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alexkhan
Joined: 10 Sep 2004
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Location: Chino, CA
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 Posted: Sat Mar 12, 2005 4:25 am Post subject: Fender Finally Getting Bought Out? |
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Found this interesting thread. It's a very new development that's probably been in the works for years:
http://www.thegearpage.net/board/showthread.php?s=&threadid=73283
Let the great decline begin! 
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Ed Yoon
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Carlo
Joined: 13 Sep 2004
Posts: 408
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| Posted: Sat Mar 12, 2005 4:50 am Post subject: Re: Fender Finally Getting Bought Out? |
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| alexkhan wrote: |
Let the great decline begin! |
begin!? didn't the decline start like 10 years ago?  |
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alexkhan
Joined: 10 Sep 2004
Posts: 2783
Location: Chino, CA
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| Posted: Sat Mar 12, 2005 4:57 am Post subject: |
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Yup, you do have a good point there.
But now that an investment company has taken over and they'll undoubtedly insert MBA-types who have no clue about what the music instrument biz is like, things will really start deteriorating fast now.
Whew... $380 million in 2004... That's a lot of dough they're raking in. I was there from '91 to '01 and they went from $90 million to $280 million during those 10 years. Pretty ridiculous growth... It stopped being fun once they got around to $250 mil and the CEO got all pissed that they weren't growing at 25% rate anymore. Man, am I glad I'm not working there anymore. 
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Ed Yoon
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Carlo
Joined: 13 Sep 2004
Posts: 408
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| Posted: Sat Mar 12, 2005 8:40 am Post subject: |
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I didn't know u used to work there, interesting 
but man, that's some serious profit  How many guitars do they churn out each day? |
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James W
Joined: 22 Oct 2004
Posts: 191
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| Posted: Sat Mar 12, 2005 1:03 pm Post subject: |
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I don't know much about guitars but I know about playing them.
I don't see what the big fuss is over gear.
... Love James XXX |
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bill®
Joined: 11 Sep 2004
Posts: 72
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| Posted: Sat Mar 12, 2005 2:20 pm Post subject: |
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| James W wrote: | I don't know much about guitars but I know about playing them.
I don't see what the big fuss is over gear. |
I don't see anyone making a fuss over gear. In fact I think people were talking about Fender's profit margins, not their merchandise. And besides, 'gear', if you include the instrument itself as being a part of that category, is often very important, and that's something anyone that knows about playing should be able to appreciate. |
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James W
Joined: 22 Oct 2004
Posts: 191
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| Posted: Sat Mar 12, 2005 4:15 pm Post subject: |
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Sorry for digressing, but I feel that players in general spend too much time over gear. Like some classical guitarists do with their nails.
I really like your picture, bill®.
... Love James XXX |
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alexkhan
Joined: 10 Sep 2004
Posts: 2783
Location: Chino, CA
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| Posted: Sat Mar 12, 2005 8:55 pm Post subject: |
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| James W wrote: | I don't know much about guitars but I know about playing them.
I don't see what the big fuss is over gear.
... Love James XXX |
James, you do have to remember that the vast majority of people who populate the forums such as The Gear Page are guitar and music hobbyists just as some men are into golf, fishing, guns, cars, hiking, or whatever. The common theme in all these endeavors is: gear. Men have fetishes with equipment that's going to help them do whatever they want to do better. It starts with toy cars through bicycles to computers and it continues on and on and on.
As far as this subject matter, Fender is by far the largest guitar manufacturer in the world, so this is interesting news to many. I also worked there for over 10 years at mid-level management capacity, so it's quite interesting to me as well. Just thought I'd share the subject matter with people since this is Open Discussion, after all. 
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Ed Yoon
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alexkhan
Joined: 10 Sep 2004
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Location: Chino, CA
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| Posted: Sat Mar 12, 2005 9:05 pm Post subject: |
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| Carlo wrote: | I didn't know u used to work there, interesting
but man, that's some serious profit How many guitars do they churn out each day? |
Yup, very interesting 10 years I had working at Fender.
Their net profit margin after taxes is in the 5% range, so on gross revenues of $380 million, their profits were probably in the $20~25 million range.
