If they were to produce a piano of similar quality in Gallatin, marketing could handle the rest.

And I see no reason why, after a "break-in period", pianos produced in Gallatin could not equal those madein NY. In fact, with a new factory things might improve.

If their performance standard was maintained, through good marketing it would not be hard to maintain sales. And Steinway is an excellect company when it comes to marketing.

It would take a lot of capital, and it seems that they are raising a lot through the sale of Steinway Hall, the reduction in debt made possible by Mr. Kim, as well as other factors.

The question is not whether the pianos would be of similar quality. The question is whether they would still be New York Steinways. Tennessee Steinway just doesn't have the same ring to it, does it?

tho it's probably proprietary info, i'd be curious to know sales by state. my guess is that there's a non-trivial cache associated with S&S in NY, and that sales there (& neighboring new england states) represent the greater percentage of sales in the US. if true, they would have to take possible lost sales into consideration along with presumed cost savings by making a move of this kind.

as RPA suggests, TN S&S just doesn't have the same ring to it.

I think you people have all lost your collective minds.

Lots of people buy cars and other goods manufactured in Tennessee and other states, without bemoaning the fact that they aren't made in NYC.

"New York Steinway" is a term largely employed to identify Steinways not made in Hamburg. "US Steinway" would work just as well.

Greetings,
American Steinways, German Steinways; lots of people like to say "Hamburg" to appear knowledgable.
These pianos have, in the past, been distinctly different instruments. It seems that there is some homogenization going on, these days, and it may start with the hammers.


Neither is perfect, there are no perfect pianos. However, I have seen a marked difference in the pianos coming out of the two different Steinway factories.
I don't see Steinway moving out of New York, but if so, Tennessee wouldn't likely be the destination.

"I don't see Steinway moving out of New York, but if so, Tennessee wouldn't likely be the destination."




Why do you say that, Ed?

I think that is what I heard, I could have gotten it wrong, I was listening to the radio in my home and my ears perked up when I heard them talking about steinway.
Kind Regards,
Brian
Just a thought, if they did move maybe they would be a little more affordable?

The fact of the matter is that NY Steinway has become uncompetitive in the most basic of the definition. You can buy a brand new a Bösendorfer 185CS for ~$60K, or a NY Steinway Model A for ~$75K. I recently tried a very amazing NY Model A that is beautiful shinny black with satin black inside rim, and neutral shinny wood color belly, almost looking exactly like a Hamburg except with square shoulders, and the action is excellent with excellent dynamics, though the treble lacks a little something, not quite as good as my Yamaha C3X, and sustain is a little less. I would never imagine I would ever say that about a Steinway, but while NY Steinway is not completely standing still with quality, neither is Yamaha. In any case, this almost Hamburg NY Steinway A had a price of $85K and while Steinway was willing to pay my sales tax, I really cannot understand why I wouldn't just walk across the street and buy the Bosie 185CS for less, which I believe is at least equal (even though my wife would not approve as she's never heard of it), or the Yammie C3X for a lot less. Is it $25K better than the Bosie 185CS? Is it $55K better than my Yamaha C3X?

I have all the respect for Steinway and what they have accomplished, but they did not evolve sufficiently in an ever changing world. They now make a product that only the 1% could afford, and you don't have to be an economist to know that is not sustainable.

their 2011 annual report is here; interesting info:

http://www.steinwaymusical.com/dlreport.php

But hasn't Steinway always been one of the most expensive pianos and only affordable by a small percent of the population?

Yes, but before, you only need to be part of the upper middle-class, say the top 10% to afford a Steinway. That is to say previously, if you made $150,000 annually, you could easily afford a Steinway. Not anymore.

A Steinway today represents 2-3 years of college education. Perhaps it always did. However, today's middle class is struggling to afford the cost of their children's college tuitions. The University of California Berkeley cost over $33,000 a year for a Califonia resident, and this is a public school. With so much financial commitments in play, would the middle class family buy their children a Steinway or 2 more years of college. The choice is simple.

As such, it isn't that Steinway has become too expensive, but the middle class has become too poor, and Steinway has not made sufficient changes in its business to accomodate the middle class that Yamaha and Kawai has done.

Did you make all this up on your own?

If so you have a vivid imagination.

But what do you base this(your statement about previously one only had to be upper middle class) on? Wouldn't it be correct to say that previously(whatever year you're thinking of) $150,000 would have been considered a lot more money than it is today?

