More Gibson financial situation news.

[Seagull S6]

King Henry sure makes the folks that ran Gibson during the Norlin era look like shear geniuses. Unless they lead King Henry away in a straight jacket like right now, I really think Gibson as we knew it is done.

[rokdog49]

Originally Posted by Pitar

I think the age of the wooden guitar is sun-setting with the boomers, taking Ferguson with them, as composites become more appealing to a succeeding generation who are much more sensitive to sustainable materials. Plus, to a techno-bred generation of manic inorganic, carbon fiber is one of the main food groups. If Gibson was ever poised to learn anything strategically marketable, that would be one. For another, Henry's diversification did not look far enough ahead. EDM is the trending new kid on the block and together with carbon fiber acoustics he might have actually won over investors and experienced a more positive positioning in the market. But, alas, poor Henry! We knew him well.

I respectfully disagree in earnest.
It may be on the decline, but it's a long way from setting.
As far as Gibson getting into inorganic materials for acoustics, talk about a death knell.
JMHO

[imwjl]

Yes to the comments on poor and strange behavior regarding debt. I’ve seen a lot of variations of that theme over many years of being an inside outsider doing IT projects. Wow do you see the personalities and dirty laundry when you’re part of communication, finance, HR and manufacturing systems. An earlier shocker for me was how often an organization doesn’t see their own problems. People have motivated reasoning and most are not so good at looking at themselves in the mirror.

I’m with everything that says this is really a debt problem, and that some elements in the whole business are sustainable.

I don’t share the romantic notion that a badge or name must go on the way many do. As is we don’t have the Gibson that was Gibson when I grew up. We have plenty of wonderful guitar makers.

If you want an iconic design acoustic we have the Collings and Santa Cruz making better Gibsons and Martins than Gibson and Martin. Add Collings again if it’s about electrics. Guitars in general? Lots of nice ones are made in Asia too.

If I have any soft spot it’s for the well being of Gibson employees outside the c suite.

Life goes on folks. If the company gets in trouble I’m only going to be concerned about those who you could say didn’t ask for it or contribute to it.

[Mr. Paul]

Interesting that after the Gibson related financial news a few weeks ago, there were many responses claiming this was old news, business as usual, and Gibson would be fine. I think those folks now have a clearer understanding of the unsustainability of Gibson's debt and realize the only relevant discussion is about the major changes coming.

I'm of the opinion that this could be a golden opportunity for an entity that wants to build great guitars and build a loyal dealer network that is allowed to properly market the goods. I don't think a policy of not allowing dealers to list their inventory on line (!!!!) will be around much longer. It would be nice to see J45s available in local shops again, next to Collings and Taylor.

[KevWind]

Gibsons problems have been brewing for a few years now
The thing getting the big splash headlines now is $500 +mil in debt coming due this summer .

But Gibson as a business has had some systemic problems for a while.
As some have mentioned some very unfortunate moves (perhaps out of desperation on Gibsons part ) that instead of increasing sales has resulted in may small to medium size Gibson dealers no longer being stocking dealers. And likely resulted in even further sales declines besides a general market downturn.

One reason as some have already mentioned, were dealer stocking minimums that were to high for many small dealers to meet. Then the second one that according to my favorite local dealer who stated it was not the minimums so much as Gibson, would not let him advertize the Gibson name on his web sight. For his store the website is by far the single most important means of advertising and public awareness of his store and product brands.

And Gibson has just recently started to sell direct online which will no doubt further alienate many dealers

At this point very hard to predict what the future will hold for the Brand
Hopefully the brand name and US manufacture of it's main electric and acoustic models will continue but no doubt big changes in the business are in the wind.

[fuman]

Originally Posted by Steve DeRosa

As the present owners of Guild, Ovation, and Gretsch can attest - not to mention Gibson itself, with its 1957 acquisition of Epiphone - there's substantial cash value in the brand name...

