More woes for Gibson

[Ross W. Lovell]

Yeah, I remember in the early 90s, one of our local shops lost Gibson and Epiphone because gibson was requiring them to buy 30 Gibsons a year, plus a bunch of other stuff. This was just not a market where anybody was going to be selling 30 Gibson branded guitars a year

I remember either 20 or 30 per month and Gibson picked models and colors. Dealers who had customers with special orders........those were in addition to the others, not instead of!

 

[MobileHolmes]

I remember either 20 or 30 per month and Gibson picked models and colors. Dealers who had customers with special orders........those were in addition to the others, not instead of!

Could be. It was a long time ago, and I was just listening to the sales guys b*tch while waiting for my bass lessons. I got the impression the quotas were new (or newly enforced) around 1990-1991, as they had been a dealer forever and couldn't continue. Based on what was in the shop, they were lucky to be moving 2 gibsons a month, let alone 20-30. What they really wanted was epiphone, but they lost that too, and ultimately, were pretty much Peavy and band instruments only after that.

 

[DrummerwStrings]

Until you default or otherwise breach whatever agreement you signed there’s not much a creditor can do to pull the plug in advance. The law doesn’t allow many situations where a creditor can take preemptive action. Usually the borrower has to do something extraordinary, such as moving funds outside the country, or selling off assets pledged as collateral against a loan before a creditor is allowed to intervene.

There is such a thing as predatory lending where a creditor will advance funding beyond what they know a naive debtor can possibly hope to repay. This is done with the intent of eventually taking over the company. But you rarely see that happen these days. And when it does, the company that got sucker punched almost always owns something unique that the creditor is secretly after, such as patents or other intellectual property, a valuable parcel of real estate or a historic building, or something similar that can be flipped for fast cash. It’s seldom done because the creditor wants the actual company.

It’s kinda rare these days because courts often take a dim view of the practice if it’s too obvious. But either way, that’s not what happened to Gibson. Henry bet the farm…and lost. It’s as simple as that.

“Twas ever thus.” as Mr. Natural would say.

I was assuming the Board owned shares, but I think I read earlier that CEO has controlling interest.

Might be a reason for Hope the investors can turn it around.

EDIT: oops, forgot this - if TB can find an angel investor...

 

[craigie]

I got mine used... saved a ton, as well.

I tried for the Chet Atkins golf clubs but they were only left handed.

 

[Korladis]

Agree. I've rarely seen a merger or acquisition that made much sense except where the company being acquired held a strong patent portfolio, or had already established a beachhead in a foreign country the buying company wanted in on.

But I guess they teach these guys differently than they way they did when I was getting my degree back in management school.

Too much emphasis on paper-pushing, not enough on paying attention to the actual products/services being sold.

Gibson CEO says he blames himself for the company's current status

As he should.

I can see it now. Mark Zuckerberg buys Gibson. Their guitars capture data on every song you play, parses out your demographic and sells the data to the highest bidder.

I doubt Zuckerberg could run Gibson any worse than Henry J did. I was thinking more Larry Page, though.

 

[Ross W. Lovell]

Could be. It was a long time ago, and I was just listening to the sales guys b*tch while waiting for my bass lessons. I got the impression the quotas were new (or newly enforced) around 1990-1991, as they had been a dealer forever and couldn't continue. Based on what was in the shop, they were lucky to be moving 2 gibsons a month, let alone 20-30. What they really wanted was epiphone, but they lost that too, and ultimately, were pretty much Peavy and band instruments only after that.

We were in Western Mass. We could sell those units, problem was one or two were seconds and marked as such along with of the ones sent, odd colors and pickupand hardware specs. Not your traditional fare. Early in the 90's was just when the new equipment was starting to arrive. I always thought the number of seconds, which were more than I though normal, were due to the learning curve on the new machinery.

 

[StraffordMike]

Let's get something straight, I'm from where they made the original Indian.

They bought a logo, barely. The name wasn't even correct, Indian MotoRcycle........there was no R in Indian Motocycle. The engines I believe, were S&S stuffed into a frame wrapped in retro sheet metal, the "craftsmanship" was only visible with an electron microscope.

