Fender lets go 300 employees

HeHasTheJazzHands

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She does not, but she did end up somewhere else in the US, I'm just not at liberty to say where until she formally announces it
I know Yamaha lost their main guy (funny enough to Fender) so if she ended up there it'd make sense.
 

dmlinger

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Eh, I don't know. Companies do layoffs all the time after reporting "record quarterly profits." This is about short-term profit maximization. Chances are they'll end up rehiring a bunch of new staff at lower wages or a bunch of contractors.
Manufacturing companies, which is exactly what Fender is, don’t cut staff that manufacture for short term gains. It’s a long play based on lower demand projections.

I guess it could also be a more strategic restructuring since higher level members were laid off. Either way, it’s definitely not a short term profit grab because it would be too disruptive and not be efficient if they had plans to hire them back. If that were the case, they’d do furloughs so they don’t have to train new employees. Training new employees cost an absolute shit ton.
 

MaxOfMetal

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Manufacturing companies, which is exactly what Fender is, don’t cut staff that manufacture for short term gains. It’s a long play based on lower demand projections.

The fuck they don't. :lol:

I've been in manufacturing my whole life, and they most certainly will reduce headcount to cook the books, even if that means spending more in the future to retrain new staff.

That's how it goes now. Manufacturing is like construction now.

They see hard times on the horizon, so they cut now. They'll work the remaining stuff to the bone and then when the dust settles and the outlook gets more rosy, they'll hire again...at entry wage.
 

dmlinger

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The fuck they don't. :lol:

I've been in manufacturing my whole life, and they most certainly will reduce headcount to cook the books, even if that means spending more in the future to retrain new staff.

That's how it goes now. Manufacturing is like construction now.

They see hard times on the horizon, so they cut now. They'll work the remaining stuff to the bone and then when the dust settles and the outlook gets more rosy, they'll hire again...at entry wage.
I guess my experience is the opposite. Granted my industry doesn’t manufacture a commodity. We never lay off or furlough manufacturing staff if it means production slows. We only do it to match demand. The cost of delays (read damages, as in consequential or liquidated) and loss of future sales would far outweigh the short term savings.

It could be possible that it’s for short term gains, but my vote is on projected demand slowing down.
 

MaxOfMetal

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I guess my experience is the opposite. Granted my industry doesn’t manufacture a commodity. We never lay off or furlough manufacturing staff if it means production slows. We only do it to match demand. The cost of delays (read damages, as in consequential or liquidated) and loss of future sales would far outweigh the short term savings.

It could be possible that it’s for short term gains, but my vote is on projected demand slowing down.

It can be both.

Projected slowdown plus the willingness to take a hit on output to reduce headcount.
 

Mboogie7

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Without reading the article, I wouldn’t be surprised if it’s tied to the recession that’s going to happen (already started but will get worse). It’s unfortunate that it happened, but what more can one say 😕
 

MaxOfMetal

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I wonder if the plan is to eventually move regular USA production out of California.

Keep the various Custom Shops, and maybe a small amount of higher tier lines in Corona, but move the mid-range production to another, cheaper to operate and staff, facility.

That solves two problems they've had brewing for a while: space constraints within the Corona complex and rising cost of doing business in Cali.

Just thinking out loud. I know the whole "moving out of Cali" rumor has been around since about forever, maybe it'll actually come true.
 

Seabeast2000

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I wonder if the plan is to eventually move regular USA production out of California.

Keep the various Custom Shops, and maybe a small amount of higher tier lines in Corona, but move the mid-range production to another, cheaper to operate and staff, facility.

That solves two problems they've had brewing for a while: space constraints within the Corona complex and rising cost of doing business in Cali.

Just thinking out loud. I know the whole "moving out of Cali" rumor has been around since about forever, maybe it'll actually come true.
My first thought, armchair at best , was some sort of decoupling from CA.
 

Adieu

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Probably going to push into pricier imports and leave USA only for the Gibson Customs-level pricing

They couldn't have not noticed people paying $1500-ish money for Indonesia for other brands
 

Lemonbaby

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I'm sure. It's always related to the business. If guitars were flying off the shelf then they would keep the staff to support the demand. Definitely sucks and I hate it for the people impacted.

