Another Incompetent Conglomerate in Trouble

There is a fair amount of hand-wringing about “Gibson Guitar, maker of the Les Paul, facing bankruptcy after 116 years in business.” “According to the Nashville Post, Gibson’s chief financial officer, Bill Lawrence, left after six months on the job and just as $375 million in senior secured notes mature and $145 million in bank loans become due, if they aren’t refinanced by July. The departure of Lawrence was seen as a bad sign for a company trying to re-organize.”

Sounds dramatic and terrible, right?

Gibson Brands, Inc. is nothing like an American guitar manufacturer, owning a collection of music instrument labels such as Epiphone, Kramer, Maestro, Steinberger, Tobias, Kalamazoo, Dobro, Slingerland, Valley Arts, Baldwin, Chickering, Hamilton, and Wurlitzer. Most of those instruments are made overseas, the majority in China including a good bit of the Gibson product line. Gibson’s big business is consumer electronics and the label either owns or distributes Onkyo and Pioneer, the Philips consumer electronics product line, TEAC/TASCAM, Cerwin Vega, Stanton, KRK Systems, and Cakewalk’s music software through it’s “Gibson Innovations” label. Orville Gibson’s instrument-making business has nothing to do with the mess that Gibson Brands has turned into.

This isn’t a new thing, either. Way back In 1944, another corporate conglomerate, Chicago Musical Instruments (CMI), bought the original guitar-making company. In 1969 CMI was absorbed by one more conglomerate, Panama-based Ecuadorian Company Limited (E.C.L.) which relabeled itself to the more American-sounding Norlin Corporation. After nearly bellying-up during the 80’s recession, some of Norlin’s rich kid-execs bought Gibson and that’s brain-dead trust behind the privately-held corporation that is currently driving the label into the ground; mismanaged by CEO Henry Juszkiewicz and corporate president David H. Berryman. Gibson’s guitar fates have been on the edge of collapse multiple times since the 80’s, so the current panic is just one of a long series. Look for some Chinese conglomerate to be the next owner of the classic “American label.” It’s just part of the plan to “make American great again.”

For some reason, this picture is getting a lot of play in the media as the possible collapse of another once-great American label is being discussed. The picture is from the press conference for the Gibson Custom Southern Rock tribute 1959 Les Paul at the Gibson Guitar Factory on 2014. The geezers pictured are Dickey Betts, Charlie Daniels, Gary Rossington, Rickey Medlocke and Jimmy Hall. I think the youngest guy on that stage might be the real Santa Claus. Gibson’s problem clearly has little-to-nothing to do with the general decline in the guitar business, but this picture is a pretty good indicator of the core problem. Guitar is an aging instrument and at the high end that Gibson wants to occupy there is no shortage of higher quality competition and a shriveling quantity of old guys with that kind of money to spend.

Like most of the too-big-to-fail corporate giants in the world, Gibson has a mismanagement problem. The only cure for that has always been bankruptcy, corporate breakup, and a huge refocus by the surviving bits. Don’t get too carried away with calling this a music business problem. This is symptomatic of a far larger American management incompetence problem and rather than addressing that problem the country seems to be doubling-down on the whole idea of putting the dumbest motherfucker at the top and feeding him cake and steaks until he blows up. America’s current business executive model appears to be a bigger-than-life Monty Python skit.