 The Clarinet BBoard
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Author: GBK
Date: 2003-02-12 03:21
"...So what does this all mean for us now?..."
The "R" in R-13 now stands for Rutland...GBK
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Author: Ben
Date: 2003-02-12 04:08
I wonder what effect this will have on the quality of instruments over the coming years....
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Author: Mark Charette
Date: 2003-02-12 04:38
Ben wrote:
>
> I wonder what effect this will have on the quality of
> instruments over the coming years....
When a Fund Management company takes over a company, it's normally to split things up and sell the profitable pieces off and killing the unprofitable ones. Buffet is barely if at all profitable (if I'm reading the B & H PR right).
But it's not all that meaningful right now. The Instrument & Publishing divisions have been up for sale for quite some time.
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Author: Karel
Date: 2003-02-12 07:41
Certainly, Morrigan. We may even come to bless the day, if it leads to better quality control. Not all change is for the worse.
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Author: Synonymous Botch
Date: 2003-02-12 12:05
" We are acquiring an outstanding collection of brands at an attractive price..." the telling note is 1.6Million pounds profit on 71Million pounds in sales, a slim margin.
Looking through my 'Business binoculars', I would suppose Rutland will shop various lines to other manufacturers that might want to expand their offerings.
The lines that cost most to produce, and perform at the slimmest margins will be first to go.
Anyone follow major-league sports trades? It's the same principle.
You hire the talent that puts 'Meat in the Seats'.
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Author: PhatLip
Date: 2003-02-12 12:45
According to the announcement at Rutland's web site, the sale includes Buffet Crampon (clarinets), Rico (reeds), Höfner (guitars), Besson (brass), Paesold (strings) and Keilworth (saxophones).
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Author: Brenda Siewert
Date: 2003-02-12 13:45
So far it isn't translating into better prices on instruments to the dealers. They're still paying the same and having a harder time getting them.
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Author: larryb
Date: 2003-02-12 14:05
Too bad Steinway didn't stay in the running to buy Buffet, etal. appears Steinway pulled out of the competition about a year ago. Since Steinway already owns Selmer, can you imagine the synergy: Selmer R13 Signature Clarinets!
Maybe what's happening is the breakup (down) of large instrument makers. Could be a good (though expensive) thing - better quality clarinets, longer wait to purchase, higher prices. We'll probably have to invest in sets of Chinese clarinets while we wait for our Chaddash pair
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Author: Mark Sloss
Date: 2003-02-12 14:25
OK, let me put my investment management hat back on for a moment. I spend a lot of time looking at "distressed" properties, and this would certainly fit. Just because Buffet is a boat anchor in the B&H portfolio doesn't mean they will kill it off. This is genuinely a case of one man's garbage being another man's gold. An acquirer would be looking at the value of the franchise, the manufacturing capability, the proprietary designs, and would try to wring efficiency out of (jargon time) the supply chain and the distribution network. You take what is essential to the product and identity, and jettison the rest.
For instance, Yamaha with their purchasing power can get greater economy out of acquiring blackwood than Buffet. For that matter, they seem to have the best part of the world supply anyway, and could make that available to the Buffet plant. Any number of companies with an established global distribution network might be able to move product around the world more efficiently than B&H has been able to do. People on the corporate side of the house will most definitely lose their jobs. People in distribution and marketing will probably lose their jobs. It is possible that another company might use the French craftsmen to do the essential work and then assemble the instruments in an eastern-bloc country, resulting in some folks on the factory floor losing their jobs.
So, what this all means is Rutland will look at Buffet in terms of what it is worth to somebody else who can take advantage of its value, and will sell it for some multiple of that value. The buyer is not likely to screw it up because it is going to cost beaucoup bucks to get it. I've said it before on this board -- this is probably the best thing that can happen to Buffet, and could mean good things to the Buffet mafia.
