Financial troubles at Gibson

[leegreenman]

The only thing keeping Gibson afloat is Epiphone and interestingly enough they continue to innovate and release new models. I can't understand how in an industry with so much innovation happening all around them, the bigger guys like Gibson and Fender continue to just trot out the same old guitars year after year.

People don't want innovation Gibson or Fender. Both are kinda backed into a corner.

 

[ThuzzleFump]

Have you seen these clunky automatic tuning machines? Crazy that on a $3k + guitar the first thing people will do is change the tuning machines.

Those things are an abomination. Or six. Six abominations.

 

[fhm555]

Well, they are about $1.6 Billion in debt. Other than filing for bankruptcy, what other options do you see for how they can get out of that situation?

They service the debt and hope they can outlast the stagnant economy. The only other option is to close up shop and if that's the plan it would have been implemented long ago. When GC starts wholesaling to anyone who walks up with cash I'll believe they are working toward going away, until then I'll not worry about it either way.Their rise or fall has no impact on my life so I could care less. I'll just have to go a little further to get strings, or finally break down and start ordering in. I've got one bass I'm already doing that for since no one locally stocks the set I need, so it would just be a matter of getting it done. I mainly go to GC now because a couple of guys I've known for a long time work there and it's always fun if I catch them on duty when I go by.

 

[xnewyorka]

They service the debt and hope they can outlast the stagnant economy.

Servicing the debt will be tough. I understand their bonds are yielding 35% now. That's an amazing return, but I'm not buying them!

 

[Handyman]

Servicing the debt will be tough. I understand their bonds are yielding 35% now. That's an amazing return, but I'm not buying them!

Good lord, really? If you're at 35%, at a minimum you've convinced a large portion of the industry's analysts that you're in some really deep doo doo.

 

[Tim Skaggs]

Take a take a look at Gibson acoustic instruments if you want to see some extreme prices.

A new F-5 mandolin will run you about $9k. They have a model that's $25k. Some Gibson banjos models are into the five figure range. I'm sure they are getting eaten alive with competitors that have serviceable instruments at 1/3 of Gibson's prices or less.

 

[Handyman]

A new F-5 mandolin will run you about $9k. They have a model that's $25k. Some Gibson banjos models are into the five figure range. I'm sure they are getting eaten alive with competitors that have serviceable instruments at 1/3 of Gibson's prices or less.

Ha, for about half the price of that F-5 you can a really nice Collings F style mandolin. Quite a bit more than serviceable, a Collings instrument is.

Gibson is the Harley Davidson of the guitar world. They've grown bloated, priced out of sync with the rest of the market, and seem to be incredibly reliant on the buying power of baby boomers who are exiting their peak buying years and entering their retirement home years.

 

[fhm555]

Like when All-Star rods got sold to Shakespeare?

Actually All-Star built their rep on Shakespeare blanks. They were one of the few rising American brands when the old houses like Fenwick were shutting down and selling the rights to their names. Where All-Star went wrong was when they decided to open their own blank manufacturing facility. They had some disastrous early production runs which resulted in not only huge financial losses from honoring warranty claims, but their rep went from top shelf toughness and quality to being known as too fragile to bother with. They bled out and just as they were about to die Shakespeare stepped in and got them for a song, and went right back to using the blanks they were producing that All-Star used to make their bones as a really good bit of kit.

Or at least that's the story I was told. When All-Star was using Shakespeare blanks so was I. I was getting the same blanks All-Star was using and they were the shiznit for freshwater stuff.

 

[drummer5359]

Gibson has made some interesting decisions over the years. Here is some history from a drummer's viewpoint.

I love Slingerland drums, I always have. Gene Krupa and Buddy Rich were Slingerland artists back in the day. Neil Peart played Slingerlands early in Rush's career, although he was never an endorser. They made amazing drums in the 50s and sixties, personally I find their drums from the mid sixties in particular to be spectacular. In the seventies they lost a little sheen, but still made very high quality drums. In the late 70s Pearl, Tama and Yamaha all made big inroads and knocked all of the American drum manufacturers on their butts. The Asian brands made innovative products at prices that the American brands couldn't compete with. Rogers didn't survive, Ludwig and Gretsch barely made it through that period. Slingerland went through a series of owners, eventually becoming a Gibson Brand.

In the late 80s, early 90s DW came up with a business model that worked. They were making custom drums in America, charging custom prices and marketing them as a premium product. they went from being a small company to being THE big dog of American drum companies.

Gibson made a go of it. They moved production to Nashville and build some great drums. Unfortunately , the Slingerland name didn't resonate with buyers who remembered the crappy drums that they sold in the 80s, certainly not at DW prices. Gibson's marketing of these great drums was pretty weak as well. The brand had lost it's lustre in the eyes of many, sort of like Cadillac. They moved production to Conrad Arkansas for a few years and eventually gave up on the drum business and closed up shop. This was around early 2008.

I had bought one their amazing "Nashville era" Slingerland Radio King snares and was saving up to order a full Slingerland kit. Alas, when I was ready to put the money down I found out that production stopped. In July of 2008 I bought a DW Collector's Series kit for the same money that I would have spent on Slingerland.

