Gibson Files For Chapter 11 Bankruptcy Protection

[ABX]

Gibson Brands of Nashville, Tennessee, issued a statement this morning outlining its plan to restructure its core business and reorganize under Chapter 11 of the U.S. Bankruptcy Code.
As outlined in the statement "... [Gibson] and its U.S. subsidiaries today filed pre-negotiated reorganization cases under Chapter 11 of the U.S. Bankruptcy Code. The filings will allow the Company's Musical Instruments and Professional Audio businesses to continue to design, build, sell, and manufacture legendary Gibson and Epiphone guitars, as well as KRK and Cerwin Vega studio monitors and loud speakers, without interruption."...

https://reverb.com/news/gibson-files-for-chapter-11-bankruptcy-protection?utm_campaign=1612019_bloggibsonbankrupt&utm_medium=FB&utm_source=FB

[ABX]

I wonder how much of this (if not all) we can blame on the Obama administration.

Gibson Guitar raids may be another case of Obama administration targeting

The Internal Revenue Service’s targeting of conservative groups puts the federal government’s raids on Gibson Guitar Corp. in a new light, according to a recent Investor’s Business Daily editorial.
The government has accused Gibson of obtaining wood that was illegal in India and Madagascar. The government argues that this is a violation of the Lacey Act of 1900, which outlaws the use of plants and wildlife that have been taken or traded in violation of foreign law......



http://dailycaller.com/2013/05/26/paper-gibson-guitar-raids-may-be-another-case-of-obama-administration-targeting/

[guitar4jesus]

You can blame most of it on Henry and the 2015 line.

[driftdiver]

Gibson uses Rosewood in making its stuff.  Rosewood from Brazil has been over harvested and is controlled but there are legal sources from other countries.  From what I understand Gibson was using the legal sources.   Obama didn't like Gibson and decided to punish them in order to send a message.  The govt knew Gibson was getting the wood through legal channels but raided them anyway, shutting down their production and confiscating ALL wood they had on hand. 

The govt passed updates to the Lacey Act which is an environmental law.   They made it retroactive, so plants or animals imported decades ago according to the laws at the time now fall under the new law.

[driftdiver]

From a story related to this case:   "Gibson Guitars is located in Tennessee, which is a right-to-work state; their competitors are not.  At one point in the saga, Juszkiewicz (the CEO) was told by government agents he could make his problems go away if he used foreign labor for manufacturing."

http://humanevents.com/2014/05/30/the-true-villains-behind-the-gibson-guitar-raid-are-revealed/

The Unions and the CEOs contributions to Republicans were behind this.

[dfwgator]

From a story related to this case:   "Gibson Guitars is located in Tennessee, which is a right-to-work state; their competitors are not.  At one point in the saga, Juszkiewicz (the CEO) was told by government agents he could make his problems go away if he used foreign labor for manufacturing."

http://humanevents.com/2014/05/30/the-true-villains-behind-the-gibson-guitar-raid-are-revealed/

The Unions and the CEOs contributions to Republicans were behind this.

From where I sit, that's called "Fascism".

[driftdiver]

From where I sit, that's called "Fascism".

Here is Gibsons artistic response

http://www.gibson.com/Products/Electric-Guitars/Les-Paul/Gibson-USA/Government-Series-II-Les-Paul.aspx

[guitar4jesus]

All of that as little or nothing to do with the situation they are in now.

[driftdiver]

All of that as little or nothing to do with the situation they are in now.

How could the loss of millions not be a factor in the current situation?

[guitar4jesus]

https://www.musicradar.com/news/gibson-how-did-we-get-here

[GrouchoTex]

They came close to this before.
In the 70's and maybe into the 80's, they would take 2nd's and still label them as Gibsons.
Some of you may remember the "firebrand" Paul and SG they came out with.
I had the Paul.
Not terrible, but not Les Paul Customs, by any stretch of the imagination.
While it wasn't misleading per se, people imagined tht the whole of Gibson's quality went downhill, and it was too expensive a guitar for lower quality.

An Ivy league grad can in from some where, and put tighter controls on the Gibson label, only released thr good guitars as Gibsons, and re-branded the 2nd's as "Epiphones".

I don't know if the same guy is CEO now (I learned this stuff touring the electric factory, in 2004, when it was still in Memphis).

Maybe they just couldn't survive the 2008 to 2016 economy?

[GrouchoTex]

https://www.musicradar.com/news/gibson-how-did-we-get-here

This mirror's a bit what I was referring to in my post:

"And perhaps we should have a little more faith in Juszkiewicz. When he took over in 1986, after all, Gibson sales were limping below $10 million after a period of management by the Norlin conglomerate. But by 1993, the firm’s wholesale shipments had rocketed to an estimated $70 million, prompting a New York Times article that spoke glowingly of Juszkiewicz “saving Gibson Guitars from the musical scrapheap”. 

That was one hell of a comeback. But it’s a tougher retail environment out there now, acknowledged by the CEO in that same Billboard interview.

“When the stock market collapsed [in 2008], almost all retail across the board fell 30%; not just the guitar sector of that, although I will admit that the guitar business still hasn't fully recovered yet. The musical instrument industry as a whole hasn't recovered; it’s getting there, but it’s still not at the same level as where it was before.”

[guitar4jesus]

Putting robotic tuners on the entire 2015 line was no way to encourage a comeback.  That was a true "Hold muh beer" moment.

[thackney]

How could the loss of millions not be a factor in the current situation?

a $250,000 settlement, a $50,000 payoff to environmentalist groups, over $2 million in legal fees

While yes that hurts, it less than 1% of the debt they have.  Their problems are far bigger.

[Fishrrman]

Juszkiewicz kept trying to expand Gibson's holdings beyond its core business, which was making guitars (electric and acoustic), mandolins and banjos.

In doing so, he just kept taking on more and more debt.

If Gibson has a pathway forward, it will be to sell off the "lifestyle companies" that it acquired and get back to the business of making guitars and mandolins. (Banjos were discontinued in 2009).

The mandolins are actually a very tiny part of their business now, run by Dave Harvey as an adjunct to the custom shop. They are producing some fine instruments (Gibson has had an up-and-down history of quality insofar as its mandolin/banjo production is concerned). Overall, the revenue from the mandolin production is a tiny percentage of their income, but Gibson's history originates with the hand-built originals from Orville Gibson in the 1890's. I hope they don't give it up...