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Author: Ralph G
Date: 2003-02-12 15:44
Mark... I almost had my wife convinced this morning that now is the time for me to buy an R-13 Prestige! Your silver lining analysis won't help my case any!r
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Author: Mark Sloss
Date: 2003-02-12 16:14
Ralph,
Please tell your wife upon further review that Buffet is indeed going out of business this week, and you must purchase that Prestige immediately. ;->
Actually, in all seriousness, one of the likely outcomes is that Buffet's new owners will have to reprice. Professional clarinets are ridiculously cheap compared to other instruments (ask a flute player some time) and that cannot persist. I wouldn't be at all surprised to see a big up-tick in Buffet's prices, followed closely by the rest of the industry. It would probably be a very good investment to buy a good instrument now.
Mark.
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Author: Todd W.
Date: 2003-02-12 17:17
From the B&H announcement:
"The Instrument Division . . . . has manufacturing operations in Germany, France, England, the United States and India."
You don't suppose all those Indian clarinets on eBay are actually made by . . . ?
Todd W. ;+}
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Author: Hans
Date: 2003-02-12 20:39
Morrigan asked: "So what does this all mean for us now?" Here is the long winded answer. It depends on a few things. If the new owners keep the company, it will probably not be good for Buffet fans. There is a general "diversification rule" in business that says that: "you can diversify from a market and product you know to another business with either (or both) the same market or the same product, but it is very unwise to move into a business where you don't know either." Most of the "don't know either" diversifications fail, unless senior management and its expertise is kept on and given freedom to manage.
"Don't know either" appears to be the case here. If the fund magagement's accountants try to run the business, rather than splitting it up, they will certainly try to make the business more profitable. There are several ways to increase profitability. One way is to increase revenue by increasing the selling price, which means you would pay more for your next R 13. Another way is by increasing sales volume/market share, which may be difficult, since Buffet already appears to have the lion's share of the market.
The short term easiest, and therefore most appealing, way to increase profits may be to reduce costs, as accountants are trained to do. That would not be a good thing. Cost reduction is commonly associated with staff reductions and loss in quality. Since experience is a critical factor in building clarinets, staff reductions might destroy the company.
The best we can hope for is that Buffet is sold to a new owner (ideally a clarinet player), who cares about the product and sees value in the name, so that the name can stay with us another few hundred years.
Hans
P.S. It was not my intention to denigrate the accounting profession; however, in my experience their typical approach is what I have described.
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Author: Ralph
Date: 2003-02-12 22:47
Perhaps, as Hans suggests, some of the brand names will be in turn sold to companies which have a strong interest in a particular brand. Just imagine if Yamaha bought the Buffet brand !!
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Author: Doug Ramsdell
Date: 2003-02-13 01:41
The other thing that's likely to happen here is that the market for used R-13s is going to kick up significantly, so if you were waiting around to pick up a good mid-1960s R-13, the short answer is probably, DON"T. I'm reminded of what happened when CBS bought Fender Guitars in the late 1960s; the new mega-corporate management began cutting corners in materials and construction, the quality of the instruments was seriously degraded, and "Pre-CBS" became a mark of quality (and also added a premium to the price of a used model). A similar fate happened to Gibson Guitars; in both cases the green-eyeshade guys turned the product to crap, and the public knew it, and bought used. The GOOD news here is that both Gibson & Fender have become independent of their corporate owners & now are making superb instruments again; the same could well happen to Buffet: an episode of being run into the ground by idiots trying to plunder the franchise, followed by some kind of spinoff to owners who know and care about the legacy of the brand and want to do justice to it. Maybe if we all cross our fingers and wish real hard, the episode of awfulness can be avoided.
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Author: Alseg
Date: 2003-02-13 01:47
Perhaps a letter to that effect (see post above this one)from the clarinet community to Rutland would help focus the new owner away from PROFITS and towards QUALITY...........it Could happen.Mark?
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Author: GBK
Date: 2003-02-13 01:56
Doug...Very well said...
As you alluded, for the near future the term "Vintage R-13" may have a new meaning - the "R" standing for Rutland...GBK (who will be stepping up the search for his 12th Buffet R-13 ... a pre-Rutland model.
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Author: Mark Charette
Date: 2003-02-13 02:44
Alseg wrote:
>
> Perhaps a letter to that effect (see post above this
> one)from the clarinet community to Rutland would help focus the
> new owner away from PROFITS and towards QUALITY...........it
> Could happen.Mark?
