Fender Struggles Amid Slumping Guitar Sales

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In The Midst of a Slow Economy

It is our vision to continue championing THE SPIRIT OF ROCK-N-ROLL® throughout the world and our mission to exceed the expectations of music enthusiasts worldwide.Fender Musical Instrument Corporation

Among electric guitar players, Fender® is truly a household name. The company’s mainstay Stratocaster and Telecaster models are so uniquely famous, that most pickers and strummers simply refer to them as Strats and Teles. But in the midst of a slow economy, reports say Fender® is currently struggling to maintain its place as an undisputed industry giant. A sign of the times, perhaps; expensive pricing doesn’t help.

A renowned reputation

In the hands of a talented musician, Leo Fender’s distinctive solid body guitar designs had the potential to reach new sonic proportions. That it is precisely what happened.

In 1951, Fender® released the Telecaster, sometimes called the working musician’s axe. That was followed in 1954 by the iconically contoured Stratocaster. Soon artists like rock and roller Buddy Holly, slide king Muddy Waters, six-string feedback god Jimi Hendrix, Yardbirds great Jeff Beck and Pink Floydist Dave Gilmour, among other electric guitar titans, helped elevate Fender® products to their legendary status.

Times and Prices Are Changing

Because so many famous artists have played Fender® guitars in the past, the vintage ones still fetch a tidy sum. Professionals and collectors are always on the look-out for a well sounding blast from the past, especially if it hasn’t been reworked. The problem is this: They are the only ones who can afford to play them.

In recent years, Fender®, officially known as Fender® Musical Instruments Corporation, or FMIC®, has taken steps to ensure its position at the top by offering a variety of products in a range of prices, beginning with the budget conscious Squire® and Standard lines.

Furthermore, FMIC® acquired a number of holdings that it thought would provide insulation from an ailing guitar market. Think again. Though the Fender® family presently includes the Charvel®, EVH®, Gretsch®, Groove Tubes®, Guild®, Jackson®, SWR® and Tacoma® brands, it hasn’t been enough to keep the business from taking a financial hit.

Recent Reports

According to The New York Times article, “A Guitar Maker Aims to Stay Plugged In,” published September 12, 2012, Janet Morrissey wrote about Fender®,”A private investment firm, Weston Presidio, controls nearly half of the company and has been looking for an exit. It pushed to take Fender® public in March, to howls in the guitar-o-sphere that Fender® was selling out. But, to Fender®’s embarrassment, investors balked. They were worried about the lofty price and, even more, about how Fender® can keep growing.”

What’s more, Morrissey’s article points to the tight relationship FMIC® has with mega-sized instrument retailer Guitar Center, which is also suffering from anemic sales. She notes, “Moody’s issued a junk rating of B2 on Guitar Center’s debt in October 2007, and has since downgraded the company two more times, most recently in November 2010, to Caa1.”
What does the future hold for Fender®? No one knows, not even Fender®. Though don’t throw in the towel just yet. In addition to its many guitars, the company has a well-known line of basses and amplifiers, along with other gear, which many artists still prefer for studio recordings as well as live shows.

If you consider the size of Fender® and the company’s place in popular music, it’s almost as if the business is too big to fail. Now where have I heard that before?

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Paul Wolfle

As a vintage and contemporary music enthusiast, guitars dominate Paul’s life. He plays slide in open tunings on a National Steel Tricone resonator and electric blues, in standard tuning, on an assortment of other instruments including his white Fender Stratocaster.

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