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January 11, 2018
 

Hobbico / Great Planes Files Chapter 11 Bankruptcy- Do you care?

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Written by: Derek Buono
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There are two main distributors in the USA that keep your hobby shop stocked, and generally control the industry as most of the products sold in the US go through either one. Over the years they’ve changed a bit. They went from distributors to manufacturers and that blurry line has always been an issue for most manufacturers since they needed to be in them to survive, and yet they hate that they would basically create competing products and control sales flow at times.

Great Planes/Hobbico sent a recent press release with their Chapter 11 filing. Does this matter to you? Yes and no. If I was to be honest both distributors have been a huge problem for the industry for years, since they became too big and too much product has been going through them AND they started buying manufacturers, or creating lines within to compete with the products they sell.

They weren’t stupid to do this and this issue is as old as they are. The first rumbling were very public from Traxxas, yet not about the current copyright court battle, but when the T-Maxx was the hottest thing on the planet and if you went to Tower Hobbies (a division of GP/Hobbico and oddly missing from this BK) and search T-Maxx, the actual truck never came up! Currently GP and Traxxas have been battling in court over patent/copyright infringement, and Traxxas has not been sending product to them. We’ve heard rumors that’s a 21 million dollar loss for GP (and obviously some to Traxxas).

What does this means for you?

Well, Great Planes has some big brands attached to them. They had previous acquired Axial, Durango, and a few other brands, and Durango is gone, but Axial must be sweating a bit. OS Engines was an exclusive, as well as Futaba being their brand. So there are lots of products and people associated with the Great Planes that might become hard to get. But if you paid attention a little you noticed that the industry was already shifting away from GP. Team Associated started selling their product through Horizon and A-Main, and other smaller brands have been building their brand more. Our only hope is that they don’t repeat history, but they have already done and started this at most distributors … so we can’t say that we learn anything.

Does the industry care?

Yes. There are lots of small companies that might never be paid for their product sold through GP, and we’ve heard they went from paying on-time to nearly 60 days months ago! They also care because secretly they hate GP for controlling the industry for so long and using the manufacturers as R&D and copying lines and products to be sold under their names.

Is it over for Hobbico?

We’d say no. Lots of businesses go through a BK (usually from out of control losses and business models) so they restructure and continue doing business (they have to repay their debts in some way). They have already closed a division out in the West leaving the main hub intact for now. There is a chance they won’t make it through this, and we hope that the brands locked within can make it out alive. Axial has been red hot lately, and it would suck to see them sink because of this.

Even the area news is worried about the end of one of it’s biggest employers

http://www.news-gazette.com/news/local/2018-01-11/hobbico-seeking-buyer-it-works-through-bankruptcy.html



About the Author

Derek Buono
Derek Buono
Derek Buono– Started in the industry as an assistant editor at RC Car Action where he spent 2 years before being recruited by Xtreme RC Cars Magazine. For the past 10 years Derek lead Xtreme RC Cars and helped double the circulation, improved editorial quality and helped lead the market in design and creativity. Derek@vrcmag.com



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