Gibson files for bankruptcy

[christianm77]

Well the joke here is that despite Gibson having a lot of bad press etc over the past few years their guitar business was still profitable.

People were still interested in buying new Gibsons.

So all of this discussion is kind of beside the point.

[Doctor Jeff]

When you are rich you want to buy expensive things. You actually want to overpay to buy something normal people cannot afford.

Brand names like Gibson, Mercedes, Steinway; those are priceless. You don't handle such a brand name by moving production to China and trying to compete with Ibanez or Yamaha. You will destroy the brand name.

So this whole 'produced Gibson for the masses of poor musicians'-line is bogus.

The problem is that Gibson isn't JUST a boutique maker for rich people--they always have put out the perception that they make products for everyone. (I personally don't think becoming just a luxury brand is a great business model; others may disagree.) What they have become is different--a lifestyle model, like Harley Davidson or Levi's jeans. They have tried to appeal to multiple facets, which is risky in and of itself.

My criticism above is that they have emphasized certain parts like the high-end archtops and the (pardon the expression) fanboy models like LP and the gimmicky stuff at the expense of certain types of guitars that could compete with Ibanez etc.

Yes, I realize that's what they have done with Epiphone, but if someone wants a Gibson name, that doesn't really work. A cheap Martin is still a Martin. A cheap Fender is still a Fender. Even the Squier brand has the Fender name on it. But an Epiphone is not a Gibson.

I don't know about Steinway, but the Mercedes (and BMW) example proves the point--they price entry-level vehicles not too far above the average price of a car, which is $33K in the US. So yes they're aspirational but if you could afford a Camry, you could, if you really wanted, afford a Mercedes or BMW.

[Doctor Jeff]

Well the joke here is that despite Gibson having a lot of bad press etc over the past few years their guitar business was still profitable.

People were still interested in buying new Gibsons.

So all of this discussion is kind of beside the point.

The operative word here is "were." Whether they still will be after the restructuring remains to be seen.

[Thumpalumpacus]

Or that well preserved used ones are much cheaper?

This, although I wouldn't say "much" cheaper ... just cheaper enough to steal the sale from the "new" column.

[Stringswinger]

The operative word here is "were." Whether they still will be after the restructuring remains to be seen.

People still buy GM cars and trucks after their "restructuring". And guitar players will still buy Gibsons after theirs. Only a Gibson is good enough is more than an advertising slogan. For many guitarists, it is a statement of fact. Even with all of the talented archtop builders out there, most jazz guitarists still aspire to own an L-5 or a Super 400. Many rock players still aspire to own a Lester (though for many of them the desired guitar is a Fender Strat, TBH).

[Doctor Jeff]

People still buy GM cars and trucks after their "restructuring". And guitar players will still buy Gibsons after theirs. Only a Gibson is good enough is more than an advertising slogan. For many guitarists, it is a statement of fact. Even with all of the talented archtop builders out there, most jazz guitarists still aspire to own an L-5 or a Super 400. Many rock players still aspire to own a Lester (though for many of them the desired guitar is a Fender Strat, TBH).

I agree people will still want to buy them. Whether they will be building those iconic guitars (in America anyway) is another question.

GM did OK after the "bailout"--they still make Camaros and Impalas. The Impala and many trucks by the way are made in Mexico or Canada. However, they stopped production on Saturn, Pontiac, and Hummer, and sold Saab to Dutch automaker Spyker.

The first car I bought with my own money was a Saab. I loved that car. A lot of great storied brands do die off. (The first guitar I bought with my own money was a Gibson...)

Chrysler got bought out by Fiat and is cutting way back on the sedan business. Same with Ford (who got some government help, though didn't go through bankruptcy).

So...it will be interesting to see who eventually owns Gibson, what models are offered and where they're made.

