Hobbico Sale of Estes

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What could have been bad news turned out to be really good news from the looks of it.
 
What a great story, the new buyer is proof of how model rockets can inspire careers. (Not that I need any, but it helps.)


Tony
 
Bob,

I suspect the hope is that a more rocketry-oriented ownership/management might have different expectations for a given kit release (either quantity or perhaps time horizon) than management for which the rockets are just one of many product lines and which (in this case) may have been one of the product lines supporting the larger corporation.

I could be wrong about that of course.....but one could wonder and hope a little along those lines. Such ideas may not work with the realities of the supply chain and such....but as I say, one can at least wonder and hope.
 
Bob,

I suspect the hope is that a more rocketry-oriented ownership/management might have different expectations for a given kit release (either quantity or perhaps time horizon) than management for which the rockets are just one of many product lines and which (in this case) may have been one of the product lines supporting the larger corporation.

I could be wrong about that of course.....but one could wonder and hope a little along those lines. Such ideas may not work with the realities of the supply chain and such....but as I say, one can at least wonder and hope.

The way the hobby industry works will not change because Estes is under new management.
Hobby distributors are in control along with Hobby Lobby/Wal-Mart/Target.
The new owners could be in for a really rude awakening when it comes time to dealing with those folks.

Then there is the issue of production. Except for motors/starters it's all done in the People's Republic of China.
Estes management has to decide months in advance on how much of each item to have made before it reaches the distributors then hobby shops/retail stores.
If they guess wrong Estes could run out of a popular product and have too much of other items that don't sell well.
That last issue results in costs to store the product and capital tied up in merchandise that doesn't move.

The Pro Series II product line is an example.
The product did not sell through and Estes was left with plenty of unsold product.
Even with slashing prices and selling the PSII on their website it took awhile to sell it off.
The PSII Prowler Launch Set had it's price nearly cut in half yet it is still being offered for sale on the Estes website.

I hope that the new Estes owners are strong BUISNESS people first.
 
Why would Estes want to re-issue a kit that did not make it's sales numbers when it was originally released?

OK, did not know that. I assumed the demand was there, since I see them go for +$200, and many still wish they bought one. Maybe it was a price thing.. maybe a few things. maybe the fact the PSII line seemed to have folded when their 'new' motors didn't' match initial sales either..
 
I'd sooner guess that the PSII line was primarily dependent on the partnership with Aerotech for the Estes-branded composite motors to be successful. When Estes no longer offered suitable motors for most of those models - especially heavier ones like the MDRM - there wasn't motivation to continue those models. They then rearranged the component combinations to create new models that were just light enough to fly on the BP motors, and sold those till they ran out of the parts. But I would reason that if the Aerotech partnership had continued, the PSII line probably would have as well and probably have even grown. Just my hypothesis.
 
I'll say (speculate?!) as well, that the big three mentioned probably didn't want to carry the PSII line, nor the associated motors. "Too big, too costly, too dangerous!"
 
One thing the new owners have that the old owners didn’t, is a direct connection to their customers. They hopefully will be able to do a better job of reading their market and responding.
As far as the Mega Der Red Max, even if it didn’t sell in high quantities (I have no personal knowledge of that; I’m accepting the statement made by others) it has a (perhaps small) very loyal following which is willing to spend a premium for a genuine Estes kit. They could re-release it with special features at higher prices as a limited run, a collector’s item. Such things are frequently done.
 
One thing the new owners have that the old owners didn’t, is a direct connection to their customers. They hopefully will be able to do a better job of reading their market and responding.
As far as the Mega Der Red Max, even if it didn’t sell in high quantities (I have no personal knowledge of that; I’m accepting the statement made by others) it has a (perhaps small) very loyal following which is willing to spend a premium for a genuine Estes kit. They could re-release it with special features at higher prices as a limited run, a collector’s item. Such things are frequently done.

