Kaman sold to Fender

[MCChris]

  seeker said:

#1 Jol and his increased community profile over the last 4+ years

#2 the continual rackup of GPs Editor Pick's for the last 5 or 6 new Hamer models

#3 judiciously using the positive image and goodwill will naturally help the (bottom line)

You're being naive if you think that any of those things matter a whit to some corporate bean counter.

[mirrorimij]

From the Hartford Courant......

"In the colorful annals of Kaman Corp., this will be remembered as the year the music stopped.

The Bloomfield maker of aircraft parts and helicopters is selling its 40-year-old Kaman Music Corp. division to Fender Musical Instruments Corp. of Arizona - maker of the celebrated Stratocaster and Telecaster electric guitars - for about $117 million.

For Kaman - and American industry - the deal will end a long-lived and quirky business combination, one that blended the stone-sober practicality of aerospace manufacturing and industrial supplies with the whimsy, levity and creativity of musical instrument innovation.

The blend was natural, at least for a time. Company founder Charles Huron Kaman, now retired, is not only a helicopter inventor, but an accomplished jazz musician as well.

Still, the company's current leaders believe that giving up the guitar-making music unit will help Kaman, which has long faced skepticism about the division from earnest investors. And now, years after most other conglomerates sold off their ill-fitting sidelines to focus on their core businesses, Kaman is following suit.

"Wall Street has been quite clear in hoping that we would find a way to be more focused," said Russell H. Jones, Kaman's chief investment officer and treasurer.

Fender chief executive William Mendello said his company has not decided what to do with Kaman Music's operations in Connecticut, but said the division president, 35-year Kaman veteran Edward Miller, will stay on. Fender will lease space at Kaman's Bloomfield campus, Mendello said.

"There's no doubt that corporate headquarters will remain in Hartford," he said.

Kaman Music employs about 500 people nationwide, most of them in Bloomfield and New Hartford, home of the company's guitar factory. Layoffs, if any, will likely be few, Mendello said.

Mendello said Fender, one of the world's most famous electric guitar brands, would significantly increase sales of percussion instruments and musical accessories, such as guitar picks and drum stands, through the Kaman deal. Kaman is the nation's largest independent distributor of musical instruments and accessories.

Kaman makes Ovation and Hamer guitars, as well as Gretsch drums, and is the exclusive distributor of Takamine guitars. In all, the company distributes about 20,000 different musical instruments and accessories, from bongos and cymbals to guitar picks and drum racks.

Mendello would not disclose annual sales figures for Fender, but they have been reported as $430 million in 2006. Fender employs about 2,600 people.

Music has always been Kaman's smallest unit, contributing $215 million, just under 20 percent of Kaman Corp.'s 2006 sales of $1.2 billion, and about the same percentage of the company's profits.

But Kaman Music also represented the innovative spirit of Kaman, now 88, who is no longer with the company and is better known as Charlie.

Kaman, who declined an offer to join the Tommy Dorsey band to become an engineer, created the music division in the late 1960s, after losing a Defense Department contract to make rotors for Kaman's own H-43 Husky helicopter, according to Jones.

Kaman used Sitka spruce he had stockpiled for use in the H-43 rotors to make a new type of acoustic guitar. Highly resonant, the wood helped minimize vibration in helicopters; in guitars, Kaman found, it could maximize it.

"You don't want a helicopter shake, to vibrate," Jones said. "But you want your guitar to shake, because that's what music is, vibrations."

Over the years, Glen Campbell, Melissa Etheridge, Neil Diamond, Billy Joel and Cheap Trick have all played guitars made by Kaman. John Lennon used an Ovation during his last acoustic recording session, according to Frank Untermyer, the Kaman Music executive who oversees the New Hartford guitar factory; Untermyer says he has a photograph of Lennon with the Ovation to prove it.

Charlie Kaman, a spunky inventor and a workaholic, developed the Ovation along with his engineers in the mid-1960s and introduced it in 1966. It was the first round-backed, acoustic-electric hybrid guitar.