LOL! Considering their margins aren't that good now, I don't think I could argue that one with them.
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Author: JMcAulay
Date: 2003-02-13 03:26
Let us not forget that in some cases of marginally profitable (or not at all) divisions, facilities are shut down for good and the brands shopped out to whomever wants to take a flyer on them. It can work for ordinary consumer goods, but I can't recall this having happened to a "professional" equipment brand.
It isn't as bad as it might at first seem, because any buyer of the brand will be paying mucho bucks and will strive mightily to live up to the brand's historical acceptance. At least that's the usual skinny.
Now, how's all that for a worst-case scenario?
Regards,
Joh
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Author: diz
Date: 2003-02-13 03:37
I'm thinking that the CEOs of Leblanc, Selmer and Yamaha (to a lesser extent) might view this corporate takeover with interest?
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Author: Peter
Date: 2003-02-13 03:53
I've never seen where this type of trouble has led to either improved quality or better prices.
Often, the "efficiency experts" move in and try to re-make a "new and improved" product that is never either new of improved. All they really do is cut production costs and diminish (or kill) any semblance of quality control that might have existed.
Look at Selmer U.S.A., all the instruments they manufacture and most, if not all can't get past advanced student grade quality.
Look at stores like Sam Ash. Try to go there to buy anything of real professional quality outside their New Your store. You'll find it somewhat difficult. That's because professional quality instruments are not nearly as profitable as student quality lines.
This may also be in the works for Buffet in the not too distant future, with its "new and improved" management. Bringing a major corporation out of a major slump by a "financial investor" never leads to anything good for the consumer.
I won't say who it was, because it could turn into one of those "loaded" subjects...but as the CEO of one major corporation was "accidentally caught" on news tape telling another major company's V.P. some years ago, "...your real clients aren't the people who buy your company's products; your real clients are the investors who put their money into your corporation and expect a profitable return on their investment."
Anyone who thinks differently, either is fooling themselves or doesn't know much about modern capitalism and the power brokers who control it under the auspices of the profit margin rules.
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Author: Doug Ramsdell
Date: 2003-02-13 06:03
Whoa, not so fast. That's all true if you're involved in consumer mass-market merchandising, maybe, but Buffet is a niche entity, and a knowledgeable buyer would know that, hopefully. And if the Gibson and Fender examples I mentioned above are at all typical, sooner or later quality wins out. Or take the case of Harley-Davidson, which was bought by AMF in the ??70s?? (I think) and the quality of the bikes got so bad, the only way you could ride one was with a pickup truck as a chase vehicle, so you wouldn't have to push that heavy, heavy bike all the way home when it quit, as it inevitably did. Management raised some capital, bought the company back, and the bikes are now superb (...of their type, I hasten to add). It's doubtful that anyone would buy Buffet for its profit potential (ha!) and anyone who did, would soon sell it off, at fire-sale prices, probably to someone like ... and here's an interesting idea ... PETER EATON! (And wouldn't THAT be a hoot?)
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Author: graham
Date: 2003-02-13 09:01
Isn't the biggest risk to the speciality clarinets like basset horns, altos, etc? And perhaps to inovatory designs like Elite (commercially a dog from what I can gather) and the DG (already defunct despite being very good). I can see Buffet turning into a three model stable: R 13 RC and E11, with nothing else to lighten it up. It would be a pity if they stopped making their bass clarinet just because Selmer are the market leaders, since I prefer Buffet to Selmer on basses, from the limited experience I have of them.
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Author: Mark Sloss
Date: 2003-02-13 13:07
To restate, Buffet's embedded value is in its designs, tools, and reputation. It is easy to quantify the monetary value of designs and tools, but reputation is the intangible that separates viable from doomed companies, and despite a few dings and dents Buffet's is pretty solid. The bankers aren't going to deliberately screw that up. They will manage the balance sheet while they own it and hold most if not all of the board positions, and will either use Buffet's current team or put people in who know the business to run it on their behalf. You won't have CPAs undercutting tone holes.
