Fender

[j45nick]

There is a really good article in the business section of today's (Saturday, September 29) New York Times on the financial state of parts of the guitar industry, primarily what's going at Fender right now. It also touches on the troubled status of Guitar Center, which was purchased by Bain Capital at the top of the market in 2007, and has been headed downhill ever since.

 

My link

 

This link may or may not work, as it isn't always easy to copy links from the Times site.

 

Sorry, I can't seem to get the link working properly. It's worth going to nytimes.com to read it.

[Rabs]

There is a really good article in the business section of today's (Saturday, September 29) New York Times on the financial state of parts of the guitar industry, primarily what's going at Fender right now. It also touches on the troubled status of Guitar Center, which was purchased by Bain Capital at the top of the market in 2007, and has been headed downhill ever since.

 

My link

 

This link may or may not work, as it isn't always easy to copy links from the Times site.

 

Sorry, I can't seem to get the link working properly. It's worth going to nytimes.com to read it.

Just copy and paste the full URL of the page in your post like this :)

 

http://www.nytimes.com/2012/09/30/business/fender-aims-to-stay-plugged-in-amid-changing-music-trends.html?_r=1&ref=business

[62burst]

'Thought I'd give a shot at putting the link up:

 

Linky

 

 

edit: Oops! Thanks Rabs!

[j45nick]

'Thought I'd give a shot at putting the link up:

 

Linky

 

 

 

This is the correct link to the front page of the business section, which contains the article. Thanks for posting it.

 

-Nick

[JohnnyReb]

Oh that evil Bain capital

[J200_2013]

Yes! so VERY VERY evil. :o

[merseybeat1963]

Analysists say Guitar Center is imperative to Fender...baloney...WE are essential to Fender.

Guitar Center and the other companys they own which have tried to corner the whole thing have made things worse since "the good olde days"

[duluthdan]

I just had an "aha" thought for the survival and prosperous future of Fender, Martin, Gibson, et al. Build a beginner guitar that is easier to play than a flippin' aircraft carrier. No wonder kids give it up early. Just spent an hour working on a Fender Squire. These things are as unfriendly a beginner guitar as there is, you could not make it harder on a beginner than to give them this guitar to learn on. Build a great affordable beginner guitar and get 'em hooked for life.

[EuroAussie]

Dan, out of curiosity what would be some aspects of what you would consider a 'friendly' beginner guitar.

 

What's the issue with the Squire, never played one.

[stein]

It may be interesting what happens with Fender from here.

 

I didn't know until the rescent stock offering that Fender was actually back to a CBS sort of structure. By that, I mean it is owned and run by a corperation rather than a group of poeple trying to build the best "Fenders" they can.

 

I think that Fender as it is today is in a lot of trouble. When you grow a company to take advantage of a good (or overblown) market, and use THAT as your measuring stick, when things turn it can only be measured as failure. For Fender to be expected to maintain and grow from the high point of a few years ago is an unrealistic and foolish expectation.

 

For those that "invested" or bought into the company to make money, they are going to loose because the measure of success is how MUCH money the can make. For those that are invested to make good guitars, they can still be in business and make good guitars. Question is, which of these two types are in control and ownership of the company? Looks like the money, doesn't it?

 

Fender, for a time, was building the BEST guitars they have problably ever built. They were also reaching into thier own history and learning how to build them better, and what makes them tick. That's a high point. But from what I have seen sinse then, they have been building things both further away from the ideal of the "vintage" Fender, AND also changing specs on standard models to be cheaper as opposed to better. It looks like they are building guitars further away from the musician or "Fender freak" and closer toward the invester. That's what I think I see anyway.

 

For those of us that remember the transistions and the CBS years, grab a seat and watch another part of history. It might get interesting.

[stein]

Dan, out of curiosity what would be some aspects of what you would consider a 'friendly' beginner guitar.

 

What's the issue with the Squire, never played one.

I can't speak for him, but I would first say there are more than one quality level and price point for the Squier series.

 

I think what he is refering to, is that for a time there were some REAL cheap guitars that went for very little money meant for true beginners, and technology had come to a point that even a cheap guitar could be made to PLAY as well as a good one. In that I mean, it might be kinda ugly, it could be made of cheap materiels, and it could sound like crap. But the action, neck shape, and ease of play could still be there, even if not as refined.

