by Joseph Stachler
Before Richard Kughn saved Lionel, George Toteff saved it. Maybe you aren't familiar with his name, but if you have bought any Lionel products made over the past thirty-one years, you are familiar with his contributions. Indeed, if Lionel were to consider producing one more Irvington car for their "Legends of Lionel" series, George Toteff would be the ideal name for such a car.
Throughout the 1960s, The Lionel Corporation was more interested in investing in new companies than its own core product line of toy trains. They had shareholders to appease. Their annual stock reports boasted of expansion on one hand, and admitted losses on the other. Management seemed to believe that trains were a liability to their success. Luckily, instead of halting train production, they gave someone else a chance to get it going again. Even during these dark times, the Lionel name was known by everyone in the country.
As strange as it seems that the nation's most famous toy train manufacturer would be interested in giving up their train line, it was even stranger that a breakfast cereal company would be interested in picking it up.
General Mills had roots dating back to 1866. The General Mills name was created in 1928, a result of the mergers of several milling companies. They were one of the few companies in America that prospered during the Great Depression. Like The Lionel Corporation, General Mills was diversifying into new industries in the 1960s. They acquired many toy and hobby companies such as Kenner, Parker Brothers and MPC. George Toteff, who was president of MPC (Model Products Corp), spearheaded the deal with Lionel that would begin what collectors call the modern era. It was a unique deal. General Mills bought all train-related assets from The Lionel Corporation, and paid a royalty for use of the Lionel name. MPC, as a General Mills subsidiary, was in charge of producing new Lionel trains.
Toteff's four years of leading Lionel produced new product lines and features that still exist today. Standard O, building kits, fast-angle wheels with needle-point bearings, and electronic sound systems were all pioneered under Toteff's management. It was Toteff who orchestrated the move from the east to the outer Detroit area, where Lionel has been headquartered ever since.
The full story of the transition from The Lionel Corporation to General Mills is documented in Lionel: A Collector's Guide & History, Volume 4 by Tom McComas and James Tuohy. The purpose of this interview is to add more to that story from the perspective of the man who was at the center of it.
Toy Train Revue: What is your background in the model industry?
George Toteff: I was originally with a company called AMT for about twelve years. Then I decided to go out on my own, and formed a company called MPC. I eventually sold my company to General Mills. When General Mills acquired us we were only doing six million dollars a year, and within that first year we were up to about twelve and growing rapidly. My background was always in modeling, ever since I was twenty-four years old.
Can you describe how you came to purchase Lionel trains?
George Toteff: What happened originally, when we sold our company to General Mills, and they were a first-class outfit, one of the things they were after all of their companies to do was expand and diversify. Being in the model car business, we had almost a miniature automotive factory. We had our own model shop, our own engineering department, our own tool shop, a complete final assembly department and our own vacuum-metalizing department [for chrome effect on plastic]. So we were pretty well established in the hobby and model industry, specifically model cars. We had great contacts with all of the automotive manufacturers. We made models of Ford and General Motors products. We were pretty well-entrenched when it came to models. We didn't do all of our own mold making, but I was associated with a company called Binder Tool and Mold. They made some molds for us. I was part-owner of that and they were in Canada.
The Lionel opportunity presented itself because of a gent by the name of Ronny Saypol. He contacted General Mills. General Mills Executive Vice President, a fellow by the name of Craig Nayland, felt that something like that would fit if MPC thought it was a worth-while venture. Remember, while Lionel was probably the greatest toy the country has known, it was also a hobbyist item. I mean, you had an institutional following that were really hobby-oriented people. So it naturally came to us. After our evaluation, we went to Nayland with a recommendation to proceed with the deal. But the gent who really got behind us was the fellow who was the president of General Mills at the time, Jim Summers. And he, frankly, loved the idea. He became a great aide for us. He believed Lionel would be a great fit for General Mills. He pretty much got the board to agree for us to make the acquisition. I did all the negotiations with Ronny Saypol.
We bought everything from Lionel, the whole deal, for around $650,000. They had an immaculate engineering department. We got everything. In addition to that, we paid The Lionel Corporation a royalty for use of the name. What we were really buying was the institutional value of Lionel, plus the trains. The real value was the name. The name was worth much more than the trains. As a matter of fact, I think it was about four years later that we paid The Lionel Corporation a million dollars in advance royalty for the name.
If there is anybody who was truly instrumental in bringing this thing around, Dick Branstner deserves most of the credit. A great guy. He's passed away, you know. He did the leg-work. He and a man named Harry Blum spent a year over in Hillside, New Jersey. I would go over there at least one week per month.
TTR: In the McComas & Tuohy book, Dick Branstner says that in the event General Mills were to have passed on the deal, you would have personally gone ahead with it.
George Toteff: What really happened....you know, that's pretty much true. Ronny Saypol became so impressed with what we had accomplished in the short time we were there, and some of the changes we were making, and the way we were heading, he's the one that said in the event that General Mills does not go ahead with the deal, he offered me and Branstner a deal to take over the Lionel operation and we'd get twenty-five percent of the company. So The Lionel Corporation would have kept the train line, with us running it, and we'd own twenty-five percent of it. That's fine, but it would have been a little un-ethical because we were still indebted to General Mills.
TTR: How did you come by the decision to move Lionel production to Michigan?