Philip Zanghi ran a scam, tried to sell jackets to finance the manufacturing side using all sorts of inventive financing.

Hey! Hey! Hey! No intention of disparaging a great marque such as Indian.
The Scout and Spirit were indeed S&S motors. The big Chief had a proprietary engine.
It was disappointing to see what should have been a fine piece of American history revived for a new generation of riders ridden into the ground.
I do understand that Polaris has done a much better job using engineering and experience gained through their now demised Victory brand. The only downside I see is the exorbitant cost. Thirty grand is a lot for a motocycle.

 

[Spidey2112]

I tried for the Chet Atkins golf clubs but they were only left handed.

A tradeoff, for sure... with my purchase, I had to sign a contract to not only embroider 'Mr. Guitar' on the side of my bag, but also use picks for ball markers.

A true plus is evident when, on rare occasion, I hit the sweet spot, achieving that...

... Nashville sound.

I would start practicing left-handed, if I were you... left-hand, or not.

 

[40Hz]

Too much emphasis on paper-pushing, not enough on paying attention to the actual products/services being sold.

Yep. That’s the big problem with American business these days. Absentee ownership. A lot of what passes for business (mergers, buyouts, licensing deals, litigation, arbitrage, brokering, etc.) is just rearranging the deck chairs. It doesn’t create new wealth for the economy. It justs moves already existing wealth out of one set of hands into another.

And in that game there’s no commitment to product, quality, or customer. Because the only thing that really matters when you “just own” something for business purposes (i.e. you “invested” as a opposed to “committed”) is the timing. Which boils down to: when do you buy in - and when should you cash out?

“And so these castles made of sand, melt into the sea…eventually…”

 

[Korladis]

Yep. That’s the big problem with American business these days. Absentee ownership. A lot of what passes for business (mergers, buyouts, licensing deals, litigation, arbitrage, brokering, etc.) is just rearranging the deck chairs. It doesn’t create new wealth for the economy. It justs moves already existing wealth out of one set of hands into another.

And in that game there’s no commitment to product, quality, or customer. Because the only thing that really matters when you “just own” something for business purposes (i.e. you “invested” as a opposed to “committed”) is the timing. Which boils down to: when do you buy in - and when should you cash out?

“And so these castles made of sand, melt into the sea…eventually…”

Yep. Too much of it has this weird attitude of thinking of all of it in the abstract instead of as actual products and services that people buy. Too many businesses being run by guys who only care about the numbers of dollars, and not about what the company actually does.

 

[gln1955]

Yep. That’s the big problem with American business these days. Absentee ownership. A lot of what passes for business (mergers, buyouts, licensing deals, litigation, arbitrage, brokering, etc.) is just rearranging the deck chairs. It doesn’t create new wealth for the economy. It justs moves already existing wealth out of one set of hands into another.

And in that game there’s no commitment to product, quality, or customer. Because the only thing that really matters when you “just own” something for business purposes (i.e. you “invested” as a opposed to “committed”) is the timing. Which boils down to: when do you buy in - and when should you cash out?

“And so these castles made of sand, melt into the sea…eventually…”

And so we have tech companies worth billions of dollars that have never made a cent on the "product" they produce.

 

[Korladis]

And so we have tech companies worth billions of dollars that have never made a cent on the "product" they produce.

Twitter, sure.

But Google, FB, Instagram have made a ton of money. Mostly through advertising revenue but also partly through taking a cut of financial transactions (for example, for Android phone apps downloaded from the Google Play store, if it's a paid app or an app with purchases made in the app, Google gets a cut of every exchange of dollars).

 

[40Hz]

Yep. Too much of it has this weird attitude of thinking of all of it in the abstract instead of as actual products and services that people buy. Too many businesses being run by guys who only care about the numbers of dollars, and not about what the company actually does.

Or the people who work in it.

Time was when layoffs were seen as a sign of failure on the part of management. Today they’re viewed as a sign of managerial acumen.

