yoko, I may start another thread just to see this photo again!!
walrus
walrus
Fender to close New Hartford operations
- Thread starter Geotrio
- Start date
john_m
Junior Member
Suddenly felt the urge to embrace my Guild. 
Was there ever a U.S. acoustic guitar company that's moved plant locations as many times as Guild?
Was there ever a U.S. acoustic guitar company that's moved plant locations as many times as Guild?
adorshki
Reverential Member
See!!! Yet another record to be proudly defended!!!Suddenly felt the urge to embrace my Guild.
Was there ever a U.S. acoustic guitar company that's moved plant locations as many times as Guild?
That would be awesome wouldn't it?
Just_Guild
Member
At the risk of sounding like a cynic (I am from Boston!), can anyone really be surprised at this, on so many levels? When I attended my first LMG event in 2012, the outpouring of love and affection was mitigated by walking through a plant that was severely outdated, a step back in time. It just didn't seem to fit with the overall high production operation of Fender. I could not help comparing production in NH to what goes on every day in the Martin Guitar factory. No comparison. The economics just didn't seem to add up.It didn't make sense to me economically or from a production standpoint.
Again, sorry for being/sounding cynical, but this is the world we live in anymore. Craftsmanship is not valued, or at least not at the level it deserves. We are a production driven, consumer driven instant gratification society. And that society has cast many highly skilled workers out the door. Our friends in NH are just the latest casualties. My heart truly and sincerely goes out to them.
So now we have to ask, "What is Guild guitars?" Looks like its a group of internet based friends who enjoy the camaraderie and pleasure of sharing a common interest and affection for a "quirky" brand of guitars that are no more. Perhaps we should never have embraced the FMIC/New Hartford mantra so readily and innocently, given the track record of this brand? Oh well, c'est la vie.
At the end of the day, it's a numbers game. For corporations today, especially those carrying huge debt loads (FMIC, Guitar Center), it's not about the music or the instruments. It's all about financial gain (and games), where senior executives can make their numbers and bonuses, maybe sneak in an IPO (no luck there FMIC), and offer a high risk investment to high net worth individuals who need to balance out their portfolios. I could go on deeper, but you get where I'm going. Like multilevel marketing schemes, the "products" are merely window dressing for the financial charades taking place behind the scenes. Don't believe me? Read the BS spouted by the CFO of Guitar Center regarding their massive debt.
In summary, I'm not surprised. And now I can pursue other guitars for my pleasure without the guilt of not being able to afford a NH Guild. I see another Godin in my future.
A sad day to be sure. Again, my sincere best wishes to all the NH employees at a very difficult time. Thank you for all the fine work you have done.
Again, sorry for being/sounding cynical, but this is the world we live in anymore. Craftsmanship is not valued, or at least not at the level it deserves. We are a production driven, consumer driven instant gratification society. And that society has cast many highly skilled workers out the door. Our friends in NH are just the latest casualties. My heart truly and sincerely goes out to them.
So now we have to ask, "What is Guild guitars?" Looks like its a group of internet based friends who enjoy the camaraderie and pleasure of sharing a common interest and affection for a "quirky" brand of guitars that are no more. Perhaps we should never have embraced the FMIC/New Hartford mantra so readily and innocently, given the track record of this brand? Oh well, c'est la vie.
At the end of the day, it's a numbers game. For corporations today, especially those carrying huge debt loads (FMIC, Guitar Center), it's not about the music or the instruments. It's all about financial gain (and games), where senior executives can make their numbers and bonuses, maybe sneak in an IPO (no luck there FMIC), and offer a high risk investment to high net worth individuals who need to balance out their portfolios. I could go on deeper, but you get where I'm going. Like multilevel marketing schemes, the "products" are merely window dressing for the financial charades taking place behind the scenes. Don't believe me? Read the BS spouted by the CFO of Guitar Center regarding their massive debt.
In summary, I'm not surprised. And now I can pursue other guitars for my pleasure without the guilt of not being able to afford a NH Guild. I see another Godin in my future.
A sad day to be sure. Again, my sincere best wishes to all the NH employees at a very difficult time. Thank you for all the fine work you have done.
Just_Guild
Member
It's all about the NUMBERS!
Here is what I am talking about re: Guitar Center. This is the business philosophy that is the norm today. I have emphasized some pertinent points.
