How many brands do you know that started with a whiff of cool, grew too big and fell into the AFAB (anything for a buck) trap? I’ve joked about Fender and Gibson air fresheners hanging from dollar store and car wash pegboards alongside their Playboy and pine tree cousins.
That day is here. Following years of expansion, extension and massive cheapening, Gibson filed for bankruptcy on May 1. And it may spell a better future for the only thing the company ever did that mattered: making great musical instruments.
Founded in 1902 and once-again privately held since 1986, Gibson lost its focus, found itself $500 million in debt, and is on the cusp of taking a $135 million loan from a new conglomeration of fund managers and bond holders. It’s a deal that’ll likely hand ownership to people who don’t know much about Gibson’s “120 Years of Innovation.” (As documented in Gibson’s timeline.)
As musical friends reacted (no doubt worldwide) on social media, I found my gut vacillating between the sentiments expressed by two musicians in my hometown, Chicago:
“Rock is dead.” — Doug Hagman
“…if you are looking for Gibson, there are 20,000 hanging on music store walls as we speak. And that doesn’t include Europe.” —James Chrzan
Doug’s got a point; today’s guitars are something of an automated, high-tech echo of the design and handiwork of Les Paul and other greats, and company ownership has shifted to a conglomeration of investors. But James is also right. Those who want and can afford a Gibson can find a huge selection at music stores both brick and mortar and online. If they’re made well and play well, great. If not, there are many other companies large and small making guitars the old fashioned way.
Headlines like the one Rolling Stone ran on May 1 — “Iconic Guitar Brand Gibson Files For Bankruptcy” — were perfect for causing hand-wringing by Gibson aficionados. But the deck (subhead under the headline) immediately followed: “Company will refocus on its musical instruments, shedding its audio and home entertainment business.“
Part of me — and many others — resent pure financial plays by investors whose moral fiber has no any steel strings attached. Other headlines similarly told a more cheerful story, such as Bloomberg’s “Gibson Files for Bankruptcy in Deal to Renew Guitar Business.” That’s the sentiment that led me to opine that the Gibson filing might be good news:
“If they shed stupid businesses like the boom-box business it bought from Philips, AND if all the good people don’t quit or get fired (or escape to Heritage Guitars!) — Gibson can restructure and get back to making guitars.” [More on Heritage below in this post.]
Yeah, just one idiot’s opinion. But by “stupid” I refer to Gibson’s 2014 acquisition of Philips’ the audio, video, multimedia and accessories business, which turned out to be a financial albatross. At the same time, companies need to make money to stay in business, and the guitar business, with sales of $5.6 billion in 2017, has been relatively flat for years. It’s just not that exciting to investors. (Gibson’s lucky a few care enough to step in with loans.) As for firings, Gibson in March planned a pre-filing workforce reduction of 12-15%, following layoffs already made to its Custom Shop, Digital Music News wrote last month. That is NOT how a company seeking to shed non-core businesses treats the braintrust of its core business. It smells more like a move by execs who are about to pack their golden parachutes and bail out before the axe falls.
MarketWatch provided some good insight early in the bankruptcy filing news cycle with the “day-of” (May 6) story, “As Gibson files for bankruptcy, are people falling out of love with guitars?” Another, filed May 10, provided more insight into why guitar companies are struggling and how to revive them. In that latter story veteran guitar pro Stevie Salas, said, “Gibson was pressured to get super-rich and they made moves that can destroy companies.” He lamented moves from Gibson, Fender and others watering down their brand image by slapping their names on $99 guitar packages sold in big-box and club-store retailers.
Writer Tom Teodorczuk added that “cheapening an iconic brand while at the same time raising prices through the roof is no way to engender loyalty by a new generation of musicians.”
Today, if I want a Gibson electric, my gut tells me to turn to Heritage Guitar, a spinoff formed in 1985 by employees who bought Gibson’s original Kalamazoo factory when Gibson moved to Nashville. Heritage has done only one thing: make high-end American electric guitars. Surely THEY are heart and soul of the old Gibson we love, right?
Heritage Guitars: following in Gibson’s footsteps?
Heritage was 0ff to a great start, but in the 1990s it stopped advertising, lost sales and nearly shuttered the 90-plus year-old factory in 2007 — until, according to a Michigan news report, a local lawyer turned co-owner became a “guitar hero” and saved the company.
The company changed hands again in 2016, and in the fall of 2017, the new management team inked a partnership with Rolling Stone and a real estate developer to create at tourist shrine at the factory aimed at “incorporating a wealth of music and pop culture into a multimillion-dollar renovation” to possibly include a live entertainment venue, instrument store, museum, recording studio, restaurant and rooftop bar,” according to a news report.
My opinion is that we don’t need another Hard Rock Cafe, we need companies that make amazing guitars. Well, actually, we need people who make amazing guitars.
