MTH Electric Trains
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Template:Infobox Company MTH Electric Trains, formerly Mike's Train House, is an American toy train and model railroad designer, importer, and manufacturer, based in Columbia, Maryland. It is a privately held company.
MTH's founder, Mike Wolf, started assembling and selling trains at the age of 12 in 1973 for Williams Electric Trains, who had purchased vintage Lionel tooling from the original Lionel Corporation in the early 1970s. By 1980, Wolf was operating a mail order business out of his parents' home, selling Williams trains and parts out of his bedroom.
When Williams decided to end its line of Lionel Standard gauge and O gauge reproductions, Wolf bought the tooling and continued building the replicas. From 1983 to 1987, MTH marketed the trains on its own. In 1987, Lionel approached Samhongsa, MTH's subcontractor in South Korea, about manufacturing Standard Gauge trains that bore the Lionel name. Samhongsa directed Lionel to Wolf. Before the end of 1987, MTH became a Lionel subcontractor, allowing MTH's Lionel reproductions to bear the Lionel name and be marketed by Lionel itself. As part of the agreement, MTH sold Lionel trains as part of its mail-order business. By the early 1990s, MTH was the second-largest mail-order Lionel dealer in the country.
MTH had a troubled relationship with Lionel, and it ended in April 1993, when MTH decided to re-enter the market with an O scale model of the General Electric Dash 8 diesel locomotive, which Wolf had first offered to produce for Lionel. Turned down, Wolf decided to market the locomotive himself, citing reduced orders from Lionel for MTH's replicas as the reason. Then-Lionel CEO Richard Kughn, who learned of the decision from a flyer at a train show, responded by cancelling MTH's Lionel dealership. MTH in turn filed an anti-trust suit against Lionel, which was settled out of court in 1995.[1] (http://www.inc.com/magazine/20050201/mth.html) MTH then expanded its product line, adding the former Lionel vintage reproductions, reproductions of equipment from other manufacturers, and new original designs. By 1997, MTH was the second-largest manufacturer of O gauge trains, behind Lionel, and at its peak employed about 80 people.
MTH and Lionel developed a rivalry similar to that between Lionel and Ives in the 1930s and Lionel and American Flyer in the 1940s and 1950s. Although their train cars are the same size and can operate as part of the same train, the two companies' locomotives use incompatible proprietary electronic control systems. MTH uses a system called Digital Command System (DCS), which is incompatible with both Lionel's Trainmaster Command Control (TMCC), used by many other O gauge manufacturers, and Digital Command Control (DCC), which is an open industry standard used by most two-rail scales.
In April 2000, MTH again sued Lionel, this time for industrial espionage, saying a Lionel subcontractor in South Korea had misappropriated some MTH locomotive designs and used those trade secrets to design similar locomotives for Lionel. On June 7, 2004, a jury in Detroit, Michigan found Lionel guilty and awarded MTH $40.8 million. The following day, Lionel announced it would appeal the verdict.
MTH has also traded lawsuits with Quantum Sound Industries, whose technology is used to add electronic sound to model locomotives from various manufacturers. MTH's critics also say the company patented some elements of DCC, which was supposed to be an unencumbered open standard.
As of June 2004, MTH has 57 employees and annual sales of about US$40 million. News reports from the fall of 2004 estimated MTH's annual sales at closer to $30 million. As a privately held company, MTH does not officially release sales figures.
Although MTH is disliked by Lionel collectors because its reproductions have lowered the market value of all but the most pristine vintage Lionel equipment, and disliked by some other hobbyists because of its aggressive marketing and legal tactics, MTH is widely credited with bringing innovations into a hobby that had changed very little since the 1950s, as well as lowering prices.
References
- Classic Toy Trains (March 1994). CTT Visits Mike's Train House. Classic Toy Trains, page 106.
- Grossmann, John (February 2005). Train Wreck (http://www.inc.com/magazine/20050201/mth.html). Inc., page 84.
- Hollander, Ron (February 2001). Let's call the whole thing off. Classic Toy Trains, page 97.