Gibson

[pucho812]

If I shook a magic 8-ball and asked a question on Gibson, the result would be out look not so good. 

https://www.nashvillepost.com/business/music-business/article/20994206/gibson-lays-off-staff-in-nashville-custom-shop

While this is sop In financial restructuring, it doesn't paint a favorable picture.

 

[JohnRoberts]

I have an old friend from Peavey who is a master luthier at Gibson now, or at least he was last week. 

JR 

 

[Timjag]

The owners of Gibson have decided to asset strip the entire company, they are shipping manufacturing to china. They ran a bunch of bogas stories about how the guitar business is dying. Which is completely untrue, they then used that excuse to announce - cost cutting. The entire process smacks of the old Bane capital model whereby you make the management rich but asset stripping, then you get a huge loan and saddle it on the company and walk with the money. The PR about failing business is all part of the trick, to prevent any big public outcry.

I'm afraid Gibson has been got.

 

[pucho812]

Seen that before. :'(

 

[iampoor1]

So is Gibson slowly being harmon-ized?

 

[JohnRoberts]

The article explains that they are dealing with a large debt note coming due soon, that if they don't pay completely, will trigger credit ratings downgrades on even more debt, requiring immediate collection.

You can't cut your way to success, but apparently you can't borrow your way there either.

I expect my friend to land on his feet, Henry Juszkiewicz may be running low on easy options. It's never a good sign when the new CFO (chief financial officer) jumps ship.

The brand has value, the business maybe not as much value as the debt exposure.  Unclear that the obvious competitors have cash burning holes in their pocket to gobble them up, and the easy money lending, may not be as easy as it has been in the recent past.

I could imagine a future where the Gibson brand is owned by a larger (profitable) company.  From rumours I've heard (but no real first hand information) not sure that would be such a bad thing, but it is always sad to see major MI brands playing corporate musical chairs.

JR

 

[fazer]

What if fender bought the name?  They’ve been doing that with other brands.  That would be poetic.

 

[JohnRoberts]

What if fender bought the name?  They’ve been doing that with other brands.  That would be poetic.

Fender is already in debt and while I am no longer working in those trenches they are not exactly enjoying robust sales. I read that Fender has decided to go direct to consumers from their website pissing off their dealer distribution.

Another old peavey friend of mine who was working for a company Fender owned in CT just jumped ship (late last year) when Fender decided to move the subsidiary to Boston (a popular destination for hiring millenials cheaply).

The guitar business will not disappear but it will continue to get leaner as fat gets cut out of the supply/distribution model.

JR

 

[pucho812]

there are pros and cons to skipping dealers and distributors and selling direct.  I had a mook marketing idiot, millennial at that,  visit us at namm this year ask why we don't sell direct even though we have an online store.  I explained about how the online store is for accessories only and how we have spent decades building up relationships with our dealers and distributors that it would be  a bad idea and  how we would loose all their support. He in the end did not get it.

Audio, instruments, and any related products in 2018 are not big money makers.  I don't think they ever were really but now more then ever the pie is getting smaller and more people are trying to get it.  We don't do it for big profit although that can happen, we do it out of passion and love.  We know we won't strike it rich, but we can earn a living. You just have to bust ass more then ever for less then ever.

 

[JohnRoberts]

there are pros and cons to skipping dealers and distributors and selling direct.  I had a mook marketing idiot, millennial at that,  visit us at namm this year ask why we don't sell direct even though we have an online store.  I explained about how the online store is for accessories only and how we have spent decades building up relationships with our dealers and distributors that it would be  a bad idea and  how we would loose all their support. He in the end did not get it.

It is unclear who will get the last laugh as millennials become more influential to markets.

Audio, instruments, and any related products in 2018 are not big money makers.  I don't think they ever were really but now more then ever the pie is getting smaller and more people are trying to get it.  We don't do it for big profit although that can happen, we do it out of passion and love.  We know we won't strike it rich, but we can earn a living. You just have to bust ass more then ever for less then ever.

When I started working at Peavey in the mid 80s having a Peavey dealership was like a license to print money, as they dominated their local markets.... Since then there has been a steady evolution to carve value (fat) from the distribution chain and diluting dealer influence. 

One major seismic shift was when Mackie invested millions of dollars in advertising (for only one SKU) to pre-sell one mixer direct to the customer, diluting the influence of old school dealer distribution.

I can't predict where this ends up and some argue buyers will always want to hold a guitar in their hands before buying. I suspect a lot are already being sold direct.

I watched this slow motion train wreck play out over a few decades. The smartest (large) retailers are combining webs sales with brick and mortar for sales and order fufilment, but this is still a work in process. 

JR

PS: FWIW I sold direct back in the 70s with my kit business and sell direct now (drum tuners). My retail price would have to be priced a bunch higher to support a dealer markup, and drummers already resist my prices, when they could buy a new cymbal instead. 

 

[chipss36]

The affordable 59 saved Gibson after the norlin area,
Long tendon neck, soild light body, the correct (not Nashville) bridge,  small things , pick guard shape....ext....
Would be nice

Instead we have les Pual’s with Ibanez neck joints and robot tuners? 

I also think harley, fender, Gibson, and the like are also due for adjustments , times have changed, it’s sad, and I am old... lol