Small Business

Gibson Guitars Weeps Over Federal Logging Rules

Brian Shactman, CNBC Reporter
Gibson J-200 guitar

Fear of over-regulation is hitting ... the guitar industry?

The iconic Gibson guitar is manufactured in the United States, but it has not been easy to keep it here.

In August, Gibson factories in Nashville and Memphis were raided, and rosewood from India was confiscated. No charges have been filed, but it's the second time Gibson has been raided.

The action stems from enforcement of a revived Federal law concerning illegal logging, and Gibson was an early target.

"We are definitely paying the price to manufacture in the United States," CEO Henry Juskiewicz told CNBC.

Juszkiewicz would know. Besides regulatory problems, he says he has been "paying the price" by making significant investments in domestic manufacturing since he took over the company in 1986.

"In the last two years, we have hired somewhere on the order of 300 to 400 new American workers," he said.

Those workers have been forced to build guitars with different material, but Juskiewicz does not want that to become a permanent way of doing business. He's reportedly spending $10,000 a month to lobby Congress to enable Gibson to make guitars the way it wants to - and the way customers expect.

Gibson Guitars: American-Made Icon

"The real issue, in my mind, is the uncertainty and cost of government regulation, which has been increasingly intrusive."

On the surface, this appears to be a nuisance, but Juszkiewicz says it's a lot more threatening than that.

"They (Federal government) have the possibility of actually destroying our business," he said of any possible court proceedings. "(But) I am committed to this country. I'm going to continue to do my best and compete effectively here.

"I'm pretty hopeful that we're going to stay the course and continue to expand here in the States."

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