Gibson CEO rumours

Jonathanthomas83

With all this Gibson talk going on, decided to whip the Les Paul out (not a euphemism) and the last few hours have flown by (and I’ve not gone blind) and it was glorious.

Bucket

I hope it doesn't betray a criminal lack of self-awareness, but I can't actually figure out why my post on page 1 has so many lols.

richardhomer

Bucket said:

I hope it doesn't betray a criminal lack of self-awareness, but I can't actually figure out why my post on page 1 has so many lols.

Your ‘rationalisation’ of the range is possibly a tad irrational....

Limehouse_Blues

Cols said:

Over the pond, it's been pointed out that Henry J does own the company and would be disinclined to sack himself.

Against that, Gibson does have an eyewatering amount of debt with no obvious means of repayment.  It could be that Gibson's creditors have made Henry J stepping back from direct control of the company a precondition of extending credit any further.

Which brings us back to how Gibson could increase income to the level where it could be profitable again.  There's four basic ways of doing this:

1.  Increasing the size of your slice of the pie (market share).  As Gibson is one of the big two, there's limited opportunity to increase market share.
2.  Increasing the size of the pie (overall market size).  The size of the guitar market is actually growing... but this is driven by the acoustic market rather than electric.  My perception of Gibson is that they keep their acoustic line stable and high-end; perhaps there's an opportunity here?
3.  Finding more pies to eat (diversify into new product types).
Limited appeal; the Gibson brand is too intrinsically linked with guitars.  Branching out would be like Harley Davidson trying to enter the electric car market.

4.  Increasing the profit margin on each guitar sold.
Two ways to do this.  One is to jack the prices up, which runs the risk of reducing sales.  The second is to reduce production costs; the best way to approach this without hitting quality would be to ruthlessly rationalise the portfolio; having to maintain all of the current models means more line changes on the production floor, which costs time and money.

Best way forward?  Simplify the product range, simultaneously reducing costs and allowing the company to focus on core products.

Re 3. At Nashville airport I recently walked past the Gibson cafe! Sadly it was closed (it was 6am). Nonetheless I bet their overpriced airside beverages are, in sheer margin terms, among Gibson's most profitable non guitar lines.

Neil

ICBM said:

Neil said:

Most people's radical ideas on internet fora consist of halving the price and doubling the QA which would have the company bankrupt in a few months. 

It will be anyway.

August next year to be precise.

I'll look out for that then. 

ICBM

Actually 3 is the main reason they're in the mess they are. Most of their debt is because they bought several non-guitar-related brands in order to 'diversify', which didn't turn out to be profitable. A classic piece of business-theory stupidity which will probably end up destroying the company.

Fender did something similar but mainly stuck to guitar-related brands, and were then told that they weren't 'diverse' enough, which is why their share offer failed. But guess which strategy actually worked better... Fender is generating profits and their credit rating has improved.

Meanwhile many companies that never bought into this sort of corporate bullshit and just stuck to making guitars are doing quite well.

August 1st 2018 is when $375 million of the debt they ran up becomes due for repayment. If they haven't found a way to refinance it by then, then they're bankrupt, plain and simple.

dindude

So basically, no real rumours on the Gibson CEO...

Jez6345789

I think every man and his dog agree the current model is broken. Without actually seeing the accounts and the actual results of the annual cycle of higher pricing at the beginning of the season and a fire sales as the new models are launched how that influences profitability over the financial cycle not sure when they changed to the big annual churn of models but if it was not profitable I doubt even Henry would pursue it out of vanity for his own business beliefs as he know he needs to make the repayments. 

I also believe the annual churn of model variants impacts on quality as people never get comfortable with their job. I sort of feel Gibson production flies by the seat of its pants in terms of production placing pressure on the workforce to get target numbers out the door. Especially the budget sub 1k stuff.

I also think when you watch PRS or Taylor production anyone can pass substandard work back down the line and they are the people who implement the QC. With Gibson, the decision is made by your supervisor who has a mountain of pressures to answer to management on.

besides fixing the financial issues whoever gets the job will need to be a real leader and people person to change the coat and tie management style that has been the norm for a good while.

Finally, there needs to be the practical stuff like a condensed range that covers price points and separates tradition from innovation. and addresses price points. With companies like PRS picking their pockets for market share and know they have the silver bullet of quality in their back pocket. Gibson needs to get the guitar business profitable and fast. 

I do think over the last few years they have missed a trick with not bringing back Valley Arts it languishes as a brand that had a great heritage in Rock with their Super Strats. But now produces pimped Tele's for the custom country scene if it's even doing that.  It would be easy to bring back the Custom Pro to get some interest back in the Super Strat Market and then fork off that to produce guitars for the modern metal market that compete with that whole segment of new players. If they need to grow market share then taking on that segment where they don't even have a dog in the race would be a worthwhile venture in my mind. 

Nice to be an armchair pundit

crunchman

ICBM said:

Actually 3 is the main reason they're in the mess they are. Most of their debt is because they bought several non-guitar-related brands in order to 'diversify', which didn't turn out to be profitable. A classic piece of business-theory stupidity which will probably end up destroying the company.

Fender did something similar but mainly stuck to guitar-related brands, and were then told that they weren't 'diverse' enough, which is why their share offer failed. But guess which strategy actually worked better... Fender is generating profits and their credit rating has improved.

Meanwhile many companies that never bought into this sort of corporate bullshit and just stuck to making guitars are doing quite well.