George Toteff: General Mills was in Minnesota. MPC was in Mount Clemens, Michigan. We had full team of about 400 employees in Mount Clemens, and we moved Lionel there. In Hillside, the place was antiquated. There were very few employees. We would have been saddled with some long-term obligations with the plant, an extremely old plant. There were some Union commitments that we probably would have been obliged to to honor. I really wouldn't have the same team that I had in Michigan. There, I had a complete staff of well-qualified people. I did have a lot of help from some of the key people at Lionel. Lenny Dean used to run their service department. Lenny Dean was a winner, an absolute winner. Lenny Dean stayed with us through it all. He directed us through a lot of the things that were in the archives. He was instrumental in many of the products we brought out.
There were about four or five other key people that helped in the transition, traveling back and forth. For months they'd help us during the week and fly home on the weekends. No marketing people, they were all production people. A man who worked in the tool shop and started a tool business of his own named Tony Gotto was one. He was very helpful in setting up the tooling, directing us to where the tools were. There was a supervisor by the name of Lou Anzallone. He made the move to Michigan to work with us. He headed up the motor department. He ran the assembly line for us, helped set it up and ran it. There was another fellow who worked in engineering named Jess Marchese. Another fellow who was very instrumental and was the brains behind the Lionel operation, and was the Vice President of Engineering, was Joe Bonanno. Howie Steinberg moved to Michigan permanently. He wasn't one of the old-timers, but he had been with Lionel for a while and he came with us. There was also the Klebba brothers, John Klebba was Plant Manager and Phil Klebba was the Production Manager.
TTR: Now General Mills owns Lionel, and you have to start making the trains. How did that process develop?
George Toteff: We didn't miss a step. We picked up production and kept the line going without any pause in the market. I think that Lionel in 1969 did less than $600,000.00. It was just a mish-mosh. It was terrible.
One of the things we did originally, was sign a one-year lease to avoid immediate long-term indebtedness for General Mills. The fellow that rented us the building was a friend of mine, and we had an option to renew for five or nine years. Then we bought a large office building over there.
When we took it over in our first year, we had some start-up problems, as you can imagine. I think I needed almost 200 new employees. There was an Indian reservation out in the middle of Lake St. Clair. We went over and met with the Indian Chiefs, and made a deal. We hired four bus loads of Indians that we'd bring into the plant to make trains. General Mills applauded us for that.
TTR: What was your marketing strategy?
George Toteff: There was a lot of brainstorming. We knew there was a tremendous opportunity for us. The marketing manager I had at the time was Sam Bushala. We brought Johnny Cash in to do commercials, that was a big key. Sam was responsible for engineering that deal. It was always a father and son thing, a healthy toy. That's exactly where we headed, exactly where we went. We appealed to adults, absolutely. Of course, it became the success story that it did. It was unbelievable.
TTR: That first year you brought out a lot of innovations that have carried on through the years. Things like the Mighty Sound-of-Steam...
George Toteff: ...and needle-point bearings, where we fastened the wheels to the axles. That took all of the friction out of the boxcars, and gave the engines much more power. The angled wheels worked better on those rails. Dick Branstner came up with those ideas.
TTR: What are some of your favorite memories of Lionel?
George Toteff: Watching the success. There were not many who believed that a train could again be number one. Road racing was the craze at the time. Many thought trains were too old fashioned and didn't have the appeal that the road racing sets had. It was great to see the rebirth of Lionel. It was great to be a part of bringing it back. Those were very exciting years.
TTR: When did you leave?
George Toteff: I was there for about three years. We were at eighteen million when I left. I brought in a fellow from General Mills named Ted Betker. He was president of Craft Master. I guess I was never meant for a large corporate structure, even though I had a great relationship with Jim Summers. He would call on Saturdays and Sundays. He was always very excited about the whole program. I left on very good terms. But I wanted to do my own thing again. I started a company called Craft House.
TTR: After almost thirty years of Lionel trains being produced in Michigan, Lionel recently closed the plant and all trains are made in the Far East. What are your thoughts on that?
George Toteff: Well, of course I am very disappointed to hear that. So many people are going over to the Far East. However, in my own opinion, this is a product that....we moved it here for a very good reason, it was brought back from Mexico for a very good reason. I would hope that this is not a mistake.
TTR: Did you have trains growing up?
George Toteff: Let me tell you what happened when I was a kid. My father was a barber. I grew up in a very small town in Pennsylvania. We had neighbors who had a train. We didn't have one because Dad couldn't afford it. For years, Dad saved all of his tips to try to buy us a train. He made a deal with a gent in town that if this one train didn't sell by Christmas, that after Christmas he would be able to buy it for a deal. It was originally forty dollars, and I think he would be able to pay twenty-eight bucks for it. What happened was Dad, on his way down to buy the train after Christmas, lost the money. I remember me, my mother, my kid brother, my father, we traced his steps looking for it. We were devastated, because this was our chance to have the train. We never found the money, so we didn't get the train. Years later, when I was negotiating to buy Lionel, and I told the gents this story, Lenny Dean and few others there got together, looked through the archives and picked out a train from the general era that they thought Dad would have bought. They took the locomotive and tender and had them bronze-plated and presented them to my father on his seventieth birthday. So here, we couldn't afford to buy the train, but later we bought the company.
TTR: Do you have any trains now?
George Toteff: When I left there, the people that I became friends with at Lionel, made up about four or five trains from the original stockpile and gave them to me. Unfortunately, I lost them to fire. I was able to save only one set. It was a desk model of the large Hudson. I still have that. About ten years ago, my kid decided to buy me a memento so they went out and bought me a collectors item, one of the Lionel products. That's all I have left.