Any real news on Heritage's status?

[Yankeefan01]

Money.

 

They most likely lack the cash to operate.

 

Yes, everything is inventoried in an acquisition.  In many cases businesses are bought off of the value of their WIP - "Work In Process" - and/or the value of their equipment and building, or off of a "multiplier".  A "multiplier" purchase takes a given value on the money they made in a given year (EBIT or EBITDA) and multiplies it by some number ("5" comes up a lot) to get the purchase price.

 

It all depends on the state the company may be in.  If you're making money hand over fist, and don't have a lot of equipment or a valuable building, you would want to sell off of a multiplier.  If you aren't making money, or are in bankruptcy, the only option can be to sell the company off of the value of it's assets (WIP and equipment).

 

Oh no, it's a lawyer!

 

Or do you just play one on TV?

 

Or are you, or have you ever stayed, at a Holliday Inn Express?

 

;D

[PacerX]

Oh no, it's a lawyer!

 

Or do you just play one on TV?

 

Or are you, or have you ever stayed, at a Holliday Inn Express?

 

;D

 

Hehehehe....

 

Not a lawyer, and I have to tell you, the one the company I work for deals with are outstanding.  Bodman is top-flight in the people department.

 

I am, however, an engineer.  Engineers and lawyers come from completely opposite thought spectrums, and sometimes drive each other batty until they both realize that what they both want is the same - the best end result for the company.

 

My background has a lot of work in it with "troubled" suppliers and "troubled" internal operations.  In some cases they can be saved.  In others, nothing can be done... and that just sucks because in many of those cases the people who get hurt are the ones least responsible for the situation the company is in.

 

In other cases, there are a combination of factors that contribute to the demise... 

 

One that really, really bothers me is a UAW plant whose union employees literally shot themselves square in the foot, mostly due to some really, really bad advice from the outside UAW bureacracy and a militant local.  Piled on top of that was horribly poor plant management, a company that would not invest in the plant at all, and the loss of a major program.

 

End result?

 

175 families whose breadwinners now have no job.

 

Apart from all those folks out of work, what really bothers me about it is this:

 

It could have been fixed.  It didn't have to happen.

 

 

IMPORTANT NOTE:

Nothing in the above has anything to do with Heritage.  Just 'splaining a little of my experience and background.  I have no idea what is really going on at Heritage and am venturing no opinion WHATSOEVER about their situation.

 

Here's really what I know for a fact about Heritage:

I believe in the product.

[AnH555]

I can't help thinking how a certain large company that used to make guitars in Kalamazoo could go to town if they acquired their "Heritage Division".

Can you imagine the marketing?  No. Oh no.

[GuitArtMan]

I can't help thinking how a certain large company that used to make guitars in Kalamazoo could go to town if they acquired their "Heritage Division".

Can you imagine the marketing?  No. Oh no.

God forbid!!! 

 

Somehow I'd like to think Marv and Jim and JP and Bill would not stoop so low...

[JohnCovach]

God forbid!!! 

 

Somehow I'd like to think Marv and Jim and JP and Bill would not stoop so low...

 

It wouldn't be a bad thing if Gibson poured some cash and organization into Heritage.  Actually, it might be one of the few scenarios that would allow our friends in Kalamazoo to continue to make guitars the old-fashioned way.

[yoslate]

Ok fellas, Just got off the phone with Graham Z. at Wolfe.  Jay was involved in a lengthy conference call with Heritage today.  I've got a Super Eagle on order, so I have a vested interest in all this.  But the same wife who's letting me acquire a Super wants to go to dinner right now.  So I'll have an interesting post when I get back from some stellar Vietnamese.  Not a lot of detail, but good reason to breathe a little easier perhaps.  Back in an hour-and-a-half. 

[clmazza]

Ok fellas, Just got off the phone with Graham Z. at Wolfe.  Jay was involved in a lengthy conference call with Heritage today.  I've got a Super Eagle on order, so I have a vested interest in all this.  But the same wife who's letting me acquire a Super wants to go to dinner right now.  So I'll have an interesting post when I get back from some stellar Vietnamese.  Not a lot of detail, but good reason to breathe a little easier perhaps.  Back in an hour-and-a-half.   

 

A N T I C I P A T I O N !!!! ;D

[golferwave]

D I T T O !

