Klarinet Archive - Posting 000508.txt from 1999/11

From: "Edwin V. Lacy" <el2@-----.edu>
Subj: Re: [kl] subject: [kl] Plastic Horns
Date: Sat, 13 Nov 1999 18:47:06 -0500

On Sat, 13 Nov 1999, musictrader wrote:

> I was surprised to read your evaluation of why Conn left Elkhart. I
> remember quite a different scenairo (as I was working for W. T.
> Armstrong as a tester/quality control at the time). As I recall, the
> primary motivation for their move was pure and simple survival (on the
> part of the owners/management of C. G. Conn). The unions within the
> company had gotten so powerful over the years, and demanded such high
> rates of pay and benefits for their membership, Conn was no longer
> able to compete effectively with other manufacturers

Your assessment of the situation and mine represent two almost
diametrically opposed viewpoints as to how the business world works. (And,
when we are discussing the manufacture, distribution and sale of musical
instruments, it is exactly the business world and not the music world that
we are considering.) First, let me acknowledge that I was not directly
involved with the situation, as you were. However, if I can characterize
your position, it seems that you view the owners, managers and
entrepreneurs as the victims, terrorized by the demands of their
employees. The employees are further villified by the almost pejorative
reference to them as "the unions."

On the other hand, my position would be that there could have been and
should have been another solution to the impasse. When a company shuts
down or moves due to their inability to successfully deal with labor
negotiations, there is always at least a little of the vindictiveness
factor involved. ("We'll show those bums that we were serious when we
told them we couldn't afford to pay them what they thought they
deserved.")

A business, even if it is in some way related to music, is just that, a
business. The owners and/or managers have an obligation to produce as
much return as possible on the investment of the owners or stockholders.
In no case does a concern for making better quality musical instrument
come into the formula. If it did, would Conn have made the move that they
did?

Given the fact that we can observe and assess the experience of Conn, I
think we can ask a few pertinent questions. The basic question is, did it
work? Is Conn more profitable or less profitable than it was before the
move? (I don't know the answer to that one, but I suspect that it is less
profitable. Certainly the reputation of the company and their product has
suffered.) I think that musicians have answered those questions for the
profession. As the saying goes, they have voted with their pocketbooks.
What is the level of the public relations image of the company in the
minds of the public, compared to what it had been?

> Whereas the "bottom line" is always a major consideration for all
> manufacturers, I do believe that the quality of their product comes in
> a very close second.

I'm sorry to say that my observations over the years have made me more of
a cynic on this one. As far as I am able to observe, the almighty dollar
is the major consideration, the minor consideration, and the only
consideration for most businesses. That's the nature of the business
world. These are the requirements that are imposed on them by their
investors.

I think that there is another assumption implicit in the position which
you espouse, and which is held by very many people. That is that the
decisions made by leaders of business and industry are somehow more likely
to carry the weight of rectitude, just on the basis of the fact that they
have the power to control the actions of their companies, as well as the
lives of their employees. This tacit acceptance of any decision being
correct if it is in the best interest of the "bottom line" is probably as
far from the truth as we could get. I have seen no objective evidence
which has convinced me that business leaders are inherently better able to
make astute decisions than are those who have even more at stake in the
company than do the stockholders - namely the employees. If the business
makes a bad decision, destroying the image of their company with the
public, and eventually causing the business to fail, who is it that is
most directly affected? I little reflection should show that it is not
the managers and entrepreneurs, but rather the rank and file employees -
the "little guy." After a business failure, it's not the managers who can
be seen in lines at the welfare office.

> I personally believe that it is a grave mistake to paint the
> manufacturer (or any single element of the music industry, for that
> matter) as the enemy; I do believe that vast majority of musical
> instrument manufacturers are conscientious and responsible in their
> strife to create a better (first) and less expensive (second) product.

Fortunately, there are examples in the industry which enable me to agree
with you about this. One of the paragons in this regard is the Fox
Products Corporation, makers of bassoons, contrabassoons, oboes, and
recently English horns. Their quality has been getting steadily better
and better for more than 30 years. I don't have any direct knowledge, but
I think it is safe to assume that the company is a profitable one. When
they have wanted to make greater inroads into the market, they have not
done so by cost cutting, reductions in the quality of their products, or
by cutting their lifeline to those who have made the achievement of the
highly positive image of their products - namely, their employees.

There are other similar examples to counter those such as Conn.

To date, I believe Fox is a company which is privately held by an
individual or a family. Alan Fox, who has headed the company for years,
won't be active in that capacity forever. Whenever he decides that it is
time for him to relinquish direct management of the company, here is what
I hope will *NOT* happen to Fox, but it is a scenario that is all too
familiar. Let's speculate that he passes the company on to others in his
family. Then, another company, such as the ubiquitous UMI, might happen
to take notice of the fact that Fox appears to have an excellent
reputation among musicians, and that it seems to be a profitable venture.
It wouldn't be surprising if they were to go to the new owners/managers of
the Fox company, and offer them what might seem like a fantastically high
sum for the company. (Exactly this same thing has already taken place in
the music industry many times - witness UMI, who now owns Conn, Armstrong,
Artley, Lesher, and others, or Lyon and Healy who now own Buffet, etc.,
etc.) In effect, the owners of the Fox company could realize in one lump
sum all of the profits that they might expect to make over the life of
their association with the company. This could well be an "offer they
could not refuse."

Then, the new owners, if past experience is a guide, would decide that
they could make still more profit if they could reduce their costs. They
would announce "economies of scale," and consolidate the management and
marketing of Fox with their other companies. They also would try to cut
corners to reduce production costs. All the while, they would be further
distancing themselves from those who made the success of Fox possible -
their employees and their customers. The final result is predictable -
eventually, the product wouldn't sell as it had, profits would go down,
further cost-cutting measures would be taken in a attempt to undersell
their competitors, and whatever company had bought Fox would be trying to
sell it to anyone else at almost any price.

This bleak prospect is entirely too real. It has already been played out
many times in Amreica business. As I said, I hope I will be proven wrong
about that scenario. But, I'm concerned about it for future generations
of musicians.

No doubt we will have to agree to disagree about this.

Ed Lacy
el2@-----.edu

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