Gibson's financial woes

andyoz

I showed a random stranger my guitar collection and the only one that they showed any interest in was my Strat.  Blanks looks for the other nice LP, SG, etc.  This is the sort of person that would be taking their kids in to buy guitars one day....

Based on that random pole, I think Gibson's fecked! 

guitars4you

andyoz said:

peteri said:

Random thought - has Gibson ever been that viable?

From what I've read the late 50's weren't massively great for Gibson, hence they stopped the Les Paul. They muddled through the 60's and have kind of staggered on since.

I was amazed when I read that all through the 60's they were making just over 1,000 SG Standards a year.  That was one of their main models and that volume is peanuts.

http://www.guitarhq.com/shippin4.html
http://www.guitarhq.com/shippin1.html

shipping figures on those pages for semi hollow and electrics during this period - I suppose they tell many stories

rossi

I have said for the last 10 years that Fender and or Gibson PRS etc may well end up Chinese owned but they would keep a US high end facility . Far too many guitars chasing the market .

andyoz

guitars4you said:

andyoz said:

peteri said:

Random thought - has Gibson ever been that viable?

From what I've read the late 50's weren't massively great for Gibson, hence they stopped the Les Paul. They muddled through the 60's and have kind of staggered on since.

I was amazed when I read that all through the 60's they were making just over 1,000 SG Standards a year.  That was one of their main models and that volume is peanuts.

http://www.guitarhq.com/shippin4.html
http://www.guitarhq.com/shippin1.html

shipping figures on those pages for semi hollow and electrics during this period - I suppose they tell many stories

Never seen that summary before, so in 68 and 69 they were making 10 solid bodies a day for the Entire World....I imagine nowadays a few of the bigger of America's 250 Guitar Centre stores would sell that many in day....

ICBM

andyoz said:

I showed a random stranger my guitar collection and the only one that they showed any interest in was my Strat.  Blanks looks for the other nice LP, SG, etc.  This is the sort of person that would be taking their kids in to buy guitars one day....

Based on that random pole, I think Gibson's fecked! 

Do you have a Flying V?

That's easily Gibson's most iconic model to a non-musician. Ask any of them to draw an electric guitar and you'll get (an approximation of) a Strat or a V.

bobliefeld

Aren't Gibson still #1 or #2 in the industry, with PRS being a very distant 3rd?  

They're not really struggling to sell guitars...   

andyoz

ICBM said:

andyoz said:

I showed a random stranger my guitar collection and the only one that they showed any interest in was my Strat.  Blanks looks for the other nice LP, SG, etc.  This is the sort of person that would be taking their kids in to buy guitars one day....

Based on that random pole, I think Gibson's fecked! 

Do you have a Flying V?

That's easily Gibson's most iconic model to a non-musician. Ask any of them to draw an electric guitar and you'll get (an approximation of) a Strat or a V.

No, can't bring myself to do it!

dindude

andyoz said:

guitars4you said:

andyoz said:

peteri said:

Random thought - has Gibson ever been that viable?

From what I've read the late 50's weren't massively great for Gibson, hence they stopped the Les Paul. They muddled through the 60's and have kind of staggered on since.

I was amazed when I read that all through the 60's they were making just over 1,000 SG Standards a year.  That was one of their main models and that volume is peanuts.

http://www.guitarhq.com/shippin4.html
http://www.guitarhq.com/shippin1.html

shipping figures on those pages for semi hollow and electrics during this period - I suppose they tell many stories

Never seen that summary before, so in 68 and 69 they were making 10 solid bodies a day for the Entire World....I imagine nowadays a few of the bigger of America's 250 Guitar Centre stores would sell that many in day....

That's the point I guess, even when I was an impressionable teenager some 20 years later than this, if someone we knew had a "real" Fender or Gibson, it was a thing of marvel, not rare but certainly not two-a-penny.

Now I can add a Gibson to my Amazon basket, along with nappies, at a greatly discount rate, then send it back the next day when it doesn't do it for me. Guitars have largely lost there true value as instruments due to the over supply.

