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Thread: Gibson is Running Out of Time

  1. #71
    Better Tone thru Mathematics bob p's Avatar
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    He's being punished because his deeds weren't all that good.

    Most guitar makers in the USA offer multiple quality tiers. You can buy high-end USA-made guitars if you're willing to pay for them. If you're not willing to pay for them you can buy one of the cheaper imported lines that are still high quality.

    I like that model. Even though the USA guitars cost more, I bought USA because I wanted to support production in my home country. All of my Fenders and Gibsons are USA. Until about a year ago I didn't even own an imported guitar. But when USA production quality became so bad at Gibson, and the prices doubled, I stopped buying Gibsons. I bought my first Epiphone.

    Almost all of the USA manufacturers deliver a top-quality guitar when you're willing to pay the high price associated with the top-quality USA made guitar. And you get what you pay for. Unfortunately that's not quite the case at Gibson. At Gibson, the quality of the USA-made guitars has diminished a lot. The workers complain that the reason for this is unreasonable volume production standards. I've heard that they're forced to keep production so high that they have to do slipshod work to meet their production quotas. The result has been a lot of substandard guitars and a lot of dissatisfied customers.

    Yes, you're a patriot when you do what it takes to keep domestic production. But you're an idiot when you drive the company into the ground by ruining the quality standards that made it famous, all because your ego sent you on a failed merger & acquisition binge that's sending the company into bankruptcy.

    It's hard to love somebody who is waving the flag while they sell you a product that doesn't have the quality level it used to have. I hate to say it, but the Epiphones I've played lately have had consistently better fit and finish than the Gibsons. I'd still be buying Gibsons if the quality was there. Or even if they were a decent value for the money. But in an era where the world is in a state of deflationary overproduction and prices on guitars are falling, I just can't justify the annual 20% price hikes that made the price of Gibsons double in recent years. When that happened Gibson became an aspirational purchase, rather than a quality purchase. Personally, I don't aspire to buy expensive guitars with defects. That's where his business model really failed.

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    There was a guy here where I live and he had somehow found a way to use bracing in acoustic guitars so that the guitars could be done in record time as compared to the conventional way that Gibson was using.....They came here to St. Johns' and I guess made him an offer he couldn't refuse.....and Gibson had agreed to have the factory here and produce the acoustic guitars here with this new way of bracing.......anyway after about a year they closed the building down and moved back to the U.S. the guy used to make his own guitars...both acoustic and electric......and they were called Garrison Guitars......apparently there were a few high profile guitar players in North America that actually used his guitars.......not sure who they were but I had heard Billy Gibbons of ZZ top owned one and the guitar player from Lover Boy as well.....I thought that there were a few more but I don't know who.......The guy's name was Chris Griffiths and he had a music store here called Griffiths Guitar Works.....Gibson wanted the rights to the new procedure and after they got it, they laid off all the workers and as the story goes, the workers showed up one day to go to work and the locks were on the door.....

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    Bent Member Chuck H's Avatar
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    Fwiw I don't think they (Gibson) schemed to connive. In fact I think it's worse than that. I think they just wen't wherever it was good for them and swallowed all in their path. Then when it was less good they went somewhere else (and, of course, took everything with them). This is even worse than "planning" to "screw" someone. When you "plan against" you give away power. Big business doesn't give power. Sadly they (Gibson) didn't regard Chris Griffiths or the towns people AT ALL for better or worse. They just used a standard business model. Take everything you can, give up as little as possible, it's not personal, pose like that's not what you're actually doing. It's a formula that's been working for business since Colombian times.

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    Better Tone thru Mathematics bob p's Avatar
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    When you say Columbian times, you mean Christopher Columbus, as in Queen Isabella, right?

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    Better Tone thru Mathematics bob p's Avatar
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    Time Is Up

    Gibson has run out of time. They filed for Chapter 11 this morning.

    http://www.bloomberg.com/news/articl...uitar-business

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    Old Timer Leo_Gnardo's Avatar
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    Quote Originally Posted by bob p View Post
    Gibson has run out of time. They filed for Chapter 11 this morning.

    http://www.bloomberg.com/news/articl...uitar-business
    No need to come running with the defibrillator paddles . . . this evening's NPR report has it that Gibson has received a $165 million cash infusion to keep operating. Light your cigars, pop open the champagne and celebrate with CEO Henry! Now there's a guy who knows how to run a company . . . not. Maybe he can piss away some of that loot by giving it away to his politician fiends, er.... friends. That always helps.

