Lionel Corporation was an American toy manufacturer and holding company of retailers that was founded in 1900 and operated for more than 120 years. It started as an electrical novelties company. Lionel specialized in various products throughout its existence. Toy trains and model railroads were its main claim to fame. Lionel trains have been produced since 1900, and their trains were admired by model railroaders around the world for the solidity of their construction and the authenticity of their detail. During its peak years in the 1950s, the company sold $25 million worth of trains per year.
In 1969, the company sold their model train lines to General Mills. It continued to operate until 1993 as a holding company for their toy stores. In 2006, Lionel's electric train became the first electric toy inducted into the National Toy Hall of Fame. The model trains are still in production, sold by Lionel Corporation's present-day successor company Lionel, LLC.
History
thumb|Lionel No. 100 Electric Locomotive, 1903-1905
thumb|Lionel No. 7 Locomotive, 1918-1923
thumb|Lionel Corporation products
The original Lionel Corporation was founded in 1900 by Joshua Lionel Cowen and Harry C. Grant in New York City. The company's devotees disagree over the date of incorporation: the official paperwork is dated September 5, but the paperwork was not filed until September 22, more than two weeks later. Initially, the company specialized in electrical novelties, such as fans and lighting devices.
Pre-World War II era (1900–1942)
Lionel's first train, the Electric Express, was long thought by historians to have been intended for use as a storefront display, rather than for sale to consumers. Delivered in December 1900, it operated on a brass track and was powered by a battery and a motor that Cowen had intended to use for an electric fan. Cowen hoped the public's fascination with railroads and electricity would draw attention to his other goods for sale. Instead, the public approached store owners about buying trains, prompting Lionel to begin making toy trains for the general public. Lionel sold 12 examples of the Electric Express.
More recently, Greenberg's Guide to Lionel Trains (2014) concluded differently: it said that the first Lionel product was the motorized Converse Trolley, with the Electric Express being made to diversify the motor's use.
Lionel's earliest trains were larger than the sizes commonly available today, running on two-rail tracks with the rails 2 inches apart. In 1906, Lionel began offering a three-rail track that simplified wiring of reverse loops and accessories. Its outer rails were 2 inches apart, which did not match any of the existing standards that other manufacturers had been using since 1891. Whether this was an accidental misreading of Märklin's 2 gauge specifications or an intentional incompatibility is unclear.
During the pre-Great War era, Lionel competed with Ives Manufacturing Company, Boucher Manufacturing Company, Dorfan, Louis Marx and Company and American Flyer.
By the end of World War I, Lionel was one of three major U.S. toy train manufacturers; the others were American Flyer and Louis Marx and Company. Cowen convinced department stores to incorporate his toy trains in their Christmas displays, linking toy trains to the holiday, and making them popular Christmas presents. Lionel made its trains larger than those of its competitors, making them appear a better value. Competitors criticized the lack of realism of Lionel's trains. Cowen had been unwilling to invest in the equipment necessary for lithography, so its early offerings were simply painted in solid colors of enamel paint with brass detail parts. Lionel responded by targeting advertising at children, telling them its products were the most realistic toy trains. Additionally, Lionel criticized the durability of competitors' products in ads targeted at parents. In 1929, Lionel opened a factory in Hillside, New Jersey, where it produced trains until 1974.
By the 1920s, Lionel had overcome Ives to become the market leader, selling metal trains with colorful paint schemes. Lionel's fierce ad campaigning took a toll on Ives, which filed bankruptcy in 1928. Lionel and American Flyer bought Ives and operated it jointly until 1930, when Lionel bought Flyer's share outright, causing Lionel to operate Ives as a subsidiary until 1932.
Beginning in the 1960s, Lionel attempted to diversify into other product lines, such as phonographs, science, weather station and plastics engineering kits. Toy train sales continued to decline and the company endured a series of management turnovers. 1969 was the final year the Lionel Corporation published a toy train catalog and manufactured O gauge trains.
Models
Lionel started the postwar period in 1945 with a train set introducing remote-control uncoupling. The locomotive was the 224, a pre-war carryover 2-6-2 Prairie type. In 1947, Lionel produced a model of the Pennsylvania Railroad's GG1. One year later, Lionel began production of their famous Santa Fe F3. As a direct descendant of the pre-war 763E locomotive, in 1950, Lionel released the 773, another scale Hudson. The Lionel FA model was also introduced in 1950.
Many collectors and operators ranked the 746, released in 1957, as the best postwar Lionel locomotive. It is a model of Norfolk and Western's J class steam engine. During both the pre-war and post-war eras, Lionel made many models of electric locomotives; during the post-war era, Lionel made models of the EP-5 and Virginian EL-C, in addition to the GG1. From 1946 through 1949, Lionel issued the 726 2-8-4 Berkshire, which is a prized item today. From 1950 to 1951, Lionel produced the 736 Berkshire, which was basically a 726 with Magne-Traction. In 1952, the Korean war caused a shortage of magnetic materials, so Lionel reissued the 726 as the 726rr (726 rerun). From 1953 until 1968, Lionel produced the 736 again.
Construction set
During the post-war period, Lionel produced a construction set, using a unique component set. While competitive sets used nut and bolt fasteners, the Lionel set employed round-head aircraft rivets retained with rubber grommets, eliminating the need for tools. The structural elements were hollow beams of square cross section made from folded and quite thin sheet aluminum. It was subject to destruction if stepped upon. A more substantial folded aluminum base plate was used to form the foundation of most constructions, and additional circular plates could be used to construct larger wheels or pivots. Pulleys, gussets, and splices were also included. The deluxe kits included an electric AC motor with a worm drive and reduction gearset that was powered from household power. While innovative, the lack of general purpose beam members with enough holes limited the adaptability of the set to complex constructions. Finished assemblies also lacked the robust durability of its principal competition at the time, the Erector Set.
