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Discussion in 'Bad Dog Cafe' started by bluesky1963, Feb 13, 2018.
Please think of the children.
I don't know the details of recent Remington manufacture, but the consumer that now has to choose between more expensive made in USA and cheaper made in China products, has pretty much made its collective choice.
I would guess that in the global market, many buyers of made in USA products used to be blue collar workers, folks who believed in the made in USA ideal because they themselves made stuff in USA and were proud of it.
Take away their jobs, take away their pride in manufacture, take away their financial security, and there goes a huge devoted buyer market.
And in fact we here on the TDPRI have made great strides for foreign manufacture, filling pages with praise for mediocre Squiers while complaining about imperfections on USA Fenders.
Fender now has stiffer price competition from its own overseas production's quality and price, so has to streamline US production to maintain attractive pricing.
Yet US buyers complain about every flaw, and sometimes seem to see no evil in the imports, despite the fact that no guitar is really perfect.
Sorry, I see all these separate events as part of one big movement.
Remington has $950 Million USD in debt. Who knows how they got that way (maybe borrowing for acquisitions, borrowing for capacity they didn't need, a holding company that bled them and borrowed against them, etc.), but it's the result of an ridiculously unsustainable business model. They blame a downturn in sales for their current situatlon, but if a downturn is sales threatens the viability of a business that big, that simply reveals the house of cards they've built.
Really, the article should say "Gibson's owners are running out of time" not Gibson is running out of time. This is a familiar scenario with many poorly run businesses - Large bond issues at fairly high interest rates catch up to them when profits are not as good as they hoped, so they take on some private equity money to make ends meet. But PE guys do not put 130mm dollars into a business like this so they can be partners with the current owners. The terms vary between PE arrangements, but it is safe to say that there will be a large-scale restructuring in the foreseeable future, the PE company will hold the equity, the Bond Holders will probably accept some reduced payment, and Henry will be forced out, with no ownership interest and spend years telling people about how he got screwed out of his business by these ruthless PE guys who were so shortsighted that they could not understand how the vision would have played out if he just stayed in charge a little longer.
For the consumers, there will be little to no disruption. Of course, it is possible (though I doubt it) that the PE guys do not have strong enough language in their agreements to force a restructure (i.e. force current ownership out), in which case, they will likely file bankruptcy protection while they fight things out, which will shake consumer confidence and devalue the brand for all investors/creditors.
Please see my post about Remington. They are in debt up to their eyeballs. I understand what you're saying about foreign competition, but that's not Remington's issue in this case.
IDK the gun market of today, is there no new foreign competition presenting significantly lower prices than the old US (and other traditionally precision manufacturing countries) manufacturers?
I wasn't suggesting that only companies that use offshore manufacture will suffer.
Not necessarily in this forum but it seems like people are gloating about this. That's really sad. The hard-working people who do the building don't make the big decisions; a few people at the top do.
Not discussing it? The top three Bad Dog topics, in order of prevalence:
3. Guitar Center is failing.
2. Gibson is failing.
1. Cargo shorts.
It's sad to see iconic brands fall on hard times. Fender is still a quality product. MIM means fewer features, not lower quality. American Fender guitars are all fine products. Gibson let quality slip. That's inexcusable when Made in USA once stood for the best quality money could buy. Gibson also cheapened the product. You can't get a guitar with a high gloss finish for under $1200 and $800 doesn't even get you grain filler. Fender doesn't make anything so poorly finished at any price. At the same time prices have been rising, Gibson guitars, which were once expensive but high value products just became expensive. There are a host of reasons for it. Bad management, over production, poor quality control, unreasonable demands of dealers that limit potential sales, competition with imports, competition with what was made last year and the year before that and the year before that ad nauseum. But these are things that all companies in competitive environments face. Companies with good management rise to the challenge which points to the biggest difference between Gibson and well managed companies, quality management. I have an SG. I love it. I'm not anti-Gibson at all, but when I'm looking at a guitars, I'm rarely looking at a Gibson. It's been unconscious. But I've begun to consciously avoid Gibson. I'm sure that there are others like me. That can't be good for Gibson's chances to emerge from bankruptcy as a strong and competitive company. This is so sad.
This seems to be a part of an ongoing pattern where we have gotten this huge market of cheap import stuff and now it's hip to pick at the expensive stuff and complain that it isn't good enough.
The only decent Gibsons I ever owned were old ones. I tried, but was never satisfied with the sound on the new ones.
Martin can build a killer sounding brand new guitar, Gibson? I'm not so sure.
Wasn’t Remington the guy who was so impressed he bought the company?
I'll miss em' if and when they go.
They probably won't stay gone long, though.
The guitar market has always had a huge market of cheap imported guitars. That dates back to the early sixties. Where do you think companies like Ibanez got their start. First of all Fender isn't in any trouble they have less than 100 million in debt and they sell over 500 million a year in product.
Squier and Epiphone are not competing against made in the Usa Fender and Gibson they are competing against the Samicks, Ibanez's and GFS brands that make up the 100 to 400 price range. At least with those house brands they get to keep some market share unlike the late 60's early 70's. Which is when both companies started to lose a lot of money.
As for Gibson The guitar business is fine, people may have problems with quality or styles but that part of the company is not the problem. Its Henry trying to be a big conglomerate like Yamaha or Panasonic. Why he invested in real money in the electronics division of Philips is mind boggling. When was the last time you bought a Phillips stereo or Tv in North America. They used to have a slight following when the European version of Marantz was aligned with philips but not here. The same goes for his other purchases of late although maybe buying Harmony Central will save them.
In the end Henry's gonna go and the guitar business will survive. And there's no way PRS could buy or run Gibson one does 50 million the other does 1.5 billion in yearly sales.
Well, if these two guitars are any indication they're doing ok.... Two new LP Jr.'s handmade for Johnny A. Check out the contours and neck join - one is 5 lb 10 oz and the other is 5 lb 11 oz.
Here's a good, Les Paul inspired guitar made in Korea China. People may say why is Gibson so expensive?
Well, you're paying American workers who have a higher cost of living than other guitar builders around the world. And they have many more years building Gibsons, than someone who is emulating them.
How do we know how long the cheaper ones will hold up in the long run? There are Gibsons that have been around for decades.
Roughly $500M of debt.
they would have to PROFIT $1,000 on 500,000 guitars to kill that debt.
Just think about that.
Two nice-looking handmade guitars for a celebrity vs. an on-going plethora of bad news at the corporate/business/financial world level. Whaaaat??????
You probably need to do some homework on the company, maybe others too.
This is a debt, not manufacturing problem.
They had software many considered good and didn't sell it.
By most measures the company is not the original Gibson and has been that way for a long time. My opinion is they have business that is sustainable but lots of competition. If you look at financials that are public you'll see the debt problem.