Fender’s post boom cancellations!

Musicman20 · August 2023

https://www.instagram.com/p/CwiT2-WRiPX/?igshid=MWZjMTM2ODFkZg==

Worse than I thought!!!!

Nitefly · August 2023

600000 guitars!?! At a conservative thousand bucks apiece, that's $600 mill!

No wonder they're laying off.

Winny_Pooh · August 2023

What big company doesnt try and forecast these changes. Could only be morons up top who'd assume extra demand indefinitely.

Jez6345789 · August 2023

Interesting I visited Martin factory again in April they were hiring for extra shifts and speaking to people it would seem they are doing better than expected. Sounds like Fender went gung-ho and inked a lot of speculative orders.

RaymondLin · August 2023

A massive sale coming this Christmas near you.

GoldenEraGuitars · August 2023

But did they actually build the ordered guitars? A cancelled order on paper isn’t the same as building an order of a thousand guitars for one retailer which is then cancelled.

It just goes to show how much a company like this has to turn over to keep their corporate money making machine working.

Voxsupertwin · August 2023

Fender make far too many variations of what are the same guitar/s, they keep reinventing the wheel.

stickyfiddle · August 2023

GoldenEraGuitars said:

But did they actually build the ordered guitars? A cancelled order on paper isn’t the same as building an order of a thousand guitars for one retailer which is then cancelled.

It just goes to show how much a company like this has to turn over to keep their corporate money making machine working.

Yup. The thing is they're a modern global company, which is to say they're almost certainly up to their eyeballs in debt which means they have no choice but to keep cash coming in even if they lay off 90% of the staff. That's what screwed Gibson, ultimately.

I feel like Fender is much better run than Gibson in 2010-2017, but if they didn't spot that the 202 lockdown boom in guitar buying was obviously a one-off and not a new annual trend then they need to take a serious look at themselves.

jmf1928 · August 2023

600,000 unsold guitars is a lot. 200,000 unsold amps might be worse on a relative scale. I hope they’re able to weather it and don’t have to turn to PE.

Litterick · August 2023

The crisis has passed, which is why he is talking about it. I don't think Fender can be blamed for its dealers cancelling orders.

earwighoney · August 2023

I think dealers have also been hit by CoL issues, higher electricity, labour wages, and CoL costs have obviously hit consumers pockets. Lots of countries have had huge issues with inflation too, be it rent or food.

Even if Fender imagined the COVID boom wouldn't last, I don't think they could foreseen the impact the Ukraine war would have had on the consumer market.

Musicman20 · August 2023

Litterick said:

The crisis has passed, which is why he is talking about it. I don't think Fender can be blamed for its dealers cancelling orders.

The market itself is also slowing regardless, so that can't help.

Not just post-covid, but the economic issues and inflation.

I realise the higher end, custom shop and limited run will always have a market with those who are quite well off, but the every day person is paying more and more out of their salary to just live. Less to spend. More cautious.

GoldenEraGuitars · August 2023

stickyfiddle said:

GoldenEraGuitars said:

But did they actually build the ordered guitars? A cancelled order on paper isn’t the same as building an order of a thousand guitars for one retailer which is then cancelled.

It just goes to show how much a company like this has to turn over to keep their corporate money making machine working.

Yup. The thing is they're a modern global company, which is to say they're almost certainly up to their eyeballs in debt which means they have no choice but to keep cash coming in even if they lay off 90% of the staff. That's what screwed Gibson, ultimately.

I feel like Fender is much better run than Gibson in 2010-2017, but if they didn't spot that the 202 lockdown boom in guitar buying was obviously a one-off and not a new annual trend then they need to take a serious look at themselves.

This is the reason I actually don’t like them. It’s just a conveyer belt of constant orders/turnover/dominance that they need to exist let alone turn a profit.

You think it’s a surprise… “oh look, their guitars are up in price again?”.. nope, the bigger the company, the bigger the turnover has to be and the bigger the marketing and BS needs to be and the more in your face with “artist” models and endorsements they need to be etc.

And that’s exactly how it’s going.

Kittyfrisk · August 2023

jmf1928 said:

600,000 unsold guitars is a lot. 200,000 unsold amps might be worse on a relative scale. I hope they’re able to weather it and don’t have to turn to PE.

How are exercise classes going to help?

Cranky · August 2023

So . . . this plus a stagnant, over saturated used market. Hmmmm

fretmeister · August 2023

So did someone at Fender actually think the lockdown boom was going to be sustained?

If so, that wasn't that clever.

stickyfiddle · August 2023

fretmeister said:

So did someone at Fender actually think the lockdown boom was going to be sustained?

If so, that wasn't that clever.

It sounds like their dealers did, not that Fender necessarily did. But equally if you spend big money to serve that demand that's on you...

GoldenEraGuitars · August 2023

It’ll be interesting to see if the new RRP’s come down or if they’ll just stagnate. The new CS models (whatever they cost nowadays) will partially dictate the used market too.

elstoof · August 2023

The shareholders want to see growth and increasing returns, it’s the CEOs job to keep those shareholders happy with pretty projections even if they know it’s pie in the sky

maltingsaudio · August 2023

On another level just goes to show, if you think your Fender is special, it’s not, it’s just one of millions!

ICBM · August 2023

They are definitely massively in debt - from memory, worse than Gibson, but with a larger turnover to potentially support it. Over half a million unsold instruments is not going to help though.

