2009 Transition Year

Hey All

It has been quite a year since I last updated.. CRAP... it has been too long, that is for sure..... And a lot of changes have happened.

For one.. our Company has gotten together with YD-Models of Australia and are we are bringing out our own line of engines, designed, manufactured and assembled in the west. In fact the only components that will be used that are not sourced in the west are the bearings (Japanese), and the ignition system (RCEXL). The carbs are being sourced in the USA.

So why have we done this? Mainly because of the Asian business culture and how they operate.

Distributors have to be supported by the factory in parts and some warranty labor reimbursement. Manufacturers have to protect the distributors by not encouraging new dealers to sprout up in areas surrounding the original dealers. As a distributor we have to be able to make a profit on the engines that is large enough for us to concentrate on engine sales and service. An over abundance of distributors forces all to lower pricing to a level that will not support anyone, which detracts from the ability to effectively serve the consumer.

This is another area where the Chinese make some big mistakes. They do everything they can to leverage the distributor. If they are not buying what the manufacturer considers to be enough engines, the manufacturer will quickly look for additional distributors to expand the sales network.

What happens next is easy to understand. Several new distributors suddenly spring up seeing what they believe to be a great business opportunity. In reality what happens is the manufacturer makes a quick one time sale to the new guys consisting of a 25 to 100 engine units.

From that point all the new distributors, plus the original ones, have a lot of product sitting on the shelf that doesn't sell. The reason for that is due to the limited number of potential engine buyers, plus any negative publicity the manufacturer has managed to accumulate.

There's only so many people that fly gas engines, and that percentage is quite small compared to glow flyers. The manufacturers fail to perform any demographic studies to understand this beforehand. But, hey, they did dump off all that product on the old and new distributors, so the manufacturer got what they wanted. Doesn't matter that all of us will suffer for it.

We predicted this would happen to us too. We spent the money, time and effort, and the sales were expanding very nicely. So....if we were a company successfully selling a 100 engines a month, then heck... the manufacturer sees the almight $$ signs hanging like low fruit on the tree....& they will then go get a couple of more "distributors" and viola...... you will be selling 1000's of engines a month!!!!! Of course that is complete drivel.. but that is the Asian business culture way of thinking. "Sales for today.... worry about tomorrow next week"....

We did not wait for this to happen. The YD-A engine was born. So instead of contributing the engineering and manufacturing of overseas engines we took that energy and focused it on engines that will be considered best in class, made in the west, and all for a reasonable cost to the modeler.

And yes...We are still bringing in engines from Asia for now. Why? Because we can for now,still control a lot of the aspects in the whole cycle. As long as we can do this, all of us win. (that includes you guys too). The engines are built to our specs, inspected here, and serviced here. You can believe that there are quality variations in the engines.... but we cull them as best we can. I am only talking about how we are operating... I do not speak for any of the other distributors out there. (regardless which engine brand(s) they carry and sell). As more of our engine types come online, we will reduce the number of engines purchased overseas.

We also know that we can compete with offshore products... IT is time.