 

Lately, the cheaper Fenders meant for students are a ***** to play compared to the good ones. High action, difficult neck shapes, and really no advantage at all to a novice. Almost like they are setting a selling point that if you want a guitar that is easy to play, you should spend more.

[jchabalk]

$230+ million in long term dept comes due in 2014.

 

ummm... run (don't walk)!

 

EDIT: I still want a strat though

[duluthdan]

The little Fender Squire acoustic I worked on this morning has a wee little plastic saddle, set so low there is next to no real string break, and that's how it came brand new. I know, because 8 years ago I was the idiot who purchased this for a teenage daughter. When she left home for college and work - she left this. I'd only seen her try to play it once. Today I wanted to make it playable for my sister-in law, just for something to get started on. The strings were your typical tight-rope walking height, and with no saddle adjustment possible the only thing to do was file the nut slots, and crank the truss rod to try and straighten the neck. Other than correcting strings 1 and 6 for radius there was no realistic room to file the nut down. Lower the action to where there is a buzz on every string fretting all strings at the 3rd fret, and height at 12 was still .12. Give a little relief to remove the buzz, and this guitar was excrutiating above the fourth fret. This is just not a kind machine.

 

What would I do?

 

- Make them all short scale.

- Truss rod nut at the top of the fret board, not an allen socket deep in the soundhole. There is no tool in the average guy's collection that will fit.

- Drop-in saddle, and not some screwy molded pre-shaped plastic job with no room for any sort of adjustment assuming that intonation on every single guitar that spits out of this assembly line will be the same.

- Don't allow parents to buy a $199 guitar in a box, advertised as a learner's guitar.

- Run the divsion at break-even to small loss - hook 'em while they're young.

 

That being said, a few years ago I did buy a $99 Chinese made guitar, after literally visiting the shop every other day for a year until I found one that had any sort of chance at life. Put on a bone nut, ugly job, dropped in a bone saddle left over from a Martin, tweaked the truss rod, removed the shiny poly with heavy duty car rubbing compound, slapped on a set of 12s and play the hell outta this thing now. It is truly a campfire worthy little beast, and if it ever lets me down, that's where its gonna end up, in the campfire.

[davenumber2]

Fender has always made junk acoustics, whether branded Fender, Squier, or whatever. Where they have made great strides in quality beginner instruments are the Squier Classic Vibe and Vintage Modified electric lines. Really nice playing and sounding guitars that pretty much anybody can afford. If you don't believe me head over to the TDPRI board and read through the pages and pages of testimonials.

 

Having said that, I think upping the quality of their low end stuff has probably dissuaded people from buying the next level up (MIM or MIJ) which has a higher profit margin.

[Rabs]

Fender has always made junk acoustics, whether branded Fender, Squier, or whatever. Where they have made great strides in quality beginner instruments are the Classic Vibe and Vintage Modified electric lines. Really nice playing and sounding guitars that pretty much anybody can afford. If you don't believe me head over to the TDPRI board and read through the pages and pages of testimonials.

 

Having said that, I think upping the quality of their low end stuff has probably dissuaded people from buying the next level up (MIM or MIJ) which has a higher profit margin.

Yeah I have to agree.. My brother in law has one of the Modern Players Jaguars.. and ok its not high end but for the price its one hell of a guitar.. Check these vids for some new fenders

 

 

[Markini]

.

 

"Having said that, I think upping the quality of their low end stuff has probably dissuaded people from buying the next level up (MIM or MIJ) which has a higher profit margin."

 

 

MIM maybe, but a MIJ is considered by many to be equal to or greater than a MIA.

[retrorod]

There is a really good article in the business section of today's (Saturday, September 29) New York Times on the financial state of parts of the guitar industry, primarily what's going at Fender right now. It also touches on the troubled status of Guitar Center, which was purchased by Bain Capital at the top of the market in 2007, and has been headed downhill ever since.

 

My link

 

This link may or may not work, as it isn't always easy to copy links from the Times site.

 

Sorry, I can't seem to get the link working properly. It's worth going to nytimes.com to read it.

Just great Nick! That stupid 'fluff piece' has little to do with anything real in the 'guitar world' of musicians and more to do with 'your' petty little political BS attitude. I think most intelligant beings are beyond the "Bain is evil" mentality. There are much more serious issues to be dealt with in our country.....if you REALLY want to go there....

