Steinway News

Posted by: Plowboy

Steinway News - 12/27/12 01:44 PM

This belongs in the Steinway Hall thread, but it got locked. Nevertheless, this might be of interest to the denizens of this forum.

Yesterday Steinway announced they were terminating the agreement with Directors Messina and Stoner to sell them Conn-Selmer. This seems like the board is actually looking out for the best interest of the stockholders. Perhaps particularly a stockholder named Kim?

Interestingly, they also modified the employment agreement with Ron Losby, the President of Steinway and Sons - Americas, so that if he were terminated, or quit, within 12 months of a "change in control" he'll get a golden parachute of two years salary and bonus.

A year or so ago in one of their SEC filings they mentioned a down turn is Boston sales and felt that Japan was becoming too expensive for manufacturing.

Combine this with nylawbiz's post about the situation of their NYC real estate and you have to wonder if there are changes in the air.
Posted by: Steve Cohen

Re: Steinway News - 12/27/12 02:44 PM

I think it is universally agreed that something is going on. However, those who know what is happening don't talk, and those who don't know, (and I am certainly in that group), are left to guess.

On today's announcement, keep in mind that Mr. Kim, who owns ~33% of Steinway, also owns Samick which is a major manufacturer of band instruments in addition to pianos.

Also keep in mind that the land that the NY factory sits on is rumored to be worth over 100 million dollars and that Samick has a lot of land surrounding their Galatin TN facility.

Steinways stock dropped about 5% after today's announcement.

I don't know if any of this is meaningful, just interesting...very interesting.
Posted by: Rich Galassini

Re: Steinway News - 12/27/12 03:02 PM

Steve
Originally Posted By: Steve Cohen

On today's announcement, keep in mind that Mr. Kim, who owns ~33% of Steinway, also owns Samick which is a major manufacturer of band instruments in addition.


This is true Steve. Also something to keep in mind - when an investor wants to painlessly gain a majority position in a company they can do this by having stock owned by holding companies, partnerships, etc.

In reality, Mr. Kim may "own" more than 33% of Steinway. To be clear, I have no direct knowledge to this effect, but it would make sense that this could be happening.

My 2 cents,
Posted by: Bob

Re: Steinway News - 12/27/12 08:35 PM

Couldn't Hamburg supply Steinway grands to the USA market if the NY factory closed and Galatin was simply a distribution and rebuilding facility?
Posted by: nylawbiz

Re: Steinway News - 12/27/12 09:08 PM

and to think, some called be crazy . . .
Posted by: Swarth

Re: Steinway News - 12/27/12 10:27 PM

The only Steinway news I got was that come in and buy today because prices are increasing in 2013.
Posted by: Steve Cohen

Re: Steinway News - 12/28/12 09:22 AM

Originally Posted By: Bob
Couldn't Hamburg supply Steinway grands to the USA market if the NY factory closed and Galatin was simply a distribution and rebuilding facility?


I don't believe that the Hamburg plant has that much manufacturing capacity.

Keep in mind that Steinway is sell their production reasonably well on a global basis.
Posted by: Rank Piano Amateur

Re: Steinway News - 12/28/12 09:34 AM

Steinway prices increase every year, at least as far as I know. I wonder whether their discounts do as well? I suppose that any percentage discount goes up, simply because it is a percentage.

In any event, there are a lot of wonderful pianos out there, and only some of them are Steinways!
Posted by: Plowboy

Re: Steinway News - 12/28/12 10:25 AM

Originally Posted By: Steve Cohen

I don't believe that the Hamburg plant has that much manufacturing capacity.

Keep in mind that Steinway is sell their production reasonably well on a global basis.


Their fastest rising market is China. If Samick took control, would that have a negative effect on their brand in China, do you think?
Posted by: PianoWorksATL

Re: Steinway News - 12/28/12 12:40 PM

At current demand, the Hamburg factory could handle grand production needs, even more if the Hamburg uprights were moved to another factory in Germany....

