Slate article on Fender's upcoming IPO

plaidbeer · Post by **plaidbeer** » Fri Jul 13, 2012 3:23 am

I didn't realize Fender was in such dire straits. Also mentions GC being on very shaky ground:

http://www.slate.com/blogs/breakingview ... weep_.html

SKC Willie · Post by **SKC Willie** » Fri Jul 13, 2012 5:33 am

as much as it would suck for all of those employed by Guitar Center, I think it would do wonders to the guitar sales business if they went under.

Guitar Center (at least mine) don't offer guitar lessons and the local feel of guitar stores that, frankly, keep a lot of people coming back not only to the store but to the guitar.

ekwatts · Post by **ekwatts** » Fri Jul 13, 2012 10:48 am

Well, shit.

I guess this shows that you really do have to slap infinitely high markups on your guitars, turn out dreadful finish after dreadful finish (for afore-mentioned high price), trade solely off nostalgia, make ill-advised and ultimately embarrassing forays out into proprietary digital technology, use illegal woods knowingly and then defend such practices as being vital to your trade and above all be about as unoriginal and insulting to your customers as you can possibly be to get along in the guitar making world.

stewart · Post by **stewart** » Fri Jul 13, 2012 10:53 am

I'm sure we could all chip in and buy Squier off them.

brainfur · Post by **brainfur** » Fri Jul 13, 2012 12:02 pm

i think squier is healthy-- foreign labor is basically free-- the main reason fender has low profit is the same reason american cars cant be profitable-- labor

SKC Willie · Post by **SKC Willie** » Fri Jul 13, 2012 12:20 pm

brainfur wrote:i think squi

er is healthy-- foreign labor is basically free-- the main reason fender has low profit is the same reason american cars cant be profitable-- labor

It's funny because everyone says that and no one actually has a study to back it up. According to NPR, This American Life, US labor isn't, actually that much more expensive after paying shipping, taxes, and other fees involved I'm international business. According to them, it's really more about being able to find tons of people willing to work and work harder than we're really willing to work.

All that said, they also didn't say how they came to these conclusions.

George · Post by **George** » Fri Jul 13, 2012 12:51 pm

SKC Willie wrote:
brainfur wrote:i think squi

er is healthy-- foreign labor is basically free-- the main reason fender has low profit is the same reason american cars cant be profitable-- labor
It's funny because everyone says that and no one actually has a study to back it up. According to NPR, This American Life, US labor isn't, actually that much more expensive after paying shipping, taxes, and other fees involved I'm international business. According to them, it's really more about being able to find tons of people willing to work and work harder than we're really willing to work.

All that said, they also didn't say how they came to these conclusions.

So it's basically not fact.

Labour is much cheaper abroad. It's why it's done this way and globalisation has done so well for developed nations. Exploiting places without minimum wages, unions etc etc is cheap. I'd much prefer it done at home but it's a pipe dream at Squier prices.

Gomer · Post by **Gomer** » Fri Jul 13, 2012 2:43 pm

public ownership sucks. it introduces an overpowering and irrelevant influence into the decision making process of the company (the expectations of shareholders).

guitars ought to be developed according to the creative sensibilities of a small group of designers and builders. oddly enough, i think this ideal increases in value as a company gets larger. in essence, Fender needs a Don Draper.

SKC Willie · Post by **SKC Willie** » Fri Jul 13, 2012 3:49 pm

George wrote:
SKC Willie wrote:
brainfur wrote:i think squi

er is healthy-- foreign labor is basically free-- the main reason fender has low profit is the same reason american cars cant be profitable-- labor
It's funny because everyone says that and no one actually has a study to back it up. According to NPR, This American Life, US labor isn't, actually that much more expensive after paying shipping, taxes, and other fees involved I'm international business. According to them, it's really more about being able to find tons of people willing to work and work harder than we're really willing to work.

All that said, they also didn't say how they came to these conclusions.
So it's basically not fact.

Labour is much cheaper abroad. It's why it's done this way and globalisation has done so well for developed nations. Exploiting places without minimum wages, unions etc etc is cheap. I'd much prefer it done at home but it's a pipe dream at Squier prices.

All I'm saying is that I'd be really curious as to how much cheaper it is. Gibson (even if it was crappy quality) has been releasing guitars that are made in America for virtually the same price. All I'm saying is that the price of labor isn't exactly transparent.

paul_ · Post by **paul_** » Fri Jul 13, 2012 4:25 pm

SKC Willie wrote:Gibson (even if it was crappy quality) has been releasing guitars that are made in America for virtually the same price.

