This is BIG NEWS for RC.

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Jeffmaturo

Well-Known Member
Joined
Jan 20, 2015
Messages
547
For the most part, this will not have a big impact on boat racers as most of our product is sourced elsewhere. It is however equivalent to Walmart filing for Chapter 11. The industry has completely turned upside down. I know Bruce Holecek well and thought he was crazy for selling when he did. I guess he had a better gauge for the market than me. Bruce and his wife Jeri founded Tower Hobbies in 1971. I understand how it happened but I am still in shock.

“Hobbico, Inc. Files Petition for Chapter 11 Relief and Pursues Sale of

Company Seeks Protection from Creditors to Restructure and Attract New Capital
Investment; Operations Continue Throughout Bankruptcy Process

CHAMPAIGN, Ill. – January 10, 2018 – Hobbico, Inc. (“Hobbico” or “the
Company”) announced today that it has filed a petition for relief under
Chapter 11 of the United States Bankruptcy Code while it seeks an orderly
finalization and implementation of its comprehensive restructuring plan.
The petition was filed today with the United States Bankruptcy Court –
Wilmington of Delaware In conjunction, Hobbico also announced its plan to
sell the company.

Since 1971, Hobbico has grown in to one of the largest United States
distributors of radio-control and general hobby products. Built up over
time and with the best intentions to further grow its business, Hobbico’s
debt has added too much leverage for the Company, and it has been unable
to successfully restructure to help meet its financial obligations. With
the added impact over the last few years of an increasingly competitive
industry, market headwinds and a series of one-off events with key
suppliers, Hobbico’s current financial position is unsustainable.

“Despite Hobbico’s core strengths, our business has faced a number of
challenges in the last few years, and we have taken steps to ensure all
available options to restore the stability of the Company have been
exhausted,” said Louis Brownstone, President of Hobbico, Inc. “However,
while these efforts were taken to rebuild revenue and profitability, they
did not sufficiently address our challenges and we decided to pursue a
Chapter 11 reorganization and attempt to attract new capital investment.”

By filing for Chapter 11, Hobbico is seeking protection from its creditors
in order to allow for an orderly finalization and implementation of its
restructuring plan. This approach allows the Company to continue to
operate the business throughout the bankruptcy process. Hobbico intends to
use the bankruptcy filing and possible sale of the business to reduce
debt, restructure liabilities, attract new capital investment and position
the company for future growth. The filing and potential sale also aim to
preserve Hobbico’s industry-leading business, including allowing the
Company to invest in new products and continue supporting all of its
customers and extended business network.

“Taking the necessary step to file for bankruptcy is difficult, but it
will help preserve the value of our business and it’s the right thing to
do for our company and our employees,” added Brownstone. “Under the
process afforded to us under Chapter 11, we hope to reach an agreement
with our creditors that will allow us to implement a restructuring plan
that fully addresses our financial challenges while simultaneously
identifying a prospective buyer that shares our vision of providing the
best possible outcome for our employees and the future of Hobbico.”

About Hobbico, Inc.

Founded in 1985, Hobbico, Inc. is the largest U.S. distributor of
radio-control and general hobby products. Hobbico is engaged in the
design, manufacturing, marketing and distribution of thousands of hobby
products including radio-control and general hobby products. The Company’s
merchandise includes a wide variety of radio-control models from cars and
boats to airplanes and drones. In the general hobby category, Hobbico
offers plastic model kits, rockets, road race sets, die-cast models, model
trains, jigsaw puzzles, science and educational kits, games, kites, craft
kits and much more. Hobbico employs over 550 in facilities that include
its West Coast distribution center in Reno, Nev., facilities in Penrose,
Colo., and Elk Grove Village, Ill., Axial facilities in the United Kingdom
and Germany, and its Corporate Headquarters in Champaign, Ill. The Company
sells over 50,000 items through three sales divisions targeting Retail,
Wholesale and Mass Market sales channels. For more information, visit
www.hobbico.com.”
 
Hey Jeff,

Yeah, I saw that. Truly a shocker.

Honestly, though, Hobbico had a knack for buying up companies and killing them, so I can see how their debts are that high (and wow, that's a LOT of debt!). There are a lot of cheap hobby products out there, from a multitude of outlets being offered over the past decade. That couldn't have helped them at all. But, I'm a computer dork, not a business man, so best of luck to their many employees. Hopefully they can find a buyer soon.

-Joey
 
It's too bad, although it does'nt surprise me in today's rediculous world of Amazon.com . Tower was one of the best catalog/on-line outlets for many years. A great resource for popular RC model items. They stock quite a range of product brands. Their on-line catalog was thoroughly designed and provide detailed technical data on most every item they sold.
 
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Hey Jeff,

Yeah, I saw that. Truly a shocker.

Honestly, though, Hobbico had a knack for buying up companies and killing them, so I can see how their debts are that high (and wow, that's a LOT of debt!). There are a lot of cheap hobby products out there, from a multitude of outlets being offered over the past decade. That couldn't have helped them at all. But, I'm a computer dork, not a business man, so best of luck to their many employees. Hopefully they can find a buyer soon.

-Joey
Hi Joey!

I know I could not believe it when I read it. Ironically, it is now 100% employee owned. Boy how times change! Hope you are doing well!
 
It's too bad, although it does'nt surprise me in today's rediculous world of Amazon.com . Tower was one of the best catalog/on-line outlets for many years. A great resource for popular RC model items. They stock quite a range of product brands. Their on-line catalog was thoroughly designed and provide detailed technical data on most every item they sold.

