GUILD Historical Question

frettedstrings

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From Hans Moust's Guild Book, I've read that The GUILD CO. was sold to Avnet, approximately 1 year before operations were moved from the plant in Hoboken to the Westerly, RI Plant. It seemed that GUILD was doing quite well, at the time, considering the need to find a larger factory. What was the reason Alfred Dronge sold the GUILD CO to Avnet?

-frettedstrings
 

chazmo

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Hi Tim,

It's a good question. These corporate takeovers into unrelated business we de rigeur at that time. Avnet probably made Mr. Dronge a generous offer. It may be that the company needed capital too.
 

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IIRC Guild could use more capital even if they didn't need it to survive and Avnet, like many companies at the time, saw becoming a conglomerate of loosely related businesses as a way to grow and profit.
 

frettedstrings

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I suppose a 'Generous Offer' could get someone to sell out, but I wonder what the GUILD CO. would have become, today, if Mr. Dronge had held on to GUILD. I know that Mr. Dronge died in 1972, but someone else would have taken over the leadership of the Guild Co.. I think of the Martin Guitar Co., starting in 1833 and Gibson starting in 1902. I understand that Gibson was bought by Chicago Musical Instruments in 1944, but Martin is still under the leadership of the Martin Family (Chris Martin (Sixth Generation). Just the inquiring mind of a Guild Guitar Enthusiast, I guess.

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fronobulax

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frettedstrings said:
I suppose a 'Generous Offer' could get someone to sell out, but I wonder what the GUILD CO. would have become, today, if Mr. Dronge had held on to GUILD. I know that Mr. Dronge died in 1972, but someone else would have taken over the leadership of the Guild Co.. I think of the Martin Guitar Co., starting in 1833 and Gibson starting in 1902. I understand that Gibson was bought by Chicago Musical Instruments in 1944, but Martin is still under the leadership of the Martin Family (Chris Martin (Sixth Generation). Just the inquiring mind of a Guild Guitar Enthusiast, I guess.

-frettedstrings

I think the high value we place on family owned businesses that have been in the family "for years" is a matter of hindsight and not necessarily an indication that family ownership is inherently a better business model. I'm not that big a student of corporate history but what little I have studied suggests that Martin as being both successful and still owned and operated by Martins is an exception rather than the rule. So as a general principle I don't see the sale to Avnet as being bad for Guild.

Less speculatively, isn't it true that Mark Dronge had actively distanced himself from Guild before his father's death? That suggests the family operated model might not have lasted to a second generation.
 

NEONMOONY

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Really, isn't what he did the accepted practice even today. You start a company, like a geocities, google, facebook, and as it becomes popular, you sell it ( or post it for public trading) and run with the dough before the romance runs out and bigger problems come to roost
 

evenkeel

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frettedstrings said:
I understand that Gibson was bought by Chicago Musical Instruments in 1944, but Martin is still under the leadership of the Martin Family (Chris Martin (Sixth Generation).

Gibson has changed hands a few more times. In the late 60's, it was bought by a South American brewing company. That company eventually became Norlin Industries. "Norlin era" Gibsons are generally regarded as a low point of Gibson history. In the mid to late '80's the company was bought by Henry Juszkiewicz, David Berryman, and Gary Zebrowski. Berryman and Juskiewicz are still running the company. Good cautionary tale.
 

adorshki

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fronobulax said:
IIRC Guild could use more capital even if they didn't need it to survive and Avnet, like many companies at the time, saw becoming a conglomerate of loosely related businesses as a way to grow and profit.
Bear in mind that Avnet Corp was a significant player in the electronics components distribution market. (Selling parts to manufacturers)
It wouldn't be unreasonable to guess that they probably saw a synergistic profit potential in owning a manufacturer in the booming electric guitar market, and supplying components to same at what would effectively be "cost" on the corporate books.
Looking around, they found Guild.
:wink:
 

SFIV1967

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fronobulax said:
Less speculatively, isn't it true that Mark Dronge had actively distanced himself from Guild before his father's death? That suggests the family operated model might not have lasted to a second generation.
Yes, Mark left Guild in 1968 already, which is written in Hans book on page 18.
I read somewhere else that he joined Guild for sometime again in the 80ties, before he founded DR Strings in 1989.
Ralf
 

SFIV1967

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Did you actually know that Avnet has a museum that displays proudly Guild Guitars ??? The museum is housed next to the lobby of Avnet's corporate headquarters in Phoenix and showcases over 100 consumer and technology products including guitars, turntables, test equipment and computers.

The handing over of the Starfire XII to John Lennon by Mark Dronge (his biggest mistake...) is one of the topics, a cherry Starfire III is displayed in the museum just as one example (Avnet bought it in an auction just before opening the museum in July 22, 2005)

If you want to read a bit about Avnet in between 1960 and 1974, downlod this: http://www.avnet.com/ctf_shared/sta/df3 ... pter_3.pdf

museum-ad.jpg


technology_museum2.jpg


Ralf
 

adorshki

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SFIV1967 said:
If you want to read a bit about Avnet in between 1960 and 1974, download this: http://www.avnet.com/ctf_shared/sta/df3 ... pter_3.pdf
I actually worked as a sales rep in their Sunnyvale CA office from '79 to '81 selling components to such diverse (and poor credit riskworthy) customers as Dan Healy of Grateful Dead soundboard fame and one Steve Wozniak, hobby computer kit manufacturer widely regarded as an eccentric mad scientist in our office. :lol:
While nostalgically googlling them I stumbled across a reference to their owning Liberty and Blue Note Records in the mid-60's as well. :eek:
 

frettedstrings

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So as a general principle I don't see the sale to Avnet as being bad for Guild. [/quote said:
Avnet must have done well after the purchase of Guild Co., as they moved from the Hoboken, NJ plant to the Westerly, RI plant and stayed there for 30 years and I would have to confess built some really nice guitars.

