Questions nixed about Conn-Selmers future
Posted: 03/09/2012 at 1:15 am
By: Marilyn Odendahl
The musical instrument maker announced in July 2011 it had received an unsolicited proposal to acquire Conn-Selmer, which is headquartered in Elkhart, and the online music division. Then Steinway chairman Kyle Kirkland and then Steinway CEO Dana Messina along with Conn-Selmer president John Stoner and other members of management made the offer.
As a result, Steinway appointed a special committee to consider the proposal as well as other alternatives. Speaking Monday, Sweeney said the company would not be taking questions about the status of the offer but he did provide an update on the situation.
“While we have not reached a definitive agreement, the special committee, with the assistance of its advisors, is actively engaged in the negotiation process,” Sweeney said. “The committee also continues to evaluate other strategic alternatives with the goal of increasing shareholder value.”
Conn-Selmer is the largest U.S. manufacturer of band and orchestral instruments. It produces brass horns at the Vincent Bach facility in Elkhart and at a plant in Eastlake, Ohio. Woodwinds are made at a separate factory in Elkhart while percussion instruments are crafted at operations in North Carolina and Illinois.
Christian Wissmuller, an editor at Symphony Publishing Group which produces trade magazines and online publications for the music industry, believes Conn-Selmer would benefit if the proposal is accepted. He pointed out the buyers are people who know the instrument manufacturing business and intend to remain in the industry, rather than close the operation and sell the assets.
“I expect it will go through,” Wissmuller said of the purchase offer, “and serve to provide more stability to the overall operation.”
This week, Steinway reported that sales in the band division reached $130.7 million in 2011, a 2 percent increase from 2010. For both the band and piano divisions combined, the company posted year-end sales of $346.3 million, a 9 percent jump from the year prior.
“Looking at our band instrument business through February, shipments are meaningfully ahead of last year,” Sweeney said. “We expect increased sales in 2012 as order flow has been strong and we are catching up on our backlog.”
Sweeney’s positive outlook matches what Wissmuller witnessed at the 2012 NAMM Show, the annual instrument makers’ conference held annually in January. The attendance was up, the number of exhibitors was up and everyone’s moods seemed to have changed from being cautiously optimistic to “straight up optimistic.”
In addition, no one was worried about the prospect of Conn-Selmer getting new owners.
“It’s big news but not ominous news,” Wissmuller said.
IMPACT OF STRIKE
An increase in shipments of woodwind instruments overcame a decline in shipments of brass horn and boosted fourth quarter band revenues 4 percent to $28.0 million. Steinway attributed the drop in brass instruments to the strike at the Eastlake plant which halved production levels in the fourth quarter compared to 2010 and led to the company missing an estimated $1 million in sales during the quarter.
The three-month strike ended in October with the production crews, who are represented by the United Auto Workers, accepting a contract that expires in February 2016. During the labor dispute, Conn-Selmer hired roughly 100 replacement workers, about half of the manufacturing workforce in the plant, and they are still being trained.
The number of production workers in the plant is 218, down from the total in January 2011 of 245.
Steinway spokeswoman Julie Theriault noted the company is pleased with the recovery of the Eastlake operation.
“There’s a good amount of progress and we’re really happy with how the quality is turning out as well,” she said.