[Jazzstdnt]

The problem is that Gibson isn't JUST a boutique maker for rich people--they always have put out the perception that they make products for everyone. (I personally don't think becoming just a luxury brand is a great business model; others may disagree.) What they have become is different--a lifestyle model, like Harley Davidson or Levi's jeans. They have tried to appeal to multiple facets, which is risky in and of itself.

My criticism above is that they have emphasized certain parts like the high-end archtops and the (pardon the expression) fanboy models like LP and the gimmicky stuff at the expense of certain types of guitars that could compete with Ibanez etc.

.

They make what they make. They started with mandolins, which are not unlike archtops.
They are not now nor have they ever been a bolt-on neck cheapie maker like Fender.

I was 16 when I bought my walnut 335 with lawn mowing money so they are for normal people. Normal people who want a certain grade of guitar. (grade, not quality).

I don't know why you bring the word "luxury" into it. Fine guitars are not champagne, which goes against the wall, and they're not fashionista threads, which become obsolete long before being worn out.

Gibson has made very artful and beautiful guitars for decades. They used highly figured woods before the homely Norlin era, and now they're doing it again (as is the competition).

I can't agree that their Super 400s, LeGrands and L5's are "high-end" or "luxury". I don't see how they're different from the pre-Norlin era. A fine archtop made in the USA in 2018 by employees with benefits, a real estate footprint, and ever scarcer materials is what it is, and costs what it costs. You either want one or you don't.

You don't seem to want one because you don't value it. So why complain?

Also - what is a "LP fanboy", and how is one different from a Tele, Strat, Martin fanboy? Can you think of any redeeming qualities or characteristics that a LP might have, such that it would inspire a loyal fan base?

[Greentone]

Jazzstnt makes good sense. When I was a kid, you could put $400 on the counter and walk out with a Les Paul, a ES-335, etc. IIRC, you'd have to fork over another $50 to walk out with a ES-175. You could walk out with a Byrdland or a L-5CES for under a grand.

These were professional quality instruments, but they weren't exotic. Save your paper route money, lawn money, etc., and you'd have a nice guitar, at some point. Couldn't wait? The ES-330 was "ES-enough."

If anything, a young person can today save summer job money and quickly save up enough to purchase a very nice, pro-quality guitar. Even Gibsons are not out of reach. Connect with CME and you will find that those Gibsons are not (in real dollars) necessarily as expensive as they were all those years ago...at least, until the inventory dries up.

[christianm77]

The problem is that Gibson isn't JUST a boutique maker for rich people--they always have put out the perception that they make products for everyone. (I personally don't think becoming just a luxury brand is a great business model; others may disagree.) What they have become is different--a lifestyle model, like Harley Davidson or Levi's jeans. They have tried to appeal to multiple facets, which is risky in and of itself.

Yes. Despite all the hoo-ha about high prices etc, this didn't appear to be Henry J's (recent) vision for Gibson either. In fact, in the past few years we saw more and more stripped down US-made Gibsons at the low price point, to the point where some Gibsons were cheaper than some Epiphones.

[christianm77]

Jazzstnt makes good sense. When I was a kid, you could put $400 on the counter and walk out with a Les Paul, a ES-335, etc. IIRC, you'd have to fork over another $50 to walk out with a ES-175. You could walk out with a Byrdland or a L-5CES for under a grand.

These were professional quality instruments, but they weren't exotic. Save your paper route money, lawn money, etc., and you'd have a nice guitar, at some point. Couldn't wait? The ES-330 was "ES-enough."

If anything, a young person can today save summer job money and quickly save up enough to purchase a very nice, pro-quality guitar. Even Gibsons are not out of reach. Connect with CME and you will find that those Gibsons are not (in real dollars) necessarily as expensive as they were all those years ago...at least, until the inventory dries up.

I've heard people say that in real terms guitar and amps have got cheaper though? Is that true?

[Jim Soloway]

I think you guys are generally chasing each other down the wrong rabbit hole in a couple ways.

