A Horrible Year for Gibson Guitars...

You've likely seen the stories regarding the illegally imported rosewood in the news lately and perhaps even heard the internet rumors of Peavey trying to purchase Gibson (which Gibson CEO Henry Juszkiewicz denied back in October). Do a quick search regarding Gibson quality on any number of internet forums and you'll see a great many posts regarding questionable quality especially considering the top self price tag.  So what's going on at Gibson? 

In my opinion, Gibson is in serious trouble and likely won't make it though 2010 without some type of acquisition likely by a foreign group of investors. Why such a pessimistic prediction? Well, consider the following chain of events which have occurred in 2009:

1. March 20, 2009 - Gibson Lays of 50: Citing a 20 percent drop in worldwide sales, Gibson announces the layoffs of 50 employees.
2. March 23, 2009 - Gibson Increases Layoffs: Just days after announcing a 50 employee layoff, Gibson announces the layoff of an additional 70 employees.
3. July 17, 2009 - Gibson Sits Out Nashville NAMM Show: While attendance on a whole was down at the 2009 Summer NAMM show, being in Nashville home to Gibson guitars, you'd think they would have made the trip across town. Is this a sign that business is so bad that they couldn't afford to participate? Many of their competitors including Fender were there. The company has also announced it would not participate in the 2010 Winter NAMM show.
4. August 12, 2009 - Les Paul Dies:  One must wonder the impact of Les Paul's passing on the company. Their biggest money maker by far bears the guitarist's name and while Les Paul the guitar has taken on an identity of it's own, this was a significant lose for the company.
5. September 23, 2009 - Gibson Proudly Announces, Then Retracts Hendrix Model: In a case of ultimate hypocrisy, Gibson announced a Stratocaster inspired Jimi Hendrix signature model complete with photos on their site showing the first batch of guitars in different states of construction on their website. After nearly a week of pretty much universal condemnation of the product on the internet, Gibson removes all traces of the guitar from their website. This was the most egregious example of a string of new products which seem completely out of touch with consumer expectations.
6. October 1,  2009 - Juszkiewicz Denies Rumors of Peavey Purchase - In a prepared statement to UK trade magazine MI Pro, Gibson CEO Henry Juszkiewicz denied the rumor of the company being acquired by Peavey. However, reading into the statement are some interesting clues regarding the state of the company.  In the statement, Juszkiewicz alludes to being affected by the economic downturn (back in March the company stated sales were down 20%) and the debt leveraged financial state of the company. Honestly, the very fact that this rumor was even addressed is curious and reads like a public relations move to make the company appear stronger than it actually is or a smokescreen to cover a failed deal. New rumors have surfaced on the internet of a new yet unnamed entity in acquisition talks with Gibson...
7. October 29, 2009 - Moody's Downgrades Gibson: Predicting weak 2009 performance, continued delays in issuing it's audited 2008 financials, and lack of access to revolving credit Moody's downgraded the Gibson corporation and warned of further downgrades.  What does this mean? Credit institutions consider a company's credit rating (as graded by Moody's and others) when a company applies for credit. A lower credit rating means less access to credit and high interest rates.  CEO Henry Juszkiewicz has admitted that the company is debt leveraged currently and the lower credit rating will result in less access to debt to grow...or keep the company afloat...
8. November 17, 2009 - Gibson Factory Raided: Federal agents raided the Gibson production facilities in Nashville seizing wood, guitars, files and computers as part of an investigation regarding the illegal importation of Rosewood from Madagascar. As a result, CEO Henry Juszkiewicz takes a leave of absence from the Rainforest Alliance. 
9. December 16, 2009 - Gibson Named Among the Worst Companies in America to Work For: In it's annual best and worst list of companies in America to work for published by Glassdoor.com, Gibson raked among the worst. Reading though some of the reviews of the company by it's employees, it's no surprise that the CEO Henry Juszkiewicz scores an abysmal 13% approval rating with the overall company rating an extremely poor 1.9 out of 5. When a company's employees are this unhappy, it's no wonder Gibson guitars have a growing reputation for inconsistent quality...