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Old 04-06-2011, 09:21 AM
Alexrkstr Alexrkstr is offline
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Default Interesting Guitar Manufacturer Business Facts

Now that I am a bit more interested in business [rather than engineering], I did some research about Taylor Guitars (Taylor-Listug, Inc.), Fender, Gibson, and Martin on my free time and found some interesting facts and figures to share.

Taylor Guitars
- Taylor's revenue is approx $21.4 million
- Approx 320 employees
- Taylor has a strategic relationship with Fender Musical Instruments Corporation... This was really interesting, no wonder Fender hasn't competed with Taylor.
- I found out that Fender actually distributes Taylor guitars (they were listed as their distributer)

Fender Musical Instruments Corp.
- Fender Musical Instruments Corporation acquired Tacoma guitars in 2004
- Fender acquired Groove Tubes in 2008

Gibson Guitars Corp
- Gibson Guitars Corp acquired Baldwin Piano and Organ from General Electric Capital Corp in 2001 (they Baldwin had filed for Chapter 11 - which is merely a change in control, it does not mean the company is only losing money). Baldwins revenues were approx $81 million and had losses of $14.2 million (OUCH!) before the acquisition.
- Gibson Guitars acquired Griffiths (Garrison) Guitars in 2007 and converted their production to make the Songmaker series. (Canada)
- Gibson Guitars has approximately 2,800 employees.

I also think its interesting that GE Capital financed Baldwin (as they finance Taylor). Even though I don't think that Taylor will have to raise capital or is interested in going public, I think it will be interesting what the next five years, where the music instruments business is expected to grow at 5% will have for us.

I would love to hear more interesting facts from you guys.
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Old 04-06-2011, 09:32 AM
EverythingMusic EverythingMusic is offline
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Originally Posted by Alexrkstr View Post
Now that I am a bit more interested in business [rather than engineering], I did some research about Taylor Guitars (Taylor-Listug, Inc.), Fender, Gibson, and Martin on my free time and found some interesting facts and figures to share.

Taylor Guitars
- Taylor's revenue is approx $21.4 million
- Approx 320 employees
- Taylor has a strategic relationship with Fender Musical Instruments Corporation... This was really interesting, no wonder Fender hasn't competed with Taylor.
- I found out that Fender actually distributes Taylor guitars (they were listed as their distributer)

Fender Musical Instruments Corp.
- Fender Musical Instruments Corporation acquired Tacoma guitars in 2004
- Fender acquired Groove Tubes in 2008

Gibson Guitars Corp
- Gibson Guitars Corp acquired Baldwin Piano and Organ from General Electric Capital Corp in 2001 (they Baldwin had filed for Chapter 11 - which is merely a change in control, it does not mean the company is only losing money). Baldwins revenues were approx $81 million and had losses of $14.2 million (OUCH!) before the acquisition.
- Gibson Guitars acquired Griffiths (Garrison) Guitars in 2007 and converted their production to make the Songmaker series. (Canada)
- Gibson Guitars has approximately 2,800 employees.

I also think its interesting that GE Capital financed Baldwin (as they finance Taylor). Even though I don't think that Taylor will have to raise capital or is interested in going public, I think it will be interesting what the next five years, where the music instruments business is expected to grow at 5% will have for us.

I would love to hear more interesting facts from you guys.
My understanding is that Taylor has decided to handle their own distribution overseas. I don't immediately have an article to back that, just seem to remember it from over the past few months.

Fender also owns, Kaman Music, which is the largest accessory distribution company in the US as far as I can tell. Kaman also owns Takamine, Ovation, and a handful of others. Fender is also now headed up by the CEO of Guitar Center who made it what it is today.

Currently the largest growth area for musical instruments is in Ukes, of all things.
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Old 04-06-2011, 09:35 AM
Alexrkstr Alexrkstr is offline
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Thanks for the info Jared. I would be interested in knowing what the strategic partnership with Fender is. No wonder Fender doesn't compete in the mid- to high-end acoustic guitars market!
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Old 04-06-2011, 09:36 AM
enalnitram enalnitram is offline
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I do limited business research in my job. I access LexisNexis academic thru my local library and use Hoover's and D&B info.