Between 1985 and 1998, Kaman's son, C. William Kaman, ran the music division, tripling its sales and merging together a half-dozen scattered companies into one business. In the late '90s, before he retired, Charlie Kaman assigned aerospace engineers to help in the design of a revolutionary graphite Ovation guitar, which came out a few years later.

Kaman founded the company that bears his name in 1945 as a helicopter and aviation parts manufacturer and it remains a major supplier to Sikorsky Aircraft Corp. of Stratford, among others. With the sale of the musical instrument division, Kaman's primary non-aerospace business will be industrial supplies distribution, which sells nearly 3 million different items, mainly bearings, but also gears, sprockets, chains and other parts for motors.

For better or worse, Wall Street stock analysts have found helicopters and machine parts easier to deal with than guitars and drums. Kaman shares rose 1 percent Monday, to a close of $37.14, after rising more than 5.5 percent on Friday. "

I wish Jol, Frank, Mike, Dave and all the others the best of luck.

[Thundernotes]

  MCChris said:

  seeker said:

#1 Jol and his increased community profile over the last 4+ years

#2 the continual rackup of GPs Editor Pick's for the last 5 or 6 new Hamer models

#3 judiciously using the positive image and goodwill will naturally help the (bottom line)

You're being naive if you think that any of those things matter a whit to some corporate bean counter.

Sadly true. Those guys have a long-term "vision" of about 90 days max - until the next quarterly report. It might depend on whether they're musicians and craftsmen instead of Harvard MBA's. I have my doubts.

[bobbymack]

Wow, alot of possibilities here...

My $.02, having been through some acquisitions back in my corp days, is that FMIC is first and foremost adding market share by eliminating competition, much as GC has over the past ten years. This will be the case whether they ultimately grow or shrink the Hamer brand.

What they do with Hamer USA is the huge question. It seems to me the smart play would be to try to finally get a legitimate competitive position vs Gibson in the humbucker / short scale market. Give the brand the marketing and visibility to push it into tier 1, get it in major artists' hands, etc. All pretty easy to do for Fender. Then, the question becomes what happens to the CT factory and crew? Can they hang with the new production demands created by FMICs marketing clout? Quality control???

As far as the current staff all being upbeat and "positive", be assured that is a happy face. Change and uncertainty is tough to swallow when it touches your livelihood, and deep down only the most forward thinking employees are going to possibly have a positive attitude about this development. But, a sure way to get canned in the transition is to come across as a naysayer...

[El Kabong]

I have visions of seeing ads in Guitar Player: A limited editon of 50 bound and crowned Standards and Specials each, done in vintage checkerboard with a certificate of authenticity and checkerboard case, signed by Jol D, Paul H and Rick N will be available, for $11,000 and $9000 respectively. This will include a leather presentation folder with a CDROM documenting the luthier process of your guitar. Wait for it...

[seeker]

  MCChris said:

  seeker said:

#1 Jol and his increased community profile over the last 4+ years

#2 the continual rackup of GPs Editor Pick's for the last 5 or 6 new Hamer models

#3 judiciously using the positive image and goodwill will naturally help the (bottom line)

You're being naive if you think that any of those things matter a whit to some corporate bean counter.

I'm not naive, it just depends if FMIC Corporate views those as "assets" to make use of. If the beancounters had their way, then yes, it is irrelevant. Meet profit goals or else. Or even shutdown if not worth it. FMIC did not get to where it is by beancounters alone though. Fender has an IMAGE; that's what they sell. Marketing folks are in the mix too. If they don't view Hamer's image as an assett, then the beancounters do win out.

And if you want to quote me, DON'T EDIT:

"It depends on whether FMIC will use that cache or just go for the bottom line. If they're smart, judiciously using the positive image and goodwill will naturally help the second."

[MCChris]

  seeker said:

And if you want to quote me, DON'T EDIT:

"It depends on whether FMIC will use that cache or just go for the bottom line. If they're smart, judiciously using the positive image and goodwill will naturally help the second."