Many of you have seen Michael Douglas' performance in Wall Street too many times. These management companies don't always carve up the carcasses. Buffet is close to worthless in pieces. You can't sell its reputation without the quality product behind it -- the customers are too discerning. You can't sell the instrument without the brand because brand loyalty is so high. They'll look for the essence of what makes Buffet who they are, and shed the rest.
Another possibility is a management buy-out where a private equity firm (even Rutland) makes it possible for Kloc and his gang to take the company themselves.
I'm usually a glass half-empty guy, but I genuinely take heart at the potential here. And, business being what it is, there is the opportunity to profit from Leblanc's misfortune if Rutland moves quickly.
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Author: Clarence
Date: 2003-02-13 14:44
I wouldn't assume that anyone at Rutland knows what a clarinet is.
If they do, only they know if they will follow the wishes of the Buffet Mafia or will turn this name into a trash basket.
There is less rocket science in making a clarinet then alot of people would lead one to beleave. Everything is measurable.
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Author: Mark Charette
Date: 2003-02-13 15:29
Clarence wrote:
>
> Everything is measurable.
Capable of being measured? Probably.
Worthwhile (in $$$ sense)? Sometimes.
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Author: Mark Charette
Date: 2003-02-13 15:31
I have asked the CEO of Rutland to communicate any information he or hist directors may have as to their planned direction with Buffet.
He may or may not answer back ... but it doesn't cost much to ask ;^)
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Author: Peter
Date: 2003-02-13 20:43
I wouldn't necessarily assume that "anyone at Rutland knows what a clarinet is," or not. Just from our own experience here at the WW/BB, we can all see that there are clarinet players in all walks of life.
Even if they really did not know what a clarinet is, I would venture to say that people like them didn't make their money by being stupid and they certainly would have consulted with experts and/or "bought" someone, or any number of someones, high up in Buffet itself to issue advise, assurances, etc.
On the other hand, while you may not have CPAs undercutting toneholes, you certainly will have CPAs undercutting many jobs there, probably including the jobs of some of the people who do undercut the tone holes, while hiring unskilled labor for "minimum wage" to supplant the skilled craftsmen and women who presently do the work.
Have we not learned anything from the health care employment problems in the U.S.? For those who are unaware:
During the last ten years, medical services institutions in the U.S. have been training janitors, bus boys and others who are involved in the lowest paid, non-skilled labor type jobs to become "medical technicians."
It's been the cause of several documentaries and news items over the years. They say they are doing this because they can't afford to pay what a properly school-trained "medical technician" requires to earn after undergoing whatever years of school and internship they have to undergo to qualify to be "reasonably" able to perform their job.
I don't knock some of these types of people taking the opportunity to better themselves, but they are not doing it through proper education, but by OJT in fields where they can cause much harm. Some are pretty good at it, most are just barely adequate, but they are kept on the job becasue of the profit margin involved.
The thing is, that companies like Rutland do not plan to take a company like Buffet and make it solvent through the manufacture of a quality product. They are after the quick cash that follows its disection, etc. Like a junk yard. They give you $100.00 for your car, then they take it apart and sell it in parts for, at least, a couple of thousand, or more.
In the meantime, there are going to be thousands of peole who are going to purchase Buffet instruments, whether good, bad, or mediocre, and keep them, just like there were thousands who mistakenly purchased Fender guitars and Harley motorcycles and wound up keeping them, even though they were lemons.
This all adds up to profits, especially to someone who is just marking time with a company, deciding how to sell it off for "junk parts" and not planning to waste any more money by further investing in it.
It's the trend, don't expect too much from this sale of Buffet and you might, not only not be disappointed, but if it takes off again, eventually you might even be pleasantly surprised. (But chances are, NOT!)
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Author: Clarence
Date: 2003-02-13 21:10
Peter,
All the clarinet players at Rutland play Leblancs. You may want to short Buffet's stock.
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Author: Peter
Date: 2003-02-13 21:16
BTW: I just gathered e-mails and telephone messages from people I know in the music and investment businesses and who could possibly stand to be affected by the Buffet sale and the Leblanc fire, and nobody seems to care one way or another.
