Gibson Files for Chapter 11

I read an article on this last week not looking good.

Yep, sadly I’d heard about this indirectly a short whileago, they were tendering for a global data network and my company was bidding, we got warnings from finance that they were struggling to avoid Chapter 11 and we couldn’t recognise the whole period value if they did let the contract, in the end they didn’t finalise for the reasons we now see.

Such a shame, an iconic music brand.

Very sad. Great guitars, but sadly, the Company has not been run well for many years. I was thinking of selling my 335 to help fund some SL cabling, but guess I’ll hold off. I assume values will now rise appreciably. Fender are in a parlous state too.. 

I've been reading a few city reports;  its reads poor CEO & other mngt issues, dire factory working conditions & ancient machinery plus huge inventories of material & unsold stock.    A while back, before Chapter 11, I looked at the product range (thinking of a new one) & was amazed at the strange variations of basically the same model in the different model type sectors & if some/all is being made (unsold) for stock - as it seems it was - no  wonder they are in trouble.

Reading city stuff it looks like it is a serious attempt at restructuring & not actually going out of business.  There are a few rumours about  Joe Bonamassa fronting a takeover of venture capital investors.    Not sure of how that will work,   can Joe turn his obsessive/nerdy knowledge of Gibson guitars into hard arsed business management.  

Old news.  Known about this for some time.  I suspect someone will buy out the guitar part of the business.   Wonder if Paul Smith would be interested?   

Mike-B posted:

**SNIP**

Reading city stuff it looks like it is a serious attempt at restructuring & not actually going out of business.  There are a few rumours about  Joe Bonamassa fronting a takeover of venture capital investors.    Not sure of how that will work,   can Joe turn his obsessive/nerdy knowledge of Gibson guitars into hard arsed business management.  

It could work, the big risk would be that a recovery looks to move all design and build to a low-cost economy, run a ruthless inventory and supplier management regime and hope the iconic brand name means that people buy what is essentially a low-cost replica. Well paired business managers and a believer like Bonamassa can avoid that, creating a high value brand again with better business practices. (That is hope rather than belief speaking,)

Alternative would be to keep the time served skill base in Nashville,  re-equip the old or move to new re-equipped plant.  Then rationalise the range & build only for sold orders,  this means dealers need to plan & stock differently but it also makes for a pent up demand & with an iconic brand it can make for better price realisation & growth in brand image loyalty.     

Sorry Mike, I obviously wasn’t clear, I meant the same as you suggested, in my mind the low-cost economy model will be slow death, well managed high quality (Rolls/Morgan) is the way to go.

Exactly Eoink,   Rather than RR & Morgan as it’s USA I had in mind Harley Davidson, unbeaten by anyone anywhere for brand loyalty & with a design that should have been scrapped eons ago.

This is ultimately what happens when a company makes products that are built to last and increase in price/desirability with age.

And produces products that are quite riduculous.

However, although I am a dyed-in-the-wool SG player, which is a perfect guitar (only marked down in my opinion by the dreadful batwing scratchplate), I do hanker after a Non-reverse Firebird.

A propos companies that make products to last there is a nice programme on BBC iplayer at the moment about Marshall amps.

Absolutely nothing to do with them being a company who built things to last. The quality has been shocking for years and the shipping of products known to have issues out to dealers was a big nail in their coffin. 

Mike Hughes posted:

Absolutely nothing to do with them being a company who built things to last. The quality has been shocking for years and the shipping of products known to have issues out to dealers was a big nail in their coffin. 

The reports of even their premium reissue Les Pauls suffering from quality control issues are widespread, and I had to return a top of the range '59 reissue, due to shoddy finishing.

Also, dealers, in The States at least, were being dictated to, as far as the stock levels they were required to hold, to the point where several of the larger, better known dealers simply stopped selling Gibson guitars.

All in all, the result of an extremely poor management, who had become complacent about a never ending demand for their products.