Bloomberg has reported that a group of Gibson’s creditors want a new CEO installed before they offer a rescue deal to the floundering American guitar giant.
Financially, it’s been a horrendous couple of years for Gibson USA. The once-great American guitar maker is in serious trouble. Now Bloomberg has reported that a group of bondholders advised by PJT Partners Inc are pushing for a new leadership at Gibson as a precondition to offering it a financial lifeline. Bloomberg says these bondholders control more than two-thirds of Gibson’s outstanding notes. If they get their way, we could see the departure of CEO Henry Juszkiewicz and his top-level management.
Custom Shop Layoffs
This news comes after the Nashville Post this week reported that 15 senior staff, including supervisors, at Gibson’s Custom Shop were laid off on Monday. This is probably part of Henry Juszkiewicz’s cost-cutting plan to be able to refinance the debt in July. That’s not good news, by any measure.
Gibson’s CEO has also been quoted recently proffering his opinion that the decline of sales is more to do with the way guitars are sold by retailers rather than issues or decisions for which Gibson is responsible. In this article in Music Instrument News, he blames retailers for the decline in guitar sales.
‘”All of the retailers are fearful as can be; they’re all afraid of e-commerce, with Amazon just becoming the second largest employer in the US, and the brick and mortar guys are just panicking. They see the trend, and that trend isn’t taking them to a good place, and they’re all wondering if there will be a world for brick and mortar stores for much longer. It’s a turbulent world to be a retailer, and many of our retail partners are facing that same issue.”‘
He also blames “purists” for being “stuck in a time warp” in terms of the guitars they buy and has been trying to justify modern innovations and stylings which like the Firebird X, Robot Tuners:
“[The industry is] stuck in a time warp, and the ‘purists’ have a very loud voice on the online forums. If you are a kid today, you have an iPad by the age of two, and if you’re not offering new technology you’re old. Kids today may think some music from the 50s is kind of cool here and there, but what other industry do you know that hasn’t changed since the 50s? Those guitars from the 50s are what the purists want, but we have to have something new and exciting. Imagine if the camera had never changed. Innovation is a part of every business to some degree, but [the guitar industry] hates it. The kids demand it, and if you don’t have it, they walk.”‘
Death Of a Giant
Let’s be clear that the previous owners, Norlin Group, didn’t exactly do Gibson any favours. When Henry and his group bought Gibson from them in 1986, it was a case of rescuing a dying giant.
But 32 years later it would appear that the vultures are circling once more. Now, Henry is no Steve Jobs. Yet he seems to think that somehow he can do for Gibson what Jobs did for Apple. I beg to differ. I feel that he’s steered the company into financial difficulties by not listening to what the players actually want.