August 14, 2014
The Toy Train Rules Christmas
By Vivian Baulch / The Detroit News
No toy is more closely identified with Christmas than the toy train. There was a time when nearly every boy wanted a Red Ryder BB gun for Christmas, but even a mother convinced her son would shoot an eye out had no objection to a toy locomotive chugging around the tree.
If truth be told, the popularity of toy trains at Christmas has as much to do with the yearnings of adults as with the requests of children. It’s not at all uncommon for a child to lose interest in a model train received as a Christmas gift and find it taken over by dad. Sometimes dad takes it over even before the child has lost interest. Sure, it’s a hokey picture, but thousands of fathers imagined their young sons browsing through the Lionel catalogue as they filled up shopping bags at the train store.
Joshua Lionel Cowen, founder of Lionel Trains, was born in New York City in 1880, and built his first model locomotive at the age of 7. Carving it from wood he fitted it with a tiny steam engine he fashioned himself. At the age of 19, Cowen removed a small motor from an electric fan and fitted it to a toy railroad flatcar, which he set up on a 30-foot circle of brass track.
He offered the new toy to a novelty shop in New York which sold the set for $6 and ordered a half dozen more. Cowen formed the Lionel Manufacturing Company on Sept. 5, 1900, at 24 Murray Street, New York City. By 1921 more than a million Lionel electric train sets had been sold to an America that had gone decidedly train crazy.
But then came the Depression, and the market for relatively expensive toy trains dried up. Hoping a low-price item would stimulate sales, Lionel made a deal with Walt Disney and rushed into production a wind-up hand car featuring Mickey and Minnie Mouse. The little car with a circle of tracks sold for a dollar and became a huge success, literally saving the company.
In 1937, Lionel made its most famous steam locomotive, the Hudson. It sold for $75, the price of a refrigerator in those days. Today, the company sells an updated Hudson for about $1,100, the price of a really, really good refrigerator.
By 1939, the Lionel catalogue boasted a product line of more than 400 separate pieces of equipment. Their trains, cars, and accessories could be boought in more than 40,000 outlets coast to coast. In 1948, the company brought out its best-selling engine ever, the colorful silver, red and yellow Santa Fe diesel.
Lionel’s fortunes peaked in the mid-1950s, with nearly $33 million in sales. By 1955, the firm employed more than 2,000 people and was the largest toy company in the world and the only one listed on the New York Stock Exchange.
To appeal to girls it offered a pink engine in 1957 with different pastel colored boxcars and caboose. Girls showed little interest in the pink and pastels, however, and the project was dropped within two years.
Cowen died in Florida on Sept. 8, 1965, at the age of 85.
In 1969, General Mills bought the rights to the Lionel name and added the toy train company to their Fundimensions division. The new owners moved the Lionel company to Michigan in 1970. In 1983, in order to cut costs, General Mills moved the company to Mexico. After an unsuccessful two-year stint in Tijuana, Mexico, Lionel moved back to Michigan in May 1985, and opened a plant in Chesterfield Township. Shortly after the move, General Mills tired of the fluctuations of the toy market and decided to divest itself of Fundimensions, selling off its product line to various firms. Lionel went to Kenner-Parker, but was clearly in trouble. A new savior was on the horizon.
Many of the boys who received Lionel trains for Christmas never lost their enthusiasm for model trains when they grew up. One of those who never outgrew his childhood passion was millionaire Richard Kughn, who bought the company from Kenner-Parker in 1986, saving it from bankruptcy.
“When I was 7,” Kughn said after the purchase, “I was walking home from school. It was trash day and I saw a toy train sticking out of a trash barrel. I stopped and pulled all the pieces out and took them home, cleaned them all up, rebuilt them and it ran.”
Two years later, on Christmas day in 1938, he recalled, “I came down in my flannel pajamas, and there it was, set up under the tree! It was a gray tin Vanderbilt locomotive with a yellow boxcar and a Shell tank car and a red caboose and track laid out in an oval loop. As soon as I could figure out where to plug in the transformer, I was down on the floor — that’s what’s fun to be nose-to-nose with the train.”
Richard Kughn proudly displays a Lionel locomotive from his private collection shortly after his purchase of the Lionel company in 1986.
Santa had come through for the little boy who loved model trains. And Kughn came through for the failing Michigan company. He rescued it in 1986 just like he rescued his first train from the trash can.
Born in Detroit in 1929, he moved with his family to Cleveland, later returning to Detroit and becoming a lifelong booster of the city. “We need to get rid of our negative image. We’re so far ahead of most cities when it comes to cultural, civic and sports events. When people get here and see what we have, the response is ‘Holy Mackerel.'” Kughn and his wife hosted Detroit’s Thanksgiving Day parade in 1997.
Besides his model train collection, Kughn also collects full sized antique cars.
“Lionel is without a doubt, a piece of Americana,” Kughn said. “No.1: Maintain that name and the quality of the product. No.2: Better penetration of the market. Every kid must have a toy train under the Christmas tree. I don’t care whether it is a boy or a girl they both should have them.”
In 1992, rock musician Neil Young, long a tinkerer and experimenter with toy train electronic control and sound devices, formed a partnership with Kughn to form Liontech. The research-and-development company was chartered to provide Lionel with new model train control and sound systems.
In 1995, after nearly 10 years at the helm, Kughn decided to sell Lionel. A number of groups made offers for the revered toymaker, but the ultimate winner of Lionel was Wellspring Associates, an investment firm headed by Martin Davis of Gulf & Western and Paramount Communications fame, investment specialist Greg Feldman, and Liontech founder Neil Young.