Monthly Archives: September 2010

Mystery product spotted …

Project_x_case

What could be inside this case ???

By |September 30th, 2010|Uncategorized|0 Comments

Lost internal history document found

I have scanned a wonderful document by Corporate historian, Julius Bellson.

Feel free to share:

       The Gibson Story    

                Written by Julius Bellson

http://dl.dropbox.com/u/8056952/The%20Gibson%20Story%20%28compressed%29.pdf

With the whirlwind of what is going on today at Gibson, it is easy to forget our legacy and the marvelous people that founded and built our company.

By |September 29th, 2010|Uncategorized|0 Comments

HJ Interview on Celebrity Access Mediawire

Industry Profile: Henry Juszkiewicz

http://www.celebrityaccess.com/members/profile.html?id=533

An article based on a recent interview…  Industry Profile

— By Larry LeBlanc (CelebrityAccess MediaWire)

This week In the Hot Seat with Larry LeBlanc: Henry Juszkiewicz, Chairman and CEO, Gibson Guitar Corp.

Even his harshest critics acknowledge that Henry Juszkiewicz, the chairman and CEO of Gibson Guitar Corp., has taken the iconic American instrument company– headquartered in Nashville– far beyond its expected destiny.

A controversial risk-taker, and a self-described contrarian, Juszkiewicz has strongly-held opinions. If he believes something will work, he develops the reasons why it will work. Even if his peers say they don’t think it will work, Juszkiewicz—who doesn’t feel bound by tradition–will likely pursue his initial course.

Interestingly, Juszkiewicz got his start in the auto industry.

Growing up in Rochester, New York, he enrolled at Kettering University/GMI (formerly General Motors Institute) in Flint, Michigan. He spent five years as a co-op student at GM’s Delco division in Rochester in a variety of jobs, from installing robots and computer work to working on injection molding.

Upon graduation, he worked for two years as a project engineer while studying for an MBA in night school at the University of Rochester. He completed his MBA at Harvard University on a General Motors Fellowship. He also played guitar—a Gibson– in the band, Tony and the Tycoons.

After attaining his MBA, Juszkiewicz left the auto industry.

He joined Neiderhoffer, Cross and Zeckhauser in New York, eventually becoming the investment firm’s executive VP of mergers and acquisitions. He left in 1981 and, with two former Harvard classmates–David Berryman and Gary Zebrowski–acquired Phi Technologies, a research, development and manufacturing company in Oklahoma City.

In 1986, despite having no music instrument industry experience between them, Juszkiewicz and his partners acquired the ailing Gibson Guitar Corp. for a reported $5 million.

Gibson Guitar Corp. was one breath away from holding its own wake. It had folded all its divisions, except for one line of guitars, and was bleeding money despite sharply cutting its staff.

Juszkiewicz and Berryman (who has headed Gibson’s Epiphone division since 1992) went on to transform a company that was bringing in less than $10 million in total worldwide sales to a dynamic powerhouse with annual revenues rumored to be approaching $1 billion, and with an annual average growth of 20 percent over the past decade.

Gibson was launched in 1896, when Orville Gibson began building mandolins at his workshop in Kalamazoo, Michigan. His mandolins were distinctive in that they featured a carved, arched, solid wood top and back, with bent wood sides. Mandolins previously had a flat solid wood top, and a bowl-like back. They were quite fragile and unstable. Gibson made a distinctive, darker-sounding mandolin that was easier to manufacture in large numbers.

The demand for mandolins quickly surpassed Orville Gibson’s output capacity, so he sold his designs to five businessmen who organized the Gibson Mandolin-Guitar Manufacturing Company in 1902.

Initially, the company produced only Orville Gibson’s original designs. In 1919, the company hired designer Lloyd Loar to create newer instruments. His contributions included the F-holes introduced on the L5 arch-top guitars of the early 1920s. In 1922, the Gibson F5 mandolin—considered to be the ultimate bluegrass mandolin–was introduced.

By the 1930s, Gibson was also making flat top acoustic guitars, as well as one of the first commercially available hollow-body electric guitars, popularized by innovative jazz guitarist Charlie Christian.

In 1944, Gibson was purchased by Chicago Musical Instruments, which took over marketing and sales of Gibson products while allowing the Kalamazoo factory to operate largely independently.

