"The Following Is Not A Political Message"

As many know, one of my hobbies is model trains, and every now and then, I'm amused when the hobby world intersects with real life. Real life, of course, always wins, but hobby types, being hobbyists, are usually surprised and disappointed when this happens. It's a little sad when people in the hobby supply business come out on the losing end as well, but this is almost always because they seem to forget that business involves real life, not a hobby.

As the New York Times put it hehind a paywall this week, "Want to Escape the Financial News? Don't Try a Hobby." Somewhat belatedly, the model railroad industry has woken up to the fact that they outsourced the vast majority of their production to a small number of factories in China. Very little is actually known about these factories -- including how many there actually are and who's behind them.

I suspect that they operate on much the same basis as larger enterprises that make products like cell phones. Rush Limbaugh spelled out the basic problem back in 2011:

There’s been this myth that we’ve shipped all of our jobs overseas. Yeah, certain kinds of jobs have been shipped overseas. And one of the misnomers with manufacturing jobs lost, take a look, for example, at the Apple iPhone. Now, the Apple iPhone is assembled in China, but all the guts are not made in China. There are parts made in America, parts made in Switzerland, parts made in parts of Europe. They’re just all shipped over to Shenzhen at the manufacturing plant and they’re assembled there, but the whole phone is not ChiCom. It’s just assembled there.

. . . We start tariffs on Chinese imports, that just never works. It just never works. The market is speaking. The market here is speaking. If we, given current labor rates and everything else, an iPhone totally put together and made in this country would cost about $1800. Well, people aren’t gonna pay $1800 for an iPhone, and Apple knows it. But with all the parts made elsewhere, shipped to China and assembled over there, you can get an iPhone for 200 bucks now with Verizon thrown in as a carrier, in addition to AT&T.

El Rushbo said this in 2011, before probably even he thought of Trump taking up politics as a retirement activity, and all of a sudden, Trump 2.0 is starting tariffs on Chinese imports, and my guess is that it's going to work. The problem is that US businesses will be affected in various ways.

President Trump said this week that there may be less dolls for children for this year’s holiday season amid his tariff war, but the hit to retail shelf inventory is likely to spread across many shopping categories if there is no quick de-escalation between the U.S. and China in the trade war.

As early as July 4, many holiday sales promotions may start to look different, as small businesses that supply big box retail stores review product inventories and discount plans based on tariff economics. Business owners and supply chain executives tell CNBC the next 30 days are critical for trade deals that lift tariffs on China for the manufacturing orders to be placed and prepared to ship to replenish shelves.

The hobby industry is affected as much as any other. The link here gives one example of how almost any industry can be caught up:

Lauren Greenwood, co-founder & president of YouCopia, which makes storage containers, had moved its U.S. manufacturing to China over the past 15 years to meet the demand from retail giant Bed Bath and Beyond. She recently posted on LinkedIn about the temporary shuttering of the factory outside Nanjing, China, which manufactures the majority of YouCopia products, and opened in January 2025.

. . . “Our manufacturing has been down for three weeks,” said Greenwood. “Come August, there will be some items no longer available, and shelves will be bare.”

Looking at this solely as a business problem, continuity planning is a well-defined field:

Business continuity is an organization's ability to maintain or quickly resume acceptable levels of product or service delivery following a short-term event that disrupts normal operations. Examples of disruptions range from natural disasters to power outages.

. . . Business resilience encompasses crisis management and business continuity. It requires a response to all types of risk that an organization may face. An organization that is business resilient is essentially in a constant state of "expecting the unexpected." It means continuously preparing to meet disruptions head-on, including events of extended duration that may affect more than one facility or region.

While auditors and business managers have focused for the past 30-plus years on IT disaster recovery, a sudden tariff war -- or for that matter, a shooting war -- is precisely the sort of thing that a business owner like Ms Greenwood should have had at the back of her mind. What if the container ship carrying her latest shipment sinks? What if there's an earthquake in Nanjing that takes out her factory? And she's almost certainly the one expert on what would have to be done.

But apparently she never quite got around to doing this, even though it would be the sort of exercise she could do in her head while driving to work. And this is the sort of exercise that the model train manufacturers also don't seem ever to have undertaken. They're just looking at a situation where they'll be short of inventory by August and throwing up their hands. After all, if Trump hadn't raised the tariff, something else would have happened, a new epidemic, a natural disaster, a war with Taiwan, whatever.

A "coalition" -- that's what they call themselves, like something out of Star Wars -- has put together a remarkably clumsy YouTube presentation on their dilemma, linked above. The lead presenter, and apparently the driving force behind the effort, is Stacey Walthers Naffah, CEO of William K Walthers, Inc, a major model train manufacturer and distributor founded by her great-grandfather in the early 1930s. Ms Naffah, who has clearly had plastic surgery, has been making the media rounds talking in glib CEO-speak about the "challenges" facing her "team" as they "figure out a plan", which seems yet to materialize.

Either they don't have a PR adviser, or they've hired Jeff Bezos's guy. The presentation begins with the stark statement, "The following is not a political message". And I suppose it isn't, insofar as it isn't much of a message at all. The rebel coalition is just announcing that the sky is falling, and if you don't want the sky to fall, then -- what? It sorta-kinda emerges that they want model trains exempted from the 145% tariff, but they don't seem to have a plan to accomplish this.

They might at least have said, "write your congressman", or"call the White House", or even "call Howard Lutnick", but they don't even propose that. Or they might have said, "Here's what we're doing. We're meeting with Secretary Rubio and Secretary Lutnick on Tuesday, but meanwhile, we're . . ." but they aren't saying anything like that, either.

Stacey Walthers Naffah has an MBA. I asked the web, "should an MBA know about business continuity planning?" and got this answer:

Business continuity management (BCM) is an important part of MBA programs. It teaches future business leaders how to keep a company running during tough times. In the business world, BCM helps companies stay open when big problems happen.

MBA students learn how to plan to deal with risks and keep businesses working. These plans cover all parts of a company, from how it works to its money and people. The main goal is to make businesses strong enough to handle unexpected problems.

She seems to be the leader of the model train rebel coalition, but it sounds as if the only class she took seriously in business school was how to talk glib CEO-speak.

Yet again, we see why "playing with trains" is a synonym for feckless activity, up there with "wanking". I do note that a number of well-known names in the hobby industry did not appear in the video, which restores to at least some degee my faith in humanity.