Rox

bobliefeld said:

Aren't Gibson still #1 or #2 in the industry, with PRS being a very distant 3rd?  

They're not really struggling to sell guitars...   

It's very easy to sell stuff.  Having a profitable business is another thing entirely.

Being $125m in debt, Gibson would need to sell something like 90,000 Les Paul standards with no overheads...

Turnover is vanity, profit is sanity.  Apparently.

andyoz

$125m debt.  I hadn't read the article.  Hmmm, that's a tough one to trade yourself out of.

guitars4you

andyoz said:

guitars4you said:

andyoz said:

peteri said:

Random thought - has Gibson ever been that viable?

From what I've read the late 50's weren't massively great for Gibson, hence they stopped the Les Paul. They muddled through the 60's and have kind of staggered on since.

I was amazed when I read that all through the 60's they were making just over 1,000 SG Standards a year.  That was one of their main models and that volume is peanuts.

http://www.guitarhq.com/shippin4.html
http://www.guitarhq.com/shippin1.html

shipping figures on those pages for semi hollow and electrics during this period - I suppose they tell many stories

Never seen that summary before, so in 68 and 69 they were making 10 solid bodies a day for the Entire World....I imagine nowadays a few of the bigger of America's 250 Guitar Centre stores would sell that many in day....

Now you put it like that it is an interesting thought - maybe that puts it in perspective what a small cottage industry we are in - nothing wrong with that providing we accept it - also puts those vintage instruments in to a firm perspective compared to today's 'collectible' guitars

roughly today Fender Custom Shop is 12,000 units a year and ditto PRS USA was a few years ago (I don't know what it is today - that equates to a touch over 30 a day

andyoz

I actually imagined Fender CS might have been making more than that.  I guess the main Fender stuff is well into the 6 figures though.

Have to keep reminding myself that those Gibson production figures in that link are all the solid bodies they were making, there was no premium priced Custom Shop, no cheap other factory, no alternative branding, that was it!  Looks like the hollow bodies were about the same volumes.  So Gibson could barely kit out an average school music class with a days output.

One things for sure, I might be a bit more careful in the future about about who I hand my '68 SG Standard over to play...

crunchman

A lot of it is image and what is perceived as cool.

Their sales weren't great in the 80s until Slash came along.  Everyone was playing superstrats and pointy things but Strats weren't cool in the 60's until Hendrix came appeared on the scene.

Strats haven't been so fashionable again in recent years because of the Tony Blair / old white guy effect.

At the moment it seems to be Teles, offsets, and Gretsches that are popular or as popular as any electric guitars are at the moment.  Looking at the likes of Ed Sheeran acoustic guitars seem to be more popular than electrics at the moment.

They need a Slash for the new generation to come along - either that or Taylor Swift to get fed up with playing pop and start toting a Les Paul.

bobliefeld

Rox said:

bobliefeld said:

Aren't Gibson still #1 or #2 in the industry, with PRS being a very distant 3rd?  

They're not really struggling to sell guitars...   

It's very easy to sell stuff.  Having a profitable business is another thing entirely.

Being $125m in debt, Gibson would need to sell something like 90,000 Les Paul standards with no overheads...

Turnover is vanity, profit is sanity.  Apparently.

Yes I know..  but there's talk of are they "viable", has there ever been a Gibson boom?  Answer is "yes!", relative to the rest of the industry they're permanently booming.  They don't really need to put the Gibson headstock on Epiphones or whatever as shifting guitars isn't really the issue.. 

ICBM

dindude said:

That's the point I guess, even when I was an impressionable teenager some 20 years later than this, if someone we knew had a "real" Fender or Gibson, it was a thing of marvel, not rare but certainly not two-a-penny.

And unless they were some of minor local rock star, they had either a Fender *or* a Gibson, not both. The average working musician might have had one, but more than likely their backup would be a cheaper Japanese brand. If they had an acoustic at all it would often be something cheap.