Just as the aforementioned marques - as well as Fender in the '80s - ceased to exist as USA manufacturers for a greater or lesser period of time, I see much the same destiny for Gibson. The quality of Pac-Rim instruments has improved to the extent that they're fully competitive with the major American brands on their own merits; just as Fender Japan served to maintain a market presence while the company regrouped, the existing operations - Epiphone China/Indonesia and the Epi Elitist Japan factory - can provide stopgap product under the Gibson name, until the new powers-that-be decide which avenues to pursue. Given the regulatory processes involved (Guild is still far from up-to-speed with their American production, and Ovation produces but a handful of USA-built models) they might do well to take a tip or two from Gretsch - arguably their main competitor in the electric market in the post-NY Epiphone/pre-Norlin days - and adopt a multi-tiered approach: bread-and-butter Working Joe/Jane guitars (J-15/J-35, LP/SG Studio, etc.) produced by a top-tier Korean/Chinese/Indonesian facility, the iconic acoustics/electrics (LP/SG Standard & Custom, ES hollows/semis, J-45/J-200/AJ, etc.) by the Japanese Epiphone operation, a possible new line of reasonably-priced carved archtops by an existing manufacturer under contract (can you say "The Loar...?), and a very limited USA Custom Shop for the likes of the L-5/Super 400/Citation. FYI I've been a Gretsch guy since 1963, probably played a few hundred Brooklyn originals, and I'll say without reservation that the current models are among the finest in their history, bar none; FWIW I'd like to see Gibson achieve the same status, and if that requires rethinking the production process in order to recover their former glory - as much as I would like to see them remain a 100% American company - it just may be for the best...

This is a pretty good analysis, and a decent off-the-cuff business plan. The Gibson brand will survive. There's too much valuable history and too many trademark instruments for it not to. But they have an unsustainable business model and a CEO who failed to make it work. That has to change. Henry's days are lettered.

[Steve DeRosa]

Originally Posted by Rmz76

I've heard of the elusive Japanese built Epiphone Elitist line J-45s but have never put hands on one.

You won't, unless you have a very cooperative local dealer who knows exactly which strings to pull, or you're ready to pay the big bucks on eBay/Reverb; FWIW I've seen the '64 Texan RI selling in the $2500+/- range, and the Elitist J-45 is far less plentiful overall - you do the math...

Originally Posted by AndrewG

Gibson also built excellent guitars in Japan from 1988-1998, licensed under the 'Orville' brand, and made by Terada and Fuji Gen. In many cases these were superior to the US models but were limited to the Japanese market. A few escaped and I played a very nice Orville ES335 a while back. These were built in the same factory as the Epiphone Elite models.

I imagine a scenario similar to that of Gretsch where production moved to Japan, with the consequence that guitars built there were light years better instruments in every respect than their US counterparts. Fender played a canny card there. Japanese-built Gibsons? Not too hard to imagine, frankly, and personally I would welcome a return to stellar quality and consistency. Ever played a Japanese Tokai 'ES' model, for example? They are fabulous albeit unashamed copies of Gibson originals.

For me the country of origin is way down on my priority list when I'm buying; quality, however, has to be Number One, and if Gibson cannot do it for whatever reason be it financial, managerial or otherwise, let them move offshore if it's a choice between losing the brand completely or resurrecting its fortunes.

Pretty much my line of thinking - see below - and as the original owner of both a '64 Double Annie and '16 5622T-CB I'll vouch for current Gretsch quality...

Originally Posted by Steve DeRosa

...The quality of Pac-Rim instruments has improved to the extent that they're fully competitive with the major American brands on their own merits; just as Fender Japan served to maintain a market presence while the company regrouped, the existing operations - Epiphone China/Indonesia and the Epi Elitist Japan factory - can provide stopgap product under the Gibson name, until the new powers-that-be decide which avenues to pursue. Given the regulatory processes involved (Guild is still far from up-to-speed with their American production, and Ovation produces but a handful of USA-built models) they might do well to take a tip or two from Gretsch - arguably their main competitor in the electric market in the post-NY Epiphone/pre-Norlin days - and adopt a multi-tiered approach: bread-and-butter Working Joe/Jane guitars (J-15/J-35, LP/SG Studio, etc.) produced by a top-tier Korean/Chinese/Indonesian facility, the iconic acoustics/electrics (LP/SG Standard & Custom, ES hollows/semis, J-45/J-200/AJ, etc.) by the Japanese Epiphone operation, a possible new line of reasonably-priced carved archtops by an existing manufacturer under contract (can you say "The Loar...?), and a very limited USA Custom Shop for the likes of the L-5/Super 400/Citation. FYI I've been a Gretsch guy since 1963, probably played a few hundred Brooklyn originals, and I'll say without reservation that the current models are among the finest in their history, bar none; FWIW I'd like to see Gibson achieve the same status, and if that requires rethinking the production process in order to recover their former glory - as much as I would like to see them remain a 100% American company - it just may be for the best...