August 1st 2018 is when $375 million of the debt they ran up becomes due for repayment. If they haven't found a way to refinance it by then, then they're bankrupt, plain and simple.

It's worse than that.  There is $145m that matures in June, and then you have the $375m.  Total is $520m.

https://www.thestreet.com/story/14280618/1/gibson-guitar-may-default-if-company-can-t-refinance-its-debt.html

They are "rationalising" some of the other businesses they bought.  They have stopped development of Cakewalk.

guitars4you

dindude said:

So basically, no real rumours on the Gibson CEO...

appears not - not heard anything within the trade or via USA forums etc - It is there long weekend for Thanksgiving plus some 'crap sale' so maybe less business action !!!!!

ESBlonde

The problem with new 20YY models each year is that they are needed for sales promotion. The big print media feature new guitars not 60 year old models which can only be repraised every 5 years for new players.
Re innovation: Don't forget that the Les Paul model went from the first black model with the wrong neck angle and wrap around bridge to the gold top then got the separate bridge/stop bar and humbuckers to the sunburst to replacement by the SG in just 8 years! It was dropped because of lack of sales. Also in that time the explorer, firebird, flying V all made a brief appearance before getting shelved again for a lack of sales.

Gibson is a sales based manufacturer and should be innovative all the time, it's the customers that are awkward!

The Glass roof website has some horror stories and executive turnover is brutal. i suspect that The creditors are excerting pressure to control Henrys business, that won't go down well but may be the saviour of the business long term.

Pass the popcorn.

Jez6345789

I agree with ESblonde there needs to be new models and historic models but the complete range change through every model is probably the most toxic. 

PRS seem to manage to get away for years with minor refreshes.  New unobtanium bridge saddles. Different pickups all branches on the tree of magical guitars.

Tronical cost them 40 million or so the press release says and the one on my 2015 junior is not a bad thing. Just not as perfect as you would want. Not sure I would trust it live with lots going on stage people hitting drums and thunking bass between numbers.

7 strings etc are as far as I see not an area they venture into for the modern thing.

so much to fix

RandallFlagg

Here's Henry's view on asking for a day off at short notice:

Source: http://gawker.com/gibson-guitar-ceo-gets-enraged-if-someone-asks-for-a-da-1661598680

Subject: RE: Personal Day-Thanksgiving Approval requested

NO

I do not allow leaders to be absent the days before and after a holiday. I had asked Tom to make it clear, but apparently people have not understood or the communication was not clear.

You cannot take long weekends or long holidays unless there are special circumstances. You are leaders and these are work days. During work our leaders need to be there doing their jobs. Taking time off when other people cannot do so or causing insufficient staff during working periods shows a lack of responsibility and consideration for all that depend on our business to be there for them.

Henceforth vacations must be taken for a minimum of one week and must be scheduled well in advance. I will expect a vacation calendar from my direct reports for an entire year.

I will turn down all requests for long weekends and for periods of less than 5 contiguous days without special circumstances.

I also do not believe it is appropriate for a request of this kind is to be shared with others. This suggests where you are coming from [employee name]. I also do not appreciate being lied to about being ill so you can game the system to get what you want [employee name]. As soon as I return from my travels, I will schedule a private conversation about this.

I have counted on the personal integrity of people working with me and have refrained from putting in place a rigorous oversight system. I have asked our HR department to oversee this activity on a spot basis which they have not followed through on. The result is I am seeing a continued decline in decorum, a deterioration in discipline in terms of appropriate attire, coming and going on time and other issues that do not belong in a professional situation with executives that are supposed to be examples of appropriate behavior.

It is not alright to leave early Friday afternoon or arrive late on Monday morning. It is not alright to take extended lunches. The list of unprofessional behavior goes on.

We will be implementing HR policies that were developed at Philips and we have appointed [person] as our global head of Human Resources. These new policies will be promulgated throughout our group of companies and these will be enforced strongly. I will take the time to review these new policies with the people that report to me directly.

I will schedule a private meeting with you [employee name].

Henry

Henry E. Juszkiewicz

CEO – Gibson Brands, Inc.

richardhomer

^ Is that an extract from his Flexible Working Policy?

dindude

So right Henry, calling people out in group e-mails demonstrates much better leadership than someone who wants to take a long weekend. Twat.

Three-ColourSunburst

You are leaders and these are work days. During work our leaders need to be there doing their jobs. Taking time off when other people cannot do so or causing insufficient staff during working periods shows a lack of responsibility and consideration for all that depend on our business to be there for them.

This is fair comment though, especially the bit about abiding by the same rules as other employees. Management are supposedly paid more because they carry the responsibility for keeping their whole department working efficiently, so if the place can run perfectly well without them, then one might as well get ride of them!

TTony

RandallFlagg said:

You are leaders and these are work days. During work our leaders need to be there doing their jobs. 

If thats a genuine email from the CEO, I think I just spotted another "leader" who's not doing his job.


It has nothing to do with taking a holiday either, although it really should result in him taking an extended one.

humbucko

I'm with Henry on this one... taking a day off sick after being refused it as leave??? Sackable offence!

Phil_aka_Pip

@ humbucko yes indeed ...

but his remarks about "attire" and single days off are bollox.

WezV

Hmm.  Carrying the responsibility does not mean you have to be there constantly.  

I consider my teams to be well managed because I can afford to step away and leave them to it.  I wouldn’t dream of micromanaging them, that would be annoying for them and more work for me.