John Claudino of Aztec Manufacturing works in his Carson City shop. Claudino specializes in manufacturing and modifying model train parts. Photo by Cathleen Allison/Special to the Review-Journal.

John Claudino was tired of laying off his workers.

Claudino, owner of Aztec Manufacturing, knew the cycle well: San Francisco Bay Area technology companies would ask him to build a prototype of a mechanical component for a new computer. While developing the product, Claudino would hire up to three workers to help carry the workload. Once a mock-up was complete, major manufacturers would take over to mass produce the device, and Aztec's employees would find themselves out of work.

"It was like an accordion," recalled Claudino, who opened Aztec in Northern California in 1976. "Either we were really busy and stretched out, or business would be flat."

To retain his employees during the quiet spells, Claudino launched a new line of business in 1981 based on his favorite hobby: model railroading. He began deploying both his staffers and his metal-working equipment to forge miniature train cars.

When Claudino moved from California to Carson City in 1996 to retire, he took his machinery with him and decided to continue making pint-size train cars on his own inside a 1,500-square-foot shop at the Conestoga Business Center.

Today, small-train enthusiasts know Aztec Manufacturing for its track-cleaning cars, its limited collectors' editions and its custom millwork.

"(Claudino) has a great reputation within the industry," said David Popp, senior editor of Model Railroader magazine. "People like working with him."

Thriving in the hobby sector can be a tall order.

The biggest demographic segment in model railroading -- the baby boomers -- is aging and losing interest in the pursuit, Popp said. Succeeding generations are smaller, so model-railroad manufacturers and retailers have fewer customers.

What's more, consolidation among miniature-train makers has left the industry with a handful of major manufacturers and a constantly dwindling number of midsize and small companies, Popp said.

"You definitely need an entrepreneurial flair to survive," Popp said. "You have to come up with something the big guys don't have, and you need to do it well enough so that people will come to you instead of buying a product (from a big manufacturer) that may be of lesser quality, but that is less expensive. John has a nice little niche. He provides services the big manufacturers don't want to deal with."

Those services include milling locomotive frames so that hobbyists can install extra components.

Claudino also is making a collectors' series of train cars decked with the logos of famed microbreweries from around the country, including Roosters Brewing Co. of Utah, Bristol Brewing Co. of Colorado and Angel City Brewing of California. He's made 42 editions so far.

Track-cleaning cars are the bread and butter of Aztec's business, however.

Popp said Claudino's innovation is the multifunction track-cleaning car. Where most makers produce track cleaners that have one mechanism -- dry rollers or wet cloths, for example -- Claudino's cars often come with both methods. He also makes cleaning cars with magnets, for picking up small pieces of metal debris, as well as cars with brushes and pads that sweep away dust and other small particles near the tracks.

"(Single-function) cleaners are much easier to produce, but John focuses on how he can make the product better," Popp said.

Not that larger companies haven't tried to take over Claudino's market segment.

Claudino said representatives of an overseas manufacturer snagged one of his track cleaners at a trade show and took it home to "reverse-engineer" it, looking for trade secrets that would allow them to replicate the product. The complexity of the cars saved Claudino; the manufacturer's mass production operation was suited only to simpler, single-method track cleaners, so company executives dropped the attempt to copy Claudino's work.

Claudino wouldn't disclose how many units he sells a year, nor would he reveal his sales revenue. But he is busy morning, noon and night with orders, he said, adding that he does "really well" and is "fat and happy." His track cleaners range roughly from $40 to $175 each, and he sells replacement rollers for $13 to $35. His microbrewery cars sell for about $30 apiece, and he offers a Napa Valley Wine Train car for $20. He has buyers across the United States and in countries including Brazil, Japan, Germany, Portugal, England and Australia.

Expanding that customer base is the biggest challenge for Claudino.

He doesn't sell his goods in stores because he wants to avoid retail markups. So he gets the word out about his work via hobby magazines, donating model railcars to publications holding giveaway sweepstakes. He also attends hobby shows several times a year, because model-railroad fans enjoy doing business with proprietors they meet in person.

Claudino's one regret? His hobby is no longer a leisure pursuit. An elaborate model railroad complete with mountains and lakes once graced his California home. Now, he has neither the time nor the space for such an extensive setup, and his favorite pastime has been relegated to running a few trains at friends' houses from time to time.

But Claudino said the trade-off is worth it.

"I've found my niche, and I'm just happy as a clam," he said. "I love building (railcars). I like the freedom of expression. I'm going to keep going as long as I can."