It's not an easy thing to instantly staff, but I can imagine it. I believe there are a few out of work craftsmen in Germany, which is a great asset. I'm sure the belief is there will be growth, but I'd be amazed if even the strongest projections called for numbers like the good old days.
Posted by: Bob

Re: Steinway News - 12/28/12 04:47 PM

And, I'm certain Hamburg would have no problems installing a New York hammer if called to do so.......of course, I'm simply guessing about a different option to production in the USA.
Posted by: backto_study_piano

Re: Steinway News - 12/28/12 05:09 PM

Originally Posted By: Bob
Driving slow?....Stay right. Driving fast?....Stay left. Can't drive?....Stay home! .......


HELP!!! I certainly hope you're not doing this in Australia or Britain (last point is relevant in most parts of the world though) ...
Posted by: Steve Cohen

Re: Steinway News - 12/28/12 05:13 PM

Originally Posted By: PianoWorksATL
At current demand, the Hamburg factory could handle grand production needs, even more if the Hamburg uprights were moved to another factory in Germany....

It's not an easy thing to instantly staff, but I can imagine it. I believe there are a few out of work craftsmen in Germany, which is a great asset. I'm sure the belief is there will be growth, but I'd be amazed if even the strongest projections called for numbers like the good old days.


I think that manufacturing solely in Hamburg would drive up prices in the U.S. (and elsewhere)to an unsustainable level.

A new factory, (in Galatin?) would solve several problems nSteinway faces. I see no reason that the quality of Steinway pianos could not be maintained in a new factory. Sure, competitors would howl, but Steinway's brand cache and marketing accumen are such that it might not suffer significantly from such a move.
Posted by: Bob

Re: Steinway News - 12/29/12 08:01 PM

Well.....it's not fair to Steinway to guess. I'm sure that whatever they do will be a long term win for the company.
Posted by: Supply

Re: Steinway News - 12/29/12 09:48 PM

Originally Posted By: Steve Cohen
...A new factory, (in Galatin?) would solve several problems nSteinway faces. I see no reason that the quality of Steinway pianos could not be maintained in a new factory. Sure, competitors would howl, but Steinway's brand cache and marketing accumen are such that it might not suffer significantly from such a move.
As I had mentioned in an earlier thread, Bösendorfer and Bechstein did it (moved the production to a cheaper location, maintaining only a "representative" exclusive store in the metropolitan centers they are associated with). Why should Steinway not do the same if it is good for the bottom line and the share price...? Unfortunately, short term profits and shareholder's satisfaction (ROIs) are what drives most of the free enterprise.
Posted by: Furtwangler

Re: Steinway News - 12/29/12 10:07 PM

Originally Posted By: Supply
Originally Posted By: Steve Cohen
...A new factory, (in Galatin?) would solve several problems nSteinway faces. I see no reason that the quality of Steinway pianos could not be maintained in a new factory. Sure, competitors would howl, but Steinway's brand cache and marketing accumen are such that it might not suffer significantly from such a move.
As I had mentioned in an earlier thread, Bösendorfer and Bechstein did it (moved the production to a cheaper location, maintaining only a "representative" exclusive store in the metropolitan centers they are associated with). Why should Steinway not do the same if it is good for the bottom line and the share price...? Unfortunately, short term profits and shareholder's satisfaction (ROIs) are what drives most of the free enterprise.


Including your enterprise also??

Sorry - but this your statement is so negative. If most of free enterprise is driven by selfish short-term interests then shall we assume that your business is the same? And mine? And Piano World for that matter?

Competition is what protects consumers from predatory business practices - not regulation nor virtually anything else.

Information and the free flow thereof is liberating to consumers - and that is Steinway's greatest challenge in my opinion - not the location of their manufacturing facility. As consumers become more aware of choices, they become better armed to make good decisions.

In that sense this forum serves a great purpose.

End of rant.