[mz-s]

A lot of people here are forgetting what Henry did to this company in the 80's after Norlin.

I'm not saying he's the right leader for Gibson today, just saying that he was the right leader for Gibson then - and his work cannot be understated. To say he is worse than Norlin is at best historical revisionism.

[jwellsy]

Gibson should go on Shark Tank.

[rogthefrog]

Originally Posted by Mr. Paul

I will take all bets on this one ... Gibson will not disappear as a manufacturer. Even if the house of cards falls and burns to a crisp, guitar production under the Gibson label will be the first to rise from the ashes.

What would be the value of the acoustic brand alone if Ren Ferguson, for example, said he was on board?

Not convinced enough people know, much less care, who Ren Ferguson is.

One thing that's always baffled me is the enormous number of Les Paul models. Vintage, custom, special, chambered, weight relieved, signature, this and that, from $700 to $7000. I've played $800 Les Paul Studios that were perfectly good guitars, so I'm not sure what an extra $6k gets you.

[imwjl]

If there are future owners I'm sure they'll be whoever decides to buy what they consider a sustainable business.

[mercy]

Carbon Fiber- NO. They dont sound good, dont look good, dont feel good. That would kill Gibson for sure.

[frank4001]

Latest I've seeen...

(Bloomberg) --*Gibson Brands is “talking to numerous financial sources” and “exploring all options” including new equity financing, debt financing, or a restructuring of existing debt, CEO*Henry Juszkiewicz*says in interview with Bloomberg News.
Deal would “probably involve new money,” and “would not be a normal bond offering,” Juszkiewicz says on Feb. 9. “We’re changing strategy pretty significantly”
“We want to avoid bankruptcy at all costs. Our plans show us continuing the business in the ordinary course”
A couple of parties who are “very interested in Gibson” have bought a “significant portion” of the bonds and are engaged in negotiations
Co. is working with Jefferies to replace the debt, per CEO; refinancing talks depend on budget process for fiscal year starting April 1
“It will be developing hopefully in the early spring, and if things go well we’ll get to the phase and be able to make an announcement,” Juszkiewicz says. “Once we have the budget, we can really have a meaningful dialogue”
NOTE: Moody’s*cuts*corporate rating to Caa3 from Caa2 in August, citing doubts on Gibson’s ability to refinance 2018 debt maturities
NOTE: S&P’s September*report*cites “going concern” warning, tighter credit terms from suppliers and new import/export regulations for rosewood used in higher-end guitars

[Steve DeRosa]

Originally Posted by mercy

Carbon Fiber - NO. They don't sound good, don't look good, don't feel good...

As the owner of two Rainsong jumbos (JM1000/JM3000) I respectfully disagree: crisp and projective, with a full low end and tons of volume; the black-and-abalone cosmetics have a certain high-tech classiness about them; and my JM1000's N1 flat-D profile is one of the very few 1-3/4" necks I can handle comfortably. Not to get OT here, but as a longtime owner of both marques I personally find direct comparison with Taylor, rather than Gibson, far more apropos - I always felt that this was the "modern acoustic" tone Bob T. heard in his head, but couldn't quite achieve with traditional-tonewood construction...

[Rosewood99]

This was the key part for me:

“Some type of restructuring will be necessary,” Cassidy said. “The core business is a very stable business, and a sustainable one. But you have a balance sheet problem and an operational problem.”

Something tells me you will still be able to buy a Gibson for years to come.