Relax.

[AdmiralB]

  MCChris said:

You're being naive if you think that any of those things matter a whit to some corporate bean counter.

You think FMIC bean counters are less (insert derogatory word here) than Kaman bean counters?

[MCChris]

  AdmiralB said:

  MCChris said:

You're being naive if you think that any of those things matter a whit to some corporate bean counter.

You think FMIC bean counters are less (insert derogatory word here) than Kaman bean counters?

Nope. Probably equal. I'd be surpised if Hamer hasn't been a point of contention between the parent company and the stockholders since it was acquired.

[Zoner]

  mirrorimij said:

From the Hartford Courant......

"In the colorful annals of Kaman Corp., this will be remembered as the year the music stopped.

The Bloomfield maker of aircraft parts and helicopters is selling its 40-year-old Kaman Music Corp. division to Fender Musical Instruments Corp. of Arizona - maker of the celebrated Stratocaster and Telecaster electric guitars - for about $117 million.

For Kaman - and American industry - the deal will end a long-lived and quirky business combination, one that blended the stone-sober practicality of aerospace manufacturing and industrial supplies with the whimsy, levity and creativity of musical instrument innovation.

The blend was natural, at least for a time. Company founder Charles Huron Kaman, now retired, is not only a helicopter inventor, but an accomplished jazz musician as well.

Still, the company's current leaders believe that giving up the guitar-making music unit will help Kaman, which has long faced skepticism about the division from earnest investors. And now, years after most other conglomerates sold off their ill-fitting sidelines to focus on their core businesses, Kaman is following suit.

"Wall Street has been quite clear in hoping that we would find a way to be more focused," said Russell H. Jones, Kaman's chief investment officer and treasurer.

Fender chief executive William Mendello said his company has not decided what to do with Kaman Music's operations in Connecticut, but said the division president, 35-year Kaman veteran Edward Miller, will stay on. Fender will lease space at Kaman's Bloomfield campus, Mendello said.

"There's no doubt that corporate headquarters will remain in Hartford," he said.

Kaman Music employs about 500 people nationwide, most of them in Bloomfield and New Hartford, home of the company's guitar factory. Layoffs, if any, will likely be few, Mendello said.

Mendello said Fender, one of the world's most famous electric guitar brands, would significantly increase sales of percussion instruments and musical accessories, such as guitar picks and drum stands, through the Kaman deal. Kaman is the nation's largest independent distributor of musical instruments and accessories.

Kaman makes Ovation and Hamer guitars, as well as Gretsch drums, and is the exclusive distributor of Takamine guitars. In all, the company distributes about 20,000 different musical instruments and accessories, from bongos and cymbals to guitar picks and drum racks.

Mendello would not disclose annual sales figures for Fender, but they have been reported as $430 million in 2006. Fender employs about 2,600 people.

Music has always been Kaman's smallest unit, contributing $215 million, just under 20 percent of Kaman Corp.'s 2006 sales of $1.2 billion, and about the same percentage of the company's profits.

But Kaman Music also represented the innovative spirit of Kaman, now 88, who is no longer with the company and is better known as Charlie.

Kaman, who declined an offer to join the Tommy Dorsey band to become an engineer, created the music division in the late 1960s, after losing a Defense Department contract to make rotors for Kaman's own H-43 Husky helicopter, according to Jones.

Kaman used Sitka spruce he had stockpiled for use in the H-43 rotors to make a new type of acoustic guitar. Highly resonant, the wood helped minimize vibration in helicopters; in guitars, Kaman found, it could maximize it.

"You don't want a helicopter shake, to vibrate," Jones said. "But you want your guitar to shake, because that's what music is, vibrations."

Over the years, Glen Campbell, Melissa Etheridge, Neil Diamond, Billy Joel and Cheap Trick have all played guitars made by Kaman. John Lennon used an Ovation during his last acoustic recording session, according to Frank Untermyer, the Kaman Music executive who oversees the New Hartford guitar factory; Untermyer says he has a photograph of Lennon with the Ovation to prove it.

