One of Middle Tennessee's best-known companies in trouble
NASHVILLE, Tenn. (OSBORNE) -- Nashville based Gibson Guitar appears to be in serious trouble in spite of the fact that the brand was recently featured at a White House “Made in America” promotion.
Dr. Andy Borchers at the Lipscomb College of Business notes that Gibson’s debt rating was recently reduced to junk bond status. He says Gibson’s attempts to diversify have left the company vulnerable at a time when the instrument market is is in decline.
“On the one hand they have an iconic brand that has been brought back, seemingly from the dead from 1986, but lately have acquired a number of debts and they’re having great difficulty in paying those debts back.”
Dr. Borchers says Gibson’s reputation with customers has taken a hit and the company is experiencing labor relations troubles as well.
He also notes Gibson was on the losing end of a squabble with federal authorities over the importation of internationally protected exotic woods used in the crafting of some instruments.
Dr. Borchers believes much of the blame for Gibson’s troubles rest squarely on the shoulders of outspoken company CEO Henry Juszkiewicz.
“Iconic brands like Gibson have a tremendous value in the marketplace, but they have to be managed, and the question is whether or not this combination of events is going to sink the boat for good.”
Borchers believes default is now the most likely outcome.
Gibson Brands has facilities in both Nashville and in Memphis.