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    Supporting Member The Dude's Avatar
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    Nope. He'll give himself a raise for "saving" the company. That's how corporate America works. The CEO's always get there $. It's everyone else that gets screwed.

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    Better Tone thru Mathematics bob p's Avatar
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    "Stand back, I'm holding a calculator." - chinrest

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    Better Tone thru Mathematics bob p's Avatar
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    I'm not sure where the idea comes from that Henry J will be getting a raise for saving the company. That sounds like class warfare fabricated nonsense, and it's directly contradicted by what was printed in the WSJ and the court documents. I guess that most people aren't familiar with the process so they make all kinds of speculative assumptions.

    > this evening's NPR report has it that Gibson has received a $165 million cash infusion
    > to keep operating.

    That's not quite accurate, as it implies that the money was a loan, and that ownership and management of the company has not changed. That's not the case. The money was not a loan. In exchange for wiping out the equity holders, the 3 main bond holding creditors agreed to take control of the company, and to provide a $165MM capital infusion to pay off the remaining creditors and to finance continuing operations.

    KKR, Silver Point and Melody Capital now own and control the company. Unfortunately they know nothing about actually running Gibson, so they're forced to use someone who knows more than they do. Like him or not, HJ knows more than they do, so they're using him as an employee during the turnaround. HJ and Berryman have been retained to run Gibson and Epiphone, respectively, but HJ's salary is only 2/3 of Berryman's. That's right -- the guy who runs Epiphone will get paid 50% more than the guy running Gibson. HJ doesn't own the majority of the company any more, that's over. And his job is only temporary, being dependent on a successful turnaround. If the turnaround is successful, HJ & Berryman will receive warrants for 2.5% of the company's stock. That's a long way down from owning Gibson. Financially speaking HJ has had his balls cut off.

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    Last edited by bob p; 05-02-2018 at 03:45 PM.
    "Stand back, I'm holding a calculator." - chinrest

    "I happen to have an original 1955 Stratocaster! The neck and body have been replaced with top quality Warmoth parts, I upgraded the hardware and put in custom, hand wound pickups. It's fabulous. There's nothing like that vintage tone or owning an original." - Chuck H

  10. #80
    Old Timer Leo_Gnardo's Avatar
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    Quote Originally Posted by bob p View Post
    I'm not sure where the idea comes from that Henry J will be getting a raise for saving the company. That sounds like class warfare fabricated nonsense, and it's directly contradicted by what was printed in the WSJ and the court documents. I guess that most people aren't familiar with the process so they make all kinds of speculative assumptions.

    > this evening's NPR report has it that Gibson has received a $165 million cash infusion
    > to keep operating.

    That's not quite accurate, as it implies that the money was a loan, and that ownership and management of the company has not changed. That's not the case. The money was not a loan. In exchange for wiping out the equity holders, the 3 main bond holding creditors agreed to take control of the company, and to provide a $165MM capital infusion to pay off the remaining creditors and to finance continuing operations.
    NPR's news blip wasn't very thorough, at the time they didn't have the details so they broadcast what little they had. So I hope you'll forgive this peasant for speculating as I do. Class warfare? What a joke. No matter what I say or do, Henry and his cohort won't be missing any golf games or lobster dinners. I'll snipe as I see fit. It's the poor people's form of entertainment, and it's not going away. Somehow we have a hard time feeling badly for rich bozos who have undermined themselves.

    KKR, Silver Point and Melody Capital now own and control the company. Unfortunately they know nothing about actually running Gibson, so they're forced to use someone who knows more than they do. Like him or not, HJ knows more than they do, so they're using him as an employee during the turnaround. HJ and Berryman have been retained to run Gibson and Epiphone, respectively, but HJ's salary is only 2/3 of Berryman's. That's right -- the guy who runs Epiphone will get paid 50% more than the guy running Gibson. HJ doesn't own the majority of the company any more, that's over. And his job is only temporary, being dependent on a successful turnaround. If the turnaround is successful, HJ & Berryman will receive warrants for 2.5% of the company's stock. That's a long way down from owning Gibson. Financially speaking HJ has had his balls cut off.
    Ohhhhhh, the humiliation! Ya think Henry will actually stick around to be treated as a second class overprivileged citizen? If I was him I'd slink off to some obscure south Pacific island to quietly spend the rest of my time on earth with plenty of rum and coconuts, and beautiful tan native women to gaze at. And not a guitar in sight.

