So who is going to buy a few pieces of Fender?

[LesStrat]

It's naive to believe that they really learned from their mistakes of 50 years ago.

The current corporate climate seems to promote unbridled greed. Long-term consequences are not part of the decision tree.

[ratherdashing]

It's naive to believe that they really learned from their mistakes of 50 years ago.

The current corporate climate seems to promote unbridled greed. Long-term consequences are not part of the decision tree.

IMO, the quarterly reporting requirement in the US (and in the countries that followed suit) has resulted in a need for very quick gains that cause long term problems.

Companies that have an annual reporting requirement only, such as in Europe, tend to be a lot more stable, and a lot less prone to making quick greedy decisions.

[jcthejester13]

IMO, the quarterly reporting requirement in the US (and in the countries that followed suit) has resulted in a need for very quick gains that cause long term problems.

Companies that have an annual reporting requirement only, such as in Europe, tend to be a lot more stable, and a lot less prone to making quick greedy decisions.

Yeah. That's worked well for Greece.

[ratherdashing]

Yeah. That's worked well for Greece.

"Companies", not "countries". Greece's problems were created by their government.

[LesStrat]

No argument here, Matty.

The quarterlies most likely began as a means of demonstrating short-term gains. It fits our microwave mentality.

[Powdered Toast Man]

Now you've made an entire post of assumptions.

Have you ever worked for a publicly-traded company? I have worked for three, including one that has a $60 billion market cap. It sucks. The shareholders are king, and the execs only job is to make the shareholders happy. CEO's who make too many decisions that result in less profit get axed, which means every high level decision is made with the goal of increasing profits. Anything and everything will be put on the chopping block if it means the company makes more profit that quarter. That, sir, is a fact.

Shareholders don't give a crap about product quality. They only care about one thing: return on investment. They will happily sacrifice product quality in the name of profit. ROI is the reason we have everything made in China, tech support in India, and huge, impersonal chain stores everywhere.

The only way we will see Fender maintain their current level of quality is if the current ownership group maintains majority control, and even then it's not a given (heck, they probably want to make money too). The whole point of going public, though, is to give up control of your company in exchange for cash money.

I hope I'm wrong. I really do. I just don't see this going well for guitarists at all.

+1

You hit it with every word of this post.

Which goes hand in hand with my point. You think Levis makes jeans? They don't. They are a brand label that slaps it's name on jeans made in a factory that is contracted to make jeans for them. No one in the factory works for Levis. You think Apple makes iPhones? They don't. They design iPhones and they are built by a third party overseas. You think Sony makes TV's? The value is in the BRAND. Companies discovered in the 1980's that their value was not in the products they made, but in the brand equity they had in their name. Consumers would still buy their products even if they weren't made by them. That's when our manufacturing base began to leave the country.

This all won't happen right away. Just wait a bit until the board becomes focused only on the current quarterly results. That's when cost cutting, or "cutting the fat" will come. "Do we really need to make everything in the USA here? What if we outsource the hardware to China and then just assemble things here?" Yeah, it'll happen.

And as for Fender being "a piece of Americana"? Just wait until the majority ownership ends up in foreign hands. Budweiser isn't American owned. Neither is Chrysler.

Hey, so where are Ampeg amps made these days?

[Powdered Toast Man]

Yeah. That's worked well for Greece.

Point FAIL.

"Companies", not "countries". Greece's problems were created by their government.

Win.

[jcthejester13]

"Companies", not "countries". Greece's problems were created by their government.

I was just owned in the face.

Hard.

[hareek]

Just wait until the majority ownership ends up in foreign hands.

This is what would ruin Fender.

But I really think you guys are overreacting. You're also comparing apples to oranges. My point about the F-150 was cutting the line altogether, not where individual components of the truck are made and assembled. We're talking about American Made Fenders here. The cream of the crop product of the company that professional famous players want to play which is....drum roll please......FREE ADVERTISING for the company. You can't compare guitars to outsourcing of jobs like call centers and electronic components etc. Electronics are made overseas because they aren't affordable to the masses if they're made in America. There is no market for a $5,000 plasma TV. There is, however, a market for a $5,000 guitar.

Again for the umpteenth time, my point is the American made quality Fender guitars and amplifiers will not go away. They will only start producing more general crap that sells well and flood the market with it. But don't worry, you will still be able to get the American Standard Stratocaster or Telecaster that you've always wanted.

[hareek]

Maybe not next year or two, but give it 5-7 years.

I told you so.


(Just getting that out of the way now because I will be playing my brand new American Telecaster and won't remember this thread in 5-7 years.)

[Luke Duke]

I wonder what the market cap will be?