Fender's USA factory puts out about 500~550 guitars per day. I left in '01 so I'm guessing that's around where they're at now. Their Mexico factory should be putting out another 600~700 per day. Then there's their imported outsourced guitars like Squier and Fender acoustics produced in Japan, Korea, China, and Indonesia and that volume is at least 1500 per day worldwide, so yeah, they move a lot of guitars.
When I was at Fender, I was in charge of their imported products - all the cheap stuff made in Asia. I managed over 15 factories spread out all over Asia, overseeing production, donig the QC, determining which factories produce how many of what models for which markets, negotiating prices, and regular business stuff like that. After a while, I decided that working there wasn't any different than working in some shoes company or whatever and that it was time to move on to doing something I really want to do within the biz.
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Ed Yoon
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BOING Music LLC - Managing Partner
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James W
Joined: 22 Oct 2004
Posts: 191
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| Posted: Sat Mar 12, 2005 9:50 pm Post subject: |
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| alexkhan wrote: |
James, you do have to remember that the vast majority of people who populate the forums such as The Gear Page are guitar and music hobbyists just as some men are into golf, fishing, guns, cars, hiking, or whatever. The common theme in all these endeavors is: gear. Men have fetishes with equipment that's going to help them do whatever they want to do better. It starts with toy cars through bicycles to computers and it continues on and on and on. |
Hehe... spot on.
... Love James XXX |
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alexkhan
Joined: 10 Sep 2004
Posts: 2783
Location: Chino, CA
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| Posted: Sun Mar 13, 2005 4:49 am Post subject: |
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As far as Fender's outlook, unless the company becomes a conglomerate that buys up piano and brass instrument companies and stuff like that, they won't be able to grow. High-tech certainly isn't a part of the company's corporate culture either. No matter how hard they tried to get their foot in the door of electronics in general beyond amplifiers, the door would slam shut. They're just going to continue the M&A binge to sustain growth and by making cheaper and cheaper guitars to drive out the high-volume low-end clone makers that still run rampant in Europe, Asia, and South America. But due to their high SG&A overhead, they can't compete too low either.
This investment company that has bought Fender will probably have one thing in mind: going public. And the calamity that will follow will make the CBS era seem tame by comparison. The guitar gear biz (or music gear biz in general) is a weird lot that typical MBAs just won't be able to grasp. Opportunities will be abound for nimble competitors everywhere. The only thing that companies like Fender and Gibson have now are the brands and economies of scale. That will typically work well in mainstream consumer goods industries, but the people wanting to get into playing music are not your typical people buying TVs and pairs of shoes. The way I see it, it's the beginning of the end of Fender as an American artistic and cultural icon. Fender will now become a commercial icon of the music biz - kinda like this industry's version of McDonalds, WalMart, Nike, Levi's, etc. - very bland stuff.
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Ed Yoon
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BOING Music LLC - Managing Partner
.strandberg* Guitars USA
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Guitar Center Inc. |
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Carlo
Joined: 13 Sep 2004
Posts: 408
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| Posted: Sun Mar 13, 2005 6:07 am Post subject: |
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| ...and they will continue to chrun out sub-par guitars to unsuspecting punk and emo bands around the world |
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frankus
Joined: 13 Sep 2004
Posts: 1100
Location: Chelmsford/Arachnipus
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| Posted: Sun Mar 13, 2005 7:36 am Post subject: |
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As an owner of a 84 strat with freeflyte, I feel that Fender guitars come in two types:
Guitars made by craftsmen who care.
Guitars made by businessmen who cut corners.
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alexkhan
Joined: 10 Sep 2004
Posts: 2783
Location: Chino, CA
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| Posted: Tue Mar 15, 2005 1:50 am Post subject: |
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Apparently, this LBO is just a phase for the company to go public next year. As suspected, Weston Presidio is hoping to cash out big with the IPO - make the quick big buck. Bill Schultz is retiring this month, having cashed out his shares, with his top two lieutenants running things until Fender finally becomes Wall Street property. Then, the company will be run by accountants... A momentous event indeed! Seems things will never be quite the same again.
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Ed Yoon
Certified Guthrie Fan-atic
BOING Music LLC - Managing Partner
.strandberg* Guitars USA
Ed Yoon Consulting & Management
Guitar Center Inc. |
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