Guitar Center CFO Discusses the Debt
GC sits down with Music Inc.'s Frank Alkyer to discuss the chain's financial situation
Tim Martin, CFO of Guitar Center, aimed to set the record straight. During the company’s Media Day back in October, Martin sat down with members of the trade press to discuss the company’s financial picture, especially long-term debt that will come due between 2016-2018.
Bain Capital purchased Guitar Center Holdings in 2007 for $2.1 billion, borrowing $1.56 billion in making the purchase. The company currently holds several forms of long-term debt, including $434.9 million in senior unsecured notes for Guitar Center Holdings, $394.9 million in unsecured notes for the Guitar Center subsidiary, $165 million in asset-based revolving debt and a $617.5 million term loan. In June, when Standard & Poor’s cut the company’s credit rating (Moody’s rated Guitar Center as stable during that same time period), a variety of industry watchers began to question the long-term outlook for the industry’s largest retail chain.
But Martin said the company is sound and moving forward. Here, in an edited transcript, are his remarks.
Music Inc.: Down the road, you have some serious debt coming due.
Martin: Not for a while. Actually, we’ve got plenty of years left.
Music Inc.: 2016, 17, 18 …
Martin: ’16, ’17 and ’18. At the end of the day, nobody ever does a leveraged buyout expecting that you’re going to pay that off with operating cash flow.
Our bonds are trading above par. That means it’s an attractive investment. Therefore, I would imagine if we wanted to refinance it, we could get some takers.
It’s kind of important to know, from a finance perspective, how the debt market looks at it. We’ve got 255 Guitar Center stores and 118 Music & Arts stores. All of them are cash-flow positive. Every single store we have in the chain is actually making cash-flow money, which from a retail investor perspective, is a huge positive — from a CFO’s perspective, a huge positive.
You kind of have to break the business into two pieces. You have the operations and the capital structure.
If you look at the operations, the business as an operating entity generated over $200 million last year of EBITA.
You can take a look at the financing aspect of it, but at the end of the day, that’s the owners of the company’s problem. It’s not the operation’s problem. It’s not the vendors’ problem. It’s actually not even the employees’ problem.
Because if there were ever a financial distress event, and I don’t think that’s likely to happen, and we could talk about a million reasons why, the vendors are in the best position possible because the bankruptcy court — and, by the way, banks — want to keep running the business so they can make more money.
If we have more than 370 stores that are generating cash flow, there is no way in a million years that a bank or bankruptcy court is going to shut the business down.
The capital structure and how we deal with the debt scenario may be a different answer. Maybe it will be refinancing. It could be an equity infusion. It could be an IPO. There are a million different answers. We’ve got years to deal with that, and some very patient owners.
Music Inc.: From the capital side of this, there’s a very different planning process than the store side of the business.
Martin: Absolutely. If anybody in our investment portfolio world — banks, Bain, the people who hold the biggest chunk of the debt — ever were concerned that they wouldn’t get their money back, we wouldn’t be opening new stores. We wouldn’t be spending over $60 million a year in capital expenditures. So, they see our financials, they sit in on our board meetings, they talk to us about the investment theory.
If they were worried, they wouldn’t let us do that, and they wouldn’t support it like they do.
Our single largest debt holder wants us to grow the business. It’s excited about the new store concept. Bain is excited about the new store concept and rolling out stores.
Music Inc.: But when someone downgrades your debt, people react.
Martin: But read Moody’s note: No short-term liquidity concerns. There is concern over what happens in 2017 and 2018. At the end of the day, the debt holders don’t have ongoing cash flow necessary to pay off the debt. No LBO does. That doesn’t happen. The capital structure is Bain’s problem — but I addressed that earlier with various scenarios, and we have to deal with it. It’s my concern and the owner’s of the company, but the business is not going away. MI
Here is what I am talking about re: Guitar Center. This is the business philosophy that is the norm today. I have emphasized some pertinent points.
Guitar Center CFO Discusses the Debt
GC sits down with Music Inc.'s Frank Alkyer to discuss the chain's financial situation
Tim Martin, CFO of Guitar Center, aimed to set the record straight. During the company’s Media Day back in October, Martin sat down with members of the trade press to discuss the company’s financial picture, especially long-term debt that will come due between 2016-2018.
Bain Capital purchased Guitar Center Holdings in 2007 for $2.1 billion, borrowing $1.56 billion in making the purchase. The company currently holds several forms of long-term debt, including $434.9 million in senior unsecured notes for Guitar Center Holdings, $394.9 million in unsecured notes for the Guitar Center subsidiary, $165 million in asset-based revolving debt and a $617.5 million term loan. In June, when Standard & Poor’s cut the company’s credit rating (Moody’s rated Guitar Center as stable during that same time period), a variety of industry watchers began to question the long-term outlook for the industry’s largest retail chain.