In 1959, Cowen and son sold their interest in the Lionel company and retired. The buyer was Cowen's grandnephew, Roy Cohn (businessman and attorney to Senator Joseph McCarthy) who replaced most of Cowen's management. The business direction of the Lionel company changed: it added subsidiary companies unrelated to toy train sets — among them were Dale Electronics, Sterling Electric Motors, and Telerad Manufacturing. During Cohn's unsuccessful three-and-a-half-year tenure, Lionel lost more than US$13 million.
Diversification
As part of the diversification, Lionel formed a relationship with the Porter Chemical Company, whose owner, Harold M. Porter, was a member of the Lionel Board of Directors. Lionel began making a variety of scientifically oriented, hands-on educational toys, designated "Lionel-Porter." The product line, cataloged from 1961 to 1968, included Chemcraft chemistry sets, Microcraft microscope sets, Biocraft biology sets, and sets teaching about mineralogy, physics, geology, mathematics, and industrial science, along with a junior line of tool sets.
Decline and bankruptcy
Lionel's efforts to diversify failed to compensate for the public's declining interest in its toy trains. By 1966, Lionel's revenue was $28 million, 40 percent from government contracts. In 1974, Lionel began to offer trains in HO scale for the first time since the postwar period; they were last cataloged in 1966. In 1975, Lionel introduced a 75th anniversary freight set that consisted of their U36B diesel engine and rolling stock that included images of catalog covers and logos from Lionel's past. One year later, Lionel released a model of the American Freedom Train to celebrate the nation's bicentennial.
The brand rose to prominence in 1976 following a series of television commercials featuring Johnny Cash, who was a longtime Lionel collector.
In 1979, Lionel re-issued the Fairbanks-Morse Train Master diesel locomotive and re-introduced the American Flyer S gauge line of trains, both of which had not been produced since 1966. Starting in the 1980s, Lionel began to issue more postwar-derived operating accessories, such as the Lumber Mill, Ice Depot, and News Stand. In 1984, they released the 783 Hudson locomotive, which descended from the 773 scale-sized Hudson originally made in 1950 and again in the 1960s.
Lionel, LLC (1986–present)
In 1985, General Mills spun off its Kenner-Parker division, with Lionel being placed under Kenner-Parker. In 1986, Lionel was sold again, this time to toy train collector and real estate developer Richard P. Kughn of Detroit, Michigan; it became Lionel Trains Inc (LTI). In 1989, Lionel phased out the Mighty Sound of Steam and replaced it with what would eventually be called "RailSounds," beginning with their re-issue of the pre-war B6 Pennsylvania switcher. It was rebranded as Lionel LLC in 1995. Lionel, LLC owns all trademarks and most of the rights associated with the Lionel Corporation.
Lionel Morsan
In the early 1970s Lionel bought Morsan Tents from founder Mort Jarashaw. It was a small chain of sporting goods stores based in New Jersey, which became Lionel Morsan.
Bankruptcy and buyout
After the sale of its train product lines in 1969, Lionel Corporation became a holding company that specialized in toy stores. By the early 1980s, Lionel operated some 150 stores, under the names Lionel Kiddie City, Lionel Playworld, and Lionel Toy Warehouse. For a time it was the second-largest toy store chain in the United States. Lionel entered financial troubles during the early 1980s recession and filed for Chapter 11 bankruptcy in February 1982. After reducing to 55 stores, it emerged from bankruptcy in September 1985.
By 1991, the chain had regrown to 100 stores and was the fourth-largest toy retailer in the country, but it encountered financial troubles due to a combination of factors. In 1989, Robert I. Toussie L.P., a partnership of several retail executives, attempted to buy the company. Lionel resisted and the fight drained the company of cash. Meanwhile, non-specialty discount stores expanded their toy sections and undercut the prices of specialty toy chains. Additionally, Lionel found it difficult to compete on price with the larger Toys "R" Us, and it attempted to expand too rapidly in a weakened economy. After a string of unprofitable quarters, it filed for Chapter 11 bankruptcy on June 14, 1991. In 1992, Lionel again tried to reverse its fortunes by merging with the bankrupt Child World, the United States' #3 toy retailer, but was unable to secure financing. By February 1993, Lionel had closed all but 29 stores in six states, concentrating on the markets of Philadelphia, central New Jersey, Baltimore, Washington, D.C., Cleveland, and south Florida. Unable to reach an agreement for reorganization with its creditors, on June 2, 1993, Lionel announced its intention to liquidate all of its stores and go out of business.
The Lionel trademarks were purchased by Richard Kughn, the Detroit real estate magnate who had bought the Lionel product line from General Mills in 1986. See Lionel, LLC.
Lionel trains were manufactured from 1920 to 1929 in a factory at 605 21st Street in Irvington, New Jersey. The factory was destroyed by a fire on April 5, 2004. According to a report from the local fire department, 100 firefighters were needed to extinguish the blaze. The building had been vacant for ten years and was in a state of disrepair, according to Fire Chief Don Huber.
The building that housed the last Lionel office is located at 26750 23 Mile Road, Chesterfield, Michigan; as of March 31, 2017, the building was available for lease. The former Lionel assembly factory was located at 50625 Richard W. Blvd, Chesterfield — a short drive from the office building.
Games licensed by Lionel Corporation
- Lionel Trains: On Track: Nintendo DS game
- 3D Ultra Lionel Traintown (and its sequel, Deluxe): Windows game
- Lionel Trains Presents Trans-con!: Windows 95/98