Then there is the the other side of government, the less savory side. You have no doubt heard about the shake down of Boeing in North Carolina. But have you read about the Gibson Guitar fiasco?
online.wsj.com/article/SB10001424052970203554104576655273915372748.html?mod=WSJ_hpp_RIGHTTopCarousel_1#printModeThe Government and the Guitar Man
The guitar maker for the stars talks about making instruments, why audio equipment isn't dead, and watching federal agents storm his office.
By NANCY DEWOLF SMITH
On Aug. 24, federal agents descended on three factories and the Nashville corporate headquarters of the Gibson Guitar Corp. Accompanied by armored SWAT teams with automatic weapons, agents from the Fish and Wildlife Service swarmed the factories, threatening bewildered luthiers, or guitar craftsman, and other frightened employees. A smaller horde invaded the office of CEO Henry Juszkiewicz, pawing through it all day while an armed man stood in the door to block his way.
"I was pretty upset," Mr. Juszkiewicz says now, sitting outside that same office. "But you can only do so much when there's a gun in your face and it's the federal government." When the chaos subsided, the feds (with a warrant issued under a conservation law called the Lacey Act) had stripped Gibson of almost all of its imported Indian rosewood and some other materials crucial to guitar making.
The incident attracted national attention and outrage. Like Boeing—whose plans to locate new production in South Carolina are opposed by the National Labor Relations Board—here was an iconic American brand under seemingly senseless federal fire.
Gibson vigorously asserts that it has broken no laws. Last month Rep. Jim Cooper (D., Tenn.) and two co-sponsors introduced legislation to modify the Lacey Act with the so-called Relief Act—which could indemnify many guitar makers and performers who now fear being arrested because their instruments were made with imported wood or exotic materials. But the new bill won't apply to anyone who's already wriggling on the government's hook for alleged Lacey violations. So Gibson, a big fish for Justice Department prosecutors and environmental activists looking to make their bones, is on its own.
As serious as the federal threat may be to one of America's oldest and most illustrious guitar companies, it isn't easy to concentrate on that subject while talking to Mr. Juszkiewicz, who bought Gibson for a reported $5 million in 1986 with two former Harvard Business School classmates. This is partly because he's full of ideas for expanding the company and is joyfully in thrall to its cool and controversial new electric guitar, the Firebird X (or 10).
It's also difficult to focus on legal matters because 117-year-old Gibson is all about making music, and so the walk to Mr. Juszkiewicz's office, in a modest industrial-park building near the Nashville airport, is a trail of musical history. On the wall of an internal staircase, a photograph of The Who's guitar wizard (and smasher) Pete Townshend induces an anticipatory shiver.
Then a metal door swings open to reveal the corporate inner sanctum, and a kind of rock 'n' roll fever sets in. Ahead is an entire glass wall of iconic Gibson instruments, beckoning to be seen and touched and coveted. First, though, there's a display of pictures featuring famous Gibson owners—from blues man B.B. King to ZZ Top rocker Billy Gibbons, from Neil Diamond to Sting. A photo of Prince Charles, posed with a Gibson, briefly kills the buzz. But another Englishman gets it going again: Jimmy Page, standing alone on a spotlit stage with the double-necked guitar that gave us the intro to "Stairway to Heaven."
There is a photo of Slash, the Guns N' Roses lead guitarist, with Mr. Juszkiewicz playing beside him. More poignant is the shot of Gibson's CEO with the late Les Paul, who gave his name in 1952 to the solid-body electric guitar that is the company's best-seller even today. In another pic taken at a Rock the Vote event in Washington a few years back, Mr. Juszkiewicz looks on as a beaming then-Sen. Barack Obama clutches a big Gibson.
After the August raids, Mr. Juszkiewicz thought of contacting the president. Gibson, which employs about 1,200 people in the U.S. alone, is in an impossible situation, after all. To this day, no charges have been filed against it over last summer's raids or a 2009 raid involving ebony from Madagascar.
At issue is not endangered wood, but technical interpretations of laws in foreign countries. Gibson says it got permits and followed foreign laws on exports of finished products, such as the prepared slats of Indian rosewood used on guitar fingerboards. The U.S. government claims the products weren't finished enough. And now Gibson has millions either tied up in seized products or committed to legal fees. "The travesty is first that we have not been charged, so there is no due process here," Mr. Juszkiewicz says.
The company and its CEO have long been active in conservation efforts—with the Rainforest Alliance, the Music Wood Coalition and other groups. Mr. Juszkiewicz still supports the Lacey Act, and keeps promoting sustainable resource practices in the industry. The fact that Gibson was singled out when other guitar makers use the same woods has fed speculation that the company was targeted—because it is not unionized, perhaps, or didn't donate enough to the Democratic Party.