[Bongoscot]

I sure wish there was a small shop with good service where I could buy a Les Paul. Guitar Center sucks and it is clear now why. I was going to hold my nose and buy from G.C. even though I did not like them. Now I think I am going to hold my nose and go to Sam Ash, the other mega store that I dont like.

[milod]

Okay, I don't consider this comment "politics," but rather "economic trends."

 

The past 50 years has seen an increasing tendency for larger corporations to leverage buyouts of others.

 

The key term here is "leverage." It's based on the same consideration that a small business buyer believes when he or she purchases a business: There's a belief that purchasing an existing business puts you immediately in the hole, but that by doing the business more efficiently (one way or another), it's worth buying the name and a bit of blue sky.

 

Weaknesses to all of these purchases arises when something doesn't go according to the business plan - whether it's Ma and Pa Jones or Jones Associates Capital Conglomerate. The era when two or three managers were paid enough to buy the business is long gone thanks to the era of leveraged buyouts by larger corporations.

 

Then the "leverage," the cash borrowed against perceived ability to make enough to both pay off large loans and to have profit for "stockholders," gets sour and some sort of accommodation must be made for the business to survive as such. Usually when such difficulties occur, it's a down market. This is where most Ma and Pa businesses are sold out and Ma and Pa hope to find jobs to live in reduced circumstances, pay off their debt and/or file bankruptcy.

 

It's more difficult the larger the company. It also has a different psychology since the owners, the managers and the workers are not Mom and Dad, but very separate constituencies that have a number of layers of psychological and economic concerns.

 

It's popular to point to evil venture capitalists, but they're risking significant loss - and want more protection than they'd get in a Las Vegas casino. Management types with sufficient wherewithall to do financial planning will tend to ensure they have some sort of a "golden parachute" for self preservation even if it means making "good excuses" for less return to the owners and less cash for the workers. The workers tend then to be something akin to a horse drawn wagon in that yes, they create the movement, but they also must always be observed carefully as a possible runaway that could destroy the wagon, the driver and even themselves.

 

So...

 

Up until the 1960s or so, I think a lotta businesses, from guitar makers and music stores to newspapers and television stations, were operated by the founder or a second generation family member. Then increasingly those companies were sold to increasingly large corporations convinced they could be efficient enough to buy properties at higher than traditional "value" and still make money.

 

Fast forward to today... Those companies, like the vanity homes sold with mortgages at the very edge of buyers' ability and in hopes of continuous appreciation, found their bubble burst. It's like the Dot-com bubble and burst that hit in the presidency in the US of Bill Clinton. That's not a political comment, just a reference to time frame. The burst came when it became increasingly obvious that all these new Internet companies couldn't possibly live up to their purported promise.

 

Yeah, we've a lot of companies in a lot of businesses today walking a tightrope and everybody's trying to figure out tactics and strategies for individual survival while there's a tendency for the company's product - whether goods or services - to suffer.

 

Frightened people don't necessarily make good long-term decisions. In many cases the owners/stockholder/venture groups are scared they'll lose their business which is the capital that creates businesses. The management class fears both the owners and the workers and form tactics for their own and their friends' economic survival. The workers increasingly are on edge feeling that they're the least able to survive collapse, and so constantly are a threat to the other two groups for lawsuits and other labor disasters.

 

Is it any wonder few of us are confident in their own economic lives?

 

FDR said one thing I tend to agree with, that the thing to fear in hard economic times is fear. And nobody today seems willing to admit that it's exactly that fear that has become part of our current culture.

 

m

[j45nick]

Just great Nick! That stupid 'fluff piece' has little to do with anything real in the 'guitar world' of musicians and more to do with 'your' petty little political BS attitude. I think most intelligant beings are beyond the "Bain is evil" mentality. There are much more serious issues to be dealt with in our country.....if you REALLY want to go there....

 

 

Hey Rod, I think you totally misunderstood why I posted this. It had nothing to do with politics, and everything to do with the entanglement between guitar manufacturers and the mass marketing mechanism that is Guitar Center. When one block breaks, the whole structure can fall.

 

You need to chill a bit, brother.

[milod]

I'll add this comment obliquely so it ain't seen as political at all.

 

All guitar/music manufacturers are in a totally different environment today than 50 years ago. Beyond the tiny specialty guitar maker, any larger manufacturer has to figure the best way to distribute his goods at the lowest cost - and with appropriate pricing on the product both for the maker and the channel to the consumer.

