Join Date: Sep 2007
Location: Deserts of Arizona - in a post-American world
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Re: Anyone avoid Guitar Center unless absolutely nessecary?
Along those same lines, here's an article I saw recently.
Funny how everybody is all in a tizzie about Big Business, Wall Street, etc.
We have a government deciding certain preferred companies are "too big to fail."
All the while, our government is doing its dead-level best to fxcking implode and take the world with it...
Meanwhile, back in the music biz where Epiphone is "just as good
Buying Chinese sh!t is cool if you really, really want it...
And people too smart/cool to shop at Wal-Mart just fxcking love GUITAR CENTER
It's an Op-Ed piece, but there are some very telling points underlined
Made In China: American guitar
Posted in Made in China, Rock 'n' Roll at 4:33 pm by George Smith
Continuing with the posts on how US electric guitar manufacturers
outsourced their production for middle class pieces for the sake of
concentrating on custom business for the non-playing wealthy, I have a few
items of interest.
The first dates from a year before the economic crash. At the time you could
still read stories on what a jolly good business it was to be able to buy
Chinese-made US branded guitars displayed in cardboard boxes at Target,
Wal-Mart and BestBuy.
From the Newhouse News Service, in 2007:
“Rock has gotten so mainstream that you see or hear guitars in just about
every movie and commercial,” says Dana Clarke, manager of Guitar Center in
North Olmsted, Ohio. “Combine that with guitars being made overseas, cheaply,
and it’s no surprise you see them everywhere.”
Everywhere, as in the aisles of Target, Wal-Mart, even Costco. They come
packaged as “rock kits.” In brown boxes. Stacked up like stairways to heaven.
And they’re cheap.
The outsourcing of production to Mexico, China and South Korea has dropped
electric-guitar prices to levels that have made them competitive with
electronic toys and gadgets.
One penny shy of $70 for an ax at Target. Less than $87 for a “guitar pack,”
amp included, at Wal-Mart.
At the same time, prices skyrocketed for domestically-made guitars, made for
the collector crowd:
[The Guitar Center man] has witnessed an explosion in price appreciation,
even for unloved guitars that would hang on the wall for months.
“In the 1980s and ’90s, guitars became a collectible with a Blue Book value,” he says.
Guitar Center, the article went on to state, “pioneered the guitar-for-masses concept.”
Fender’s new CEO, Larry Thomas, was formerly chairman of Guitar Center.
And while things were heady in 2007, Guitar Center is now stuck in the
doldrums. When the middle class was beggared by the economic crash, GC suffered.
“Moody’s downgrades Guitar Center debt,” reads a news story from November 12:
Moody’s Investors Service has downgraded private equity-backed Guitar
Center Holdings Inc., parent of Guitar Center, to Caa2, from Caa1, citing
increased interest expenses when it begins paying down its senior unsecured
pay-in-kind notes starting in April 2011. Until last month the business, owned
by Boston buyout firm Bain Capital LLC, has deferred paying cash interest on
its $375 million senior notes held at the holding company level. Moody’s said
Friday, Nov. 12, that, while sales have improved, its earnings are not
expected to recover sufficiently during 2011 to fully cover its interest
expense through internally generated cash flow. The agency said the
Westlake Village, Calif.-based music store chain, the largest in the
U.S., “could voluntarily pursue a debt restructuring or an amendment to its
debt facilities” at terms it would deem to be equivalent to a default.
Caa2 means holdings are of “poor standing.” Guitar Center, in other words, is
a substantially risky business not far away from falling into default.
Fender, for its part, has had a great deal of trouble controlling who uses its
designs. It’s a consequence of other companies fabricating them uncontested
and the company’s own mass outsourcing to China. The temptation to
capitalize on the brand name and look is very strong.
Paradoxically, in a news item from the Arizona Republic in 2009 (Fender is
based in Scottsdale), one reads:
Fender filed for the trademarks as part of its global strategy to fight
counterfeiters and protect its intellectual property, he said. The problem has
gotten worse as copycats have guitars made in China, ship them to
warehouses in the United States and sell them over the Internet …
Over the years, again prior to the current troubles, domestic guitar
production as investment pieces for the wealthy was generally hailed.
For example, this from 2003, on a guitar show:
Things took off in the late 1980s and early 1990s as Boomers with increasing
disposable income started buying the axes preferred by their musical heroes.
Most of those were built in the 1950s and 1960s, the first two decades for
mass-marketed electrics. Suddenly, certain models and years, mostly Gibsons
and Fenders, started commanding seriously crazy cash — $10,000-$40,000.
And this news piece from 2006 on Gibson’s peddling of premium models to the
stupid rich in Japan is also revealing:
Gibson makes a range of guitars solely for the Japanese market, including
rocker Tak Matsumoto’s signature Les Paul in such special guitar shades as
“It is so cool,” says Yuki Yamaguchi, a 19-year-old student who bought a
$5,400 Tak Matsumoto Gibson on three-month credit. “I open the case and
look at in and go: ‘It is so cool.’”
Amateur musicians such as Yamaguchi, who acknowledges he hardly has time
to play his guitar and spends more time admiring it, may be just buying a dream.
But they make for serious business.
“Some of these consumers own five, 10, 20 guitars because they’re
collecting … They’re collecting for the love of collecting,” a Gibson sales exec
told the newspaper reporter.
“The Japan-only Les Paul with the beat-up look costs about $3,000 …” added the piece.
Ironically, flooding in Tennessee stalled Gibson’s domestic production for a
couple months earlier this year.
The Nashville newspaper, The Tennessean, reported on the matter:
Widespread flooding two weeks ago pushed many of the city’s rivers and
streams well beyond their banks, including Mill Creek, which flows just behind
Gibson USA’s sprawling factory complex near Nashville International Airport.
The plant churns out 2,500 guitars a day. It is one of several mass
production facilities the company operates around the globe – including in
Memphis; Bozeman, Mont.; and at least five factories in China.
Gibson guitars manufactured in the flooded plant cost between $700 and
$3000. Paradoxically, the custom shop — which produces Gibson’s really
idiotically priced pieces for the plutonomy or Nashville recording artist with a
label deal — was not impacted.
Dick Destiny » Made In China: American guitar
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