Fender to close New Hartford operations

[newton]

I have had a rather dim view of F.M.I.C. ever since Leo FENDER was not allowed to use his own name on his own headstock. (Presumably for contractual/legal reasons.) Since then, G&L guitars have for ever and always been "Fender" guitars. I state this as a form of disclosure as to what my opinion of F.M.I.C. is. I wonder how many guitars they would have sold if the headstock had their name on it instead of Leo's. (rhetorical)

As to the question of F.M.I.C.'s financial acumen and their financial situation, I would say the link to this article is a fairly unbiased point of view: http://www.wealthlift.com/blog/fender-pull-ipo/

The article is short and to the point.

 

[SouthernSounds]

Huss and Dalton is a small shop, in a small-ish town in VA. They employ 11 people and make about 350 guitars a year, average price each about $5K +/-. They kept their guys working through the '08/'09 downturn by creating a Road Series...A dread and an 000, gloss top, matt body finish (all their guitars are urethane BTW), Gotoh/Kluson tuners...they were to make 100, and dealer orders were closed after a day or so as they were full. Nice guitars, sold for around $2K, and the prime mission was to keep the guys working. Mark Dalton said they were great guitars but he couldn't make any money on them...but it kept the shop open and the guys working.

Hear, hear...

Although he could well be just the marginal agent on a world of representative ones. The one that the world itself disregards...

Kudos to Mr. Dalton! :applause:

And thanks for the alternative​ point of view, Bill! :encouragement:

All the best,
B.

 

[adorshki]

Did anyone miss that, "kept the guys working..." ?

I suspect it's another example of the ability of a sole proprietor to run things the way he wants, when he doesn't have to worry about answering to a board of directors or investors.
Even if he did have some investing backers, odds are they'd prefer to see the shop keep going in hopes of eventually earning a return on their investment, rather than simply declaring a bankruptcy and taking a guaranteed loss. That would depend on how long they could afford to let that investment "hang out there".
In contrast, Fender appears to be needing to cut their losses, NOW.

keep seeing 11 people/350 guitars a year, at a price point where Guild was approaching, and they are flourishing. I just do not get it.

The most likely reason is that he's at an ideal "Economy of Scale" to meet his personal goals for the business.
Some variables that come to mind: Does he own the shop property? Is it paid off? What's the cost of labor per unit compared to the gross profit? What's the net profit per unit compared to New Hartford's?
We may never know those figures but I suspect it's simply that at his size he can actually be profitable at his volume and size, whereas apparently New Hartford could not.
Or at least not profitable enough to satisfy investors' demands for returns or restructuring.
This whole thing about the abilities of little guys vs big guys is starting to intrigue me.
I mentioned somewhere else that I begin to wonder if the very nature of having a "Board of Directors" or "committe" leadership tends to make "Heartless Decisions" easier. The feeling of personal responsibility and guilt from making that kind of decision gets heavily diluted when it's spread out over a group.
This case might be good example "small company dynamics" at least.
Any arguments for or against my new pet hypothesis is quite welcome.

 

[fronobulax]

Just a thought and you can run with it or throw tomatoes if you wish...

Huss and Dalton is a small shop, in a small-ish town in VA. They employ 11 people and make about 350 guitars a year, average price each about $5K +/-. They kept their guys working through the '08/'09 downturn by creating a Road Series...A dread and an 000, gloss top, matt body finish (all their guitars are urethane BTW), Gotoh/Kluson tuners...they were to make 100, and dealer orders were closed after a day or so as they were full. Nice guitars, sold for around $2K, and the prime mission was to keep the guys working. Mark Dalton said they were great guitars but he couldn't make any money on them...but it kept the shop open and the guys working.

Did anyone miss that, "kept the guys working..." ?

I keep seeing 11 people/350 guitars a year, at a price point where Guild was approaching, and they are flourishing. I just do not get it.

Apples and oranges, if only because Mark Dalton is not compelled to run his business so that his investors realize an appropriate (their definition) profit.

I also note that if the Gold Stardard for efficiency in guitar production appears to be one guitar per day per worker so H&D is only 10% of the way there.