Fender also owns Guild and Kaman.

Quote:
Leo Fender and Doc Kauffman formed K&F Manufacturing in 1943 and made transducers (or pickups) for electric guitars. Soon thereafter, Fender bought out Kauffman and renamed the business Fender Electric Instruments Company. In 1951 the company introduced the Broadcaster, a simple, two-pickup instrument that is widely regarded as the first successful solid-body electric guitar. Three years later Fender added the now legendary Stratocaster electric guitar to its lineup. A perennial favorite, the guitar found its way into the hands of pop music luminaries such as Buddy Holly.

In 1965 Fender sold the company to CBS for $13 million. Though the company suffered complaints about quality, CBS boosted sales to almost $60 million by 1981.

Facing stiff competition from Japan, Fender began losing money, forcing CBS to sell the company to then Fender division president William Schultz and a group of investors for $12.5 million in 1985. Schultz halted US production, laid off more than 700 employees, and changed the company's name to Fender Musical Instruments; he also managed to turn the company around. In 1995 Fender acquired the Guild guitar line from guitar maker U.S. Music.

The company opened a new $20 million production facility in Corona, California, in 1998. In 1999 Fender began selling its products through Musician's Friend, a musical equipment e-commerce site and catalog owned by Guitar Center. Also that year it began selling the guitars of Robert Benedetto, considered the world's top maker of jazz guitars. Fender introduced its American Series guitar in 2000; the guitar replaced the American Standard, the "bread and butter" of the company's products since 1987.

In a 2002 agreement with The Gretsch Company, makers of vintage, hollowbody acoustic and bass guitars, and percussion, Fender gained operational control (development, production, marketing, and distribution) of all Gretsch stringed-instrument products, effective January 2003. Also in 2002, Fender acquired the Charvel/Jackson guitar product line from Akai Musical Instruments.

In 2003 the company acquired certain assets of SWR Sound Corporation, maker of bass amplification products. In October 2004 Fender acquired Tacoma Guitar, which designs the Olympia acoustic guitar.
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Old 04-06-2011, 09:47 AM
enalnitram enalnitram is offline
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From Hoover's. I don't know why but when I click on the profile for Taylor today, it gives me an error.

Quote:
Although it trails top guitar maker Fender, Gibson builds instruments that are held in unparalleled esteem by many guitarists, including top professional musicians. The company's most popular guitar is the legendary Les Paul. Gibson also makes guitars under such brands as Epiphone, Kramer, and Steinberger. In addition to guitars, the company manufactures pianos through its Baldwin unit, Slingerland drums, Tobias bass, Wurlitzer vending machines and jukeboxes, and Echoplex amplifiers, as well as many accessory items. Company namesake Orville Gibson began making mandolins in the late 1890s. Gibson Guitar is owned by executives Henry Juszkiewicz and David Berryman.

Gibson's core business continues to focus on challenging such rivals as Fender, Martin, and Taylor for a greater share of the guitar market. Video games, such as Guitar Hero, have increased awareness of guitar-playing as a social endeavor among young and old gamers alike. To get the word out about its products and to attract customers, the company has traditionally relied on word-of-mouth between players and endorsement deals with top-selling musicians. Moving beyond this strategy, Gibson maintains a marketing deal with Universal Studios, having acquired the naming rights to the 33-year-old Universal Amphitheatre at the company's Southern California theme park. The deal, worth about $14 million and extending through 2015, not only gives the instrument maker brand visibility in an important market but also opens the door to product placement in TV and film projects.

The music instruments maker focuses on its namesake Gibson brand and on injecting the latest in its robot technologies into its product development. To this end, Gibson in 2010 launched its Gibson Dusk Tiger guitar. It boasts third-generation Robot Tuning technology with 18 programmable alternate tunings. The firm's also extending its reach into the consumer market with its Wurlitzer Digital Lyra Jukebox, which debuted alongside the Dusk Tiger in early 2010.