In the early 1950s, Gibson introduced its first solid-body electric guitar. Designed by guitarist Les Paul, the first solid body guitar, called the "Les Paul,” was released in 1952.

In 1957, Gibson purchased one of their chief competitors, the Epiphone guitar company. The Epiphone brand name became generally used by Gibson for lower-priced guitars manufactured in countries other than the U.S.

In 1969, Chicago Musical Instruments was taken over by the South American brewing conglomerate, E.C.L., which changed its name to Norlin Inc. In 1983, Norlin was taken over by Rooney, Pace Group and Piezo Electric Products. The new owners promptly put Gibson’s music division up for sale. New owners did not step forward and the company staggered on.

When Juszkiewicz and his partners took ownership, they fired 30 of its 250 employees, including all of the company’s top management. Gibson then began an aggressive round of savvy acquisitions. This included the purchases of: Steinberger, a manufacturer of high-tech electric guitars, in 1987; Oberheim Corporation, a synthesizer manufacturer, in 1990; and Tobias, the maker of hand-tooled professional quality basses, in 1990.

When the company bought the Flatiron Mandolin Company in 1987, Juszkiewicz used its factory in Bozeman, Montana to establish a flat-top acoustic guitar division. Mandolin production, inherited from Flatiron, also continued, reviving a division of Gibson had long closed.

Gibson brought the Baldwin Piano and Organ Company out of bankruptcy in 2001—during a time when U.S. acoustic piano sales had dropped 16% below the previous year. The company now manufactures instruments under the Baldwin, Chickering, Wurlitzer, Hamilton, and Howard names.

Juszkiewicz has since fulfilled his vision of Gibson as a full-line, global musical instrument company

He expanded Gibson’s global presence through several key acquisitions. It acquired Deutsche Wurlitzer, headquartered in Germany. The acquisition brought the Wurlitzer jukebox and vending electronics brand completely under Gibson’s umbrella. Gibson also purchased Dongbei Piano Company, China’s third largest piano manufacturer.

The widening of company product lines resulted in a similar expansion of Gibson’s global footprint. Today, 50% of the company’s revenue is generated outside the U.S. Juszkiewicz, however, deflects any speculation that Gibson would consider a public offering to raise cash for further expansion.

Meanwhile, Juszkiewicz relentlessly works to keep the musical community strong and vibrant.

When Hurricane Katrina hit the Gulf Coast in 2005, Juszkiewicz along with Canadian producer Bob Ezrin, and U2’s the Edge, with support from Guitar Center Music Foundation and the Recording Academy’s MusiCares—co-founded Music Rising, an initiative to replace instruments that were lost by area musicians.

Gibson, and the Guitar Center immediately pledged $1 million and issued a limited-edition guitar to benefit the program as it joined forces with VH1, MTV, Ticketmaster, SpinCo, MusiCares and others to provide up to 3,000 instruments for players, plus gear for churches, schools, repair shops and music academies.

As well, after flooding that struck Tennessee in May (2010), Gibson worked with Music Rising, and MusiCares to donate $250,000 to Nashville musicians so they could replace instruments damaged in the flood.

Not all of Juszkiewicz’s innovations have been triumphs and there’s been a few misfires along the way. After all, this is a man behind the world’s first digital guitar—an invention scorned by Gibson traditionalists, and that was primarily only PC-friendly. More recently, there’s been Gibson’s Robot Guitar—which tunes itself using robotic technology–that is still trying to find a home in the marketplace after being launched four years ago.

You are often a target for intense criticism.

I think that if you become more successful, you become more of a target. Period. When we were small, we were cute. Now we are big and…..

C’mon, Henry. You are viewed as an eccentric.

At the same time, a lot of things that are viewed as “street wisdom” are wrong. Industries tend to travel in packs, and they turn toward these beliefs that I would call “street wisdom.” I have always been contrary to street wisdom. I do things differently. Our policies are different. Our approach to retailers is different. Our approach to the internet is different. In many cases, years later, the market catches up to us. But, we are the guys that are taking the arrows when we make the move. Being the head guy, I’m the first guy to take that arrow.

Eccentric is another word for maverick.

It is. I’m a contrarian. You could call that eccentric. But I’m not a contrarian to be contrary. I’m actually pretty intelligent about why I do things.