If I remember right, production of the kit ended when Estes ran out of the MDRM nose cone. I wonder how many nose cones would have to be produced to make a limited run feasible. There are other upscales that could use that cone as well which could make a production run more palatable... (and yes, I’m hoarding a MDRM nose cone for a future upscale build...) [emoji16]

Chris


Sent from my iPhone using Rocketry Forum
 
The way the hobby industry works will not change because Estes is under new management.
Hobby distributors are in control along with Hobby Lobby/Wal-Mart/Target.
The new owners could be in for a really rude awakening when it comes time to dealing with those folks.

Then there is the issue of production. Except for motors/starters it's all done in the People's Republic of China.
Estes management has to decide months in advance on how much of each item to have made before it reaches the distributors then hobby shops/retail stores.
If they guess wrong Estes could run out of a popular product and have too much of other items that don't sell well.
That last issue results in costs to store the product and capital tied up in merchandise that doesn't move.

The Pro Series II product line is an example.
The product did not sell through and Estes was left with plenty of unsold product.
Even with slashing prices and selling the PSII on their website it took awhile to sell it off.
The PSII Prowler Launch Set had it's price nearly cut in half yet it is still being offered for sale on the Estes website.

I hope that the new Estes owners are strong BUISNESS people first.

I agree that being good business people first is a key thing for the longevity of Estes Industries.

That said....

I wasn't thinking particularly of the PSII kits (even though the post just above was about the MDRM). It seems plausible (as EXPjawa notes) that whatever happened with the Estes/Aerotech agreement had to be a factor as well, since kits are out there to sell motors, and Estes didn't/doesn't make F50s, G80s and such. Which is not to say it couldn't happen again.

On the supply chain thing - of course it's even more complicated than that as the tubes come from where they always have and have to get sent to China.....or at least that's my understanding. None of this is cast in concrete, however if the business case closes for a change in how things are done.

My thoughts were more based on things I've heard with respect to folks in Champaign IL at Hobbico HQ not really knowing what to do with Estes products (sounds familiar) as things got tighter and the expertise that was brought to bear earlier in the Hobbico ownership tenure left. We can certainly hope for a return to management knowing what they have and hopefully knowing/learning how to more effectively market not only to WalMart/Target/Hobby Lobby but also to other outlets as well as supporting those hobby shops that still exist.

One thing that I wonder about is if the last hobby distributor standing (Horizon) will handle Estes (or Aerotech/Quest for that matter).

In any case we have to give 'em time. In the meantime we can be thankful that Estes Industries is still operating, and that (hopefully) the folks in Penrose all get to stay and maybe even get some more help.

With a little luck I might get a chance to talk to John Langford for a couple of minutes after the TARC finals awards banquet is over (next month) and maybe I can learn a little bit about how he sees all this.

As for the Prowler launch set.....it's at best an odd collection of bits. The E PortaPad and E-version of the Electron Beam is barely adequate for such a model. I wondered what they were thinking when that set was originally created (when PSII kits were designed for Estes/Aerotech composite Fs and Gs).

I just went to make sure I'd remembered that right and found these messages on the rotating screen in the center of the home page (though they're rotating by almost too fast to read 'em):

Screen Shot 2018-04-13 at 11.24.58 AM.png

Screen Shot 2018-04-13 at 11.25.16 AM.png
 
...


With a little luck I might get a chance to talk to John Langford for a couple of minutes after the TARC finals awards banquet is over (next month) and maybe I can learn a little bit about how he sees all this.

...

If you do get that lucky would you ask him what his involvement will be ? Up till now I've only seen his son's name on documents related to Estes Industries LLC and the auction.
 
That's kind of the idea. Two years ago when I helped at the TARC finals I managed to chat with him a bit as the awards dinner was breaking up and we all wandered back towards vehicles. So I'll try that approach again. Since he's running one of the ranges this year he may or may not be too tired to chat with a casual acquaintance by then (he and his son have both been involved in the Museum of Flight/NAR effort and that's where I've met them) :)
 
I for one, see Penrose as a full manufacturing facility. That's what it was built for.
Perhaps the new owner will take advantage of that, and return Estes back to a place you can visit...and take tours.
Buy kits out of the lobby, which the parts are made and put into kits on site.
Bringing jobs back to the USA!
At least, I would hope the landscaping around the building will be repaired.
I haven't seen it in person, but what is on Google Earth looks more like a old Ghost Building from the 60's and an eye sore for the name of Estes!
 