But Martin said the company is sound and moving forward. Here, in an edited transcript, are his remarks.
Music Inc.: Down the road, you have some serious debt coming due.
Martin: Not for a while. Actually, we’ve got plenty of years left.
Music Inc.: 2016, 17, 18 …
Martin: ’16, ’17 and ’18. At the end of the day, nobody ever does a leveraged buyout expecting that you’re going to pay that off with operating cash flow.
Our bonds are trading above par. That means it’s an attractive investment. Therefore, I would imagine if we wanted to refinance it, we could get some takers.
It’s kind of important to know, from a finance perspective, how the debt market looks at it. We’ve got 255 Guitar Center stores and 118 Music & Arts stores. All of them are cash-flow positive. Every single store we have in the chain is actually making cash-flow money, which from a retail investor perspective, is a huge positive — from a CFO’s perspective, a huge positive.
You kind of have to break the business into two pieces. You have the operations and the capital structure.
If you look at the operations, the business as an operating entity generated over $200 million last year of EBITA.
You can take a look at the financing aspect of it, but at the end of the day, that’s the owners of the company’s problem. It’s not the operation’s problem. It’s not the vendors’ problem. It’s actually not even the employees’ problem.
Because if there were ever a financial distress event, and I don’t think that’s likely to happen, and we could talk about a million reasons why, the vendors are in the best position possible because the bankruptcy court — and, by the way, banks — want to keep running the business so they can make more money.
If we have more than 370 stores that are generating cash flow, there is no way in a million years that a bank or bankruptcy court is going to shut the business down.
The capital structure and how we deal with the debt scenario may be a different answer. Maybe it will be refinancing. It could be an equity infusion. It could be an IPO. There are a million different answers. We’ve got years to deal with that, and some very patient owners.
Music Inc.: From the capital side of this, there’s a very different planning process than the store side of the business.
Martin: Absolutely. If anybody in our investment portfolio world — banks, Bain, the people who hold the biggest chunk of the debt — ever were concerned that they wouldn’t get their money back, we wouldn’t be opening new stores. We wouldn’t be spending over $60 million a year in capital expenditures. So, they see our financials, they sit in on our board meetings, they talk to us about the investment theory.
If they were worried, they wouldn’t let us do that, and they wouldn’t support it like they do.
Our single largest debt holder wants us to grow the business. It’s excited about the new store concept. Bain is excited about the new store concept and rolling out stores.
Music Inc.: But when someone downgrades your debt, people react.
Martin: But read Moody’s note: No short-term liquidity concerns. There is concern over what happens in 2017 and 2018. At the end of the day, the debt holders don’t have ongoing cash flow necessary to pay off the debt. No LBO does. That doesn’t happen. The capital structure is Bain’s problem — but I addressed that earlier with various scenarios, and we have to deal with it. It’s my concern and the owner’s of the company, but the business is not going away. MI
Nice one. However, I don't blame Fender, I blame the bottomless American greed. Everything ends boys and girl, but think about what we have: classic Guild guitars that we love and sound great. Be happy for the run we had. Of course I feel bad for the new Hartford workers, but as others have said, craftsmanship and quality aren't as meaningful today. It's like digital music. I truly thank God for all of my vinyl and the good times we had.HEY FENDER......
killdeer43
Reverential Member
- Joined
- Aug 21, 2008
- Messages
- 21,848
- Reaction score
- 113
All the more reason to embrace the Guilds we have and continue the search for more.
LTG LIVES! :tranquillity:
Joe
LTG LIVES! :tranquillity:
Joe
tjmangum
Senior Member
This is all sad to hear, but I can't help but wonder if Fender is to blame or the buying public? Starting almost 20 years ago Fender rescued the brand and in spite of moving the manufacturing site over and over, went out of their way to create a well made competitive product that the public has never quite embraced. Distribution in recent years has not been strong, but is that Fender's fault or that of the retailers who chose not to carry the brand? How long can Fender itself continue? How many darn variations on the Strat & Tele can they possibly make? As the financial numbers have pointed out, Fender, nor GC are in great shape. If GC goes down, who will they take with them?