 

It's a lot more difficult today, I think, than when Fender came up with the Tele, Strat and Precision, and Gibson the LP, 335 and SG. There's double the population, double the potential market but... far fewer practical outlets. Ditto capo and string makers, btw. Markets always are changing; always have, always will.

 

m

[retrorod]

Okay, I don't consider this comment "politics," but rather "economic trends."

 

The past 50 years has seen an increasing tendency for larger corporations to leverage buyouts of others.

 

The key term here is "leverage." It's based on the same consideration that a small business buyer believes when he or she purchases a business: There's a belief that purchasing an existing business puts you immediately in the hole, but that by doing the business more efficiently (one way or another), it's worth buying the name and a bit of blue sky.

 

Weaknesses to all of these purchases arises when something doesn't go according to the business plan - whether it's Ma and Pa Jones or Jones Associates Capital Conglomerate. The era when two or three managers were paid enough to buy the business is long gone thanks to the era of leveraged buyouts by larger corporations.

 

Then the "leverage," the cash borrowed against perceived ability to make enough to both pay off large loans and to have profit for "stockholders," gets sour and some sort of accommodation must be made for the business to survive as such. Usually when such difficulties occur, it's a down market. This is where most Ma and Pa businesses are sold out and Ma and Pa hope to find jobs to live in reduced circumstances, pay off their debt and/or file bankruptcy.

 

It's more difficult the larger the company. It also has a different psychology since the owners, the managers and the workers are not Mom and Dad, but very separate constituencies that have a number of layers of psychological and economic concerns.

 

It's popular to point to evil venture capitalists, but they're risking significant loss - and want more protection than they'd get in a Las Vegas casino. Management types with sufficient wherewithall to do financial planning will tend to ensure they have some sort of a "golden parachute" for self preservation even if it means making "good excuses" for less return to the owners and less cash for the workers. The workers tend then to be something akin to a horse drawn wagon in that yes, they create the movement, but they also must always be observed carefully as a possible runaway that could destroy the wagon, the driver and even themselves.

 

So...

 

Up until the 1960s or so, I think a lotta businesses, from guitar makers and music stores to newspapers and television stations, were operated by the founder or a second generation family member. Then increasingly those companies were sold to increasingly large corporations convinced they could be efficient enough to buy properties at higher than traditional "value" and still make money.

 

Fast forward to today... Those companies, like the vanity homes sold with mortgages at the very edge of buyers' ability and in hopes of continuous appreciation, found their bubble burst. It's like the Dot-com bubble and burst that hit in the presidency in the US of Bill Clinton. That's not a political comment, just a reference to time frame. The burst came when it became increasingly obvious that all these new Internet companies couldn't possibly live up to their purported promise.

 

Yeah, we've a lot of companies in a lot of businesses today walking a tightrope and everybody's trying to figure out tactics and strategies for individual survival while there's a tendency for the company's product - whether goods or services - to suffer.

 

Frightened people don't necessarily make good long-term decisions. In many cases the owners/stockholder/venture groups are scared they'll lose their business which is the capital that creates businesses. The management class fears both the owners and the workers and form tactics for their own and their friends' economic survival. The workers increasingly are on edge feeling that they're the least able to survive collapse, and so constantly are a threat to the other two groups for lawsuits and other labor disasters.

 

Is it any wonder few of us are confident in their own economic lives?

 

FDR said one thing I tend to agree with, that the thing to fear in hard economic times is fear. And nobody today seems willing to admit that it's exactly that fear that has become part of our current culture.

 

m

WTF?????? Yep....what you said, Milod

[retrorod]

Hey Rod, I think you totally misunderstood why I posted this. It had nothing to do with politics, and everything to do with the entanglement between guitar manufacturers and the mass marketing mechanism that is Guitar Center. When one block breaks, the whole structure can fall.

 

You need to chill a bit, brother.

Yes Nick....I will "chill" a LOT.....WHEN we get REAL "leadership" BACK in this country! How 'bout THAT?????

[zipster100]

Hat's off to milod and very insightful commentary. Nice explanation.

[Murph]

I think you also have to consider the market has shrunk so much, even as the population increases. In the 60s and 70's EVERY kid wanted to play guitar. Now they just want to play games, text and watch Facebook. I mean, there are exceptions, but the numbers simply aren't there.