by Joseph Stachler
Lionel L.L.C. has a new president and chief operating officer. Richard N. Maddox succeeded Gary Moreau on July 26, 1999. Mr. Maddox has a solid background in the model railroading industry. He was previously senior vice president of sales and marketing at Bachmann Industries.
"We at Lionel have known about Richard's excellent reputation in this market and in joining Lionel L.L.C., he will significantly strengthen our management team," said Martin Davis, managing partner, Wellspring Associates L.L.C.
Toy Train Revue spoke with Mr. Maddox on Wednesday, August 4, 1999. He discussed with us his role at Lionel and shared some of his plans for the future.
Toy Train Revue: Did you have trains as a kid?
Richard Maddox: I guess that just about anybody that came out of my era of the 40s as a youngster had Lionel Trains or American Flyer. I did. I had Lionel.
TTR: Why do you think you were picked to run Lionel?
Richard Maddox: I think that management had decided that Lionel required someone with a strong background in railroading. I've been in the industry for over 40 years. I think that they also felt that they needed someone today who is strongly sales and marketing-oriented. I believe that really was the reason.
TTR: What's the first thing you've done as president of Lionel?
Richard Maddox: I think we've done a lot of things. We got together and we looked at what we had been doing. We made some decisions on what our plans would be for the future and what the culture of the company should be. I think essentially we decided that we are going out and we are going to absolutely produce the best trains made in the industry. We are going to produce the highest quality. And we are going to look to produce them at an affordable price. And we are not going to compromise on any of that.
TTR: Do you plan to move all production to the Far East?
Richard Maddox: Absolutely not. We certainly are going to look to produce more product in the Far East. But we are going to continue to produce product here as well. My guess is we won't change anything here. But we certainly are looking to do a number of different items and perhaps step up the quantity of locomotives and accessories that we're doing. And broaden the line.
TTR: So it sounds like you recognize that production in the United States has a significant place in Lionel's culture.
Richard Maddox: Oh, absolutely. Yeah, there's no question about that. We're not changing anything here.
TTR: MTH Electric Trains offers many reproductions of Lionel pieces, both past and present, for substantially less money than Lionel charges. How will Lionel compete with those products and the products of other manufacturers of 3-rail trains?
Richard Maddox: Basically I believe that I'm going to benefit tremendously from a lot of things that have been done here in the last twelve months in order to address this issue. So it's going to look like I came in, made a lot of changes, and things got better when in reality things have already been better. We put out the Hellgate Bridge, which was also an MTH item, and was something that we had done many years ago. We put out a baby Hudson. We're coming out with an Allegheny. All of these products are state-of-the-art products. Extremely high-quality products. Competetive in price and in fact it's my understanding that our Hellgate Bridge has been an absolute outstanding seller. In fact, we're sold out. So I think while this may have been an issue twelve months ago, it's a non-issue today.
TTR: In the most recent MTH catalog there are a lot of accessories in it that Lionel currently produces as well. Things like signals and the oil pumping accessories and MTH sells them for less than Lionel does.
Richard Maddox: I'll tell you honestly that I haven't really gotten to the point of looking into those types of items since they're not my first issue here. We've looked at locomotives. We've looked at high-visibility items. We've looked at train sets. And for the most part it's my opinion that as the leader of the market place, we're competetive.
TTR: How do you view the internet and QVC as tools for selling Lionel trains?
Richard Maddox: They're two totally different areas. Let me answer first on QVC: every time that we do a show on QVC, we reach out to somewhere between 40 and 60 million people. I view that as the least-expensive advertising of it's kind in the world. I think it's important that we do that. We look constantly to find ways in our industry to bring new people into railroading. And if we have an opportunity to expose new people who more than likely will never get into a hobby shop in their lives, we're going to reach out and do that kind of thing. As for the internet, our thrust is again, to reach people, especially families, who typically are not hobbyists. Who are not railroaders. We've been preaching to the choir for years and we have a group of dedicated railroading enthusiasts who buy Lionel products. Who buy everything we make, in some cases. What we need to do is to reach out to a new group of people and expand our base. That's what we intend to do with the internet. We certainly hope that we're able to do that.
TTR: The recent rap on Lionel has been low quality and high prices. What do you plan to do about that?
Richard Maddox: We plan to make our development process longer, which gives us more of an opportunity to test product prior to going into the marketplace. We simply will refuse to ship product into the marketplace that is at all questionable. Product will not be shipped unless we're certain that it's top-quality. Now, to say that nothing will slip through, who knows? But we will never ship any product that isn't top quality.
TTR: What are your plans to avoid the recent disasters like the Backshop and Culvert Loader?
Richard Maddox: Bob [Grubba, head of Engineering at Lionel] assures me that we are giving each one of the new projects enough time that we have sufficient opportunity to really do some significant testing prior to production. The problem usually just is that something was rushed into production to hit a time and not sufficiently tested.
TTR: What about dumping product on the market? A collector who paid $400.00 for the Pullman Heavyweight passenger set when it was first released now sees it being sold for $190.00 from some distributors. Why should he buy products right away when he might get a much better deal a year later?
Richard Maddox: Good question. He should buy it because in the future, we don't think he'll get a better deal again. We may have made some mistakes about over-producing. But at the moment, we produce based on the orders we receive. What had happened apparently in this case is we overproduced product and we felt that we needed to move it.
TTR: So items like the Log Loader, Industrial Water Tower, passenger cars....
Richard Maddox: Obviously more product in inventory than we needed to have there. While I don't know the specific circumstances at that time, management at that time must have felt that they needed to move the product into the marketplace. I can tell you this: we are going to be very cautious about the numbers that we produce. We expect that our next major half-dozen releases are already oversold and allocated. I intend to keep it like that.
TTR: Finally, you will be at the helm of an American icon as it reaches it's centennial. What are your feelings about this and the challenges before you?
Richard Maddox: We're obviously really excited about the opportunity to do new product aimed at this centennial. I'm excited, of course, about being here and I really don't look at it as so much of a challenge as an opportunity to end a long career with the number one manufacturer of model trains in the world and the most visible manufacturer of model trains in the world. I think that the people here have actually eliminated those challenges I may have had. For me, it's just going to be a very enjoyable process.
TTR: Congratulations on becoming the president of Lionel and best of luck to you in the coming years.
Richard Maddox: Thank you, I'm really excited about it.