 

[Korladis]

Or the people who work in it.

Time was when layoffs were seen as a sign of failure on the part of management. Tossy they’re viewed as a sign of managerial acumen.

Yep. It's sad.

I know Rickenbacker gets a lot of flak around here, especially due to the brusque and tempermental nature of their CEO, but they notably didn't overextend themselves, and didn't have to do mass layoffs.

 

[40Hz]

And so we have tech companies worth billions of dollars that have never made a cent on the "product" they produce.

Gotta love the stock market and the “technical” financial analysts.

Old joke:

Business Guy: How can you possibly run a business where you’re losing money on every transaction?

New Age Biz Guy: It’s simple. We make it up on volume.

 

[40Hz]

Yep. It's sad.

I know Rickenbacker gets a lot of flak around here, especially due to the brusque and tempermental nature of their CEO, but they notably didn't overextend themselves, and didn't have to do mass layoffs.

Rickenbacker understands that with the product they’re making that:

No difference + No difference + No difference equals: BIG DIFFERENCE!

First you have a successful product, which you introduce a “little” change to in order to save yourself some money because “it won’t make any difference” to the product. Then you make another change “nobody will even notice.” But eventually ou hit a tipping point where some minute change, in conjunction with what went before has a cascading effect. A sacred trust, so to speak, has been violated and you are now producing something very different than what your customers want - or more importantly, are buying.

John Hall gets that. Henry Juskiewicz doesn’t.

Of course it always helps a musical instrument company when its CEO actually wants to run it as a musical instrument company as opposed to turning it into a holding company.

 

[Korladis]

Rickenbacker understands that with the product they’re making that:

No difference + No difference + No difference equals: BIG DIFFERENCE!

First you have a successful product, which you introduce a “little” change to in order to save yourself some money because “it won’t make any difference” to the product. Then you make another change “nobody will even notice.” But eventually ou hit a tipping point where some minute change, in conjunction with what went before has a cascading effect. A sacred trust, so to speak, has been violated and you are now producing something very different than what your customers want - or more importantly, are buying.

John Hall gets that. Henry Juskiewicz doesn’t.

Of course it always helps a musical instrument company when its CEO actually wants to run it as a musical instrument company as opposed to turning it into a holding company.

Also understanding that you don't have to necessarily like the new generation's music to market to them. RIC noticed that the indie and stoner crowd seemed to like their instruments, and so marketed towards them. Fender did the same.

 

[Wisebass]

Old joke:

Business Guy: How can you possibly run a business where you’re losing money on every transaction?

New Age Biz Guy: It’s simple. We make it up on volume.

Business Guy: How can you possibly run a business where you’re losing money on every transaction?

The other guy: I don' t care I am the broker.



Wise(b)ass

 

[bound'n'blocked]

none of the les paul players i know - and i know many - appreciated either the robo guitars or the government grey ones. i realize someone must be buying them - well, i don't realize that at all. sam ash hollywood sold like 3 of those robo les pauls in a year with them prominently displayed. i wonder who IS buying them!

In all my years of, well, years...I have come across exactly ONE of those robo tuning guitars. I thought it was really cool when I saw it and the guy started to tune his guitar. I could have tuned ten in the time it took. I wasnt impressed.

BnB

 

[bound'n'blocked]

Most manufacturers don't really care if pee buy their guitars, as long as the DEALERS buy them. Given Gibson's penchant for huge (and ridiculous mixes) annual dealer commitments, big dealers have to buy a bunch of unsellable crap to get the bread and butter items. And this has been going on since at least '77 when I got into retail. Small dealers get shut out, and the company looses touch with the wider retail market.

I've mentioned this in the other Gibson threads as well. I have had two friends who were retailers. One couldn't get a Gibson dealership because of some ridiculous rule about dealers being within so many miles of each other. The other had a dealership, but said the stupid demands places on dealers (amount of stock required, particular guitars you had to carry, where in the store it went, what went near it etc...) made it not worth it most times.

BnB