I stand by my comment made elsewhere that there is a big difference between a company that exists to make the best guitar possible and one that is constrained to make a profit for its owners. H&D is the former. I could argue that Guild was never the former and has always been the latter but if that is gonna start a fight, I'll refine it to say Guild under FMIC.

 

[griehund]

i have had a rather dim view of f.m.i.c. Ever since leo fender was not allowed to use his own name on his own headstock. (presumably for contractual/legal reasons.) since then, g&l guitars have for ever and always been "fender" guitars. I state this as a form of disclosure as to what my opinion of f.m.i.c. Is. I wonder how many guitars they would have sold if the headstock had their name on it instead of leo's. (rhetorical)

as to the question of f.m.i.c.'s financial acumen and their financial situation, i would say the link to this article is a fairly unbiased point of view: http://www.wealthlift.com/blog/fender-pull-ipo/

the article is short and to the point.

yup.

 

[tjmangum]

Peter Drucker, the guru of management science, said 60 years ago, "The first order of any business is to stay in business. The second order is to make a profit." I wonder how much of this change in direction (and perhaps others not released to the public yet) have to do with FMIC just plain staying in business? Kudos to Mr. Dalton for finding a way to stay in business during a tough time.
T

 

[mcduffnw]

Hi All...

Sadly...the problem for Guild,Ovation,Hamer...is that...ultimately...they are businesses owned by "money people"...the elite wealthy investors, whose sole goal in life is to accumulate as much wealth and thus power as possible. The top management at FMIC, and the holding companies that own FMIC, whom are "money people" themselves, and yet, beholden to even more powerful "money people", the investors that own the holding companies, and who really control all of this...care absolutely...ABSOLUTELY...nothing for the companies that are in their portfolio, beyond their profitability. They do not care at all...whatsoever...about how these three guitar companies are iconic, each in their own right, and how much Guild/Ovation/Hamer have helped people to make wonderful music, enriching the greater world at large for decades. The "money people" do not care at all about the workers, whose passion and skill and hard work, down through the decades, created all of the various wonderful instruments. None of that matters to these "money people". They think, and view the world, only in terms like ROI, and profitability after EBITA, and they spend their days, scheming of ways to make more money, and gain more power, at the expense of someone else. That is their idea of fun... *sigh*

The ultra elite/wealthy "money people", whom are the investors in companies like the holding companies that own FMIC, are very singularly driven people...rather scary people really...who will...and do...forsake anyone and anything, for sake of amassing more wealth and power for themselves...regardless, and careless of the tumult it causes in the lives of so many...so far down below them.

Alas...I think the only hope, for any real chance for the salvation and true rebirth of Guild and Ovation and Hamer, would be for FMIC and the holding companies who own/control FMIC, to finally tire of owning them, and just look to sell them off outright...and then hope that someone who has the money...AND...a true love and passion for the business...another Al Dronge, Stu Mossman, Richard Hoover, Don Gallagher Sr and Jr, Bob Taylor...would come along, and be willing, and in fact...REALLY WANT...to take the chance.

It's an admittedly slim chance...but great things have happened before this way...and they can happen again.
All we can do is hope and pray...

Kind Regards
duff

 

[Westerly Wood]

Can't wait to get a Corona 2015 or 2016 Guild F30...

 

[crank]

Fender, or FMIC seems to be better at brand dilution and brand disintegration than they are at brand building.

 

[FNG]

If it wasn't for Fender, Guild would have disappeared years ago.

It's a shame, but it's a very competitive business in a tough economy. There are a whole range of outstanding guitars in the upper end price range of Guild offerings. You have to give Fender some credit for trying to make it work.

 

[Watasha]

If it wasn't for Fender, Guild would have disappeared years ago.

It's a shame, but it's a very competitive business in a tough economy. There are a whole range of outstanding guitars in the upper end price range of Guild offerings. You have to give Fender some credit for trying to make it work.

They aren't trying very hard. That's what irritates people. Talk to a dealer & let them tell you the ridiculous hoops they have to go through to get Guild stock. Fender does next to zero ads for Guild. Guild distribution is absolutely horrid. I had to TRY to get my D55, they didn't make it easy for me at all. It might have been better for Guild to have disappeared years ago, then maybe someone could have resurrected the brand later instead of diluting & destroying it. FMIC has done Guild no favors.