The idea that every amateur bedroom player would have *several* Fenders, Gibsons and other big-name brands would have been inconceivable - but the guitar industry has now built its business model around that. If it ever shifts back towards the guitar as an instrument where you just choose the one that suits you and that's enough, they're all screwed.

Lodious

In some ways, I'm more concerned about the dealers than Gibson themselves. I went in Guitar Guitar in Newcastle a couple of weeks ago and they had a shed load of expensive Gibsons. Some of the Les Pauls were 8k+. These are basically '59 RI's which someone has attacked with a brillo pad. The pricing appears to be built on sand. Upping the price by 2K for the True Historics over the regular '59's for some changes to the shape of the plastic and getting the pickup covers the right shape is just bullshit. It destroys the credibility of the brand. If fashions change, and people stop thinking guitars attacked by a beltsander are really cool, some of their stock could be worth a fraction of what they are asking for it.

I hope I'm wrong, but when looking at their stock, I just thought 'Who the hell is going to buy all this stuff?'. I just can't see them shifting the stock at anywhere near the prices they are asking.

I also think the whole China thing will soon stop being the panacea for underperforming western companies. I'm working with a Chinese team at the moment and they are very smart people. I don't think it will be long before they start leveraging a bigger piece of the action as day by day, they are holding more and more cards. Their costs are increasing significantly year on year.

To outsource correctly, the company needs to be able to manage smartly, and I honestly don't think that Gibson is a company run by smart people at the moment. 

It all seems to have gone a bit bonkers at the moment.

andyoz

Re. labour costs....Indian made guitars will be the real cheapies one day and the Chinese stuff will be viewed as premium!

kjdowd

andyoz said:

I can't think of any other manufacturing industry business model that is based on basically selling a 60yo design which is essentially what Gibson and Fender do.

Innovation drives new sales/customers and fiddling with the electronics on a LP isn't going to do it.  I can't think of any similar example in the manufacturing industry, at least one with a never ending growth model - anyone?  Also, I don't think kids would really gravitate towards an LP when they are hard to play compared to alot of others (alot of us put up with them because our heroes played them)

The whole thing seems to be supported by twats like us that have 10 guitars when we would have only had one or two 30 years ago.  Now we just seem to sell them to each other rather than buying new.

It's an interesting question and the one that springs to mind, I suppose, is furniture. While there is some innovation here (Ikea, maybe?) the business model has turned more to innovative finance than product development as such, or at least that's how it seems to an outsider. And I suppose you do get growth as populations grow, I doubt it's seen as a high growth business. 

Like I say, I've little in the way of actual insight here...

ICBM

andyoz said:

Re. labour costs....Indian made guitars will be the real cheapies one day and the Chinese stuff will be viewed as premium!

Exactly, in the same way as once 'Japanese electric guitar' meant a Microphonic Plywood Special, and now they're the premium non-US country.

andyoz

kjdowd said:

andyoz said:

I can't think of any other manufacturing industry business model that is based on basically selling a 60yo design which is essentially what Gibson and Fender do.

Innovation drives new sales/customers and fiddling with the electronics on a LP isn't going to do it.  I can't think of any similar example in the manufacturing industry, at least one with a never ending growth model - anyone?  Also, I don't think kids would really gravitate towards an LP when they are hard to play compared to alot of others (alot of us put up with them because our heroes played them)

The whole thing seems to be supported by twats like us that have 10 guitars when we would have only had one or two 30 years ago.  Now we just seem to sell them to each other rather than buying new.

It's an interesting question and the one that springs to mind, I suppose, is furniture. While there is some innovation here (Ikea, maybe?) the business model has turned more to innovative finance than product development as such, or at least that's how it seems to an outsider. And I suppose you do get growth as populations grow, I doubt it's seen as a high growth business. 

Like I say, I've little in the way of actual insight here...

Furniture has a definite fashion element to it though to some degree.  I can't think of anything else in my house that looks like it would in the 50's...except for the skirting board, doors and my guitars (and a few of the amps).

An LP Standard now looks the same as the 50's LP.