What's up at Gibson?

[Denman John]

Seems they are planning on selling their property in Nashville

http://www.tennessean.com/story/mone...rket/82120490/

[fentonjames]

they need to 'really' produce mandolins again and stop with the guitars with robot tuners for people that are too lazy to tune their own instrument and get rid of the stupid circuit board and go back to traditional pots and wiring.

[John Eischen]

Was this the facility that was caught in the flood?

[George R. Lane]

they need to 'really' produce mandolins again and stop with the guitars with robot tuners for people that are too lazy to tune their own instrument and get rid of the stupid circuit board and go back to traditional pots and wiring.

I doubt they made much of a profit off of mandolins. It is guitars where they make their money.

[Ted Eschliman]

stop with the guitars with robot tuners

For what it's worth, the new 2016 guitar models are being released without Robot tuners because of what Henry Juskewicz described as <snicker> Dealer "Soft Reception."

[MikeEdgerton]

Don't they have some larger more modern buildings that are further out away from the downtown area? It's been a few years since I was down there.

I'll answer my own question, yes they do. I'm sure these are excess to their real operation. This looks like they're going to harvest some real estate holdings as the value has gone up dramatically due to the changes in the neighborhood.

[barney 59]

It's probably cheaper to build a new facility with new infrastructure and technology than try to rehabilitate an old facility. The technology is changing so fast that your new stuff is outdated almost as soon as you get it! You need the new stuff to compete because someone is buying it if your not! It almost makes sense to start building yet another location almost as soon as you finish the last one because no doubt someone is going to create new machines that will do more and do it better than what you just bought! The old factory chugs out whatever you do while the factory gets built. Then there is the matter of getting it up and running and training the staff to use the new stuff. Hopefully that is the old staff but a lot of times not. Often the new equipment means less workers anyway. One of the downsides of this wonderful digital age. There are big tax breaks when you do change locations, even if it's overseas, and if the property your leaving is worth something to someone else that's a nice bonus but companies leave them and abandon them, sometimes even whole cities, all the time if it's not.

[f5loar]

Maybe it's time to go back to the size they had in Kalamazoo. Hey, I heard even that building is for sale! As far as electric guitars, they could build every model they make at their Memphis plant. As far as acoustic, they still are making those out in Bozeman, MT. Mandolins is only a blip on their financial sheet. Banjos don't even rate any more. I do think Dave Harvey and his staff is doing a great job.

[MikeEdgerton]

Does Gibson still own the Kalamazoo building(s)?

[Astro]

I am sure Gibson would not even think of selling buildings or changing any production locations without first consulting the experts here at The Mandolin Cafe !

[lenf12]

I am sure Gibson would not even think of selling buildings or changing any production locations without first consulting the experts here at The Mandolin Cafe !

You didn't get the phone call??

Len B.
Clearwater, FL

[Emmett Marshall]

Now that they've read this thread, they'll start making lots of changes. You'll see.

[Bruce Cech]

Maybe they are selling it and then will lease it back. a lot of companies do that to raise money.

[MikeEdgerton]

If you read the article it talks about the gentrification of the area. I'm pretty sure Henry is reaping the benefits of a building that he probably doesn't care a whole lot about but he can make some money on. Those weren't even good warehouse buildings.

[JeffD]

I doubt they made much of a profit off of mandolins. It is guitars where they make their money.

Not even guitars. http://www.tennessean.com/story/news...cond/31165805/

[TonyP]

Not even guitars. http://www.tennessean.com/story/news...cond/31165805/

Interesting article, even though it's packed with economic jargon like leveraging. The whole music lifestyle thing gives new meaning to " I only play the radio". I hope all the real craftsmen are going to be ok in all this.

