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| Economics of Small Locomotives https://www.rypn.org/forums/viewtopic.php?f=1&t=39578 |
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| Author: | daylight4449 [ Wed Jul 13, 2016 12:03 pm ] |
| Post subject: | Economics of Small Locomotives |
So I've been batting the thought around in my head for a while (thank Fred Jordan for making me think about it to begin with) and maybe someone here could help me flesh out my thesis. Now when I say 'economics of small locomotives' I'm talking about your classic industrial tank engine. Lets say you form a non-profit dedicated to restoring one and either leasing it or renting it out to museums in the region for special events and whatnot. Think something along the lines of what the Gramlings do with their growing roster. How could a group structure itself where it's successful in it's goal and remains viable? As I see it, there's a few points to flesh out. -Repair and Storage Facilities -Personnel -Transportation -Costs Odds are good that I'm missing a few to consider which is why I'm putting the idea out on here. For the sake of argument, let's see if some people on here have some ideas to put together a good plan of attack in dealing with small engines... |
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| Author: | Dave [ Wed Jul 13, 2016 12:21 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
Look at potential revenue before worrying about expenses. Revenues might not be there, but expenses will always find you. How many opportunities to run are the Gramlings turning down that might leave a gap you can fill? |
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| Author: | bigjim4life [ Wed Jul 13, 2016 12:34 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
Dave wrote: Look at potential revenue before worrying about expenses. Revenues might not be there, but expenses will always find you. How many opportunities to run are the Gramlings turning down that might leave a gap you can fill? And on the flip side - why would a group like the Gramlings turn said opportunity down? For purely scheduling/logistical reasons (otherwise they'd be there)? Or is there something else at play that you need to be warned away from as well? |
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| Author: | Dave [ Wed Jul 13, 2016 2:05 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
My guess and intent was scheduling difficulties. It's sensible to arrange a tour such that you build on your transportation so you don't work in Los Angeles this weekend, Boston next weekend, and Seattle the one after that. If the Gramlings are running a big circle tour and the same customers want steam again when their tour is at the other end of the country, there's possible room to recover your costs. I don't think they are making any money beyond what it costs them to provide the product and put something in the bank for the next overhaul. It's a very different market than Thomas or Hogwarts Express. |
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| Author: | EWrice [ Wed Jul 13, 2016 2:08 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
This has been a thought in the back of my mind too. Especially since I have had eyes on a small mogul that would be about as big as you could truck without too much expense or piles of permits. I think the idea is sound as long as you market it in the right areas. For the most part, if people can see big steam, they will choose that over "Hank the Tank". (I am one of the exceptions. I prefer small, industrial or amusement park steam.) So, I would say you would want to avoid spending the resources to market in areas where big steam can, and does, do what it was built to do. There are a few exceptions, one being Michigan. 1225 is there, but is so limited on when and where it can go, as well as speed. The ability to move a locomotive around by truck from tourist line to tourist line is great, if you can time the logistics right. Especially if you could step it up and have a small tender loco. |
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| Author: | dinwitty [ Wed Jul 13, 2016 2:54 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
The first thing I would say..don't quit your day job. Your looking at the simple logisticis of running a business. In a way you treat it like a hobby because you are interested, preserving and restoring an engine, then when its done-available it can be leased/rented/loaned/whatever. Restoring engine costs vary to whatever volunteer labor is done vs professional, 765 was kinda gun and run restore as donations etc were solicited. The engine was in really overall good shape albeit your full checkevoer required and fix buggers. The costs are relative to how big/small you are going, a dinky 0-4-0 has a low overhead but smallerish return but will get you in the door going at a minimal cost, a large engine you look for lots of cars to carry passengers for a good return on the investment and profit back for continuing operations, maintenace, etc. |
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| Author: | WVNorthern [ Wed Jul 13, 2016 4:17 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
Between the Gramlings and Viscose #6, the Northeast probably is pretty well-covered for traveling small steam. If you were to concentrate on other portions of the US, the opportunites would be greater. |
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| Author: | Alan Walker [ Wed Jul 13, 2016 6:55 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
Equipment rental with support could be profitable if done right as a business. There would be outlay to get started and it wouldn't be super profitable, but it might be sustainable. |
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| Author: | bigjim4life [ Wed Jul 13, 2016 7:51 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
I've always said that designing a portable railroad turntable could be a nice business, but that's a pipe dream... |
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| Author: | bbunge [ Wed Jul 13, 2016 8:36 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
A couple of thoughts just to add to the business model/approach: * Note the Gramlings "winter" their locomotives at remote locations, sometimes where there are shop facilities. In other words, the locomotives don't "go home" each winter; * One aspect of what the Gramlings do that stuck me is they aren't a museum and they don't restore to original or museum quality levels. They use what is available and around to reduce costs and make repairs easy. Two examples; they use common hardware store electrical conduit and boxes and their locomotive headlights are modern locomotive ditch lights. They restore to operate, repair cheaply, easily and from anywhere; * Add into your expenses the cost of a truck and trailer and everything that needs to go into the trailer, from tools to spare parts. Then those vehicles need upkeep, gas and repairs; Note that with all the traveling they do, they apparently find it cheaper to hire the transport rig than to buy one. Finally, while the northeast/east/midwest may be tapped out; I've always wondered if the Age of Steam Roundhouse wouldn't make a neat "home" for a number of these traveling locomotives, especially when it comes to heavy repairs and providing for another base for young blood to learn the trades and keep the art alive. Bob |