Gibson's growth also has expanded the business globally from its Nashville roots. The guitar maker has gained a foothold in Europe and is looking to extend its reach in China and India. It entered Germany in 2008 and nearly doubled its business there by the end of 2009. Besides Europe, Gibson is banking on boosting sales in China as its middle class grows. In India, where Gibson established a division there in 2010, the company is tapping the country's affinity for music and its affluent customer base. Gibson operates a manufacturing plant in China to make Epiphone guitars and it has a majority stake in Baldwin Zhongshan China, a joint venture with Zhongshan Yue Hua Piano and Musical Instruments. To strengthen its foothold in China and significantly expand its manufacturing capacity there, Gibson acquired a major player in China's piano market -- Dongbei Piano Co., Ltd. Gibson renamed the firm Baldwin-Dongbei Piano & Musical Instruments Co., Ltd. The deal followed several other previous purchases, such as Gibson Med, a key European distributor based in Milan, Italy, and Deutsche Wurlitzer.

The company's long-range sights are set on top musical instruments maker Yamaha. Through its acquisition of famous brand names, from Baldwin to Wurlitzer, and its reintroduction of others, such as Epiphone, Gibson has expanded its product lines beyond the core guitar market and continues to develop new products. Juszkiewicz, chairman and CEO, sees potential in using technology to update designs that have not significantly changed since the 1950s. To this end, the firm is looking to build on its earlier successes. It developed a digital guitar that looks and feels like a conventional electric guitar but converts string vibrations into a data stream using Gibson's proprietary MaGIC (media-accelerated global information carrier) technology. The company also hopes to license MaGIC to manufacturers for use in consumer electronics.

Juszkiewicz and Berryman bought Gibson for $5 million in 1986.


HISTORY:

In the 1880s shoe-store clerk Orville Gibson bought a small workshop and began making mandolins based on his own innovative design. He was soon making arch-top acoustic guitars, banjos, and lutes, and by the turn of the century demand outpaced supply. Gibson and a group of financiers established the Gibson Mandolin-Guitar Manufacturing Company in 1902. Gibson was given $2,500 for the right to use his surname; he died in 1918.

Gibson capitalized on the popularity of banjos in the 1920s and guitars in the 1930s. In 1941 guitarist and inventor Les Paul showed the company his new baby: an electric guitar. Gibson execs rejected the innovation immediately. During WWII the company made parts for the war effort, and in 1944 Chicago Musical Instruments (CMI) bought Gibson in preparation for the pent-up demand for guitars that would follow the war's end. In the meantime, Leo Fender had introduced the first commercially successful electric guitar: the Fender Telecaster. In response, Gibson Musical Instruments introduced the Les Paul model in 1952.

The rise of guitar-oriented rock 'n' roll during the 1950s and 1960s created unprecedented demand for guitars. In 1969 CMI and another company merged to form Norlin, whose lack of attention to manufacturing quality tarnished Gibson's good name. In 1986 Gibson guitar enthusiast (and Harvard MBA) Henry Juszkiewicz and his partner David Berryman bought the company for $5 million.

The two immediately replaced top management and began retooling Gibson's factories. From 1986 to 1996 the company grew a rock-solid 30% a year and acquired a slew of musical instrument makers, including Tobias Guitars in 1989. In 1996 it opened its first music cafe, originally called Henry's Coffeehouse and later named Gibson Cafe and Guitar Gallery, in Nashville, Tennessee.

Gibson continued making acquisitions in 1998, buying Opcode Systems (music production hardware and software) and Trace Elliot (amplifiers). After failing to meet expectations, it closed the Tobias division in 1998 (though it still produces guitars under the Tobias name). Also that year the company acquired another music cafe, Caffe Milano, in Nashville, but Gibson closed both of its cafes in 2000 after failing to make them profitable. That same year, however, the company opened music venue Gibson Bluegrass Showcase at Opry Mills shopping mall in Nashville.