As far as most of them are concerned, they say good for Buffet, if they survive fine, if they don't, someone else will eventually take their place.
About the fire, they say, good for Leblanc, look at all the insurance money they will collect and probably not use too much of to rebuild, so they will probably make much more money out of this than out of selling clarinets.
Nobody seems to really care one way or the other. Oh, well!
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Author: Classifan
Date: 2003-02-13 21:29
I'm getting a new buffet soon cause I don't like this news at all.
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Author: Mark Charette
Date: 2003-02-14 01:06
Peter wrote:
>
> On the other hand, while you may not have CPAs undercutting
> toneholes, you certainly will have CPAs undercutting many jobs
> there, probably including the jobs of some of the people who do
> undercut the tone holes, while hiring unskilled labor for
> "minimum wage" to supplant the skilled craftsmen and women who
> presently do the work.
Oh, you know this for a fact, right Peter? While it may end up being true - I don't think you have any "inside skinny" on what will happen.
> Have we not learned anything from the health care employment
> problems in the U.S.? For those who are unaware:
Please keep more or less on track - this is too far afield for the BBoard and debateable - but not here.
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Author: Synonymous Botch
Date: 2003-02-14 12:22
I dunno MC,
There has been a recent drop in patient days at our local community hospital since they began piping in the 'All Acker Bilk' channel on the cable radio. The census is high, but patients 'get well' quick!
Mebbe the two are related?
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Author: brenda siewert
Date: 2003-02-15 15:07
Prices are really good right now on new R-13s from wwandbw and also from Brook Mays. I've also found several really nice R-13s from the ones I've played. So, if you think you're wanting a new R-13 you might get one now. It's all about the bottom line with most "buy outs," and you can be certain the prices will go up a bit across the board with the new owners. And, most dealers are "sucking air" right now--so it would be a good thing for the economy to buy a new instrument.
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Author: jbutler
Date: 2003-02-15 16:21
I spoke at lenth with Don Reynolds of Buffet at TMEA. Don and I have known each other for a number of years. Francois was there also, but busy with working on clarinets at the convention. Don told me that the corportation is headed by the owner/investors that currently own the factories in Germany that produce the E-11. (I mentioned the Schreiber name, and he nodded, but did not vocally confirm.) At any rate the majority owner is a person by the name of Winter and according to Don is related to the Winter that produces the clarinet cases. He is really looking forward to the new ownership in a very positive way. They also bought the Rico portion of Boosey also according to Don.
jbutler
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Author: Peter
Date: 2003-02-15 22:55
JB,
If that's the case, maybe there is some light at the end of the tunnel, and it might not be a train! We'll have to wait and see.
Oh, darn it, I did it again! Are trains O.K. to mention? :-) :-) :-)
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Author: PJ
Date: 2003-02-16 03:37
Where can one follow the most reliable updates on this subject other than this BB?
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Author: Mark Charette
Date: 2003-02-24 17:08
Just a quick update. As I noted above, I sent a letter to Mr. Langdon, CEO of Rutland Funds Management.
I have just received a note from Sylvie Irvoas, Marketing Manager of Buffet Crampon. In part:
"Mr. Michael Winter, President of Buffet Crampon and new Chief Executive of The Music Group will inform you directly about the recent change in the
organisation of our group."
I'm looking forward to receiving the information!
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Author: jbutler ★2017
Date: 2003-02-24 22:56
Yes, Mark...that was the name given my by Don Reynolds. His brother is Jacob Winter who is with the instrument case company. According to Don, Michael was on the BOD at Boosey and had to excuse himself from the negotiations.
jbutler
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Author: Bradley
Date: 2003-02-26 03:35
I agree with most of the others when they said "change is sometimes good" because we all know the day Boosey and Hawkes took over Buffet in the 70s i believe- the entire line suffered. Although the Buffet artisans were retained for the most part i heard, Boosey let down the high Buffet standards.
Maybe Rutland or w/e will bring a change for the good, although if Buffet doesnt start to make more profits (which if Rutland is smart and they market them it will) they might let down the standards even more
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