First, by all accounts the problem is not a result of underperformance by Gibson guitars. It is a mountain of debt resulting from the purchase of several other companies, mostly bought with borrowed money and most of which continued to lose a lot of money after they were acquired.

Second since Gibson is being acquired, at least for the short term, by Gibson's primary creditors, the new owners are not likely to be motivated by Gibson's long term best interest. Their first concern will most likely be to get back the substantial amount of money they're putting up to allow this deal to move forward plus as much as they can of the money they were already owed before having to pour in good money after bad. I doubt that they have any real ambition to be in the guitar business. They were just really left with no choice so I suspect that they will want to get as much of their money out as quickly as possible and leave it for next owners after them to decide what to do with Gibson for the long term.

[John A.]

I've heard people say that in real terms guitar and amps have got cheaper though? Is that true?

There are many ways of looking at that question. If you compare a particular model's current price to an earlier one + inflation, some come out cheaper today, while others come out more expensive, depending on the model, what your reference year is, etc. It's also hard to compare a Gibson or Fender of today to one from when I started in the late 70s because there are so many more variants of the models. A LP Standard cost $500 in 1980. That's about $1500 in today's $'s. But now there are multiple versions of a LP Standard, plus Traditional, Classic, etc., ranging from $2k-ish up, but there are LP Studios, Faded-Something-or-Others, etc. for $1000-ish.

I think the main difference between now and then is the value available at the lower to mid end. If you look at an entry level electric ca. 1980 (say, something that cost about $150 at the time) and compare that to something that costs the inflation adjusted equivalent to that today (about $450), you get a MUCH better guitar today. A $150 Fender copy in 1980 was likely pretty terrible. Today, you can get a dang nice Squier for $350. And in archtops? There were no good cheap archtops, period. Kays and Harmony's have taken on a certain retro cachet, but they're mostly pretty bad, and were when they were new. A cheap Ibanez, though, is a real guitar that can actually be played.

John

[Chazmo]

No matter how this Chapter 11 plays out, I'm afraid the Gibson guitar company many of us know and love will never be the same. If nothing else, the fine, handcrafted archtops will probably not be coming back in the immediate future. To piggyback on Jim Soloway's second point above, this will be all about money. The new Gibson will want to move product to keep cash flow going and that means focusing on guitars that sell faster and in larger quantities, like Les Pauls. The best we can hope for is that everything gets straightened out and Gibson comes roaring back stronger than ever eventually. But I dunno about that...I don't think I'd bet my house on it.

The good news is that nature, and economics, hates a vacuum. There will still be people who want nice archtops and other makers will fulfill that desire. Competitive manufacturers, such as Godin, may step up their archtop game and come up with new models with quality and features that exceed current offerings. Individual luthiers may get a lot busier with custom orders. Those who are already busy will get busier. And if demand exceeds the capacities of current luthiers, we may have surge of new craftspeople who take on the archtop trade. Who knows, we may see some cool new designs in years to come from an industry that has been mired in designs from the early part of the last century.

[Doctor Jeff]

They make what they make. They started with mandolins, which are not unlike archtops.
They are not now nor have they ever been a bolt-on neck cheapie maker like Fender.

I was 16 when I bought my walnut 335 with lawn mowing money so they are for normal people. Normal people who want a certain grade of guitar. (grade, not quality).

I don't know why you bring the word "luxury" into it. Fine guitars are not champagne, which goes against the wall, and they're not fashionista threads, which become obsolete long before being worn out.

Gibson has made very artful and beautiful guitars for decades. They used highly figured woods before the homely Norlin era, and now they're doing it again (as is the competition).

I can't agree that their Super 400s, LeGrands and L5's are "high-end" or "luxury". I don't see how they're different from the pre-Norlin era. A fine archtop made in the USA in 2018 by employees with benefits, a real estate footprint, and ever scarcer materials is what it is, and costs what it costs. You either want one or you don't.

You don't seem to want one because you don't value it. So why complain?

