UPDATE: On May 1, Gibson Brands filed for bankruptcy and moved to oust its long time CEO and major shareholder Henry Juszkiewicz, following a transition period. Three of the company's creditors took possession of the company and agreed to loan it a badly needed $135 million to maintain solvency. News reports suggested the new Gibson will shed its troubled consumer electronics divisions and focus on its core guitar and stringed instrument business.
Gibson, legally known these days as Gibson Brands, Inc., couldn’t be a bigger deal in American music. Its iconic electric guitars, banjos and mandolins changed the world in the hands of greats like Bill Monroe, Earl Scruggs and Mother Maybelle Carter.
But lately the lead story at Gibson isn’t about music. It’s about staggering amounts of debt and observers warning of impending bankruptcy.
News reports indicate that even though Gibson makes annual revenues of more than a billion dollars, it owes creditors at least $375 million by this summer. If famously controversial CEO Henry Juszkiewicz can’t secure a refinancing deal by July, he likely will have to give up control of the company, which by the way, he helped save from near death when he bought it in the mid 80s.
This is all complex stuff but the fate of Gibson matters to musicians and the people who love them. So I sought out one of the world’s experts on the company. Walter Carter is proprietor of Carter Vintage Guitars in Nashville. He worked for Gibson in industry and public relations in two stretches. And he literally wrote the book on the Gibson story. That's where our conversation starts.
He's optimistic about the long term viability of the Gibson brand and he says he "wouldn't bet against Henry," yet Carter told me that since the Nashville flood of 2010 inundated Gibson’s bluegrass instrument shop at Opry Mills, production of banjos, mandolins and dobros has essentially stopped. So for all the optimism about Gibson guitars, it’s worth noting that the iconic brand has already backed out of some important legacies.
Carter on the company's immense debt:
“This is the regular M.O. of CEO Henry Juszkiewicz. He’s always been financially on the edge, and that’s been his way of expanding the company and growing the company as fast as possible, with a bit of overextension always being a part of Gibson’s financial situation. I think it’s a little bit more precarious now because the company has expanded into the consumer electronics field, and if it gets in trouble, the guitars are not big enough to save the company.”
On the controversial track record of Henry Juszkiewicz:
“Henry has done a great job of bringing Gibson back from near death in the mid-80s. The company’s grown continually since then. It’s still a major brand. What I’ve always said is his vision for the growth of the company and his recognition in trends in instruments and consumer electronics has always been correct. It’s his ability to implement that vision where he’s fallen short.”
On the challenges inherent in the guitar and stringed instrument marketplace:
“All the major brands have had trouble moving beyond their iconic instruments. Gibson really hasn’t done much since the Les Paul. Fender’s bread and butter is still Stratocasters and Telecasters. Martin is still dreadnought flattops. When they’ve tried to do other things...they didn’t sell. A company can become victimized by its own tradition.”