[Dick Seacup]

Hrmm, this is fun. ;D

[JohnCovach]

Many years ago I won a free rafting trip through a radio promotion.  On the first day, we took the most leisurely trip, and then on the second we did the fast rapids.  When we were out the first day, our guide told us that people would always ask, "when are the next rapids coming up"?  He said that no matter where they were in the course, they were instructed to say either "in about twenty minutes" or "just beyond the bend."  This seemed to satisfy most folks.

[yoslate]

Fellas:

Dinner was terrific, as always: vegetarian spring rolls, rice noodle soup with beef, and....  Oh yeah, the phone call.  

 

Suspense was killing me, re: my first post on this forum a week ago.  With a custom spec'd Super, ordered up from Jay and Graham the first week in May, I have been getting a little antsy!  And again, everyone, the postings here have really helped.  My dilemma was becoming:  Cross my fingers and hang with my order, or cancel and just pull the trigger on a lovely Golden Eagle Jay already has?  Bird in the hand, yadda, yadda....  Called Graham three weeks ago.  He advised, sit tight.  Followed up this afternoon.

 

Without specifics, Graham says, and he specifically said I might post this, that after a lengthy phone call with folks in Kalamazoo, the word was the anticipated sale of Heritage is off!  The principals at Heritage (yep, those guys) apparently sensed the deal was thus:  The "interested party" with whom they were negotiating would buy Heritage, pump it up, then turn it over relatively quickly, again, to the highest bidder, for a quick tidy profit.  The gents from Kalamazoo, whom we regard so highly, don't want the company to go where that would most likely take it.  No deal.  

 

Now, the task at hand is to spool the shop back up and address the backorder problem (Jay received a new piece from them in the last couple of days).  That has begun or is imminent.  Next in the pipeline, get a cash infusion and begin the expansion of the operation gradually by bringing in and training new craftsmen in the Heritage tradition.  

 

I hope I have represented my conversation with Graham accurately and objectively.  He had reported unrestrained dancing at Wolfe guitars, post conference call.  So, that's it guys.  Hope I got it right.  Looking forward to hearing some confirmation!  Best to all....

[skydog52]

I ordered a millenium DC about a year ago and very interested in what's going on.

I own a H555 cherry transluscent and it's my favorite guitar. They do build a great instrument.

In fact a was ready to order a custom 150 cm. Hope it works out.

[JohnCovach]

I stand by my remarks concerning deer season.

[squawken]

Again, considering the all back orders, why did they just stop shop?  As great a product they offer, it didn't seem to be a very wise business decision (stopping).  But based on the new news I do admire the integrity of these guys, and it makes me feel better owning their product.

[JohnCovach]

I love these guitars (I now have five and am on the lookout for the sixth).  And I'm proud as heck that they are made in Michigan.  But I think the aborted sale is just as likely bad news as good.  I appreciate the good intentions to start back up and I'd love it if it really came to pass.  But all visible signs seem to indicate that these guys are coming up on retirement and have lost some of the drive that moves even a small company forward.  If there were some indication that there was a younger generation ready to take over the reins, with new ideas and fresh energy, that would be great.  Maybe there is and none of us have heard much about it. 

[golferwave]

 It sounds as if the factory got shut down for four months for nothing. I hope they can address the backorder problem adequately and my opinion is that should be their first order of business. I know that many of you have been waiting patiently for some time to receive your guitars. The large dealers like Jay should get a steady flow of new product but the backorders need to come first and I'm confident that they'll do that. If they want to raise capital they should sell some stock or bring in a couple of new partners. We'll see what happens.

[Thundersteel]

If they want to raise capital they should sell some stock or bring in a couple of new partners.

 

I'd be willing to buy some stock in Heritage! It would be nice to be considered a "part owner" (though a very small part) of the company!

[wingnut1]

I think they should issue stock and sell over the counter.  They could set up an ESOP plan for their employees that would allow them to become owners too and they would become invested in the company.  This could help with their transition plan and help the company survive long term.

[GuitArtMan]

Fellas:

Dinner was terrific, as always: vegetarian spring rolls, rice noodle soup with beef, and....  Oh yeah, the phone call.  