You never know as Fender is privately owned. I'm guessing their portfolio is trending towards mostly selling either China/Mexico cheapo guitars and Custom/Masterbuilt stuff. Both ends of the portfolio don't require a lot of staff in the US. As far as I read on several articles, Fender was growing around 30% in 2021 and is doing quite well.
 

ellengtrgrl

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There are projections/concerns that the guitar sales surge of the last couple of years was Covid driven (people stuck at home being laid off, or working remotely, with free time on their hands, looking to do/learn something new). With more people being back to work, less people have time to play guitar. Also, like the surge in 1960s guitar sales that occurred after everybody discovered the Beatles. a lot of these new players won't stick with playing guitar, giving it up, and flooding the market with used guitars - you're already starting to see this to an extent on Reverb, where some of the crazy prices we've seen over the past year and a half or so, are finally starting to moderate. Either way, it means that the demand for new guitars will go down, hence excess manufacturing capacity.

The big question is, is Fender doing like some of the companies did in 2020, when there were fears that Covid would cause a big drop in sales, causing an excess reduction in the workforce. Many departments wound up understaffed, and struggling to keep up with a demand for product, that was higher than the gloomy forecasts predicted.

One of the problems IMO, that is always in the background, is people higher up the corporate food chain are big on "lean" operations - there's nothing wrong with that, but they completely miss what "lean" means. In their minds it means slashing manufacturing resources (both equipment, and personnel) to the bone, and trying to get blood from a stone, and especially seems to be a prevalent mindset among "money men", who have absolutely no exposure to a manufacturing environment (their backgrounds are in business management and finance). Workforce reductions go hand-in-hand with this mindset. Sorry, but it may make these people feel "hip and cool" in a business sense to say "we run a lean business", but they couldn't be further from correct from what "lean" really means. It means to get rid of inefficient practices while maximizing the use of the resources you have (and yes, that means people who are dead wood, and manufacturing processes could be performed better in another manner). But ya know, "short term profits are us" has been a thing with companies in North America and Europe for a long time.

I feel for the Fender Corp. workers that were given the axe - I used to work for a Fortune 200 company in the early 2000s, who was notorious for dealing with things by letting people go. Less than a year after that company bought my workplace at the time, they'd slashed the workforce by 50% (from 700 people down to 350 people). I almost lost my job, and to keep a roof over my head, (due to a recession going on at the time) took a huge cut in pay, and wound up on the factory floor at that company (I was working in Quality, when things all went down), in a job I hated, on 2nd Shift. It took me a couple of years, but I was able to get another job, but still, it was no fun during that time period.
 

Kaura

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That's really surprising. I was just talking to someone who told me they've sold more guitars in the last few years than any other time in history for them. Maybe that's not true then.

That's the thing (or at least a theory). They probably hired more people to keep up with the demand and now that the demand has gone back to the level it was before the pandemic they're letting people go.
 

DiezelMonster

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So they can't push products out to stores in time. They cut back on QC to rush out what they can. Then raise prices 20-30%. Then now cut staff. Interesting.
That is another thought I had.
It's been difficult for us to get stock. Most USA Fenders were only available to us in very limited numbers, where before I could order as many as I thought I needed. Now instead of limited run Usa and Mexico guitars, I'm featuring limited run Squiers. Demand for USA guitars where I'm at hasn't gone down but supply sitll sucks but is getting better.

Maybe like others have said, they will get rid of the California USA line and maybe move it to a state with less restrictions.

I can't imagine having a business that has to paint anything with a durable finish getting by California environmental laws.

I'm going to call someone today on the inside and see what I can find out.
 

Estilo

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That is another thought I had.
It's been difficult for us to get stock. Most USA Fenders were only available to us in very limited numbers, where before I could order as many as I thought I needed. Now instead of limited run Usa and Mexico guitars, I'm featuring limited run Squiers. Demand for USA guitars where I'm at hasn't gone down but supply sitll sucks but is getting better.

Maybe like others have said, they will get rid of the California USA line and maybe move it to a state with less restrictions.

I can't imagine having a business that has to paint anything with a durable finish getting by California environmental laws.

I'm going to call someone today on the inside and see what I can find out.
Interesting, for someone not from the USA. Seems to me some state laws were created without much thought as to the demand destruction they might cause, hurriedly introduced as knee-jerk policies to counter the intertia in place in industrial complexes, or to curry favour with voters.

I'm all for progress but knee-jerk reactions scarcely produce anything positive.
 

MaxOfMetal

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I can't imagine having a business that has to paint anything with a durable finish getting by California environmental laws.

Nothing is really prohibited, there's just more accountability as far as labeling, storage, and discarding excess materials. Everything needs to be accounted for.

I don't think anyone sprays more nitro or poly in this country than FMIC does in California.
 

Mathemagician

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If they expand to another state and in the future can add more headcount to up USA production that would be great. But this definitely looks like a combo both of PE padding revenues for a future strategic exit and cutting headcount due to lower demand expectations. Just sucks for everyone laid off.
 


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