In 2001 Gibson bought the assets of Baldwin Piano & Organ (the largest seller of acoustic pianos in the US), which was under bankruptcy protection. Gibson made it a subsidiary and changed its name to Baldwin Piano. The next year the company's technology division, Gibson Labs, introduced plans for the first digital electric guitar (introduced in 2004) along with technology partners 3Com, Xilinx, and AMD.

In 2003 the company formed its Gibson Audio division to create convergent products involving traditional electronics and digital technology. The group's first product, the Wurlitzer digital jukebox, was launched late that year.

Les Paul, the namesake for one of the company's top products, died at the age of 94 in August 2009.
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Old 04-06-2011, 09:51 AM
EverythingMusic EverythingMusic is offline
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Originally Posted by Alexrkstr View Post
Thanks for the info Jared. I would be interested in knowing what the strategic partnership with Fender is. No wonder Fender doesn't compete in the mid- to high-end acoustic guitars market!
Well, they do compete, just not under the Fender name. Fender also owns Guild, and Gretsch. Other brands include Jackson, Charvell, and EVH.

Now KMC (Kaman) was already an empire before being purchased by Fender. They own Toca, Takamine, Genz-Benz, Gibraltar, Becker, and Hammer Guitars.

Other facts include, Martin helped Taylor get started and Taylor helped Breedlove get going.
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Old 04-06-2011, 10:58 AM
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SWR says they are a Fender-owned Company...but have not been "Fenderized"

So we customers might perceive a good product variety in a SWR/Fender store even though there's no actual product competition.

And by the same token, there's none of the desirable pricing effects of brand competition.
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Old 04-06-2011, 07:47 PM
Alexrkstr Alexrkstr is offline
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Originally Posted by EverythingMusic View Post
Well, they do compete, just not under the Fender name. Fender also owns Guild, and Gretsch. Other brands include Jackson, Charvell, and EVH.

Now KMC (Kaman) was already an empire before being purchased by Fender. They own Toca, Takamine, Genz-Benz, Gibraltar, Becker, and Hammer Guitars.

Other facts include, Martin helped Taylor get started and Taylor helped Breedlove get going.
Interesting, what do you think their strategy is? In order for Fender to get profits from both without cannibalizing their sales they have to differentiate the guitars quite a bit. Hence, I think Guild will not try to cut into the Taylor niche or vice versa.

Thoughts?
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Old 04-06-2011, 08:21 PM
Dr. Spivey Dr. Spivey is offline
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Fender manufactures, markets and distributes Gretsch guitars. The Gretsch family still owns the brand.

Fender is the US distributor for Takamine, it remains a Japanese company.
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Old 04-06-2011, 08:42 PM
Alexrkstr Alexrkstr is offline
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Seems like Fender is a power house...
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Old 04-06-2011, 09:54 PM
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Quote:
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Taylor's revenue is approx $21.4 million
Gross or net?
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Old 04-06-2011, 10:14 PM
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Gross or net?
Gross, but I don't think the amount of returns and refunds is significant.
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Old 04-07-2011, 01:15 AM
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The Fender factory in Ensenada, Mex. had 800 employees, when I visited in '96! I'd never seen such an operation! At the time, they were trying to set up another factory in Argentina. I don't know if they ever did?

I'm curious if there's any guitar company with more employees than Fender?

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Old 04-07-2011, 04:59 AM
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Gross, but I don't think the amount of returns and refunds is significant.
seems like an awful low number for gross revenue to me
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Old 04-07-2011, 06:40 AM
Alexrkstr Alexrkstr is offline
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seems like an awful low number for gross revenue to me
I agree, but that's what I found listed under Taylor. I'm guessing its an estimate since they are a private company.

It would be great to see someone value Taylor... There aren't any public transactions or comparable public companies that I can think of.
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