Got his email today [SIZE=+3]Estes — Cox Corp[/SIZE]

[SIZE=+1]Case No. 18-10055 (KG), U.S. Bankruptcy Court for the District of Delaware Important Notice Regarding the Sale of Your Personal Information and Your Right to Opt-out [/SIZE]

Important Notice Regarding the Sale of Your Personal Information and Your Right to Opt-out

[SIZE=+1]Dear Valued estesrockets.comCustomer:

As you may be aware, Estes-Cox Corp. declared bankruptcy in January 2018 and has been seeking a buyer for its assets.

We are excited to share with you that estesrockets.com will continue business, as the Bankruptcy Court has approved the sale of Estes-Cox Corp. assets including estesrockets.com to Estes Industries LLC.

Estes Industries LLC warmly welcomes estesrockest.comcustomers and looks forward to building on the 60-year tradition of providing Estes rocketry products to customers all over the world. Estesrockets.com will continue to serve you under the new owners.

The estesrockets.com Privacy Policy provides that the company "will not share any personally identifiable information with any third party without your consent." Under this Privacy Policy, you have the right to opt-out of the sale and the transfer of your personal information to Estes Industries LLC and of receiving future e-mail or mail communications from Estes Industries LLC.

You can review the full privacy policy at the following link; www.estesrockets.com/privacy-policy.

You may elect to opt-out by:

Sending an e-mail to [email protected] containing the first and last name used on your account and the e-mail address associated with your account. Please include "optout" in the subject line or body of your e-mail.

Your request must be received with the next ten (10) calendar days — no later than April 22, 2018.

We thank you for your past patronage of estesrockets.com and look forward to a bright future for model rocketry and estesrockets.com with Estes Industries LLC.

Sincerely,

Estes-Cox Corp. and estesrockets.com

www.estesrockets.com
[/SIZE]
 
What I would really like to see is the return of being able to order any Estes part, not just left overs or whatever is laying around, airframes and centering rings I can get from at least 3 vendors but nose cones and other unusual parts are kit only or just unobtanium. While the MDRM might be expensive as a kit the nose cone and decals should be reasonable by themselves, thats what builders thrive on is the parts not necessarily the whole kit.
 
I sure hope they can remain profitable with a virtual monopoly on BP motors A-F. An abundance of RTF and even some educational bulk packs should keep the motor sales flowing. It is all about the motors baby! The financials still justify a $7 million purchase price! Domestic motor production with no serious foreign competition rules!

With all the problems associated with CHICOM manufacturing, from illegal red pigments to enormous variations in production quality/control, I think maybe bringing back kit production on shore could be a possibility. It just depends on how much the costs really rise from our red capitalist friends. Merica is still too dern expensive! But a trade war could help that price imbalance, but consumer prices would rise even further (Catch 22).

Keep a few basic kits for the Hobby Lobby shelves if that still makes sense given their pricing requirements. And at the very bottom of the list is providing service to the hobbyists who don't buy retail priced skill level three, four, five and pro series kits, leaving a warehouse full to sell at cost - NO MARK UP! That just further kills the local brick and mortar or even on-line retailers.

So I want you to get get up off your couch and go to your local hobby store and buy that Little Joe kit and it's building supplies, then do it again next week. Leave the OOP $200 MDRM on Ebay the guy bought a few years back for $30 when no one would buy them new. Leave all the pricey OOP stuff on Ebay the guy bought a few years back when Estes had the huge Christmas Warehouse blow out because no one would buy those kits new. Look hard for a third party parts supplier doing it because they love it, it is our only hope.