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SFIV1967

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frettedstrings said:
Avnet must have done well after the purchase of Guild Co., as they moved from the Hoboken, NJ plant to the Westerly, RI plant and stayed there for 30 years and I would have to confess built some really nice guitars.
Actually Avnet owned Guild for 20 years. "In mid August of 1986, Avnet sold Guild to a management/investment group from New England and Tennessee. Officers of the newly formed Guild Music Corporation included company President Jerre R. Haskew (previously Chief Executive Officer and President of the Commerce Union Bank of Chattanooga Tennessee), Executive Vice President of Plant and Operations George A. Hammerstrom, and Executive Vice President of Product Development and Artist Relations George Gruhn (Gruhn later left the company in early 1988)".
(Source)

Ralf
 
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frettedstrings

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So, SFIV1967, so as to complete the historical dotted lines ... Hans I hope you are taking notes ..... Avnet bought GUILD in 1966 and sold out in 1986. When was the move to Corona, CAL?

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dapmdave

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frettedstrings said:
So, SFIV1967, so as to complete the historical dotted lines ... Hans I hope you are taking notes ..... Avnet bought GUILD in 1966 and sold out in 1986. When was the move to Corona, CAL?

-frettedstrings

I think that Fender bought Guild in 1996, and moved production to Corona in late 2001. The Tacoma move came in 2004, and eventually production was moved to the old Hamer/Ovation facility in New Harford in 2008.

Standing by for any and all corrections... :lol:

Dave :D
 

SFIV1967

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@Tim: Well, that will be all written correctly in Hans' new book, but until that is out we have to use whatever sources are available... So quoting the source I mentioned in the post before:
"Unfortunately, the remaining members of the investment group (Gruhn had already left) defaulted on bank obligations in November of 1988, leading to a court supervised financial restructuring. The Faas Corporation of New Berlin, Wisconsin (now U.S. Musical Corporation) bought Guild in January 1989. ... Guild was purchased by FMIC in 1995. ... In 2001 production was moved to Corona, CA." As previously mentioned at LTG the last remaining employees (who are members here) closed the door in Westerly in December 2001.

Fender acquired the Tacoma Guitar Company end of October 2004. (I have seen an article from 11/1/2004). Fender began building Guild guitars in Tacoma "after February 2005" (info in Guild serial number list).

Regarding move from Tacoma to NH: The announcement was done on Jan 31, 2008:
"SCOTTSDALE, Ariz. – (Jan 31, 2008 ) Fender Musical Instruments Corporation (FMIC) announced today it will move production of Guild Guitars from Tacoma, Wash. to its newly acquired Ovation and Hamer Guitar manufacturing facility in New Hartford, Conn. The move will take place as a phased operational transfer, expected to be completed before the end of the year.
FMIC’s recent (Dec. 31, 2007) acquisition of Bloomfield, Conn. based Kaman Music Corp. also included the purchase of KMC’s Ovation and Hamer guitar brands, and their manufacturing facility in New Hartford, Conn."

Ralf
 

littlesongs

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fronobulax said:
frettedstrings said:
I suppose a 'Generous Offer' could get someone to sell out, but I wonder what the GUILD CO. would have become, today, if Mr. Dronge had held on to GUILD. I know that Mr. Dronge died in 1972, but someone else would have taken over the leadership of the Guild Co.. I think of the Martin Guitar Co., starting in 1833 and Gibson starting in 1902. I understand that Gibson was bought by Chicago Musical Instruments in 1944, but Martin is still under the leadership of the Martin Family (Chris Martin (Sixth Generation). Just the inquiring mind of a Guild Guitar Enthusiast, I guess.

-frettedstrings

I think the high value we place on family owned businesses that have been in the family "for years" is a matter of hindsight and not necessarily an indication that family ownership is inherently a better business model. I'm not that big a student of corporate history but what little I have studied suggests that Martin as being both successful and still owned and operated by Martins is an exception rather than the rule. So as a general principle I don't see the sale to Avnet as being bad for Guild.

Less speculatively, isn't it true that Mark Dronge had actively distanced himself from Guild before his father's death? That suggests the family operated model might not have lasted to a second generation.

Avnet was a family owned and operated business in 1966. The term "Avnet" is not a clever corporate mishmash like "Exxon" or a thousand others. The moniker originated with founder Charles Avnet who opened up shop in 1921. At the time the company acquired Guild, it was being run by his sons, Lester and Robert. In a nutshell, a successful family owned and operated business founded by immigrants in New York City was acquired by another successful family owned and operated business founded by immigrants in New York City. There was nothing wrong with the business model.
 

fronobulax

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littlesongs said:
Avnet was a family owned and operated business in 1966.

News to me but it doesn't really under cut my point, which I thus must not have phrased clearly ;-) Thanks.

littlesongs said:
There was nothing wrong with the business model.

My point was not that there was anything wrong with the model as much as to suggest it was not better than numerous other business models. I was reacting to the implication that Martin is somehow better off than Guild just because because Martin has been a family owned business throughout its entire history..

Since we tend to only discuss successful family businesses, see the rise and fall of the Haft family businesses as a counter.
 

littlesongs

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My intention was not to compare business models generally, but to show that these two businesses with families involved were successful. Guild survived on their own merits. Avnet did too. Martin is probably better off with family ownership as well. Rickenbacker is still essentially a family run operation. Frankly, it really doesn't matter so long as the company isn't run by a raving madman.

HenryJ.jpg
 
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