Simply and sadly put, the market isn't growing as fast as the target population of enthusiasts is losing interest or dying, thus second-hand engines are nearly enough to keep the market saturated!
Also, the bargain priced, more advanced machines from markets like China, are a definite factor hurting the traditional tin toy and simpler engine makers as well.
Though we bemoan what is occurring, we may well be the ultimate cause of these traditional companies struggles, for the reasons that Jim, Nick and I have mentioned above.