Gibson traditionalists argue that products like the digital guitar could have undermined the sales of Gibson’s core product.

We are committed to making what people love. Good marketing is not to tell people what they need. Good marketing is to listen to what they tell you, and give it to them. There are a lot of people who have really traditional values, and want a part of our history. Of course, we are going to give them that benefit. But, if that’s all we do, then there is something wrong with us.

Gibson built its iconic image on doing things new and differently. Starting with Orville Gibson who built the radically different mandolin. He was very pointedly against his competition; how terrible their designs were. Starting from that, the company has been an innovator, and has done new and radical things. Most of the time, the company was right in the long run; and suffered in the short run.

People say, “The Les Paul is such a great guitar.” What they don’t realize is that the first Les Paul was circa 1952. In 1959, which is the Holy Grail of Les Paul guitars, we only built about 300 units. 300 units. That was not a big number of guitars for Gibson. So six or seven years later, the guitar was not a success. Gibson discontinued the Les Paul in the early ‘60s. It really wasn’t until about ’65 or ’66 that design became popular. Here’s our #1 selling guitar that was totally unsuccessful commercially until 13 years later. It was not an instant hit. Gibson was rather bold in that it did, in fact, make the Les Paul and sold the Les Paul throughout that period, and stood behind Les and his concept.

Models like the Flying V, the Explorer and other radical designs, became popular, but they were reviled as hideous when they were first introduced.

[In 1958, Gibson produced two new futuristic designs; The Explorer and The Flying V. Neither sold well until being reintroduced a decade later along with The Firebird.]

What draws people to musical instruments?

Music has been around since cave man days. Music is a universal cultural value. Everybody loves music. Why do people like music? The answer is kind of simple. It brings joy. It is one of those few things that brings you a pure joy. When you hear a song that connects with you; or if you are a musician, and you are onstage and you hit “The Zone,” there’s an emotional and gratifying experience that has absolutely no bad effect on you physically or mentally. There’s no hangover. It is pure joy. And, it is experienced by children in the womb; it is experienced by old people; and people with severe physical ailments. It is a wonderful thing.

Musical instruments are part of life.

What we really do is bring a certain amount of richness and enjoyment to life. We certainly need it. So understanding that and understanding that it is not just about woods, strings and glues, but it is about making people feel good and, maybe, feel like a rock star or whatever, is a wonderful thing.

What guitar did you play in high school?

I played a (ES) 335 Light guitar because I couldn’t afford the real thing. It was brilliant. I still have it. I didn’t have to sell it because I wouldn’t have gotten $10 for it. It has special meaning.

Do you still have calluses?

I do. I still play.

How many personal guitars do you own?

Well, unfortunately, I lost almost all of my guitars in a flood. I had them stored in my basement which flooded. I pretty well lost the entire collection.

The Gibson plant in Nashville also suffered water damage in May (2010).

Absolutely. It was totally destroyed, but, we rebuilt within 90 days. In spots, it was under 10 feet of water. So we lost all of the inventory, all of the raw materials and a lot of the equipment. Some really great people took it on themselves to get us back up-and-running. They did an exceptional job.

[On May 1 and 2, 2010, torrential rain caused floods that devastated Nashville, as well as surrounding communities. The water forced thousands from their homes, submerged some of the city’s most prestigious landmarks and destroyed the gear of scores of musicians. Gibson Guitar’s Gibson USA production facility, responsible for the Gibson Les Paul Standard and the Gibson SG Standard guitars, was consumed by water.]

How many people work at the Nashville plant?

About 500 all together.

What was your impression when you arrived at the plant and saw the extent of the damage?

I was numb. It was so bad. In context, however, there were a lot of people in Nashville that were….As a company, we are insured and it was a lot of hard work to get back, but there are some people (in Nashville) who’s lives were just devastated. Their homes were washed away. They weren’t insured.

You rebuilt on the same site?

Yes. The building was intact. It had to be totally scrubbed and disinfected.

Gibson worked with Music Rising, and MusiCares in raising $250,000 to donate to Nashville musicians who lost instruments in the flood.

One thing I am very proud of is that we help people–a lot of people. We have for many, many years. We are a very successful company, and there are a lot of people who need help. Those of us who are fortunate need to lead the way and help those who are less fortunate.