Now back to your regularly-scheduled Steinway speculating.
Posted by: j&j

Re: Steinway News - 12/29/12 10:57 PM

Unfortunately, I've never owned a Steinway piano and I really don't ever anticipate having the available funds to really shop for a large Steinway grand. If I did, at this time, there is no Steinway dealer in NM. The authorized Steinway dealer closed more than a year ago, so if pianists in this state want a new Steinway from an authorized dealer, they have to have it shipped in. I'm not sure why it matters to me, but I find it very sad and troubling. Whatever the management and staff at Steinway do to promote their brand and keep their legacy and history alive, I'll cheer them on.
Posted by: Norbert

Re: Steinway News - 12/29/12 11:03 PM

Steinway is affected by change as is everybody else in the industry right now.
Chances are in few years nobody will even recognize the map.

We have picked our winner, hoping everybody else has picked theirs.

Norbert
Posted by: James Scott

Re: Steinway News - 12/30/12 01:31 AM

As a business Steinway has to do what Steinway has to do to survive. The forseable future doesn't look too good for any type of prosperity, especially for an industry that is based more on desire than need.

But as someone who has to deal with training new employees, I can tell you that it's very difficult to find good help. Steinway has a huge number of employees, specialists, and craftsman in their NY facility, many of whom have been there for the better part of their whole lives. It would be very difficult for them to pick up and move to TN. Their place has been there for a long time and they're sort of stuck in their ways, if you know what I mean. A lot of their equipment is ancient, but still perfect for their needs, and so are their people. Undoubtedly they'd loose many of their best people in such a move. A Steinway is a Steinway not because of the name plate but because of the people building them.
Posted by: Mark VC

Re: Steinway News - 12/30/12 03:18 AM

Consider some of what we hear (for example, in adjacent threads to this one) about 'variable' quality in Steinways - folks, there's no such thing as variable quality - in a manufacturing sense, if a process is variable it's not under control. I know of a company in a different industry that had so many quality problems at a particular plant that they finally decided to close it. There were too many old timers who couldn't change, too much outmoded equipment, etc. Steinway may have decided to fix its quality problems by simply closing the plant, and is trying to do so while retaining its mystique.
Posted by: frog97

Re: Steinway News - 12/30/12 02:20 PM

I heard on KBAQ this morning, that Steinway would not be making any changes, but did consider selling the building and took some offers from other potential buyers. But, decided that the offers would not improve Steinway's position.
Also,Steinway looks for a good 2013.
I look forward to a better 2013 also as my team lost a bowl game last night, but it was still fun.
Happy new year to all at PW.
Posted by: pianoloverus

Re: Steinway News - 12/30/12 02:33 PM

Originally Posted By: Mark VC
Consider some of what we hear (for example, in adjacent threads to this one) about 'variable' quality in Steinways - folks, there's no such thing as variable quality - in a manufacturing sense, if a process is variable it's not under control. I know of a company in a different industry that had so many quality problems at a particular plant that they finally decided to close it. There were too many old timers who couldn't change, too much outmoded equipment, etc. Steinway may have decided to fix its quality problems by simply closing the plant, and is trying to do so while retaining its mystique.
But from several threads at PW and the from the Piano Buyer it seems that there has been great improvement in the consistency and quality of Steinways in recent years.
Posted by: LJC

Re: Steinway News - 12/31/12 10:57 PM

Steinway has indeed improved their product over the last several years. New tooling is everywhere in the factory. I don't think any brand can build without some variation, at least while pianos are still made of wood.
Posted by: nylawbiz

Re: Steinway News - 01/01/13 03:36 PM

Originally Posted By: LJC
Steinway has indeed improved their product over the last several years. New tooling is everywhere in the factory. I don't think any brand can build without some variation, at least while pianos are still made of wood.


Yes, a lot of computer aided manufacturing where appropriate. But also more portable. Easier to relocate machinery that skilled staff.
Posted by: Rank Piano Amateur

Re: Steinway News - 01/01/13 04:05 PM

By way of a response to Furtwangler: if a business is owned and run by a specific person or group of people, they can make whatever decisions they want about running it, because their only obligation is to themselves. Thus, they can make decisions based on principle and pursue goals in addition to (or even instead of) generating profits.

Once a company is publicly traded, however, that changes, because those in charge of running it now owe an obligation to shareholders, who are the real owners of the company. There are of course companies that are publicly traded that adhere to principles, but stock prices are kept high (and go higher) when the company generates profits, not when the company takes a principled stance that actually costs it money. It is my understanding that Steinway is publicly-traded; thus, its priorities may well not be the same as those in an ownership that is willing to put principle ahead of profits.

