Gibson Declares Bankruptcy

On Tuesday, iconic guitar manufacturer Gibson filed for chapter 11 bankruptcy protection.  It is the next step in attempting to keep the deeply indebted business alive after years of declining sales.

Founded in 1902, the maker of the Les Paul is facing a declining guitar market in the United States and a steady attack on its reputation from multiple sources.  Some point to minor issues with quality – minor, that is, until the large pricetag of the custom guitars is considered.

For example, from Gearnews (a popular site for musicians), they show examples from the Gibson web catalog of brand new guitars with demonstrated flaws such as:

A chipped, $4799 Les Paul

A 2018 Les Paul with cracked headstocks

These are not catastrophic mistakes; rather, they are easily understood when one considers the company was already dealing with debt problems at that point and likely used slightly damaged stock for inventory photos so they could ship the undamaged stock to buyers.  But they can hurt a company that is already dealing with an image problem.

And Gibson has an image problem.  Specifically, it has a political problem.  The Gibson CEO, Henry Juszkiewicz, was a known contributor to Republican politicians.  That, the CEO believed, helped to trigger a pair of raids from the U.S. government.  From Forbes:

Gibson’s very success made it a fat target for federal prosecutors, whom Juszkiewicz alleges were operating at the behest of lumber unions and environmental pressure groups seeking to kill the market for lumber imports. “This case was not about conservation,” he says. “It was basically protectionism.”

Two months before the raid, lobbyists slipped some arcane supply-chain reporting provisions into an extension of the Lacey Act of 1900 that changed the technical definition of “fingerboard blanks,” which are legal to import.

With no clear legal standards, a sealed warrant the company has not been allowed to see too this day, no formal charges filed, and the threat of a prison term hanging over any executive who does not take “due care” to abide by this absurdly vague law, Gibson settled. “You’re fighting a very well organized political machine in the unions,” Juszkiewicz concluded. “And the conservation guys have sort of gone along.”

The cost to settle the lawsuits amounted to more than a half million dollars.  Far more important, however, was the fact that during that time, the company was barred from working on any pre-existing orders associated to the guitars targeted during the raids.

And, of course, the quality of the wood they were using was affected when they were forced to find new suppliers for wood they’d previously been legally importing.  A sample comment from Independent Music Promotions:

Building tuners into every guitar only served to hurt the tone of their instruments, similarly, the low quality of wood they have been using, which was reflected only in rising prices and not lowering them served to make Gibson even more of a laughable husk of their past selves.

That’s not the only issue, though.  With the market declining as more musicians move toward electronic sound production and other guitarless styles, Gibson was forced to rely more on their standard rock-playing base… and, following the raid and the “outing” of the CEO as a Republican, many high-profile rock musicians who happened to associate strongly with the Democrat party suddenly reversed course from their years of praise for the company and instead started condemning it, even as left-wing bloggers started attacking them.

The loathesome Gawker provides an example:, with Gibson Guitar Is a Remarkably Unpopular Company (2015)

The problems that Gibson was facing were bad enough without the political angle.  People have long been contentious about their prices, due in part to their American manufacture, and guitar players as a percentage of the popular music industry have declined steadily for a quarter of a century.  The political issues seem to have been the as-yet-unrecoverable step toward dissolution.

Time will tell if they can successfully navigate bankruptcy to re-emerge and continue an iconic American brand.

 

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About AlienMotives 1679 Articles
Ex-Navy Reactor Operator turned bookseller. Father of an amazing girl and husband to an amazing wife. Tired of willful political blindness, but never tired of politics. Hopeful for the future.