If you ask most guitar people about acoustics, they will tell you about Martin, Taylor, Gibson..... and maybe, just maybe, Guild. I love Guild and have way too many of their guitars, but to most people it's an afterthought brand and after today's news, might well become one of those "remember when"s. How many here have bought new Guild guitars? (I've bought a few) Obviously, not enough players in world have, or they wouldn't shut it down.
If you ask most guitar people about acoustics, they will tell you about Martin, Taylor, Gibson..... and maybe, just maybe, Guild. I love Guild and have way too many of their guitars, but to most people it's an afterthought brand and after today's news, might well become one of those "remember when"s. How many here have bought new Guild guitars? (I've bought a few) Obviously, not enough players in world have, or they wouldn't shut it down.
SFIV1967
Venerated Member
Exactly! GC is Fenders biggest customer. If GC goes down Fender itself goes down. That is directly connected. Hence the owners of both companies worry about both I think. Just_Guild made excellent points above.
Even if every listed LTG member (4,367 listed) would have bought at least one NH guitar, 4,367 guitars would not have saved NH in the long term. (Mind Martin shipped almost 99,000 guitars in 2013 and Taylor shipped probably well over 100k in 2013).
Ralf
Just_Guild
Member
Thanks Ralf.
And Godin produces about 150,000 guitars, of all types, per year.
So it's a brutal environment if you are a musical instrument producer. And a mature industry, lacking growth potential. (See failed FMIC IPO).
Good question above, how long can Fender keep riding on the variations of 60+ year old product designs? Makes you realize what a genius Leo Fender really was.
None of this changes the reality of the NH closing.
srickl
Junior Member
And Fender has diluted its own brand - a lot like General Motors. Look at the FMIC line-up:Guild, Ovation, Takamine, Fender Acoustic, Tacoma, Jasmine - their price points overlap and there are too many of them. When you walk into the GC acoustic room, the low end brands get the shelf space - they may not be great instruments, but most of them are fairly good. So gee, do I buy a Chevy or a Buick or a Caddy? They all get me where I want to go.
We have a big supply and demand problem here and moving operations is not going to change that. Fender had the opportunity to add value to the Guild brand in so many other ways. The New Hartford plant could easily have been transformed into a destination, much like Nazareth, PA. The utilization of Sundown Ski area for performances made fabulous sense. And the Connecticut hills are a wonderful draw.
I am deeply saddened. When we look at the founders of these brands: Al Dronge, Charlie Kaman, Leo Fender, you see entrepreneurs who knew their business from the bottom up. Their companies were responsive and lean, went through hard times, and survived. It was not easy at all, but there was a real person at the top of the ladder, not a corporate Board.
Brief rant on: Corporations and their Boards have sucked much of the spirit of our American manufacturing out the door and into the third world. Boards play it safe, have a few too many lawyers involved (apologies to any of you in that profession) and hide under the mantle of the corporation. When things are going bad, they fire the division head, lay off employees and shut down plants - rarely do they fix the problem. And oh yeah, they make sure they get paid for the privilege. Rant off:
Ok - my spiel here hasn't helped me much. I am deeply saddened by our loss and deeply saddened at the loss of this wonderful Connecticut family in New Hartford, Connecticut. These are great people and I doubt the pieces can be placed back together again. To Ren, Chris and Kim, thank you so much for all that you have done for the Guild community - I am glad that you came to our beautiful state and extremely sorry that we couldn't hang on to you.
My best to all, LTGers and the New Hartford employees - thank you.
Rick
mavuser
Enlightened Member
They already tried that when Westerly closed. Ever hear of "American Acoustech?" yeah, I didn't think so. Someone would have to buy the actual brand so they can use the name. Thats the only way it will work. I'm sure American Acoustic Guitars sound and play wonderfully, but there is more to it on a mass market level, when your spending hunderds or thousands of dollars...even for a "Boutique company"
Epiphone was a relatively young company when Gibson bought them. And Dronge was already in the industry...and back then the laws and international trade tarrifs and such were much different (lesser...), and still they took some big risks, even back then.
An investor would have to buy the actual Guild brand...if it is (or becomes) "for sale."