Ahhh the delightfulness of pho...  I used to work with a Viatnamese girl (ok lady) and she'd take us to this place we only knew as "Ghetto pho".  It's in a part of town you wouldn't want to go to at night if you catch my drift.  They only serve one thing and that was beef pho - but man oh man oh man did they do it right there.  The broth was out of this world.

 

You need to try the barbeque pork spring rolls sometime.  They are deeeeeeliciouuuuuuus!

[yoslate]

G-ArtMan:

 

Fabulous!  All of this sturm und drang over guitar-business issues, and I'm waiting for information-laden posts, just as everyone else is, and what I get is an enthusiastic recommendation for beef pho!  I love perspective!  Thanks!  Next time, barbed pork spring rolls it is!  In the meantime, think I'll fire up the Top Hat and spank the 150 for a bit....  ;D

                                                         

[PacerX]

Well, I think the important question needs to be highlighted a bit:

 

What has changed that has allowed the operation to continue, when apparently it could not do so (or would not do so) before?  This addresses the present.

 

Here are some artful words:

 

"If there were some indication that there was a younger generation ready to take over the reins, with new ideas and fresh energy, that would be great.  Maybe there is and none of us have heard much about it."

 

If the operation is capable of continuing, provisions for the above would seem to have to be very high on the priority list.  This addresses the future.

[Gitfiddler]

Ya know, all of the great ideas we've come up with regarding Heritage's current reorganization remind me of the many committees, task forces, think tanks, brainstorming sessions I've participated in over the years.  Maybe the guys at Heritage can check out our site and mull them over.  Maybe it would take some of the pressure off of the four or five owners if they tapped into our constructive ideas.  I read that Jay Wolfe was party to a recent conference call with Heritage...and he's a member of our 'Club'.

 

I nominate Jay to be our Heritage Owners Club delegate or ombudsman until this all shakes out.  What do you all think? 

[golferwave]

  I vote yes! - How about it Jay?

[yoslate]

Whew....

 

Well intentioned as all of this rumination is, and I think it rendered with the best of intentions, I suspect there are business and personal variables here we simply can't imagine...lots of thoughtful staring into coffee cups at the dinner table, framing thoughts, long after the pork chops are finished in Kalamazoo.  Those unknowns are, I'm sure, what are holding sway. 

 

Successful businesses are not participatory democracies!  As much as we might wish to have some say in this affair, I can't imagine that we have any voice outside of this forum for opinion.  And what we've offered up is only that: opinion, something there's no shortage of among middle-aged men.

 

PacerX quotes JohnCovach in asserting what might be "great."  I suspect that may be the most resonant statement made by any of us yet...with the possible exception of what follows in the Covach quote.  I don't think any of us has a clue...to belabor the obvious.

 

As to Jay becoming some sort of liaison for us, I'd imagine he's already done that in spades!  He wants to sell more of those guitars, and we want to buy them.  How symbiotic is that?  And as an "Official" Heritage Club Owners "delegate" to Kalamazoo...he might as well don an eight point rack and a big, fluffy white tail...and drive north on the 15th of November....

 

Best of luck to everyone losing sleep over this in Michigan!  I'm gonna go put a new set of wires on the 150....       

[JohnCovach]

I agree that we can't know much about this and that we're just speculating.  Actually, I think in many ways some of us (including me) are worrying aloud--we care how this turns out.  My guess is that the guys who started Heritage are getting to the end of their careers, and the problem is how--or even whether--to pass the torch.  It doesn't take much imagination to see a group of guys who love to build guitars, who started a company because they didn't want to move south, who got a chance to build guitars the way they thought they should have been built when CMI was ruining the Gibson brand in the late 70s/early 80s.  These guys made it work for more than twenty years, but they can't do it forever.  They are in Kalamazoo, struggling in a poor Michigan economy, so finding younger guys who want to carry on the tradition has got to be tough.

 

Under such circumstances, you gotta wonder if it's better to sell the brand or to keep it and continue somehow soldiering forward.  If you sell the brand, quality may suffer.  But if you keep it, you're not sure how long you can sustain it.  I have no way of knowing, but that's what I imagine these guys are going through.  It's tough to let go and tough to hold on.  But it's true, I'm only guessing. 

 

There is so much that's cool about Heritage guitars.  I'm really pulling for these guys.