    Here's a song dedicated to Henry J. There's no guitar on it. And by coincidence the artwork seems appropriate to the moment. Looks like Peter Max might have done it.


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    If one is like some people, the delight in HJ getting castrated exceeds their concerns about the Gibson legacy and future of te company. For others, whatever humiliation he faces is secondary to insuring the ongoing viability of a great brand, and what is essentially one of maybe 3 or 4 benchmarks in the guitar manufacturing game.

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    Old Timer Leo_Gnardo's Avatar
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    Quote Originally Posted by Mark Hammer View Post
    If one is like some people, the delight in HJ getting castrated exceeds their concerns about the Gibson legacy and future of te company. For others, whatever humiliation he faces is secondary to insuring the ongoing viability of a great brand, and what is essentially one of maybe 3 or 4 benchmarks in the guitar manufacturing game.
    Personally I'd like to see an uptick in market share for Guild. They seem to have been an also-ran ever since they started but my friends & crustomers & I all seem to agree they're an under rated marque, we luv all Guild guitars & basses we've run across. The only obvious duds are damaged ones.

    Lots of great Epiphones out there too, just sayin'. When a company's "b" brand exceeds the "a" brand it makes the world seem upside down. "The Gods Must Be Crazy." All the better for guitar buyers though, as long as they buy them on playing merits not the name on the headstock.

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    Supporting Member The Dude's Avatar
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    In case you were feeling sorry for Henry,

    According to nashvillepost.com:

    "Court filings show Juszkiewicz is in line for a one-year consulting role that will pay him $2.1 million in fees and give him a package of warrants to acquire up to 2.25 percent of the shares of a reorganized Gibson. Juszkiewicz also will receive $1.5 million of the proceeds from the sale of Gibson's 54 percent stake in Japanese audio electronics company TEAC."

    Oh, that poor man.

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    Better Tone thru Mathematics bob p's Avatar
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    NPR isn't the most accurate news source. They spout their fair share of half-truths. I think the WSJ article was better.

    Some people love to hate Henry J just because he's "rich" and they are not. Envy is an ugly character trait.

    The facts are that he lost vast sums of money, tens of millions of dollars if not more, and that he won't have very much left, in spite of his current salary and the sale of assets. Some people will hate him even though he's lost maybe 90% of what he had, solely because the 10% that he's got left is more than they will ever have. Some people are just wired to hate like that. Personally, I don't hate the guy, but I do pity him for letting his greed run amok and ruin him, taking so many other people down with him. It was his own greed in trying to build a "lifestyle empire" that ultimately destroyed his investments. He bought this all upon himself. Though I don't really feel sorry for him, I do feel sorry for all of the Gibson employees whose lives have been shaken up by the bankruptcy.

    I am not bothered by the fact that he's going to be paid $2.1 million to run the company. The simple facts are that there are not very many people who are qualified to be CEOs of large corporations, and they get paid what they are worth according to the free market. I wouldn't have paid him that much, but if KKR, Silver Point and Melody think that's what it's worth to try to salvage their investment, then that's their business decision and my opinion doesn't matter. Good for him. If you really don't like it, you only have two options: piss and moan (which accomplishes nothing) or vote with your wallet and don't buy a Gibson. I've been unwilling to buy one of their instruments since the 90s because the prices have just been unrealistic.

    If the new company is reasonable about pricing, instead of trying to sell guitars for 2x to 3x what they should cost, then I can see a successful turnaround. I might even buy a new guitar. What the new company really needs to do is to adjust the prices so that they are realistic. but I doubt that will happen with HJ at the helm. I don't think that a successful turnaround is even possible if they follow his old pricing strategy of hiking prices by 20% every year. I think they're going to have to get rid of him before things will really change, and that no recovery will be possible until that happens.

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    Quote Originally Posted by Leo_Gnardo View Post
    we luv all Guild guitars & basses we've run across. The only obvious duds are damaged ones.
    Feh. Guilds haven't been any good since the move from Elizabeth NJ.

    But seriously, considering Guild's pillar-to-post history, how could the marque maintain its mojo throughout its lifetime? You've got your original NY/NJ Guilds, your Fender Guilds, Tacoma Guilds, Kaman Guilds, Asian Guild DeArmonds....
    https://en.wikipedia.org/wiki/Guild_Guitar_Company

    One highly opinionated summary:
    Why Buy a Guild Guitar?