[Ivan Kelsall]

I can't help feeling that Gibson lost their way a long while ago. Since the advent of Bluegrass music,their banjos & mandolins became the most sought after 'brand' of those instruments. I understand the far wider market for guitars,but to neglect (to a point) 2 instruments which have become extremely widely used,is a mistake. Dave Harvey seems to be looking after the mandolin side of things very well indeed, & maybe it's only because of his input & guidance,that Gibson are still building mandolins at all ?. Re.Banjos - as with mandolins,there are currently many excellent builders on the market,but Gibson,as with mandoilins, could have had their share of the market in banjos as well. Simply build a good quality instrument & don't hike the price up simply because of the name,& again, as with mandolins,many folk would like a good Gibson banjo,even today. The name Gibson still has the kudos to sell instruments,but you can't sell 'em if you don't make 'em. I feel that a lot of it has to do with Gibson banking on their name to sell,without backing it up with real quality - mandolins maybe being an exception because of Dave Harvey's input. IMHO,they should have addressed their whole catalogue of instruments & not concentrated so much on the guitars. Mandolins & Banjos still sell,but Gibson,especially as it seems with banjos,lost sight of that fact - or simply ignored it,
Ivan

[Mandolin Cafe]

In a story we linked to on the home page early last week it was noted Gibson was recently downgraded by Moody's to Caa1 from B3 due to weak sales and other related problems. The article stated "....could mean for example that any suppliers that Gibson may use for parts will need paying and Gibson may not have the cash flow to do so."

We're not ones to assert action B is the result of A every time like seems popular, but when you need cash, you're going to find a way to get it. Anything in the Gulch is going for ridiculous prices so I can't see it as a bad decision to turn a property you're probably not using. I'd think the company is shrinking rather than growing so owning a bunch of buildings you're not using just complicates matters.

‘Gibson’s Caa1 Corporate Family Rating considers its weak liquidity profile, soft credit metrics and the highly discretionary nature of its musical instrument and consumer electronics product lines. Demand for these products was dampened by the deterioration in discretionary consumer spending during the last few years and was exasperated by the poor consumer reception of its 2015 guitar models. The ratings also reflect the company’s high leverage at around 8.5 times and the risks associated with the consumer electronics business.

‘Another key concern is that there continues to be high turnover in the company’s senior financial management level. Gibson’s ratings are supported by the company’s strong brand recognition in musical instruments and market share for guitar products, and diversified product line within guitars and related music areas.’

Gibson have claimed that their new improved 2016 lineup has been very popular and Henry Juszkiewicz has said that they are already experiencing an increase in sales, with the popular new lineup. Henry has also stated that their quarterly results for the end of last year were better than the previous years. At the beginning of December 2015 Moody’s stated that Gibson’s approach to business ‘the riskiest’.

Count us as one of the folks that thinks calling for Gibson to start mass building mandolins and banjos as a way out of financial difficulties to be, how shall we word this politely... dumb as hell. Suggest those of you making that recommendation stick with your retirement or day job and don't get into business consulting.

[fentonjames]

just watch. they are going to start a new push for mandolins, all with the dreaded robot tuners!

[Brian Evans]

Anyone else notice that the August 2015 article noted that they have applied to trademark the F-series mandolin? I wonder what happened to that application?

[Ken Waltham]

Count us as one of the folks that thinks calling for Gibson to start mass building mandolins and banjos as a way out of financial difficulties to be, how shall we word this politely... dumb as hell. Suggest those of you making that recommendation stick with your retirement or day job and don't get into business consulting.

Unfortunately, I really have to agree with this. 15 years in a rock band really opened my eyes to the wider world beyond mandolins. In fact, I am mildly concerned that mandolins.. or even banjos.. may go extinct in the Gibson catalog.

[MikeEdgerton]

In fact, I am mildly concerned that mandolins.. or even banjos.. may go extinct in the Gibson catalog.

The good news is that if the mandolins and banjos do leave the Gibson catalog there are literally dozens of other options available now. That wasn't always the case.

[Mandolin Cafe]

Gibson hasn't built a banjo since before the 2010 flood, maybe longer. Going extinct... change that to already gone. Add to that resonator banjos were their thing. Openback banjos are outselling resonators 5-1 is what we keep hearing. Another road to financial success!

[lukmanohnz]

You just have to marvel, given the potency of that brand, how they've managed to do so poorly. Martin seems to be going strong while still building most of their instruments in the US and not having an electric (or mandolin) product. Taylor is also doing well, it seems. Is it that they are a public company beholden to shareholders? But Fender thrives...

[LongBlackVeil]

im not so sure Gibson is doing all that poorly. They had a really bad year last year sure. But i think overall they will be fine.

Alot of people like to say that Henry is the source of their "problems". While i dont like him either, It should be remembered that Henry resurrected this company from the dust. Without Henry there might not even be a Gibson today