Charlie Kaman, a spunky inventor and a workaholic, developed the Ovation along with his engineers in the mid-1960s and introduced it in 1966. It was the first round-backed, acoustic-electric hybrid guitar.

Between 1985 and 1998, Kaman's son, C. William Kaman, ran the music division, tripling its sales and merging together a half-dozen scattered companies into one business. In the late '90s, before he retired, Charlie Kaman assigned aerospace engineers to help in the design of a revolutionary graphite Ovation guitar, which came out a few years later.

Kaman founded the company that bears his name in 1945 as a helicopter and aviation parts manufacturer and it remains a major supplier to Sikorsky Aircraft Corp. of Stratford, among others. With the sale of the musical instrument division, Kaman's primary non-aerospace business will be industrial supplies distribution, which sells nearly 3 million different items, mainly bearings, but also gears, sprockets, chains and other parts for motors.

For better or worse, Wall Street stock analysts have found helicopters and machine parts easier to deal with than guitars and drums. Kaman shares rose 1 percent Monday, to a close of $37.14, after rising more than 5.5 percent on Friday. "

I wish Jol, Frank, Mike, Dave and all the others the best of luck.

Wow, cool story. That says a lot right there about the "big picture" and how business really works these days too. Young Turk chooses engineering over Tommy Dorsey, makes some splashes in a couple industries (usually the sign of some kind of creative genius when you think across product applications with new tech/materials) and some $$ being a innovator much like Leo Fender and others. I appreciated the use of that "surplus" Sitka for the Ovation tops and using aerospace geeks to help with design. We do have some cool alternative acoustics as a result I would say.

It does sound, however, like there was some pressure from Kaman investors who, like many concerned onlookers, see only the devil in musical instruments and such, so the offloading of Kaman's musical wing

might have originated from within and Fender certainly seems to be a perfect "Corporate" fit, with the musical lines other than Hamer having value as well. Drums by Gretch would fit, Ovation and Tak are a slam-dunk (Fender can have a legit high-end acoustic selection),and they have all the doo-dads and accessory goods and most importantly - the venues through which to move all this stuff. I think the distribution angle might be as big as the product lines here, and if that is the angle Fender will use to push all this new stuff(including their own current), be ready to see the retail landscape change yet again. Pray for your local Mom and Pop. Not to speculate on anyone's future or current Biz but I wonder if I can get my 2008 Hamer at Willie's (a current Fender dealer who somehow manages to keep all the bottom-feeder stuff off the shelf), or if our own BCR Greg will have to take on the Fender (Jackson/Charvel/Gretch/Guild/) line in order to keep selling Hamers? FMIC is become a VERY large gorilla my friends, and now they are messing in our yard, too. It irks me (as an unstable anti-corporate lefty whack-job) to think that these kinds of "money" choices have the potential for MANY creative and hard-working people to be adversely affected, depending on the whims of "corporate" or whoever Jol and those at Hamer(Ovation/Jackson/Charvel.....) answer to. If they had issues under their current umbrella and needed to move or be forced to make compromises, I guess this is fantastic news. I hope they can still pusue THEIR creative vision for what the Hamer brand will be be in this new incarnation and chapter of the brand, avoiding unwanted interference or mandated changes that may influence quality, availability, service, or model choice.

If Jol and Co. wanted to expand wildly (if that is any part of the plan - to increase production substantially) and needed more $$$ to do so, this is probably great news. If they got news from upstairs that they have been tossed to the Big Machine and "best of luck" and there is lots of uncertainty and hand-wringing going on, that really sucks. The truth is most likely somewhere in the middle and we can only sit back and watch our favorite small manufacturing entity get thrust into the fast lane and trust that those at the wheel know what they are doing. Of course we will be hearing "it's all good" at this point but certainly stay tuned

Best of luck, indeed, Kaman.

[shredmeister]

Hey look at the positive side - (although HIGHLY UNLIKELY) -

The new EVH SIGNATURE HAMER !!!!

