Hobbyists hopeful about Hobbico properties' future under Horizon

Hobbyists hopeful about Hobbico properties' future under Horizon

CHAMPAIGN — When Hobbico filed for bankruptcy protection in January, John Klapp was worried his favorite hobby company was going to disappear.

"I'm a huge fan of Hobbico," said Klapp, a member of the Tri-County RC Club in Mattoon. "I've had over 20 years of experience with them and had nothing but positive experiences. I never had any issues. They were timely, friendly, and they've always been a pleasure to deal with."

Now that Horizon Hobby has bought Hobbico's remote-control business for $18.8 million, the Hobbico name may fade away.

"The business is all operated under the name Horizon Hobby. We own the Hobbico name but won't use it as it's been used in the past," said Horizon CEO Joe Ambrose.

But besides a name change, hobby shop owners and club members are wondering what could happen to certain brands of remote-control cars and planes that might now be redundant under one roof and how the merger could affect prices.

Hobbico and Horizon were the two top hobby product distributors, said Robert Miller, past president of the Champaign County RC Club.

"Hobbico and (its subsidiary) Tower Hobbies were certainly the big players in the RC field," Miller said. "And Horizon has been right there with them."

"I think that overall, Horizon has treated us very well over the years, but that's when they had competition to worry about," said Brian Schneider, manager of Roger's Hobby Center in Saginaw, Mich. "Now, there's one singular voice guiding an entire industry. You don't have Microsoft and Apple going at each other, you don't have Ford and Chevy. ... I don't know if that will turn out to be a good or a bad thing, but it's definitely something to watch."

While there are still other hobby product distributors out there, such as Hong Kong-based HobbyKing and HRP in Utah, Schneider and other hobbyists are worried prices could increase, making business more difficult for hobby shops facing competition from the internet.

"I don't think I'm worried about retail prices changing. Where I see the biggest potential problem is hobby shops being squeezed," Schneider said. Though he added, "there's enough Chinese vendors out there to keep Horizon honest."

While he's cautiously optimistic about the purchase, he wishes someone would have bought Hobbico and run it independently, like when a group of investors led by Joe Ambrose bought Horizon in 2014.

"It'd be better for the industry as a whole and better for the employees. A lot of people lost jobs over the last couple weeks," Schneider said.

In a statement issued to The News-Gazette on Friday, Horizon said it won't be raising prices, at least not because it's buying Hobbico, and it shed more light on what the purchase meant for Hobbico employees.

"Prices won't be impacted by this transaction. This business is very competitive," Ambrose said. "There are lots of factors that impact pricing — some positive and some negative, from the consumers' perspective. Horizon's purchase of Hobbico's assets won't be one of those factors that impact pricing."

He also said the purchase of Hobbico should help improve the availability of products that had been limited recently while Hobbico was struggling and that "popular product brands and Tower Hobbies, one of the places (hobbyists) like to shop, won't be going away."

In the bankruptcy auction last month, "we were the only bidder for Hobbico's RC business," Ambrose said. "The other option was liquidation."

140-plus Hobbico hires

As for the 280 Hobbico employees in its RC units, 200 applied for employment at Horizon, and 165 were extended offers.

"At this point, we have hired over 140 people in Champaign," Ambrose said Friday. Horizon has also hired all 23 people who had been working under Hobbico's Axial and Arrma brands in California and the United Kingdom.

Of the 140-plus employees from Hobbico in Champaign, Ambrose said "the jobs are mostly permanent."

"We've hired over 80 people directly into Horizon, with another 60 working for us initially through the staffing agency," Ambrose said. "About 40 jobs are former Hobbico people working in the distribution center at Interstate Drive."

For those who didn't land or accept jobs at Horizon, the Champaign County Economic Development Corporation is trying to help and organized a well-attended job fair two days ago for former Hobbico employees.

"We've had companies that know that's a good-sized workforce with longtime employees and skill sets," said Craig Rost, executive director of the EDC. "At the job fair, we had some of those companies there for employees to ask questions."

The EDC has also been working with former Hobbico workers, who Rost said were a mix of professional, customer support, sales and distribution employees.

"A lot of them have contacted us just asking for general assistance. Some haven't written a resume for 20 years, or they have specific questions about a job or a company," Rost said.

He said the EDC tries to step in when there have been major layoffs.

"We make every effort to try and not have people leave Champaign County," Rost said. Because if they don't find a local job quickly, "pretty soon, they'll start looking regionally or across the country."

Changing hobby industry

The bankruptcy and purchase of Hobbico is just another sign that the hobby industry is changing, though not all hobbyists agree how it's changing or think that the changes are necessarily bad.

The Academy of Model Aeronautics is planning to release a "State of the Hobby" report this week based on interviews with people across the industry and provided the executive summary to The News-Gazette in advance.

"Some in the industry feel strongly and passionately about specific factors that affect the hobby and the industry that supports it. Other interviewees have agreed that the hobby is changing but couldn't quite pinpoint the exact cause of the changes," the report will say.

"First, the hobby is evolving. For better or worse, the interviewees clearly identified several changes in the hobby over recent years. This includes everything from diminished interest in hobbyists building their own models to a general acceptance of lower quality, but more affordable, products.

"Second, changes in the retail industry overall are also affecting the model aviation hobby and the industry that supports it. For example, consumers are buying more online and manufacturing in the U.S. is decreasing.

"Third, and perhaps most importantly, the threat of increased regulations on model aircraft are creating a disincentive for hobbyists — putting an already fragile industry at serious risk of decline."

When the Federal Aviation Administration issued rules for drones in 2016, sales plummeted, said Patrick Egan, an editor of the Small Unmanned Aerial Systems News website.

"It just chilled the market," he said. "People I knew said, 'I'll just get my son a BB gun instead. That doesn't have to be registered with the federal government.'"

People flying drones and hobby aircraft for fun and not for business have fewer requirements, but Egan is also worried the "hobbyist exemption" could be taken away.

The Champaign County RC Club has had relatively steady membership recently, Miller said, with around 100 members.

He acknowledged the hobby can be expensive and that hobby shops are getting harder to find.

"But we have been encouraged because there are young people who are joining our club," Miller said.

And he's also tentatively optimistic about Horizon's purchase of Hobbico's RC business.

"If the core business could be kept as is, I think it would benefit all of us in the hobby community," he said. "We're somewhat relieved that Hobbico is going to remain more or less intact and be taken over by another organization, Horizon, that understands the hobby."

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