Put some teeth into that 40+ years old market demographic! Well, maybe I can when I find my teeth. Think they fell behind the toilet a few months back and I can't quite bend that direction, dern it!:)
 
I (and pretty much every Estes website customer) got that email too. Basically it looks like they're telling you that your account info and history will be transferred to the new owner unless you say no.

I don't see any reason you wouldn't want your info transferred over, but some might not. Likely all part of the legal process of transferring all assets and IP to new owners.
 
I'd sooner guess that the PSII line was primarily dependent on the partnership with Aerotech for the Estes-branded composite motors to be successful. When Estes no longer offered suitable motors for most of those models - especially heavier ones like the MDRM - there wasn't motivation to continue those models. They then rearranged the component combinations to create new models that were just light enough to fly on the BP motors, and sold those till they ran out of the parts. But I would reason that if the Aerotech partnership had continued, the PSII line probably would have as well and probably have even grown. Just my hypothesis.

There was never an issue with Estes/AeroTech motor availability.

When the original Pro Series II Builder's kits were discontinued Estes still had a supply of all the AP motors except for the G80s which were all sold.
AeroTech contacted Estes about making another run of motors but Estes wasn't interested. They still had plenty of motors.

F50 and G40 motors were still in the warehouse which could be used to fly the Mega Der Red Max.

Again, motor availability was not an issue with the cancellation of the initial PSII line. Poor/low kit sales was the issue.
 
Again, motor availability was not an issue with the cancellation of the initial PSII line. Poor/low kit sales was the issue.
I would posit that sales would have been considered good for most other vendors, but Estes needs to operate at higher volumes. I've certainly seen plenty of MDRMs at launches, but they're not selling bulk packs to Boy Scout troops, certainly.

It may larger rockets just fundamentally not viable for them, unless they change their business model a bit. Will be interesting to see if Mr. Langford tries to push in this direction.
 
One thing the new owners have that the old owners didn’t, is a direct connection to their customers. They hopefully will be able to do a better job of reading their market and responding.
As far as the Mega Der Red Max, even if it didn’t sell in high quantities (I have no personal knowledge of that; I’m accepting the statement made by others) it has a (perhaps small) very loyal following which is willing to spend a premium for a genuine Estes kit. They could re-release it with special features at higher prices as a limited run, a collector’s item. Such things are frequently done.

When you or I buy an Estes product in a hobby shop, online or from an on-site dealer at a launch how much of the money you spend goes to Estes?

None.
Zip.
Zero.

The product was sold by Estes to a hobby distributor who in turned sold it to the hobby shop, etc.
Estes was paid by the hobby distributor for the product.
Hobby Lobby/Wal-Mart/Target buy enough to qualify for distributor (or better) pricing.

Under these conditions, hobby distributors/Hobby Lobby/Wal-Mart/etc. are THE customer.
We 'hobbyists' account for maybe 1% of Estes sales.

When Wal-Mart says they want 10 new RTF kits and a new Launch Set to sell (Along with P.O.P. materials and displays) for the Holiday season you can bet Estes is going to spend their capital to make sure Wal-Mart gets those products.

Oh, what would be an economical production run for more MDRM nose cones?
Oh, 2,000-3,000 pieces.
If Estes couldn't sell that number of MDRM kits in a year they will not be able to sell that many nose cones by themselves.
It would be a waste of capital.

Individual customers/hobbyists have not driven Estes sales since 1969 when Estes was bought by Damon and Damon connected Estes with hobby distributors to get increased market penetration.

It's been this way for almost fifty years.
 
I (and pretty much every Estes website customer) got that email too. Basically it looks like they're telling you that your account info and history will be transferred to the new owner unless you say no.

I don't see any reason you wouldn't want your info transferred over, but some might not. Likely all part of the legal process of transferring all assets and IP to new owners.

Yes, I've been dealing with that issue recently for a website I'm building for a client. A proper Privacy Policy with Terms and Conditions includes required clauses to cover both COPPA (federal) and CalOPPA (California) privacy laws. And part of those laws covers what happens when a new owner takes over. That is exactly what Estes Industries (feels good to type that name!) is doing.
 

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