Also - what is a "LP fanboy", and how is one different from a Tele, Strat, Martin fanboy? Can you think of any redeeming qualities or characteristics that a LP might have, such that it would inspire a loyal fan base?

If you read my post you would notice I was responding to a prior post suggesting rich people would pay more for certain goods. Catering to rich people is the definition of a luxury business. I never said Gibson was exclusively a luxury brand, only that focusing on that segment, as some have suggested, is a losing proposition.

Re' the Gibsons you mentioned, I'm trying to imagine how a Super 400 or LeGrand cannot be considered a "high-end" guitar.

Other than that, I realize they make what they make and charge what they want. That might one reason they're in financial straits and Henry J was complaining about people not wanting to buy his guitars. (Of course his explanation was the guitar stores. Can't have anything to do with competition and prices.)

[Doctor Jeff]

Yes. Despite all the hoo-ha about high prices etc, this didn't appear to be Henry J's (recent) vision for Gibson either. In fact, in the past few years we saw more and more stripped down US-made Gibsons at the low price point, to the point where some Gibsons were cheaper than some Epiphones.

I agree Gibson had kind of a 2-pronged approach. However, just looking at current GC selections for cheaper solid body Gibbies, there are VERY few that are not hundreds of dollars more than competitors like ESP, Ibanez and Epiphone. Maybe the Firebird--but who wants one of those? (I joke, of course.) And there just are no bargains among the archtops. I mean, the perception is their prices are high. So you really have to want MIA with the Gibson name, and presumably a tradition of quality attached to it, otherwise you'll buy something else.

I think you guys are generally chasing each other down the wrong rabbit hole in a couple ways.

First, by all accounts the problem is not a result of underperformance by Gibson guitars. It is a mountain of debt resulting from the purchase of several other companies, mostly bought with borrowed money and most of which continued to lose a lot of money after they were acquired.

Second since Gibson is being acquired, at least for the short term, by Gibson's primary creditors, the new owners are not likely to be motivated by Gibson's long term best interest. Their first concern will most likely be to get back the substantial amount of money they're putting up to allow this deal to move forward plus as much as they can of the money they were already owed before having to pour in good money after bad. I doubt that they have any real ambition to be in the guitar business. They were just really left with no choice so I suspect that they will want to get as much of their money out as quickly as possible and leave it for next owners after them to decide what to do with Gibson for the long term.

Jim, I agree with the second part. However, as to the first, "by all accounts" the guitar business is doing OK? There are unknowns here that are yet to be uncovered. Bad business practices in one area generally bleed into another.

There are 3 reasons we know of to question that assumption. 1) Gibson selling the Memphis plant and laying off workers. Downsizing is never a sign "things are all right." 2) Henry J complaining in an interview about the need to change focus because they were having trouble selling guitars (posted above). And 3) their crazy decision to cut off long-time vendors and focus mainly on large boxes and the internet.

I hate to keep bringing this up, but to me it's telling. I can't see how firing so many major retailers like Dave's Guitars should make us confident in Gibson's ability to sell their product. I know it pissed a lot of people off, not just the retailers but a lot of their customers. I can't find the sense in it, but if someone has a reasonable explanation I'd give it a listen.

[Thumpalumpacus]

Well the joke here is that despite Gibson having a lot of bad press etc over the past few years their guitar business was still profitable.

People were still interested in buying new Gibsons.

So all of this discussion is kind of beside the point.

Not really, when you consider that those profits which might otherwise have gone to other endeavors had to be used instead to pay the bills for unprofitable divisions. Perhaps ploughed back into the business?

[Thumpalumpacus]

They used highly figured woods before the homely Norlin era [...]

lol, there are plenty of beautifully-figured Norlins, and plenty of plain vintage Gibbys.

I wonder what figuring sounds like amplified?