 

[pjheff]

There are a whole range of outstanding guitars in the upper end price range of Guild offerings. You have to give Fender some credit for trying to make it work.

But therein lies the problem of the business strategy. You have a saturated market of premium guitars and a brand known, if anything, for its midlevel value. Trying to rebrand Guild as a boutique line, especially in the absence of significant advertising, product placement, and availability, seems doomed to failure.

 

[SFIV1967]

FMIC has done Guild no favors.

That's a bit black and white...They kept it "surviving" for 19 (!) years after all, since they bought it in 1995. Including Westerly, Corona, Tacoma and New Hartford. So they put money in it and tried, but failed, also due to all the reasons already mentioned in the many many posts in the last 3 days.
Ralf

 

[Watasha]

That's a bit black and white...They kept it "surviving" for 19 (!) years after all, since they bought it in 1995. Including Westerly, Corona, Tacoma and New Hartford. So they put money in it and tried, but failed, also due to all the reasons already mentioned in the many many posts in the last 3 days.
Ralf

Read my previous post again. Sometimes letting something die is better than keeping something on life support while hurting the brands image in the process. See the recent resurrection of D'Angelico guitars. They are instantly seen as quality instruments despite being defunct for years because someone didn't run the brand into the ground for 20 years.

 

[Jim]

To reaffirm previous posts regarding Fender's lack of support for Guild I just now was in a local guitar store that is a Guild and Ovation dealer and the guitar set-up guy had not heard of this news yet. I think it is very revealing that one employee at another guitar shop I go to that carries Fender said they durn' stock Guild guitars because they were told by Martin guitars that if the store displayed Guild stock, they wouldn't send them any more Martins. That is proof how good Guilds are if they so threaten Martins name recognition.

 

[Westerly Wood]

Are we saying that Guild in Westerly would not have survived had FMIC not bought them? I do not really know the story of those final non-fender owned Guild years in Westerly. Was it that bad? Was Guild already dying? As that would change my perspective on what happened earlier this week. I would still be bummed for the workers, and hopeful for a Corona redux, but I might not be so disappointed with Fender...Though I do agree I am rather disgusted to learn what happened with Leo....

 

[jeffcoop]

They aren't trying very hard. That's what irritates people. Talk to a dealer & let them tell you the ridiculous hoops they have to go through to get Guild stock. Fender does next to zero ads for Guild. Guild distribution is absolutely horrid. I had to TRY to get my D55, they didn't make it easy for me at all. It might have been better for Guild to have disappeared years ago, then maybe someone could have resurrected the brand later instead of diluting & destroying it. FMIC has done Guild no favors.

Fender has done a remarkably poor job of managing the US production of acquired and managed brands in this millennium--see Hamer, Ovation, Tacoma, and Gretsch as well as Guild.

 

[davismanLV]

Was it that bad? Was Guild already dying?

From what I understand, things were BAD at the end at Westerly, RI and FMIC saved them from going under. That's as I understand it.

Also, while I would love to see someone take over the Guild brand, FMIC is not gonna let that brand name go without wanting an exorbitant amount of money for it. They'd see it as a way to reduce some of their HUGE debt. At least, I think they would. The names are things they own that are actually valuable. And they'll keep a strangle hold on the names until they're DEAD, DEAD, DEAD. That's my opinion. That's how it usually works. It's sort of an, "If we couldn't make it work, then NOBODY will!" type attitude. They look at the name as an asset, which unfortunately, they've greatly diminished.

I'll tell you one thing, FMIC closing the New Hartford plant and certainly added some activity and spice to LTG!! Hooray for that!! :encouragement:

 

[adorshki]

I'll tell you one thing, FMIC closing the New Hartford plant and certainly added some activity and spice to LTG!! Hooray for that!! :encouragement:

GEEEEZ>>>If yer lookin' fer some excitement there's a wreck out on the interstate!
(Sorry Tom, couldn't resist--layful: )

 

[geoguy]

Gretsch seems to be doing alright. But IIRC FMIC is merely responsible for distributing Gretsch . . . Gretsch itself is owned by an elderly Gretsch descendant (Fred Gretsch III, or something like that).

Maybe Guild would do better under that business model, rather than being owned outright by FMIC.