My two cents.
Posted by: Furtwangler

Re: Steinway News - 01/01/13 04:23 PM

Gee thanks.

I did not know that (to borrow a phrase from the late Johnny Carson).

So let me get this straight - there are actually some publicly owned companies that adhere to principles? Gosh. What a country.


My three cents.
Posted by: Steve Cohen

Re: Steinway News - 01/01/13 05:36 PM

Originally Posted By: frog97
I heard on KBAQ this morning, that Steinway would not be making any changes, but did consider selling the building and took some offers from other potential buyers. But, decided that the offers would not improve Steinway's position.
Also,Steinway looks for a good 2013.
I look forward to a better 2013 also as my team lost a bowl game last night, but it was still fun.
Happy new year to all at PW.



Now I'm confused. I thought that the Steinway Hall deal was finalized, with the exception of a balance to be paid to Steinway when they vacated the building.

I thought the issue that was deemed not in the best interests of stockholders revolved around selling the Selmer/Conn decision to two executives.
Posted by: Nash. Piano Rescue

Re: Steinway News - 01/01/13 10:49 PM

If Steinway wants to build a new factory in Gallatin then they better start saving money now for the new TN employee workers comp trust or just consider hiring temps. They will never have a sustainable qualified workforce in Gallatin. Not many people will work 10 years for a 30 cent raise to 8.30 an hour. 48 % of their revenue will go straight to the comp trust for the first 2 years.

They would be better off in a more business friendly state like Delaware or South Carolina, Maybe Georgia.
Posted by: Rank Piano Amateur

Re: Steinway News - 01/02/13 07:42 AM

Would a Steinway made in Tennessee still qualify as a New York Steinway?
Posted by: ando

Re: Steinway News - 01/02/13 07:52 AM

Originally Posted By: Rank Piano Amateur
Would a Steinway made in Tennessee still qualify as a New York Steinway?


That's an interesting observation. Steinway has tied its branding in with its location so leaving NY could be a terrible move in terms of continuity of a beloved line of products. It's quite possible they might have left NY long ago if it weren't for the "Steinway New York" factor. On the other hand, NY has been good to them and they might not have lasted this long without the heritage in NY. I don't know - just thinking out loud...
Posted by: Steve Cohen

Re: Steinway News - 01/02/13 09:04 AM

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.
Posted by: Rank Piano Amateur

Re: Steinway News - 01/02/13 09:27 AM

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?
Posted by: Entheo

Re: Steinway News - 01/02/13 10:12 AM

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.
Posted by: Furtwangler

Re: Steinway News - 01/02/13 10:20 AM

I think you people have all lost your collective minds.
Posted by: ClsscLib

Re: Steinway News - 01/02/13 11:49 AM

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.
Posted by: Ed Foote

Re: Steinway News - 01/02/13 02:57 PM

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.
Posted by: Furtwangler

Re: Steinway News - 01/02/13 03:12 PM

"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?
Posted by: frog97

Re: Steinway News - 01/02/13 03:15 PM

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?
Posted by: 4evrBeginR

Re: Steinway News - 01/02/13 05:00 PM

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.
Posted by: Entheo

Re: Steinway News - 01/02/13 05:01 PM

their 2011 annual report is here; interesting info:

http://www.steinwaymusical.com/dlreport.php
Posted by: pianoloverus

Re: Steinway News - 01/02/13 05:19 PM

Originally Posted By: 4evrBeginR
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.
But hasn't Steinway always been one of the most expensive pianos and only affordable by a small percent of the population?
Posted by: 4evrBeginR

Re: Steinway News - 01/02/13 05:37 PM

Originally Posted By: pianoloverus
Originally Posted By: 4evrBeginR
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.
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.
Posted by: Furtwangler

Re: Steinway News - 01/02/13 06:05 PM

Originally Posted By: 4evrBeginR
Originally Posted By: pianoloverus
Originally Posted By: 4evrBeginR
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.
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.