When Hurricane Katrina hit in 2005, you co-founded Music Rising, an initiative to replace instruments by musicians in New Orleans. What touched you about that disaster?

New Orleans is one of the key birth places of modern Western music. Not just rock and roll, but jazz and rhythm and blues. Secondly, it was one of the few spots where musicians made a living. A lot of musicians. Even in big cities like New York and Los Angeles, when you look at the number of clubs and number of places you can play, it is fairly limited. There’s a musical community in New Orleans. But, musicians don’t (usually) have insurance, and they are the last on the list in terms of being thought about (after a disaster). So I said, “Man, that’s our music community. The successful people in music should reach out and help.” And, New Orleans is also very close to us, physically.

It’s not just the instruments. It is that musicians can create music with them.

We had employees on our buses that went into the area and they distributed guitars personally. With all of the FEMA (Federal Emergency Management Agency) money and all this other stuff, at the end of the day, we didn’t give away that many guitars, okay. But people saw that we cared. It wasn’t some impersonal government cheque. It was our own people who took their own time and went down there. They showed their concern. They wanted to bring joy to the folks there. It was enormously satisfying for our people. The community (there) really reacted because (the effort) was sincere. Our people were going down there and helping. “We love you. We you to get back up.” The concern was more powerful than just the instruments themselves.

The list of musicians that have played Gibson guitars includes Keith Richards, Chuck Berry, Chet Atkins, Eric Clapton, Jimmy Page, B. B. King, Frank Zappa, and Neil Young. When you acquired Gibson in 1986, it was already an American icon.

It is an institution. For well over a century, Gibson and its people have touched millions of lives all over the world. So, I look at it as an institution. It was sad and ironic that it was virtually extinct (when we arrived). Institutions die, and that is a very, very sad thing. Fortunately, we were able to revise this institution, and it’s doing great stuff once again.,

The company was then doing $10 million annually in worldwide sales. That’s not much.

We are a lot bigger now. We’ve been growing ever since 1986. One of the things that I clearly remember is that we closed the deal just before the NAMM show. So it was kind of a big deal. New owners for Gibson being at this NAMM show. So many competitors came over and said, “We wish you a lot of luck. It would have been just so sad if Gibson had gone away. We are with you.” That just kind of reflected the same feeling that I had about the relevance of the company, and how many lives it had touched over such a long period of time.

When you took over, it’s rumored that a buyer ordered 60 Gibson guitars because he figured Gibson would stop making guitars, and they’d be collector items. A true story?

It is absolutely true, yes.

The company really was in such bad shape?

Well, $10 million in sales. As a comparison, Manny’s (in New York), which was one of the larger music stores then, did several times that out of just one store. So we were down to not much.

You had been working at an investment firm. Why buy an instrument company with no experience in the field?

There were several reasons. One was that my profession was as a turnaround guy. That’s what I had done and I had done successfully. So Gibson was a turnaround, actually.

What had you been doing at the New York investment firm Neiderhoffer, Cross and Zeckhauser?

I was an investment banker, representing private companies that were largely selling. Fortune 500 owners. My educational background, and my ability to deal with a lot of successful people in the entrepreneurial world, really honed me for what success was about, and (dealing with) entrepreneurial businesses.

You possess a mixed bag of skills. You have worked on a production line; and you understand high finance. All very helpful in running a company like Gibson.

It is both a gift and a curse, because my creative side is always fighting my rational side. But absolutely, the role at Gibson is perfect. It matches. I am able to use everything I have. And, it needs everything I have. So it was an ideal match. Initially, when I got involved with Gibson, my thought was that that this would be another turnaround. That it would probably be a five year project, and then I would move on and find something else that was distressed. But it was just love at first sight, I guess.

You fell in love with the child.

Yep. That’s a bad thing to do as a turnaround guy. But is has worked out well.

Getting to know Les Paul. How cool was that?

That was really cool. He was this incredible legend, and he was a good friend.

When you came to the company, you reached out to him. He was being largely ignored.