Yeah but they take a LOT of labour out of the finishing process on the cheap ones. Takes way less time and way less hands-on work to do those satin finishes... they don't fill the grain, just spray a sanded body/neck with a couple cans of different stuff and let it dry for a few days (in a massive kiln room to speed up the process). On the really cheap ones like those recent melody makers they don't even mask the fretboard edges properly when they do this, colouring outside the lines and shit.
Meanwhile the bodies are CNC cut just like overseas stuff.
To finish a glossy nitro Gibson they have to fill and sand it, spray the colour, spray the clear, dry/cure til it can be wetsanded, buffed/polished to a shine by a guy holding it to an arbor, etc... it's an entire other line/department and weeks of waiting that the guitar goes through before assembly.

That's why all the sub-$1000 Gibsons are "Faded" models, yet basically constructed the same way/with the same materials as the pricer Gibsons (including their regular pickups and bridges, one piece neck/headstock construction etc...) It's labor.

Rox · Post by **Rox** » Fri Jul 13, 2012 5:05 pm

I smell politics ..

DGNR8 · Post by **DGNR8** » Fri Jul 13, 2012 10:08 pm

I bet it's sloppy, bloated management, as much as anything.

jcyphe · Post by **jcyphe** » Sat Jul 14, 2012 2:55 pm

I think Fender has a huge potential to leverage it's brand name and designs in clothing, merchandise, licensing. As that article said it's only 1% of their revenues. But I do think a Fender publicly run company is going to suck, at least for a while.

I also think Fender makes way too many models. Especially way too many models of crap people don't want. I think they need to pick the best of their line-up and make the best version they can per price range. Once you make too many different models it confuses the larger consumer base. It doesn't confuse the people on forums because they are super dorks, who follow the minutia. I have a nephew who is now getting into playing music, he wants a Fender because most of the bands he likes all use Fenders. This is why Fender will always have value as a company. Because every rock and roll video since rock and roll started is either a Fender or Gibson commercial, for the most part.

When I was explaining the different models of Stratocaster(what he wants) to my nephew I tried to start simple with USA, Japan, and Mexico. But then I had to end up talking about Squier and where they're made, and then the models that were close to vintage and the models that were modified or modern. This is without getting into signature models and limited editions, it's very confusing for a beginner.

We live in an age where people expect to get the best product no matter how much money they have to spend. So if they have $200 and they want a tablet, they buy the best $200 tablet and they usually have no trouble finding out what that product is. If they have a bit more money they buy an iPad. Apple is a good example of this, they have a few products that are all very good. And while I don't think Fender should go that far, they are on the Dell/HP side of things with too many fucking different models, many of which nobody wants. Obviously guitars are more personal and less spec driven than most tech products, what one person hates another might love but I think Fender can learn from the product line-up of things young people buy. Because how young people buy tech products is starting to influence how they buy everything else. This is another reason why young people find buying cars to be a ridiculous experience, because the purchasing model is so outdated, with limited places to purchase(dealerships), negotiation, and having to dig around more than they should for specs/info that matters to them.

gaybear · Post by **gaybear** » Sat Jul 14, 2012 4:32 pm

brainfur wrote:i think squier is healthy-- foreign labor is basically free-- the main reason fender has low profit is the same reason american cars cant be profitable-- labor

American cars are profitable

singlepup · Post by **singlepup** » Mon Jul 16, 2012 7:06 am

stewart wrote:I'm sure we could all chip in and buy Squier off them.

I'm in. I'll sell my car. Although I'm not sure how we could make Squier any better.

jcyphe wrote:I also think Fender makes way too many models. Especially way too many models of crap people don't want. I think they need to pick the best of their line-up and make the best version they can per price range. Once you make too many different models it confuses the larger consumer base.

I completely agree with this. It's basically what economists might call the Post-Fordian model, right? In essence, shifting away from the one-size-fits-all approach in order to appeal to a broader number of customers who each get to feel as if they've purchased a special product. The "select individual" line which we all despise is a perfect example of this type of thinking.

I think Fender has made the mistake of offering too many "modern" products. It's not the 1980's anymore... Fender doesn't have to compete with Ibanez and Mesa Boogie. If this recent Squier offset phenomenon has proven anything, it's that people who are considering Fender guitars primarily desire models that are similar to the vintage models.

Post by **Mike** » Mon Jul 16, 2012 8:11 am

Joe is right, I remember when I got my first guitar it was a pretty simple choice. I wanted a Stratocaster, and back in 1994 I think Fender only made about 3 different Strats, and I couldn't afford any of them clearly. Squier made one Stratocaster (in Japan) and it was still a stretch to afford, but still, looked the business.

I was going to get a no-name POS from the Argos catalogue when my Dad (who himself didn't know much about guitars, but clearly knew enough) told me to save for a Squier, and that if I could save half he'd lend me the other half to buy it and I could pay him back over the next 6 months. I mowed every lawn on my street for 3 months and got the red Squier. I don't think I would still be playing guitar today and as deeply in love with it if I had bought the POS copy from Argos.

