I am one of the many MBK Alumni in the area, and I end up fielding the question “What happened to Klein’s?” a lot, so I’m going to explain my understanding of what brought about their demise.
I worked at MB Klein back in the early-mid 2000s. I think it was 2003-2005. I was in the N Scale department, working for Shane, and built their first eCommerce website. I left in 2005 to focus on web development but the place always kept a warm place in my heart.
I got a chance to check the place out one last time when they were moving in 2007.
I was excited when they moved to Cockeysville from Baltimore because I lived nearby and now they were convenient to pick stuff up from. I still remember the time (well, some of it) that we visited the store after the Beer Bourbon and BBQ festival. I don’t remember what I bought, but it was a good time. I was also excited for them because Shane and my dream, back in the day, was to turn the company into the Amazon of model trains. The move to Cockeysville was a big step on that journey and for a while it looked like they were succeeding at it.
I found some photos of the new spot, and while I wasn’t able to get photos of the warehouse, here’s what the store looked like. Quite a difference from the old location.
All sorts of things happened in the intervening years, but I’m going to focus on what has happened in the past few months that brought about their end. I haven’t wanted to conjecture and feed the rumor mill, but now that the dust seems to have settled I wanted to share a bit of what I’ve learned. I don’t have any real insider information, but I’ve gathered some bits and pieces and have put it together here.
First, MBK/ModelTrainStuff.com was a sole proprietorship owned by Ted Klein. Ted passed away in 2020, leaving the business to his long-term (very long term, they were already together for ages when I worked there) girlfriend Elaine. Elaine owned it until she passed a little while later and the business’s ownership passed to her daughters.
The daughters wanted out of the business and so were looking to sell it for the maximum value while also extracting what they could from it in the interim. I don’t blame them, you can make money in the model train industry, but you really have to have your head in the game and have some hustle. It’s not the type of thing you’d really consider “passive income”.
In England, Hattons had been looking to get into the US market to help offset the instability and challenges they were seeing in post-Brexit Britain. They made an attempt in 2022 but that does not seem to have taken off. To try again I think they lined up a partnership with Heartland Hobby (who they might’ve already had a relationship with due to their previous US efforts, but this is pure speculation) to handle fulfillment and to use the MB Klein relationships, customer base and other business infrastructure.
In Colorado, Intermountain also saw a chance to do some vertical integration following the Broadway / Factory Direct Trains model. Intermountain was already a distributor, but they could now become a retailer as well.
There might’ve been other plans in other quarters as well but I haven’t heard anything about them.
The Intermountain and Hattons plans were being formulated against a backdrop of rising interest rates and, I’m guessing, declining cash reserves at MBK. This might’ve been because of the way the MB Klein finances were set up (they were very intertwined with Ted’s personal finances). Those two things would’ve made other options, like an employee buy out (which would’ve been awesome) difficult.
Intermountain came to the table and MBK was ready to sell. Apparently Hattons showed up with a bigger check at the 11th hour and won the brief bidding war.
In the meantime, economic conditions continued to change: interest rates continued to climb and Hattons domestic position was continuing to decline. Elaine’s daughters, however, were happily out of the model train business.
From what I understand, the Hattons team did their best to arrest the decline of the remains of MB Klein, and tried to transition to the new model, but it did not work out. I believe there were issues with order processing and the ability of Heartland to handle the capacity needs of retail fulfillment (as opposed to wholesale). This made the whole plan untenable. I have also heard that there were issues with out of state sales tax payments that likely also sapped the company of its cash reserves.
Somewhere along in here MBK closed the majority of its Maryland operation because the stock remaining there did not justify the costs of the operation in a high cost location.
Eventually, the whole thing came apart. Hattons UK’s US rescue plan fell apart and they knew it was time to pull the plug. I’m guessing the final bricks were falling in the US too, and we finally saw the last one tumble.
I had a chance to swing by the old US location on January 29th, 2024 and audibly gasped when I drove into the parking lot. All of the signage is gone and there’s no indication that the company was here.
I’m incredibly sad to see the end of MB Klein. Keeping a company like that alive for over 110 years was an amazing feat, but it’s tough to escape the trap of being a “family business”. The entire team who was able to keep it going for so long, especially at the end in the face of such challenges deserves commendation. I feel terrible for them, especially the long-time employees, now having to find something new to do. I feel bad for the local model railroad community that has lost a strong support pillar. I know, personally, the ability to place an order in the morning and pick it up on the way to the grocery store that afternoon will really be missed.
My best wishes for the entire MBK team. I hope you all move on to new greater things.