By Martine Ehrenclou
By now you’ve heard the rumors about Gibson Brands, the preeminent manufacturer of electric guitars, facing the possibility of bankruptcy if it cannot pay back a whopping 375 million by July of 2018. On Monday, February 26, Gibson cut 15 staff from their Custom Shop in Nashville, TN.
The layoffs affected a number of senior workers, including supervisors. According to The Nashville Business Journal, Gibson CEO, Henry Juszkiewicz, said, “The staff reduction was part of a broad initiative throughout the company to prepare for our refinancing.” To help reduce the debt, Gibson’s sold its own Memphis factory in Oct. 2017 and Cakewalk Software this month.
The home of the iconic Les Paul guitar, Gibson opened in 1902 as a guitar and mandolin manufacturing company and are known for developing some of the most popular guitar models.
I have one myself. And I’m glad I purchased my used Les Paul when I did. It’s not my go-to guitar, but it sounds and plays great.
Gibson Custom Shop in Nashville was launched 20 years ago and makes recreations of prized vintage guitars as well as signature models for notable musicians such as Pete Townshend, Zakk Wylde, and many more. Gibson’s Les Paul and SG models have been played by generations of musicians, including Slash, BB King, Carlos Santana, Bob Marley, Joe Bonamassa and more.
Possible reasons for the downfall of the legendary guitar maker?
Gibson CEO, Henry Juszkiewicz, in part, blames the guitar stores. According to an interview in Billboard, he said, “All of the retailers are fearful as can be; they’re afraid of e-commerce, with Amazon just becoming the second largest employer in the U.S., the brick and mortar guys are just panicking.”
Um, yeah, for good reason.
Another contributing factor might be, according to Juszkiewicz, the guitar retail market never fully recovered after the stock market collapse in 2008. More to the point though, is that local, brick and mortar music shops are now far and few between. Online retailers have taken over and when it comes to purchasing a guitar, it isn’t easy to do that online—musicians want to play a guitar they intend to purchase. Every guitar is slightly different, with its own feel and slight variation of tone.
I’ve returned a couple of guitars to online retailers myself. You have to hold that guitar in your hands, play it, and hear the sound.
In addition, the popularity of the guitar might have suffered over the last decade or two. Younger music listeners may not gravitate to guitar-driven music, and the focus of the guitar hero is not as in vogue as it was in the 60’s, 70’s. It’s been reported that fewer pre-teens and teens are learning guitar and instead, are gravitating to making music with technology.
That is a shame. I sure hope the pendulum swings back on that one. You don’t have to possess musical talent to make music using technology.
Gibson tried to keep up with that technology by creating, Firebird X “hexaphonic” limited edition with advanced technology to make it sound like dozens of vintage electric or acoustic guitars at the touch of a button. It included automatic tuning. The guitar was not a hit with players, especially with the $10,000 price tag. Then there was the line of self-tuning “robot” guitars (G Force) that Gibson spent millions of dollars developing. Sales dropped dramatically.
Juszkiewicz is quoted as saying, “The fact is, we don’t see ourselves as a guitar company, we see ourselves as a music lifestyle company.”
Hmn. I wonder if that comment coincided with the reported drop in quality in Gibson’s instruments.
In 2014, Juszkiewicz acquired Phillip’s audio division to add headphones, speakers and digital recorders to the Gibson brand, to “recast Gibson from a guitar company to a consumer electronics company,” according to the Washington Post article, Why my guitar gently weeps.
According to Digital News, a Chinese investment consortium is entertaining the idea of purchasing Gibson. “The consortium is strategizing a possible buyout in the next few months, specifically the July/August time frame.”
Let’s hope Gibson can pull themselves out of the hole.
What are your thoughts about this? I welcome your comemnts.
I worked for Gibson for 3 years as USA Production Manager in Nashville and left of my own accord 3 years ago. It is simply one of the worst managed companies I have ever been associated with. Henry J is the problem. He is a self described business, musical, and manufacturing genius, while in reality he possesses none of those qualities other than within the bubble that he has created around himself. Gibson has needed a board of overseers for years, and it sounds like they are about to get one.
Gary,
Thanks for sharing your thoughts and your story.
This is a fitting end to all the Gibson nonsense! They have been screwing the small vendors FOREVER making it nearly impossible to sell its brand. Super high buy-ins, they get to choose the pieces you have to carry, insane pricing schemes, and no protection from the big retailers like Guitar Center. In then end it will collapse due to ego, stupidity and greed…Sad because the guitars are great! But no young person can afford them.
REV,
Thank for your comment!
Making $7000 guitars expecting mass consumption is just idiocy. They think the “high end collector market” is THE only market for some reason and even at that, they are not better than TONS of gear out there at fractions of the price…and the young buyers are clearly voting with their dollars spending on brands like Ibanez and Schecter and of course Fender. The average Les Paul Standard is now a $3000 guitar!! What??!!!! Custom shop guitars from the others I mentioned are offering crazy amounts of options and finishes and woods…….Gibson has sadly been victim of its own “We are too big to fail” attitude. A few friends of mine own their own guitar shops and they have always been mistreated by Gibson like the other comments have been saying. Sad for a great American company to be going down this road……
Jive,
Thanks for your comment!
The Gibson price / quality is BAD. I’ve owned three LP standards & sold them all. I now own a Japanese Tokai Love Rock. The Tokai is less than half the price of the Gibson & far superior in every way. Either new owners will start to build quality guitars at competitive prices or they’re finished…
I worked Gibson for over 10 years reporting directly to CEO Henry J and they were clinging on for dear life back in 2000 with 200 million dollar loans from the Nations Bank Nashville do this nothing new. Henry’s micro management and pointless purchases of tiny brands in an attempt to be the Proctor & Gamble of musical instruments has ruined the company when they should have concentrated on just Gibson and Epiphone. Henry is also a nasty bully who terrorises his employees, like many I was lied, cheated and bullied out of my job. Any take over must involve Henry being removed from the company or the farce will continue.
Jack
Thank you for you comment