Nobody will be bitchin' then.

[kizanski]

  shredmeister said:

Hey look at the positive side - (although HIGHLY UNLIKELY) -

The new EVH SIGNATURE HAMER !!!!

Nobody will be bitchin' then.

Except for EVH. He's never welcome in one place too long and always blames THEM for outstaying his welcome.

[seeker]

  MCChris said:

  seeker said:

And if you want to quote me, DON'T EDIT:

"It depends on whether FMIC will use that cache or just go for the bottom line. If they're smart, judiciously using the positive image and goodwill will naturally help the second."

Relax.

Sticking someone in the eye by calling them naive, and then misquoting to make the point wouldn't sit well with most folks, myself included.

Thinking happy thoughts now.

[Steve Haynie]

Just a thought...

A 50% interest in Guitar Center was sold to investors in 1998 for $126,000,000.00. That was a network of 18 retail stores.

Kaman's music division is sold in 2007/2008 for $117,000,000.00.

[MCChris]

  seeker said:

Sticking someone in the eye by calling them naive, and then misquoting to make the point wouldn't sit well with most folks, myself included.

Thinking happy thoughts now.

I didn't misquote you, nor did I change the meaning of your post. And yes, you are naive if you think any of the things you mentioned have any bearing on what a corporate bean counter sees on a <Ace Frehley voice>P&L statement</Ace Frehley voice>.

[slider313]

Ray,Kmart sucks. Kmart sucks. Kmart sucks. Kmart sucks.Kmart sucks. Kmart sucks.

Sorry.

[burningyen]

There have definitely been improvements in Fender quality recently. I get the sense that they're taking a little more pride in their products and making an effort to improve their brand. It's no coincidence that the only electric guitars I own that aren't Hamer are Fenders. On the other hand, there's still no question that Hamer quality still blows away Fender quality in terms of their everyday output. For me it's wait-and-see time.

Re the "Squier Standard" comment: that would actually be a good thing in terms of boosting the Hamer brand image. It probably won't help sell import Standards, though.

[seeker]

  MCChris said:

  seeker said:

Sticking someone in the eye by calling them naive, and then misquoting to make the point wouldn't sit well with most folks, myself included.

Thinking happy thoughts now.

I didn't misquote you, nor did I change the meaning of your post. And yes, you are naive if you think any of the things you mentioned have any bearing on what a corporate bean counter sees on a <Ace Frehley voice>P&L statement</Ace Frehley voice>.

Yes you did. I AGREE with you that that bean counters don't give a whit about such things. Bean Counter = Bottom Line.

"It depends on whether FMIC will use that cache or just go for the bottom line."

Leaving that part out completely changes the meaning. If the bottom line/bean counters win, then they won't use that cache, which means all that Jol/GP stuff doesn't matter. Period. Agree.

If you're trying to say that bean counters always win and none of this matters, then say so.

[MCChris]

  seeker said:

bean counters always win and none of this matters

There. I said so. By "misquoting" you.

[Pieman]

When I think of my Strat, I think of it as a utilitarian, ergonomic music maker even in my hands. (Hey, its my time, my ears and my life.) It functions well, stays in tune, feels good, sounds better with Fralins. The fit and finish is nice---for a painted slab of wood. Okay, the skunk stripe was never smoothed down even with the rest of the neck.

My P90 Special is a "coated" slab, too, but it is a better instrument. And my Artist Custom is pure art, even when compared to my very pricey but flawed Stickley dinning room set. No comparison. Everybody at Hamer today (or maybe last week) is clicking. The designs and execution are fabulous. I was bummed when I heard about the sale. How long will the wood supply last? Are they still buying billets? Are they going to have time to keep the saws, the scrapers and the chisels sharp and the spray guns clean? I sure hope so. You just don't pick up and leave and start up that easily. Fender owns the designs now. Are there any Hamer patents? Fender owns those now.

Maybe Fender will offer the Hamer business for sale to the Hamer employees. There's a lot of "private equity" money out there despite the credit crunch. Some of those money guys are the Hamer lovers "who excel in other fields" and maybe they could finance the acquisition. It would be a damn shame to see the quality go down.