You are right, I could not wait to get their monthly and yearly catalogs in the mail! They were equivalent to getting the Sears Christmas catalog as a kid!

For some fun reading check this out!

https://www.indeed.com/cmp/Hobbico/reviews
 
Just went and looked, and it looks like Futaba is a Hobbico product. The thought of them being gone alone would change everything, let alone the other products they offer, especially in the aircraft side of things. I would bet Aquacraft will suffer from this as well.
 
Who here understands the 100% Employee owned deal (ESOP)?

Some of you might work under that now.. (my past (Hobbico) and my Current (Realityworks) are both ESOP company's.

Just to clarify.. its a glorified retirement program. Company's can reap major tax advantages by being an ESOP company BUT at the risk if payouts at the end of a "time" departure or termination. If the company does not have a good plan for payout they better get VERY creative with the funds..

I am still "vested" in hobbico and have another few years to go. When the time is up they need to "pay out".. well that was the plan..LOL.. Also... we do not hold shares and we do not make decisions.

IF.. the company's culture is "rich as one".. VERY good things can come from an ESOP.. if it is not.....

Grim
 
Old Fart here, through all the mumbo jumbo
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what's the bottom line. Is Tower hobbies no long going to exist?
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Futaba is an exclusive brand they carry,, not a brand they own. AquaCraft is a brand they own as well as Topflight and Flyzone and so on..

Futaba will not suffer all that much from this. We might have to change where we buy Futaba from in the future but the products will not go away. The others however are assets of the company. They could well go away.

Grim
 
I remember sitting in Bruce's home in Naples FL, the one he had a Rolls Royce convertible helicoptered in when he was having the home built. The house was then built around it. He hated to talk about RC, his passion was flying full size military jets. He is actually an amazingly skilled full size jet pattern pilot. He did however talk about the business side of RC and how he hated dealing with the Orient (China) for numerous reasons. He also spoke of the breakup with Kyosho which at the time was monumental. Finally, he spoke of how the internet was changing things for the better but this was prior to the flood of inexpensive knock offs of most of their product line and even started seeing money spent on R&D for new better products at a much lower price.

There is just no way in it's current form Hobbico can compete with the East. I hope for Grim's and others sake they can restructure and find a business model that works in todays ever changing retail environment.
 
I have some back orders with Tower. Some items promise delivery in January. The rest are "order pending" from K&S and Dremel makes it look like they have Tower on cash only deal.

This sucks.
 
I work at a hobby store and we could see this coming. Many things on backoder plus some brands moving to Horizon. I think the fact that they lost Traxxas was the straw that broke the back. China is killing us slowly and we are helping them do it.
 
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Juice I owned a hobby shop for years. I was in shock when I heard Traxxas was pulling out from their distribution, which was after I closed my doors. Management was lost when it came to competition from the East. For whatever reason early on they were unwilling or unable to listen to customer feedback which ultimately led to where they are now. I know the other hobby shop owners I knew would all tell them the same thing I did. We need alternatives to less expensive brands that are being sold online. I could go on for pages on how the market is in a state of change. I have a suspicion a foreign owned company would be very interested in purchasing Hobbico. Although it would be the crown jewel for them, Horizon is facing the same challenges Hobbico is now and therefore not in a position to make a play for it.
 
All we have to do to see the demise of the US hobby industry is look at ourselves and the industry itself:

1) How many products were designed in the US and sent to China to save manufacturing costs?

2) How many of these products were slightly altered to avoid licensing issues and manufactured under a new name and sold in the US?

3) How many of you are buying through "knock off" retailers like HK, just to save a dime?

4) How many US hobby related businesses have gone under because of lack of sales due to #3?

Need I say more?
 
I understand the ESOP program only to well. Your retirement is based on the stock in the company you are working at. When the company goes out of business the stock goes to zero and so does your retirement.
 
In the court filing Hobbico stated it had 10 to 50 million in assets and 100 to 500 million in liabilities....

I suspect Bruce knew exactly what he was doing......
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With the Hobbico filed asset to debt ratio I also suspect it will be tough to sell.....

This has been going on for a long long time...This did not happen over night......

It is pretty obvious the management of Hobbico was really in over their heads....or.....

maybe they really knew what they were doing....who knows ???

I would be willing to bet the upper management of Hobbico is not worried about where their next meal is coming from.....

Don't be naïve.... HK is not the problem....The astronomical cost of doing business in the USA is the problem.......

When your business is controlled by government regulations,lawyers,unions and insurance companies

and financial protections from the cradle to the grave,costs are going to go through the roof...

I am not saying that is all bad but rules,rules and more rules costs money.... HK is not causing this result.....
 
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Rod is spot on in his post in regards to the cost of manufacturing in the U.S.
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Everyone remembers K&B 2 part epoxy paint, killer stuff at a good price.... until the EPA stepped in. Same with McCoy glow plugs, great prices until California labeled the wire as a cancer causing agent. Don't get me wrong, some oversight in regards to the environment is good but in the last decade the EPA has crushed U.S. manufacturing. Government regs are phasing out incandescent bulbs in favor of compact fluorescent lamps yet all those CFLs are made overseas as the cost of manufacturing in the U.S. to meet EPA regs is insane. Get the picture yet.......
 
Pretty simple. Big co greed. And we live in a Walmart gotta have t now world. When business is good. People spend spend spend. Then it drops like a rock they realize they are broke and ahh the government will bail us out.. sad really

Sent from my iPhone using Tapatalk
 
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