[Thumpalumpacus]

Second since Gibson is being acquired, at least for the short term, by Gibson's primary creditors, the new owners are not likely to be motivated by Gibson's long term best interest. Their first concern will most likely be to get back the substantial amount of money they're putting up to allow this deal to move forward plus as much as they can of the money they were already owed before having to pour in good money after bad. I doubt that they have any real ambition to be in the guitar business. They were just really left with no choice so I suspect that they will want to get as much of their money out as quickly as possible and leave it for next owners after them to decide what to do with Gibson for the long term.

KKR has a pretty good track record of taking over troubled businesses and resetting them for fundamentals precisely in order to sell higher. Such sales typically go to folks who want the business to thrive.

KKR sure doesn't seem like Bain to me.

[ptchristopher3]

[...]

I hate to keep bringing this up, but to me it's telling. I can't see how firing so many major retailers like Dave's Guitars should make us confident in Gibson's ability to sell their product.

Based on what source do you say they “fired” Dave’s?

[Doctor Jeff]

Based on what source do you say they “fired” Dave’s?

It's a little unclear if Gibson dropped Dave's or Dave's dropped them. There were a lot of articles out last year stating that Gibson was ending relationships with most brick and mortar stores outside of a handful, and moving toward various big box/online retailers.

I can't find specific details, except for these forum discussion from last year:

Dave's Guitar Shop No Longer a Gibson Acoustic Dealer? - Gibson Brands Forums

Dave's Guitar no more Gibsons | The Gear Page

In any event, most reports state that Gibson was putting unreasonable conditions on retailers to the point most of them were not willing to carry Gibson anymore.

[Doctor Jeff]

These were on Dave's facebook page today...





Joe Bonamassa for Gibson CEO?

[ptchristopher3]

[...]

In any event, most reports state that Gibson was putting unreasonable conditions on retailers to the point most of them were not willing to carry Gibson anymore.

Right. So it is a total pant-load to (arguably repeatedly) say that Gibson “fired” dealers.

A call to such dealers seems to yield suggestions that indeed the manufacturers wanted the dealer to carry stock that did not sell well.

Gasp,... remarkably similar to the smaller retailers that no longer carry Fender, also reportedly (from said dealers) due to demands from the manufacturers that the dealers carry stock that is unlikely to sell.

[Doctor Jeff]

Right. So it is a total pant-load to say that Gibson “fired” dealers.

A call to such dealers seems to yield suggestions that indeed the manufacturers wanted the dealer to carry stock that did not sell well.

Gasp,... remarkably similar to the smaller retailers that no longer carry Fender, also reportedly (from said dealers) due to demands from the manufacturers that the dealers carry stock that is unlikely to sell.

Hmmm...not sure I see your point...

There was a lot of discussion last year that Gibson was dropping B&M retailers right and left and moving toward GC and a few others and online sales. The exact way it transpired is not very important. And that's pretty much what happened.

I don't see that Gibson has gained anything from not dealing fairly with B&M stores.

Dave's has long been a huge vendor for Fender, PRS, Gretsch, Martin...and started carrying Heritage within a month or so of parting ways with Gibson.

[ptchristopher3]

Hmmm...not sure I see your point...

I understand.

My view is that is it silly to say that the manufacturer “fired” dealers.

They did not.

[BeBob]

Manufacturers forcing dealers to buy undesirable crap that won't sell is nothing new. when I drive past my local Ford and Chevy dealers I see them flipping SUVs and Trucks as fast as they can get them, while there's an entire back lot full of those EPA-mandated econoboxes that nobody wants. If the guitar industry was like the car industry those unwanted guitars would end up in a shredder.

Gibson hasn't been fair to it's B&M dealers, in any number of ways. The problem of forcing them to spend a million dollars on inventory they don't want has already been cited as an example. If anyone thinks that Gibson screwing their dealers is a pant load, consider how all of the B&M dealers felt when CME started selling guitars at blow the dealers' wholesale cost as "floor models."

The Gibson management hasn't been above screwing anyone. they make a habit out of screwing anyone they can.