He was. It just so upset me. I didn’t know Les personally (when I arrived), but I knew about him. He virtually gave us the guitar at Gibson. It is our best-selling guitar, still. How could you not respect the guy? Not only was he legendary, but he was actually a great person to know. He had a fantastic sense of humor. He was always creating. He had designs on his kitchen counter. And, he was pretty contemporary. He was taking apart very sophisticated video gear one time I walked over. Sony gave him a whole bunch of stuff, and he took it apart. It was this studio stuff. I said, “Les, what are you doing?” he said, “I’m trying to figure out how this works.” And he did.

He was really a true renaissance man. He was personable. He was funny. He had a tremendous respect for his audience and for people. You don’t see that very much in new entertainment, although there are some (artists) that still do have that. You saw a lot of that in the old generation. They loved their fans and they respected their fans. They didn’t have 50 armed guards around them. Les was warm and congenial. He didn’t care who you were. He reached out to you. He did that in his art; and he also did it in person.

[Just about everybody identifies the two words "Les Paul" as a line of guitars launched more than 50 years ago and, as well, as the name of one of the pioneers of sound-on-sound recording.

Paul’s made his pitch for manufacturing a solid-body guitar to Gibson management in 1946. Gibson eventually came up with a prototype, gave it to Paul, and incorporated several of his suggestions. In 1952, Gibson issued the first guitars bearing the name with its mahogany/maple construction and the twin "humbucking" pickups.

Ironically, Gibson briefly suspended the Les Paul series, even throwing out its construction mold. The Les Paul was dead in the water until the mid-’60s when a new generation of guitarists, including Eric Clapton and Michael Bloomfield, began performing and recording with Les Paul guitars.

Paul and Gibson renewed their association in 1968, with two new Les Paul models that they unveiled at the annual NAMM show.

In 2009, Paul died of complications from pneumonia at the White Plains Hospital in White Plains, New York.]

After your purchase of Gibson, the company significantly expanded its business. That’s been an on-going strategy.

Yes, it is. My goal is continual growth for the company. The company has successfully grown. We have approached a 20 percent annual growth rate since 1986. In order to grow, you have to do things differently. You have to do things better. You have to find new areas (of business); new products; and new price points. One of new areas is new brands and new categories in the musical instrument world. But frankly, we have mostly grown by increasing our market share. We continue to do that today. Even in the more difficult economic times, we were increasing market share pretty substantially. We continue to do other brands. Some of them are pretty compelling, but our base competence in guitars is still a growth engine for us.

There have also been stresses with other brands. The piano business in North America greatly fell off a decade ago with imports from Indonesia and China.

The piano was (once) an individual piece of art. If you look at piano design in the 1800s, there was a lot of marquetry. The piano business lost that sense of art, and sense of personalization. People haven’t lost it. The industry lost their ability to meet peoples’ needs. That’s why it is suffering. It has become commoditized. You can live without commodities.

The piano business is a puzzling business.

If you study the history of piano, and piano markets, you find that the piano is really one of the fundamental ways that a culture that is breaking into middle class success uses to say, “I’m here.” As an example, when the U.S. developed a middle class in the 1800s, and in the Industrial Revolution, America became the largest market for pianos in the world. That’s true of all of the cultures that have sort of exploded. The most recent one being Korea. Korea was the largest market for pianos in the world for almost half a decade.

I would have thought China would be the largest consumer market.

Well today, it is China. China is the biggest market for pianos. The fact is, that the culture is just starting to get into middle class. There is a still a lot of people working on farms and so forth. We are in China, and we are doing very well. We are producing pianos in China, primarily for Chinese consumers. The market is really pretty spectacular in China. We are very happy there.

It’s remarkable that more than 50% of Gibson’s sales are from outside the United States.

Actually, it is even more. About two-thirds of our revenue, at points in the past year, have been outside the U.S. market. The economic depression or recession or whatever you want to call it hit especially hard in the U.S. market. Virtually every other market in the world was hit, but not to the same extent. America is still suffering where most of the rest of the world is recovering.

Gibson had layoffs in the U.S. in 2009, but have since brought workers back.

We brought them all back, and we are currently hiring.

Why that kind of international growth for Gibson products?

It is both simple and complex. The simplicity is that we are only successful if people pay for our stuff. Right? They have to pay for it. So we have to have happy customers. We have to do things that are compelling so people buy our product. We love our customers, and we have a lot of customers and fans worldwide. And, we are constantly trying to improve, and give them what them what they are looking for. If we do a better job than the other guys, then our market share grows.