    Quote Originally Posted by Leo_Gnardo View Post
    Lots of great Epiphones out there too, just sayin'.
    Yes, sir! Especially the ones made in Long Island City....


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    Quote Originally Posted by bob p View Post
    NPR isn't the most accurate news source. They spout their fair share of half-truths. I think the WSJ article was better.

    Some people love to hate Henry J just because he's "rich" and they are not. Envy is an ugly character trait.

    The facts are that he lost vast sums of money, tens of millions of dollars if not more, and that he won't have very much left, in spite of his current salary and the sale of assets. Some people will hate him even though he's lost maybe 90% of what he had, solely because the 10% that he's got left is more than they will ever have. Some people are just wired to hate like that. .

    Preach Joel Osteen Preach! Money is kisses from God apparently...

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    Last edited by tedmich; 05-03-2018 at 06:53 AM.

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    Better Tone thru Mathematics bob p's Avatar
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    I have to admit, I don't know who Joel Osteen is. I must not watch enough TV.

    I've never understood the practice of Schadenfreude. I think the people who practice it are emotionally broken.

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    Old Timer Leo_Gnardo's Avatar
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    Quote Originally Posted by bob p View Post
    I have to admit, I don't know who Joel Osteen is. I must not watch enough TV.
    I watch nearly zero TV, that's the way it is for nearly half a century. BUT I have from time to time seen clips of a TV preacher who gets his audience's attention with the line "God WANTS you to be RICH!" Of course all you have to do is send him all your money... Maybe that's Joel O. And it goes back to biblical times: "cast your bread upon the waters, and you will be rewarded seven times seven." Great, that's just what I need, 49 soggy loaves of bread.

    I've never understood the practice of Schadenfreude. I think the people who practice it are emotionally broken.
    It's been a popular form of entertainment since time began. Man slips on banana peel, falls on his butt, that gets a rise every time. Pie fights, Punch & Judy puppet shows, and of course much more elaborate gags & plots in every form of media. Seems the more pompous the receiver of bad luck is, the bigger the laugh. Emotionally broken? If that's the case then most of the human race is exactly that.

    As for Henry J, even if he's busted down to a fraction of his former net total worth, he still has plenty of loot to skate along very comfortably for the rest of his life. Somehow I can't see him dragging himself into a skid row bar, dusty and disheveled with threadbare clothing and holes in his shoes, ordering half a pint of cheap draft, then getting into a conversation with "don't you know who I used to be?" Yes, as you said, and I agree fully, it would be in Gibson's best interest to show him the exit door, permanently. As a manager, he is pure poison. I can't imagine anyone else would hire him now. That remote island paradise is looking better every minute. He could be the biggest bore in Bora Bora.

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    Better Tone thru Mathematics bob p's Avatar
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    I appreciate slapstick humor. The banana peel and pie fight gags are funny. Punch and Judy, not so much, and hardly a good lesson for teaching children. But they are gags, where we're not actually reveling in someone else's real misfortune. When it gets to finding pleasure in someone else's real misfortune, that's a sociopathic personality trait. I'm not saying that schadenfreude makes everyone a sociopath, but that sociopaths do engage in schadenfreude. Impaired empathy for others isn't something to be proud of.

    What?!? God wants me to be RICH!?! I can't argue with that. Bring it on!

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    Better Tone thru Mathematics bob p's Avatar
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    Henry J wants more money.

    Gibson, KKR break off restructuring talks

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    Old Timer Leo_Gnardo's Avatar
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    Quote Originally Posted by bob p View Post
    After he's finished wrecking Gibson, maybe Henry can get a new job as ambassador to North Korea.

    If there's any way Epiphone can go independent now they should make the move.

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    Better Tone thru Mathematics bob p's Avatar
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    I thought the article was interesting. Henry J is PO'd because the bondholders aren't looking to get paid, they want to take control of the company away from him.

    Of course they do. That's how the vultures feed; wipe out the equity holders and take what's left for the secured debtors. And if their plan is successful they'll end up much better off than if they got paid what they were owed.

    I'm thinking that they intend to squeeze him as hard as they can. Sure, they'll let him run the company for a while, but their intent is to take all of the equity away from him.

    Maybe if Henry is intent on putting up a fight, then we'll see another round of deep discount sales.

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    Bent Member Chuck H's Avatar
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    This thread and the attached articles are like looking into a dark, unpleasant hole. Still following though.

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