Anyhow, I think when Fender started putting their name on anything not US made it started to dilute the brand. When they put their name on anything from China it REALLY diluted the brand.

IMO of course.

Luke

[dominus]

Yeah. That's worked well for Greece.

When you import more than twice as much as you export, eventually you run into problems. That can happen anywhere.

[hareek]

I wonder what the market cap will be?

Anyhow, I think when Fender started putting their name on anything not US made it started to dilute the brand. When they put their name on anything from China it REALLY diluted the brand.

IMO of course.

Luke

Exactly. It won't be any different than what is already happening now, there will just be more of the crap available to the market. We still have American made Fenders now, and we'll still be able to get them in the future. Unless, as someone said, the ownership becomes foreign. That's a whole other ball game at that point.

[Luke Duke]

I doubt Fender will end up completely owned by a foreign entity. My guess is that it will be a domestic mutual fund darling for at least a year.

I wish I knew what was going on at Fender, I can only assume the big players want to cash in their chips; I say this because Fender could have gotten a private business equity loan pretty easy I'd think. I mean if a company like O'Reilly's, which is family controlled btw, can do it I'm sure Fender could.

I DID remember what all the wholesaler told me about Fender in 10. It was that the Wellington Group owned a big chunk of it in their hedge fund that you need 10M to buy into. Which means it is possible, though unlikely IMO, that Fender is being forced to "go public".

Luke

[fretburner]

Maybe this will inject boatloads of cash into Fender and they will be able to hire more craftsmen in SoCal and make better quality products?

[Kam]

+1

You hit it with every word of this post.

Which goes hand in hand with my point. You think Levis makes jeans? They don't. They are a brand label that slaps it's name on jeans made in a factory that is contracted to make jeans for them. No one in the factory works for Levis. You think Apple makes iPhones? They don't. They design iPhones and they are built by a third party overseas. You think Sony makes TV's? The value is in the BRAND. Companies discovered in the 1980's that their value was not in the products they made, but in the brand equity they had in their name. Consumers would still buy their products even if they weren't made by them. That's when our manufacturing base began to leave the country.

This all won't happen right away. Just wait a bit until the board becomes focused only on the current quarterly results. That's when cost cutting, or "cutting the fat" will come. "Do we really need to make everything in the USA here? What if we outsource the hardware to China and then just assemble things here?" Yeah, it'll happen.

And as for Fender being "a piece of Americana"? Just wait until the majority ownership ends up in foreign hands. Budweiser isn't American owned. Neither is Chrysler.

Hey, so where are Ampeg amps made these days?

Sounds like someone's read No Logo.

[philthis]

What you are about to witness is the transformation of Fender from a company that actually manufactures things into a brand that just slaps it's label on things. They've already been moving this direction with all their overseas expansion - the first Chinese made guitars with a "Fender" badge on them. This is what companies do - the value is in the brand, not what they actually make. So they'll increase their contracting out to foreign factories and decrease production in the USA. I could also see Mexico going away and them moving all foreign production to China.

alot of truth to this. I think the factory in Mexico was somthing like 50 mill. if its paid back you can expect a gradual migration of many products.

[Powdered Toast Man]

Again for the umpteenth time, my point is the American made quality Fender guitars and amplifiers will not go away. They will only start producing more general crap that sells well and flood the market with it. But don't worry, you will still be able to get the American Standard Stratocaster or Telecaster that you've always wanted.

Where are the USA made Fender guitars from 1985/86? Hint: There are none.

[hareek]

Where are the USA made Fender guitars from 1985/86? Hint: There are none.

They were owned by CBS then and the result of their decisions ruined the reputation of the company. That's not good for sales which in turn is not good news for a board that is looking to make profits. Having professionals play their guitars sells them more guitars and the pros want the good stuff, not the crap from overseas. The American made quality guitars simply won't disappear unless they willingly want to risk losing professional endorsements and the whole company altogether.

Anyway it's pointless to argue about this since everyone here is speculating and none of us know what is taking place behind closed doors at Fender. I've stated my point and exhausted the issue so I'll close out with this post. Time will tell what will happen. Right now Fender is making excellent guitars so get 'em while they're hot!

[ItsaBass]

"Again for the umpteenth time, my point is the American made quality Fender guitars and amplifiers will not go away. They will only start producing more general crap that sells well and flood the market with it. But don't worry, you will still be able to get the American Standard Stratocaster or Telecaster that you've always wanted."

That's just ridiculous. It sure will go away, just as it has done in the past under corporate ownership. That's the whole cause for alarm. The market is already flooded with low-end crap. But right now, that low end crap actually happens to be better made than it ever has been in the past. There will be cost cutting effort after cost cutting effort, quality will drop across all product lines, and prices will go up. No profit is good enough for a corporation.