The Latin market has been healthy for Gibson. The company sponsors many high-profile Latin music artists, and events.

We do. We are very dedicated to the Latin market. The Latin market is all over the place. Absolutely, it is an emerging music market in the United States. It is already a high growth area. But, it’s one of the sleeper economies. If you mention two of the three global economies that are future growth areas, the third one is Brazil. It is a Top 10 economy. If you take a look at the economic statistics on Brazil, you would be surprised.

There’s a huge middle-class in Brazil.

A huge middle-class and a very, very musical culture. You can say Latin, but (the population) is Portuguese (speaking).

You obviously favor free trade.

Yeah, but it is very difficult selling into developing markets. It always h

By |September 29th, 2010|Uncategorized|0 Comments

A New Era at Gibson – The A.R.T. of management takes hold

My time at Gibson over the last several years has been extremely challenging.  For the first 20 years of so I was hyper focused on moving the company forward.  The results were encouraging with consistent growth in sales and profits and increases in market share. 

Yet often, I felt isolated and alone at pursuing these ambitious goals.  Every profit center manger fought for an easier path, and many showed they did not believe this growth was possible in either word or action.  Rather than leading change and improvement, I often felt I was pulling team mates with alternate personal views and agendas.  When the weight of pulling them became too great, I had to make changes.

I always found team mates that could achieve these ambitious goals, but even those that could were narrowly focused and required a lot of my time an energy to push them.  The character of the team changed to more competent leaders, but most still required a great deal of energy to motivate them to achieve ambitious results.

Over the last two years I am finding team mates that are self-motivated to achieve great results.  The change is taking place slowly, one position at a time, but I am no longer alone.  There are true leaders that buy into my expansive and aggressive vision without the need to push.  They push themselves.  This is truly an exceptional  executive TEAM.  As the change ripples through the organization, the last vestiges of passive aggressive intransigence and surreptitious disregard for ambitious goals is falling away.  This is truly a great time  to see the birth of organizational excellence.

At the heart of the new Gibson culture is what I call the A.R.T. of management.  ART is an acronym that stands for accountability, responsibility and transparency.  These three traits not only allow our company to achieve ambitious goals, but also make our company a great citizen and partner for all  the  stakeholders that rely on our success.

Accountability

This simple principle means that everyone in the organization is accountable for achieving specific goals.  Those goals must be plainly presented to the team mate, be objective and be tied to high integrity numbers (metrics) which show progress towards the goal on a daily basis.  The individual makes a personal and sincere commitment to the goal, and realizes there are consequence for both success and failure.

Responsibility

This goes beyond individual accountability which is very specific, and implies an attitude of ownership for the entire enterprise, regardless of the individual goals.  This sense of responsibility means that our team mates look beyond their roles and share a sense of enterprise mission.  They go beyond what is necessary to succeed in the individual positions and do whatever is necessary to move the entire team forward.  They critically analyze everything and everyone around them constantly, committed to constant improvement.  They are vocal and take initiative when something is not right and holds the organization back.

Transparency

This entails a total openness of what we are doing whether as individuals or an organization.  If we are doing the right things, than openness only shows others we are doing things right.   Sincere transparency is the basis of trust.  This real openness of information and action allows for a dialogue within our team and with stakeholders outside of our team where we can discuss our goals, and our problems and work to a mutually acceptable resolution.  Transparency builds trust and allows dialogue.  Dialogue based on trust and mutual interest allows people to move mountains.

By |September 7th, 2010|Uncategorized|1 Comment

Post flood plant still working hard to recover – we are hiring again!

The Nashville USA plant continues to increase production as the hard working staff rebuilds various parts of the process.  With many new machines and improved processes there is a steep learning curve.  The net result is a significant improvement in the new products.  This continual reach for better product is something this team is committed to.

As we surpass production levels seen pre-flood, we are starting to hire at all levels of the Gibson organization.  We expect to slowly build staff through the rest of this year.

The Epiphone division is also growing and shipping a record breaking number of products worldwide.

We have the best team yet at Gibson and it is good to start to grow once again.

By |September 6th, 2010|Uncategorized|0 Comments