Early this year, Heritage — which I thought was the soul of Gibson —fired 10 craftsmen and more quit in protest as the company automated with multi-axis CNC and PLEX machines. I love automation, it’s a tough call to bash it categorically but man, is nothing sacred? Maybe it’s okay, maybe not. But increasingly, artisans are being left out, as expressed in the March 1 headline, “Firings of craftsmen take heart out of Heritage Guitar, workers say.” If Heritage was the heart of Gibson, and some of the best people have left, I hope they keep making guitars, either by banding together or working as sole artisans…for those deep-pocketed musicians who can afford to support them.
The grass ain’t any greener at Fender
Roughly analogous to the Heritage/Gibson relationship is that of that other iconic guitar company, Fender and spinoff G+L (The “L” being Leo Fender. Like Gibson and now Heritage, Fender and G+L use CNC and PLEX technologies.
Back in 1965 when Fender sold out to CBS, purists decried the change. They were right to in some cases, including the devaluation of classic amps like the Twin Reverb amplifier and others whose circuitry was “enhanced” to be cleaner, changing the nature of the amps’ trademark growl. In 1985, employees purchased the company back and today, a holding company of multiple partners runs Fender. And like Gibson, Fender has made many acquisitions. One I see as particularly ugly is the 2011 partnership with Volkswagen to put “Fender Premium Audio” into cars. You don’t play it like a guitar, you play it like a car stereo.
So many brands have turned themselves into crap over the years just to make a Faustian buck. Of course, expansion and globalization has had various merits, business-wise for years (though my focus isn’t on them at the moment). In the 1970s, Japanese then-upstart Ibanez made a mint making cheaper knockoffs of Gibson’s Les Paul guitars, and over the years leading brands offshore their own knockoffs to Asian factories, even G+L. Rather than going into that tangled knot, help yourself to two good if aging articles I found, one from Acoustic Guitar (2014) and another on USA vs. Chinese guitars from Guitar Player (2013). If they ask me to write, I’ll update them!
The cycle of innovation
As old brands face shaky prospects for rebirth, new startups should emerge to take their place. New growth in the form if small startups that succeed will always end up changing hands in the natural course of their lives. Retirement, death and other drivers of succession are just part of the corporate, and human, nature.
But it doesn’t have to be that way if companies can be innovative without losing their souls and core consumer/user proponents.
Any number of papers, presentations and tutorials are available to leaders who want to stay leaders. Just search “innovation management” or “cycle of innovation” and you’ll find links such as the American Society for Quality’s Innovation Management Cycle and the “3 Key Principles for Maintaining a Cycle of Continuous Innovation” from Chief Executive magazine. In the latter, the first principle is: “Start at the top,” with the CEO leading by example. That doesn’t mean there’ll be greater handmade content in the products coming out of guitar factories. A case in point: Gibson’s G Force “robotic” (self-tuning) guitars. But it does mean, at least, that the Gibsons, Fenders of the world will have a better idea how to balance the need for profits against the effects of innovation on brand loyalists.
Love the instrument before the company
I admit it’s painful when something like the Fender Stratocaster name is whored-out to Asia and Mexico to capitalize on the iconic guitar name and shape, but there are still “American Original” Strats for the purists. It’s just the nature of things.
In the late ’80s when I bought my Strat Plus in its debut year, I was choosing between that and a G+L, and chose the Fender because the G+L was heavy as hell…great sustain but heavy as hell. The neck wasn’t lined up with the strings as perfectly I thought it should be, so I went back to the music store where Larry, the guy who sold it to me, gave it a whack it to straighten it out, and said, “They’re all like that.” I wish I paid better attention to G+L but I still have my Plus and pretty much love it.
In 2003 when I bought a Hofner Jazzica archtop hand-crafted in Germany and finished in the company’s violin shop. The label inside the F-hole indicated that it was “No. 1 of 50” of a limited run for the year. That year, the company’s musical instrument division was sold, sold again and a year later, sold again. A few years later Hofner established in 1887 and made famous by Paul McCartney’s “Beatle bass,” was making Jazzicas identical to mine in a factory in China. It bugged me a little to see the Chinese models hanging in a shop, but for me, it’s the feel and sound, not the look (despite its hand-rubbed violin shop finish) that makes my guitar what it is.
Hofner has changed ownership about as often as I change my underwear (well, not quite), and I sleep very well at night knowing that I have a quality instrument. The location of the factory making newer versions doesn’t affect te quality of mine.
There will always be artisans making quality guitars — for that matter, making all manner of good things. I suppose we’ll just have to do our best to have the things we like, and can afford, while doing our best to support the artisans who care about the work they do. As big names rise, fall and regroup, smaller shops will continue to spin-off, emerge, innovate.