They're probably in the trap that a lot of large companies seem to have got themselves into - not just in the music industry - of requiring the capitalist model of everlasting growth just to stay afloat.

CavemanGrogg · August 2023

elstoof said:

The shareholders want to see growth and increasing returns, it’s the CEOs job to keep those shareholders happy with pretty projections even if they know it’s pie in the sky

What share holders?

ICBM said:

They are definitely massively in debt - from memory, worse than Gibson, but with a larger turnover to potentially support it. Over half a million unsold instruments is not going to help though.

They're probably in the trap that a lot of large companies seem to have got themselves into - not just in the music industry - of requiring the capitalist model of everlasting growth just to stay afloat.

How are you getting even ballpark figures or financial information about the liquidity to debt ratio of a privately owned company, these documents and information are not available to nor made public

stickyfiddle · August 2023

ICBM said:

They are definitely massively in debt - from memory, worse than Gibson, but with a larger turnover to potentially support it. Over half a million unsold instruments is not going to help though.

They're probably in the trap that a lot of large companies seem to have got themselves into - not just in the music industry - of requiring the capitalist model of everlasting growth just to stay afloat.

Yep I agree. And at this point it's been standard MBA-equipped strategy-consultant dogma for 25 years, so it's going to take some high profile failures before anyone thinks about any other models.

dindude · August 2023

With so few guitars to build it’s a shame their QC is the worst it’s been for ages. Their line up is also very drab. And I’m a massive Fender fan so doesn’t please me to say it.

m_c · August 2023

From how I interpret the comments, they don't actually have those instruments/amps, it was simply what was cancelled.

I'm sure some of them made it through production, but they aren't saying that they physically had 600'000 unsold guitars, they're just saying that was the total orders that were cancelled.

FelineGuitars · August 2023

I have said it often before and will continue to do so:

"Guitars generally do not get thrown away and end up in landfill like old phones, computers and tech.

Fender and Gibson's biggest competitor in the marketplace is themselves and stuff they made previously"

If a percentage of the population bought a guitar during lockdown, they still have a guitar to play and may simply be learning new songs.

Most will not feel the need for many more guitars (I know that sounds like heresy on this forum)

They can only hope that in the next planned lockdowns to come that more folks will want to buy a guitar??!

Philly_Q · August 2023

FelineGuitars said:

They can only hope that in the next planned lockdowns to come that more folks will want to buy a guitar??!

110 Mad Scientist ideas mad scientist scientist mad

stickyfiddle · August 2023

dindude said:

With so few guitars to build it’s a shame their QC is the worst it’s been for ages. Their line up is also very drab. And I’m a massive Fender fan so doesn’t please me to say it.

I have't played enough to comment on QC but I can't argue on the lineup. I also find the model names incredibly confusing

Standard, Classic, American Standard, Deluxe, American Vintage was a relatively clear way of telling you what the model was without any other info.

Player, Performer, Professional, Ultra, Modern, Deluxe, Vintera... I have absolutely no idea where any of those are made and which are "better" or "more vintage-y" than others.

guitars4you · August 2023

FelineGuitars said:

I have said it often before and will continue to do so:

"Guitars generally do not get thrown away and en up in landfill like old phones, computers and tech.
Fender and Gibson's biggest competitor in the marketplace is themselves and stuff they made previously"

If a percentage of the population bought a guitar during lockdown, they still have a guitar to play and may simply be learning new songs.
Most will not feel the need for many more guitars (I know that sounds like heresy on this forum)

They can only hope that in the next planned lockdowns to come that more folks will want to buy a guitar??!

This by the bucket load - I've said the same for many years

I don't know how many used guitars are listed for sale today on Facebook, reverb, gum tree, e-bay etc but it will be a few thousand - Every penny spent on those is a sale the manufactures won't get to see - I can sell the same used guitar many many times over and make a buck on it each and every time I sell it - The manufactures only have one shot at it

Manufactures have to hope your Gas problem will get far worse and/or they need to find many new customers

A small idea they could offer is a 'refurbishment' option - Send in a used model and they will clean, set-up, as required - Offer different packages inc re-frets, re-spray etc - This could be offered world over as required, via appropriate workshops in their own distribution centres, be it UK, Germany, Japan etc - With appropriate 'refurbishment certificate' - It could add additional credibility to some used gear

Hurling_Fruitmig · August 2023

guitars4you said:

A small idea they could offer is a 'refurbishment' option - Send in a used model and they will clean, set-up, as required - Offer different packages inc re-frets, re-spray etc - This could be offered world over as required, via appropriate workshops in their own distribution centres, be it UK, Germany, Japan etc - With appropriate 'refurbishment certificate' - It could add additional credibility to some used gear

Apologies for a slight thread drift, but I read this and had the bonkers idea of ordinary and well used-instruments being returned to be stripped down, refinished, and professionally relic-ed to 'add value'.

timmypix · August 2023

I mean, this is just an evolution of the Gibson Demo Shop/Mod Shops. They're taking old B-stocks, returns and artist loans and either selling them as-is with a demo stamp at a discount, or giving them new finishes and features and selling at a premium for their uniqueness, and it seems to be working.

Extending that idea to second-hand/used examples isn't such a stretch in the way that @guitars4you has described.

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Fender’s post boom cancellations!

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