Back then things were simpler, the product line was easy enough to understand from the outside. Now it's a clusterfuck. Great for us geeks, not so great for anyone else.

Rox · Post by **Rox** » Mon Jul 16, 2012 5:07 pm

brainfur wrote:i think squier is healthy-- foreign labor is basically free-- the main reason fender has low profit is the same reason american cars cant be profitable-- labor

There's a bit more to that one . Starting with gross mismanagement ... And that most corporate suits are classic textbook psychopaths and narcissists with little if any sense of a real reality .

But I'm gonna stay on guitars .... They keep me stable . Fender will pull out of it . So will Gibson... Or the Chinese will buy them . Either way they'll still be there .

plaidbeer · Post by **plaidbeer** » Sat Jul 21, 2012 2:24 am

Not happening now. And Guitar Center/Bain, who makes up nearly 1/6 of their business owes them $11M.

http://finance.fortune.cnn.com/2012/07/ ... ?hpt=hp_c3

jcyphe · Post by **jcyphe** » Mon Jul 23, 2012 4:08 pm

I'm glad this didn't happen and I hope all the debt they owe to sharks like JP Morgan can be worked out.

To stay growing all major guitar companies are going to have to attract more female players. Harley Davidson which is in a similar boat as a "lifestyle product" has been trying to increase female ridership for a number of years now because they know it's vital to their growth. I think the companies need to sit down and identify some features that women and young girls want in an instrument, if they want anything different to begin with. They just can't get away with making goofy guitars or painting a model pink or some shit. You want economic growth you can't just ignore half of the population, especially half of the population that is trending upwards in terms of economic purchasing power.

This is why tech is slaying everything, while men tend to make up most early adapters, women buy tech products like smartphones in higher percentages or equal percentages as men.

Men Are From Mars, Women Love Smartphones

mixtape · Post by **mixtape** » Tue Jul 24, 2012 1:48 am

jcyphe wrote: To stay growing all major guitar companies are going to have to attract more female players. Harley Davidson which is in a similar boat as a "lifestyle product" has been trying to increase female ridership for a number of years now because they know it's vital to their growth. I think the companies need to sit down and identify some features that women and young girls want in an instrument, if they want anything different to begin with. They just can't get away with making goofy guitars or painting a model pink or some shit. You want economic growth you can't just ignore half of the population, especially half of the population that is trending upwards in terms of economic purchasing power.

I've been mulling over this in the back of my mind all day. Here are my possibly thread-derailing thoughts:

On the one hand, I'm very excited that a company like Daisy Rock exists and is attempting to redress precisely these problems. On the other hand, I find it disheartening (pun intended) that so many of their guitars look like this. (I do love the look of the Retro-H, though, and it will be on my short list if I ever go shopping for a semi-hollowbody.) They'll be interesting to watch in the years ahead.

But while marketing guitars to women and girls is their whole raison d'etre, what can bigger guitar makers like Fender and Gibson do to the same end? A first step would be to take another look at their signature series. To the best of my knowledge, the only women to have Fender signature models are Bonnie Raitt (some Strat?) and Courtney Love (Squier Venus). Otherwise it's a vast forest of penises. Beyond that, I'm thinking back to what drew me to the Super-Sonic (it's been way too long since I bought an honest-to-goodness new guitar). I liked the tone, I liked the idea of being the only kid in school who had anything like it (whereas everybody and their dog plays a strat), but more importantly, I found the weight and the neck profile very comfortable to play--unlike a lot of the other guitars in the store. Then again, I'm 5'1" with skinny hands. A lot of women aren't, so for Fender to market smaller, lighter-weight guitars to "women," as a whole, seems reductive and condescending--not much better than just painting them pink.

Unfortunately, I don't think "marketing to women" is going to be enough, because while building electric guitars that appeal to (a relatively small existing group of) female players is one thing, getting larger numbers of women in the door of the music store to start with is quite another. For that to happen, I think there needs to be a corresponding change in the culture of popular music. Female guitarists don't have a ton of role models out there. Most often, The Guys decide, "We should have female vocals" (subtext: "...and eye candy") and bring in a female vocalist. This is not invariably the case, but it's a prevalent mentality. Rolling Stone's most recent list of the however many greatest guitarists in the history of ever (somebody posted it in the pub a while back) was misguided in a lot of ways, but its inclusion of more female players was a step in the right direction. Even so, it's exceedingly hard to get large numbers of girls serious about playing guitar when the female musicians who are marketed most aggressively to them are manufactured talent a la American Idol and Hannah Montana. I know I'm painting in broad strokes here; of course there are plenty of exceptions--but still, nowhere near enough for Fender to achieve signature-model parity even if they tried.

There was going to be a lengthy anecdote here about spending my formative years browsing the bargain bin at a used CD store here, but this post is long-winded enough already, so I'll let someone else have the floor now. Would the other be-ovaried shortscalers please stand up and chime in?