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The Engine That Can?

In an age when Wii and iPhones are cherished toys for children, it's a name better known by Grandpa - Lionel - whose miniature trains still come out of basement boxes at the holidays to chug circles around tinsel-trimmed trees.

In an age when Wii and iPhones are cherished toys for children, it's a name better known by Grandpa - Lionel - whose miniature trains still come out of basement boxes at the holidays to chug circles around tinsel-trimmed trees.

"My father bought me a train when I was 5 or 6 years old, and it's still running today," said 61-year-old Donald Newhard, who gave trains to his sons when they were little and will give a pair of engines to his 5-year-old grandsons this year. "It's a Christmastime thing."

But as much as Lionel, an icon of Americana, has endured for generations of fans like Newhard, its decades-long battle against extinction is anything but over. Determined as ever, the company is steaming forward with an ambitious strategy, and the Philadelphia area is proving to be a key locale in its latest effort to win over digital hearts with age-old, analog toys.

Two years after emerging from its second bankruptcy since the Vietnam War, the maker of toy trains will begin manufacturing a Made-in-the-U.S.A. boxcar line at a Bucks County factory in January.

The limited run of 10,000 plastic-on-steel boxcars will be the 109-year-old company's first U.S.-made line in a decade, made possible, in part, by a shift in the global economics of manufacturing.

And for this Christmas, after the New York company tried out a seasonal-store idea in Manhattan last year, Lionel chose Cherry Hill Mall as one of five 2010 locations.

It's all part of an effort to reinvigorate a pop-culture mainstay that was one of the nation's most powerful brands in the 1950s, went bankrupt in 1967, and later moved all its production offshore.

Despite the turbulence, Lionel has had staying power that stems from a fundamental, if increasingly unhip, notion of play: as a family, on the floor, year after year.

"Brands like Marvel and Lionel and the pop-cultural brands have two separate businesses: the kid who's seeing his first comic book or train set, and the kid who saw his first comic book or train set 40 years ago," said chief executive officer Jerry Calabrese, a former Marvel Comics president who joined Lionel in 2004 to take it through bankruptcy in 2005 as a defense against a costly lawsuit.

"Our job is to create lifetime customers," Calabrese said, "and then from there point them down a lifelong path of being involved with the company and the hobby. Anybody can have a onetime hit. And if you do, that's not a great model.

"What you want," he said, "is something that can become serial and episodic."

It's an uphill battle, trying to draw attention to electric trains in a market where smartphones, iPads, laptops, and virtual-world video games mesmerize even tots.

Lionel's strategy involves multiple approaches: the Made-in-America line; the seasonal stores for unknowing mall shoppers and older customers who long for a reintroduction; licensing agreements that include partnerships even in Hollywood.

Robert J. Osterhoff, who published a book about Lionel in 2008, said the company seems to be building momentum.

"The name Lionel . . . in 1959, was one of the top 10 brand names in American industry. And for a variety of reasons - slot cars, video games, computers - other priorities took place with kids growing up. So the brand lost its prestige."

Osterhoff, 63, said he assembled, oiled, and fired up his own childhood Lionel train set with his grandchildren Wednesday. "That runs as well as it did 60 years ago."

Recent changes at Lionel have been notable, he said. "As we speak, it's come back, and it's doing extremely well."

Exactly how well is impossible to know. The company known as Lionel Electric Trains is owned by private investors, and its financial data are not made public.

Calabrese said his team began exploring the possibility of manufacturing at a U.S. factory a couple of years ago.

"I've always been fascinated with the idea of making stuff in the States, and I think it's kind of tragic that we're in the current state we're in, in terms of making things, especially iconic things, such as trains," Calabrese said.

To make it happen, Lionel hired the two brothers who own FPI Topcraft in Warminster, Sam and Sebastian Murray. In 2007, the Murrays bought the Ivyland Road factory, which makes plastic consumer products through injection-molding techniques.

FPI Topcraft will produce the body of the plastic boxcar, as well as serve as project manager of the line, dubbed the U.S. Presidential Boxcar Series.

Several other U.S. factories, including one in northwestern Pennsylvania, will make the steel wheels and stamped base of the boxcar.

But the molds that will be installed in factory machines to make the parts are still being made in China, to save on what would have been the highest labor costs.

Over the last few years, as inventory loans were hard to get and businesses had less cash, overseas manufacturing became somewhat less attractive than it had been, said Sam Murray, FPI Topcraft's chief operating officer.

Freight costs are up, and overseas labor is getting more expensive, too, as Asian economies develop. Given uncomfortably thin profit margins, retailers are less willing to wait for weeks for new shipments to arrive.

All those factors helped make the Lionel project affordable, Sam Murray said.

"We can respond much faster when a product is selling well, and resupply shelves very quickly," he said. "Plus, we can monitor the quality process much closer."

The project will create 10 temporary full-time jobs that, Sam Murray hopes, could become permanent if Lionel continued with more such efforts.

Making Lionel trains on U.S. soil was tough even at the height of their popularity, said Osterhoff, the author. The company made most of its money on lucrative military contracts at wartime, he said, so the government business effectively subsidized the toy business even in the best of times.

Lionel CEO Calabrese cautions against expecting a wholesale comeback of its manufacturing operations to the United States. "I don't think we're going to return to the era of having a factory next to our office," he said, for this reason: "Thousands and thousands of obstacles."

But, he added, "My hope is that we can pick and choose the things we make that fit what can be done here, and we will do that. These things will cost a bit more, but people have been very supportive."

Lionel began selling in chains such as Target and Wal-Mart a few years ago. But for years, its train sets were the province of hobby shops such as Nicholas Smith Trains in Broomall. At 101 years old, the Delaware County outlet is Lionel's oldest U.S. retailer and among the few toy-train stores left.

It is where Newhard, a Lehigh County farmer, was buying engines for his grandkids last week.

In a cubby the size of a large closet, off a mazelike sales floor packed with model trains and accessories, repairman Eric R. Hofberg leaned over a small table and inspected the insides of a malfunctioning train engine.

"I go on online forums, and I see the discussions that lament that trains are no longer made in the U.S.," said Hofberg, 65, of Media, himself an avid collector.

Store owner Chris Gans said he believed Lionel had its work cut out for it. But a U.S.-made line, and Lionel's other initiatives, could help the company grab a bigger bite of the crowded toy market than it has enjoyed of late, he said.

Maybe Gans' confidence has to do with his earliest memories of his father's Christmastime train sets.

"The biggest impression was taking the tinsel off the tree and putting it across the tracks and watching it spark," said Gans, 72, smiling with devilish intensity. "That was the biggest fun. Or putting our toys on the track and letting 'em crash into it."

Even in this digital age, maybe - just maybe - Lionel is on to something.

Watch a video of model trains at