[Guest pirateflynn]

As quiet as it appears to be right now you can bet that there is a plan of action already in place for Hamer USA. Before spending 117 million dollars a detailed business plan has been authored with major contribution by the bean counters.

It might be optimistic to consider "Hamer" as a viable brand name ready to play with the big boys. Afterall, it hasn't worked at all in the past. But, I wouldn't rule out some sort of push in that direction. Marketing is a HUGE part of creating an image and Fender is very successful at that type of work. They are more competent at marketing an image than innovating guitars designs. Jol and company are innovative at guitar design, however, only have moderate success in translating that to convidence in a brand. I can tell you that here in SoCal sales are still soft for Hamer. "The guitars great, but it's hard to get anybody excited about them. They look at them and then walk out the door.", was what I heard recently at a retailer (paraphrased).

So maybe Fender can do what hasn't been done before for Hamer, create a historic image that the buying public will bond with. Is Fender willing to spend the money to promote Hamer Guitars? Has Jol spent the last several years restoring the reputation of Hamer Guitars to attract a buyer? I wouldn't be surprised if the answer to both of those questions is yes.

[kizanski]

  Pieman said:

Maybe Fender will offer the Hamer business for sale to the Hamer employees. There's a lot of "private equity" money out there despite the credit crunch. Some of those money guys are the Hamer lovers "who excel in other fields" and maybe they could finance the acquisition.

It would be good to see the employees buy the company...if it made money.

Many of you have forgotten that Hamer USA is only kept afloat by the import line and that it is in the red every year.

I'm not saying that this IS what will happen, but don't be surprised if the Fender bean counters look at Hamer USA as a loser and simply close it down. As that article pointed out, Kaman liked the idea of having the innovative division in with the high tech aerospace division, but Fender might not share that opinion.

They didn't get to be as big as they are by holding on to dead weight.

Hamer makes great guitars, and that's a point no one would argue, but as far as being a money-maker...

[Lew]

  kizanski said:

  Pieman said:

Maybe Fender will offer the Hamer business for sale to the Hamer employees. There's a lot of "private equity" money out there despite the credit crunch. Some of those money guys are the Hamer lovers "who excel in other fields" and maybe they could finance the acquisition.

It would be good to see the employees buy the company...if it made money.

Many of you have forgotten that Hamer USA is only kept afloat by the import line and that it is in the red every year.

I'm not saying that this IS what will happen, but don't be surprised if the Fender bean counters look at Hamer USA as a loser and simply close it down. As that article pointed out, Kaman liked the idea of having the innovative division in with the high tech aerospace division, but Fender might not share that opinion.

They didn't get to be as big as they are by holding on to dead weight.

Hamer makes great guitars, and that's a point no one would argue, but as far as being a money-maker...

I must be a real cynical bastard to hope fender do close Hamer down rather than fuck it up... dont get me wrong I would rather they made shit guitars and the people at Hamer and there families were financially stable rather than unemployed but...

Danzig guitars sounds like a great new guitar brand to be honest hah ;P

[DavidE]

"It might be optimistic to consider "Hamer" as a viable brand name ready to play with the big boys. Afterall, it hasn't worked at all in the past."

While not on the level of Fender, Gibson, PRS, Martin, Taylor and others, it appears that it HAS worked well enough to create enough demand to exceed current production. Hasn't it?

[Matt Mattson]

  Quote

you can bet that there is a plan of action already in place for Hamer USA. Before spending 117 million dollars a detailed business plan has been authored with major contribution by the bean counters.

Absolutely. When Eastern Airlines closed, the head honcho (Marty Shugrue) said: "I simply woke up and said it was time to pull the plug." Right. Everyone walking in to work was met with closed gates, everyone on the inside of the gates had new ID badges, and tags had appeared on anything and everything in the weeks previously (auction tags).

Nothing on the scale of Fender buying Kaman just happens.