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| Author: | Randy Hees [ Wed Jul 13, 2016 10:09 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
It is all about a revenue/cost model... a realistic revenue and cost model... Your cost list didn't mention insurance... potentially a bit number You didn't mention crew travel/housing costs... The other half of the model is the revenue/cost model for the site your are visiting... Will their event raise enough ADDITIONAL money (aka the additional visitors beyond who might come if you are not there) to allow the site to pay your expenses... For some groups, events are not money raising events, rather community events, or support building events, but most need need to pay expenses... Many of the visiting locomotives I have worked with, are hobbies for the owners, who have restored/rebuilt the loco out of (their) pocket and the site/festival are only paying avoidable expenses... transporting the loco, fuel, some support for crew travel, but rarely anything to support restoration or long term maintenance costs. Randy |
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| Author: | softwerkslex [ Thu Jul 14, 2016 1:22 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
Could be worse. You could buy a boat. |
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| Author: | BSOR Patarak [ Sat Jul 16, 2016 12:52 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
One thing to consider in the transportation of the locomotive is not only the pure cost of the trucking. The Gramlings choose to hire out trucking for several reasons and is not totally based on cheapest price. When you lease out the piece of equipment, there has to be some knowledge that travels with it. Consider a piece of hydraulic track equipment versus a steam locomotive. It is easier to have anyone operate the track equipment than the steam locomotive. Far more damage can be done, or danger to the operator on a steam locomotive. So, along with the equipment lease, the traveling locomotives usually include experienced crew members to over see the operations. This leads to long hours at each location. The Gramlings do return to the same locations many times and probably work with the same crews which helps. The Viscose #6 is hauled and overseen by the same driver/operator. A weekend trip turns into a week long venture in most cases. With that said, trucking isn't always about lowest cost. Contracting out this service can be more costly, but frees up some time to the operators potentially? The other consideration there, is the investment in the locomotive. Is the driver familiar with the load, what about the loading and unloading? Scheduling the load to arrive at the right time. These are just a few of the issues to consider when deciding the best way to transport. Another issue when finding locations to market the "service" to is marketing. Sure, the first time steam arrives on a new railroad, it peaks a lot of interest. Now, do it several weekends, or year after year. Without the proper marketing, numbers will dwindle and make it impossible for the location leasing the locomotive to make money as well. I have been involved with many of the trips of the Viscose #6. As was mentioned before, there is the market availability in the north east. With several of the critters being moved around, how many new markets are there? Also, some think that the small locomotive is somehow less capable than a road engine. (and I thought that too once!) Though, it is still a fully functional locomotive. It operates the same way, with the same dangers and need for experienced operators. These small locomotives bring a chance for more to experience and learn what steam is and how it operates. Though they may pull smaller trains, all one has to do is hear them work to appreciate it just the same. Don't get me wrong, I love something as big as the 765 passing on the main at track speed with a long train behind her. These smaller locomotives are the same on a smaller scale; Less crew, less equipment to move, less coal and water. Viscose 6 operated 3 weeks on the Cuyahoga Valley in Cleveland along side the 765 for one of the Steam in the Valley Events. We used less coal and moved more miles in all of that time than the 765 did. They consumed more getting it hot and keeping it hot. Ours was ready to run in 4 hours and cooled down within an hour, allowing the crew to be back at the hotel in less time. As I mentioned, these small locomotives are a great tool to inspire new generations of steam fans. The opportunities to see mainline steam are less and less everyday. This is a way to continue to have steam reach new places. By visiting smaller lines, or inaccessible places, new blood can be introduced to steam. Another advantage to the tank engine that many people get to experience is when a vestibule coach or open car is placed directly behind the loco. It is as close to being in an operating cab as one can be without actually doing it. You can see everything and feel the heat out of the firebox door! If you can fire the small fire well, you can move up to any locomotive! |
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| Author: | Stationary Engineer [ Sat Jul 16, 2016 6:32 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
I want to mention that 50% of the population live within 50 miles of the coast. We're in the Midwest away from a big city like Chicago. We had the Gramlings two years in a row and that was a mistake. The ridership was down the second year. We should have waited a few years to have them back. We did sell out the "at the throttle time" both years. Location Location. Tom |
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| Author: | hotbox [ Sun Jul 17, 2016 2:03 pm ] |
| Post subject: | Re: Economics of Small Locomotives |
When you attempt to get a "group" involved in a project like that, things become even more difficult. You're looking at all the typical headaches of a museum but with an extra requirement to travel and spend nights away from home. It's not an easy thing for an actual company to manage. As many of us know, volunteers are far more difficult to wrangle than paid employees, especially when come to the less glamours jobs. The outlay for a shop, machines and materials to complete the initial restoration would be quite substantial even if the group did most or all of the work. Bringing in a contractor would only elevate costs. Right or wrong, people don't get as excited about a little engine, so volunteers are harder to come by for group with small engines as opposed to big, loud, impressive, and expensive masses of hot iron. If you want to cart a little engine around, here are the basics of what you need. The Place - To run it and to keep it and repair it when it's not running The Money - for the restoration The Transportation - your truck or a trucking company The Desire - to see this engine run (no matter what) (Most importantly) No expectation of profit - you'll be in better shape than most if your venture breaks even If you enjoy driving/traveling and living modestly in a motorhome or fair (not great) hotels for 8-10 months out of the year and busting your butt with a small group of friends and family to keep the thing running then you may have yourself a hobby that allows you to do something you love at minimal cost. It's no way to make money but its a fun way to spend it. |
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