To compare the price of a Steinway to the cost of college education and know if it is any greater today than in the past you would have to have accurate figures for these two costs going back for some extended period.

No, not entirely. My son is a senior at UC Berkeley, and I am paying his tuition. I wish it was a vivid imagination, but as I recall when I applied to Berlekey myself, an engineer's salary was about $40K a year, and Berkeley cost about $6K a year. Now, an engineer's salary is about $80K to $100K a year an Berkeley cost $33K. So if income kept up with inflation, an engineer today should be paid something like $210,000 a year with a senior engineer making $300,000, instead. I do not believe that it is any secret that income in real terms has been strinking since 1980 far and away more than the inflation index published by the government would account for. You just have to look at prices of everything, add them up and know it is not 2-3% per year. Economic calculus is not required.

$150,000 I stated is today's money. The Wall Street Journal has a web based income calculator that shows what income level is what percent of the nation. I believe $150,000 is in the top 10% or close.

Anyway, this is a discussion. PW likes to take something like this discussion and go ballistic like everyone is in a court room. I don't see why that is necessary. The point is simple, if you make a piano that cost $80 to $100 thousand dollars, then you would think someone making 3 to 4 times that annually could afford it comfortably. And even that would be a big purchase. How often do you spend a third of your annual income on one item without thinking it through carefully?

Steinway states that the average income of their purchasers is around $300,000.

Interesting, but how would they know that?

Marketing research.

Smart companies do it.

It is called "know thy customer".

Steinway may be many things but they are certainly smart.

I review my numbers with the WSJ income calculator and it seem I'm a little off, but not much. To be top 10% you need income of $160,000. $300,000 puts you at top 3%, and you need $550,000 to make it to the 1% club. So I was incorrect in saying that Steinway makes a product for the 1%. In fact, they make a product for the top 3% of the US.

It is possible that the top 10% in the US were never able to afford a Steinway any time in history. I do not know. I am guessing that at some point in the recent past, they were able to.

The issue seems to be that they're sitting on extremely high value real estate, and they could capture that value by moving manufacturing to lower value land. So, perhaps elsewhere in NY State where other manufacturers have downsized, like maybe Rochester.

Or Poughkeepsie.

Another thing about the Tennessee tax structure for business is they now have a raw materials business tax. So all that wood laying around is taxed each year in March. I have a small shop and each year the assessors come in and measure my boards, new and reclaimed, It is a good thing that Gallatin is in Sumner county though because if it was like another 3 miles south it would be Wilson County and that is where the stakes really change.

Steinway currently has an excellent workforce to draw from in NY that relies on efficient public transportation. There is none really outside of Nashville. There is STAR which has one rail car and that is it. There is no way that they could get good workers here unless they are moving their good experienced workers too.

Yes and as everyone knows NY City and State taxes are among the lowest anywhere.

I don't know anything about market research but I don't see how would they could find out a customer's income. How do they do this?

Maybe that they check out who of their employees ..

..range 0-25.000 // 25.000-50.000 // 50.000 - 80.000 // 80.000-120.000 // 120.000-200.000 etc. ..

..has bought a new Steinway piano?

I know Steinway employees who own a Steinway grand.

Typically they just ask. The research company mails out questionaires, or even e-mails them. They pretty much just trust folks to answer honestly.

However, Samick bought 17 acres in Gallatin, far more than is needed for the current operations.

I don't know for certain how Steinway does it - but one way it could be done would be to ask customers to voluntarily check a box with their approx. family income on a warranty registration card, or alternatively when visiting the store ask prospective customers to fill out a card for registration for in-store programs, concerts, email or regular mail newsletters, etc

All voluntarily of course.

I would be surprised if the major car manufacturers don't also have this data.

Or one could commission a market research firm to study actual purchasers on a confidential basis to find out reasons for purchasing your brand, what they liked, what they didn't like, what alternate brands they had considered, all that kind of stuff.

This is essential when marketing any product but most important when marketing a product that obviously targets a narrow demographic group by income etc

As I have pointed out on other threads - these manufacturers, including Steinway's piano division - are small entities by comparison with many other industries (e.g. autos). They have to market as wisely as possible.

Nobody - not even Steinway - can afford to waste $

I think many would say it's none of your business, but perhaps some like to boast if their incomes are high. But perhaps this way works. I regularly get free donuts at Dunkin by filling out an online questionairre where one of the questions is about income.