Since then several American companies have tried to buy the name. Gibson refuses to sell it. A company called "The Chicago Drum Company" has some of the old tooling and Niles Illinois employees. They make some great drums that are pretty much reproductions of the revered 50s and 60s Slingerlands. (Very similar to what "Heritage" does in making models similar to Gibson in the old Kalamazoo plant.) DW builds a line of drums called the "Classic Series". They don't look like Slingerlands, but they sure sound like them. The shells are built to 1950s Slingerland specs. Maxwell drums also make a line of Slingerland clones that are wonderful. Steve Maxwell tried to buy the name from Gibson and was told that it wasn't for sale.

Unfortunately, the longer the Slingerland name stays out of production, the less it means to current drum buyers. It is a sad state of affairs.

 

[fhm555]

Servicing the debt will be tough. I understand their bonds are yielding 35% now. That's an amazing return, but I'm not buying them!

I'm no business whiz, I just know what it take to run a small business. I opened and closed more than a few and if times are adequate I'm OK, if they are good so am I, when they trend down I strike my tents and let the next optimist take their shot. I have no doubt it's infinitely more complicated at the GC level, but the basic philosophy of gambling on the economy has to apply, and if they are in trouble they are really trying hard to bluff.

 

[Diamond_Dave]

The current philosophy of American business is for every one productive working employee, always hire two managers. One to watch the employee, and one to manage the employee and manager. And whenever there are cuts in jobs, it's ALWAYS the hourly working stiffs. This is the reason our country is sooo screwed up. So many mid level families and workers with both parents working to hold on to what little they have.

But in Asia? They are ruthless in competitiveness. They're not going to stack managers on top of managers because they're SMARTER than American businessmen-- they know where all the worthless fat lies. So, as the offshore instruments are becoming higher quality, Americans are still managing managers and cutting the working end of the business. This is how Gibson along with most all the other American businesses conduct "business." It's no wonder they're losing the battle. Same with Sears. They cut the staff, but should KICK OUT the managers.

I don't think this is the case at all. They manufacture and manage they same way we do. Same books, same paradigms. The difference is labor cost. Chinese workers earn two or three bucks an hour. American factory workers make something like $12 on average. When you figure everything else is a commodity that costs about the same here or there...you get really nice Epiphones at 1/4 the cost of a Gibson.

But you're correct that the Chinese (and the Koreans and Indonesians) are ruthlessly competitive. That's why quality has gone up so much in the last few years.

 

[xnewyorka]

Good lord, really? If you're at 35%, at a minimum you've convinced a large portion of the industry's analysts that you're in some really deep doo doo.

Here's where I saw that:
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Will Guitar Center be overwhelmed by its debt?

 

[rogerbmiller]

[Invalid or Expired Link Removed]

 

[Relsom]

Actually All-Star built their rep on Shakespeare blanks. They were one of the few rising American brands when the old houses like Fenwick were shutting down and selling the rights to their names. Where All-Star went wrong was when they decided to open their own blank manufacturing facility. They had some disastrous early production runs which resulted in not only huge financial losses from honoring warranty claims, but their rep went from top shelf toughness and quality to being known as too fragile to bother with. They bled out and just as they were about to die Shakespeare stepped in and got them for a song, and went right back to using the blanks they were producing that All-Star used to make their bones as a really good bit of kit.

Or at least that's the story I was told. When All-Star was using Shakespeare blanks so was I. I was getting the same blanks All-Star was using and they were the shiznit for freshwater stuff.

Seems I remember when a lot of cheap All Star branded rods were being stocked at Dicks about 10 or 12 years ago. They didn't have the balance and feel that I had been use to associate with the brand. I went with Shimano. I'm not into it enough to pay for Loomis.

 

[fhm555]

Seems I remember when a lot of cheap All Star branded rods were being stocked at Dicks about 10 or 12 years ago. They didn't have the balance and feel that I had been use to associate with the brand. I went with Shimano. I'm not into it enough to pay for Loomis.

Unless it's changed hands again, Loomis is owned by Shimano.

 

[roller]

View attachment 2693514
This EB is a lover. So is that Koa Kawai. 2 of my lifers.
Sometimes, whoever it is, they just nail it!

Those graphite-necked Kawais are nice basses and a great bargain.

 

[wmhill]

Didn't anyone else feel that the "$99 Les Paul" was a desperate cry for help?
Epiphone Announces New Les Paul

 

[Jeff Scott]

...Or some investors will buy rights to the name then import a $20 instrument and slap a Gibson decal on the headstock....

Hasn't that already been going on for a few years now (read: Chinese fakers).

From the analyst in GN.C's link:

Last year, Fender Musical Instruments Corp., partly owned by Servco Pacific Capital and TPG Capital LP, was able to pull itself up to B1 from B2, which is still in speculative territory but only by four notches. The upgrade followed Fender's move to pay down $40 million of debt in 2016, bringing its leverage to 2.5 times debt to Ebitda. Still, the company has posted small revenue and has poor product diversity, Moody's said.

Just what we need, even more variations on Teles, Strats, P and J basses...........................

 

[two fingers]

[Invalid or Expired Link Removed]

Ouch.

 

[Relsom]

Unless it's changed hands again, Loomis is owned by Shimano.

Wow, I had no Idea. I've been happy with Shimano Clarus rods for a long time. My tournament fishing buddies might turn their nose up but I think they're hard to beat for $70.

Regarding Gibson though, my first real Bass was an EB0. I've had a soft spot for those SG derived instruments ever since but my attraction to them is sentimental rather than technical. When considering a new instrument, Gibson is one name that rarely enters the conversation, at least for me.