlin Engine - Mustang 1
Me109 Engine 1