MTH Electric Trains

From TheBestLinks.com

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 had its origins when its founder, Mike Wolf, started assembling and selling trains in the basement of his parents' home in 1980 at the age of 12. He worked for Williams Electric Trains, who had purchased vintage Lionel tooling from the original Lionel Corporation in the early 1970s. When Williams decided to end its line of Lionel Standard gauge and O gauge reproductions, Wolf bought the tooling and continued building the replicas, which were marketed by Lionel itself. By the late 1980s, MTH was also a large mail-order dealer, selling trains from a variety of manufacturers, including Williams and Lionel.

MTH's relationship with Lionel broke down in 1992. MTH had arranged for a locomotive to be made for Lionel, and Lionel backed out unexpectedly. With the tooling complete but no one to sell the engine and no money to pay the subcontractor, Wolf decided to market the locomotive himself. Then-Lionel CEO Richard Kughn became angry that Wolf did not inform him of this decision. Reportedly Kughn learned of MTH's entry into the market from a flyer at a train show. Lionel then cancelled MTH's Lionel dealership. MTH then expanded its product line, adding the former Lionel vintage reproductions, reproductions of equipment from other manufacturers, and new original designs.

Within a decade, 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 sued Lionel 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.

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 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.