Yoko Oh No
Member
I've read though the financials and crunched some numbers...from what i remember from my old college stat days, this is the formula i came up with:
guild = oldsmobile
guild = oldsmobile
killdeer43
Reverential Member
- Joined
- Aug 21, 2008
- Messages
- 21,848
- Reaction score
- 113
Here's an interesting tidbit from the past....2001 to be precise.
https://groups.google.com/forum/#!topic/rec.music.makers.guitar.acoustic/pX6IKM7IT5U
Familiar ring, perhaps? :tranquillity:
Joe
https://groups.google.com/forum/#!topic/rec.music.makers.guitar.acoustic/pX6IKM7IT5U
Familiar ring, perhaps? :tranquillity:
Joe
SFIV1967
Venerated Member
Right, but then you have to decide how to make the Newark St. Line independent from FMIC...After all that seems to be a line that is not bad. The Arcos line is probably something you can cancel without too much pain, but even the GAD line seems to be good at the price point. I test played a D-140 in a shop for instance yesterday, nice guitar and big big tone. I compared it against a Jumbo F-150RCE which wasn't any loud compared to the D-140. They had about 10 different GADs and Arcos in the shop in Germany.
Ralf
southernGuild
Senior Member
- Joined
- Aug 28, 2009
- Messages
- 4,925
- Reaction score
- 0
Well said Rick, ( post 92)
What a lost opportunity there. Sad for all involved.
What a lost opportunity there. Sad for all involved.
SFIV1967
Venerated Member
...and Hans thought he doesn't need to write a book about Guild in New Hartford...Now he can start volume III or IV ! :excitement:
Which brings the question when Volume II will be finally published!
Ralf
Which brings the question when Volume II will be finally published!
Ralf
Just_Guild
Member
Yes, a surprising number and not all that well known in the US. I had first heard of Godin (5th Avenue) through my jazz guitar forum. Picked up a used one at GC and was not that impressed (didn't have the bling or finish I was used to with higher end jazz guitars). But as I have learned more, I am very impressed with the quality of instruments they put out, the innovations they have developed (check out the A line; I'll probably have an A6 Ultra before the week is over) and at price points that rival anything from Asia. Typically not fancy guitars (my Seagull 12 string is as plain as my Guild D-25) but it gets the job done for much much less than a comparable Martin or Guild. And it sounds great doing it; my Martin buddy was blown away).
One of the things that disappointed me about this recent incarnation of Guild was the lack of innovation. In my opinion (and others are free to disagree), they were getting by on their heritage, not with anything that would truly set them apart from the competition. To me, again just my opinion, after first blush, there was no "WOW" in the line up. Vintage recreations (very nice, I agree), but the Starfire IV for example is just a recreation of my 1972 original, without the master volume I might add. Doyle Dykes? Ok, pretty sweet guitar, but again, based on an existing model. And who is Doyle Dykes anyway? As he said, the best guitarist you never heard of.
So to me, these recreations that were not recreations maybe satisfied the Guild aficionados desire for the great guitars of the past, but probably were not enough to attract new customers to the brand and actually make the purchase. Case in point, the large number of new Starfire IV's selling on e-bay and elsewhere. Doesn't do much for the brand, does it? And if I'm a music store owner, fighting against the likes of Sam Ash and Guitar Center, with limited selling and promotion space, do I really want to put my livelihood at risk by investing in a brand that has a history of here today and gone tomorrow?
Without excellent product promotion and distribution, you can make the best products in the world and be beaten by lesser brands with a better program.
So I think I've beaten this dead horse to death! sad news indeed not just for the folks at NH, but for all who appreciate fine American craftsmanship and workers who take great pride in what they produce.
One of the things that disappointed me about this recent incarnation of Guild was the lack of innovation. In my opinion (and others are free to disagree), they were getting by on their heritage, not with anything that would truly set them apart from the competition. To me, again just my opinion, after first blush, there was no "WOW" in the line up. Vintage recreations (very nice, I agree), but the Starfire IV for example is just a recreation of my 1972 original, without the master volume I might add. Doyle Dykes? Ok, pretty sweet guitar, but again, based on an existing model. And who is Doyle Dykes anyway? As he said, the best guitarist you never heard of.
So to me, these recreations that were not recreations maybe satisfied the Guild aficionados desire for the great guitars of the past, but probably were not enough to attract new customers to the brand and actually make the purchase. Case in point, the large number of new Starfire IV's selling on e-bay and elsewhere. Doesn't do much for the brand, does it? And if I'm a music store owner, fighting against the likes of Sam Ash and Guitar Center, with limited selling and promotion space, do I really want to put my livelihood at risk by investing in a brand that has a history of here today and gone tomorrow?
Without excellent product promotion and distribution, you can make the best products in the world and be beaten by lesser brands with a better program.
So I think I've beaten this dead horse to death! sad news indeed not just for the folks at NH, but for all who appreciate fine American craftsmanship and workers who take great pride in what they produce.