"I don't think it's a political issue," Mr. Juszkiewicz says, shaking his head. "But I will say this: I wrote a letter to President Obama. I spelled out what happened. I said: You know, we got raided and here are the facts, I think it's unfair. What do you think we should do? No response."
Maybe the president is not a music lover? "He knows who we are," Mr. Juszkiewicz says. "His daughters have a couple of Gibsons. [Mrs. Obama] gave a guitar to [the French president's singer-songwriter wife] Mrs. Sarkozy. And we called up to make sure that he saw the letter, and he did. No response."
Legal travails aside, he says the company—which now includes Baldwin pianos, Fingerland drums, Wurlitzer jukeboxes and vending electronics and more—is thriving. "We have really good financial results and we've been accruing market share, so from a business perspective we look great," Mr. Juszkiewicz says.
As for the future, it's about expanding and improving the brand. "Consumer electronics is a big target of ours because it's a much bigger market than the M. I. [musical instrument] industry. . . . Right now we have a brand that people recognize and value. But only 5% of those people can buy something with the Gibson brand. . . In order to buy a guitar you actually have to play guitar. . . . You may say, 'Wow that's pretty cool to do,' but . . . it's like learning Greek. It's not intuitive to sit down and start playing rock and roll. So guitar players reflect one in 20 consumers. But high-fi speakers [can be used by] 20 out of 20, so it's a much larger market."
Who would have guessed that listening to good music on great audio equipment isn't obsolete? "The iPod is a brilliant device and it's not going away, but it is an isolationist tool. Music ultimately is social and it's lost a lot of that," the CEO says. "But if you have ever listened to a great set of speakers and a great set-up, it is an awesome experience. It's not for everyone . . . but there are a lot of people who would really love that experience who aren't getting it. In fact, the average consumer is buying nine speakers for their big-screen TV that they paid thousands of dollars for, and they paid like 300 bucks for these cheap plastic speakers going on the walls."
As for branding Gibson, Mr. Juszkiewicz says he takes inspiration from a company like Nike. "If you go to a Niketown [superstore], they are absolutely beautiful, beautiful. They treat athletic shoes like jewelry."
Raised in Rochester, N.Y., Mr. Juszkiewicz earned an engineering degree at the General Motors Institute, worked for the company's Delco division, and then got a GM scholarship to Harvard Business School, graduating in 1979. He and two friends bought a small tech company, made that profitable in a month, then in 1986 bought a failing Gibson and made that profitable in 30 days too. His secret: "hard work" before the purchase, including 10 months he spent in the factory.
What is Mr. Juszkiewicz's biggest risk these days? "Probably this DoJ incident" he says. "It's another case where our attorneys are saying: 'Look, you better shut up. Don't talk to the press, lay low, let this process work its way and things will go a lot smoother if you just be quiet.'"
But "factually, that hasn't been the case," he continues. "If you study other Lacey [Act] cases, you know there is not a lot of good history of Lacey prosecutions. And you know people went to jail." Perhaps he thinks of the 2000 felony case in which four people were sentenced to up to eight years in federal prison for importing lobster tails without the cardboard container specified in a Honduran law—a law that Honduran officials testified was defunct. "They played the game and they got nailed. There was no compassion. There was total aggressive kill."
But back to happier topics: the ultra high-tech Firebird X guitar, Mr. Juszkiewicz's other recent preoccupation. Self-tuning and equipped with Bluetooth, it can deliver some 2,000 combinations of analog sound and effects—from mellow jazz to acoustic electric to distorted rock and everything between and beyond. It's a beauty and, at about $5,500, roughly the melt-down value of a nice 18k gold necklace. Naturally, many traditionalists hate the Firebird X. But Mr. Juszkiewicz says even loathing is a welcome reflection of people's passionate interest in the Gibson brand.
I can't pin down the normally talkative CEO, a guitarist himself, on one burning question, about his favorite player or playing style. "It's like great wine," he scoffs politely. "There is no the great wine, there's a lot of great wines. There's all the pairings: Are you having fish or are you having meat? So I actually like all kinds of music—blues, jazz, classical. And how can I compare a Segovia to B.B. King?"
Though it helps if they played a Gibson. Talking about the guitar business over the last century, Mr. Juszkiewicz points out an uptick related to tough times: "We did really well in the Great Depression." Because everybody wanted to be like Woody Guthrie? "No, I would guess not," comes the reply. "He did play our guitar, though."
Ms. Smith is a member of the Journal's editorial board.