Posted by: pianoloverus

Re: Steinway News - 01/02/13 06:21 PM

Originally Posted By: 4evrBeginR
Originally Posted By: pianoloverus
Originally Posted By: 4evrBeginR
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.
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.

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.
Posted by: 4evrBeginR

Re: Steinway News - 01/02/13 06:25 PM

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.
Posted by: 4evrBeginR

Re: Steinway News - 01/02/13 06:31 PM

$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?

Posted by: Plowboy

Re: Steinway News - 01/02/13 06:56 PM

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

Re: Steinway News - 01/02/13 07:09 PM

Originally Posted By: Plowboy
Steinway states that the average income of their purchasers is around $300,000.
Interesting, but how would they know that?
Posted by: Furtwangler

Re: Steinway News - 01/02/13 07:12 PM

Marketing research.

Smart companies do it.

It is called "know thy customer".

Steinway may be many things but they are certainly smart.
Posted by: 4evrBeginR

Re: Steinway News - 01/02/13 07:15 PM

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.
Posted by: JohnSprung

Re: Steinway News - 01/02/13 07:22 PM

Originally Posted By: Rank Piano Amateur
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?


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.
Posted by: Furtwangler

Re: Steinway News - 01/02/13 07:49 PM

Or Poughkeepsie.
Posted by: Nash. Piano Rescue

Re: Steinway News - 01/02/13 08:04 PM

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.
Posted by: Furtwangler

Re: Steinway News - 01/02/13 08:20 PM

Yes and as everyone knows NY City and State taxes are among the lowest anywhere.
Posted by: pianoloverus

Re: Steinway News - 01/02/13 08:25 PM

Originally Posted By: Furtwangler
Marketing research.

Smart companies do it.

It is called "know thy customer".

Steinway may be many things but they are certainly smart.
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?
Posted by: BerndAB

Re: Steinway News - 01/02/13 08:48 PM

Originally Posted By: pianoloverus
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.
Posted by: JohnSprung

Re: Steinway News - 01/02/13 08:48 PM

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

Re: Steinway News - 01/02/13 08:55 PM

Originally Posted By: JohnSprung
Originally Posted By: Rank Piano Amateur
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?


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.


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

Re: Steinway News - 01/02/13 08:57 PM

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 $
Posted by: pianoloverus

Re: Steinway News - 01/02/13 09:27 PM

Originally Posted By: JohnSprung
Typically they just ask. The research company mails out questionaires, or even e-mails them. They pretty much just trust folks to answer honestly.
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.
Posted by: 4evrBeginR

Re: Steinway News - 01/02/13 09:58 PM

OK, I did another thought exercise. Don't ask me where I got the numbers. It's a hypothesis. If you don't like these numbers, do propose more valid ones. Besides, this is a thought exercise for discussion, not a Havard Business Review case study.

So, if Steinway customers average $300,000 annual income, which is top 3% according to the Wall Street Journal, then the TAM (total addressable market) for Steinway in the US is about 9,000,000 individuals. If we use 4 people per household, that's 2.25 million households that potentially could become a Steinway household. If 10% of these households buy Steinways, then they could sell up to 225,000 pianos. If each household buys one every 50 years, that's 4,500 pianos a year Steinway could sell.

So the fact that Steinway sold only 1,000 pianos last year in the US suggests only 2% of US households that could afford a Steinway are buying a Steinway. If your marketshare is only 2% of your TAM, how long can you keep up that product line?

Of course, if Boston and Essex is killing it, then Steinway would be able to subsidize its Steinway products with its Boston and Essex products. I don't have any idea how well Boston and Essex are doing.

I am a Steinway customer, and I wish them well. I just don't see how they could survive as an independent company. It would make business sense for Samick to take over the Boston line, close the NY factory, and move production to Hamburg, or vice versa. The 2% of that top 3% of the US income bracket are not price sensitive to the difference between NY and Hamburg products. This whole TN thing makes absolutely no sense. If you are marketing to the upscale you need to be associated with certain cities, NY, Paris, London, period.
Posted by: Plowboy

Re: Steinway News - 01/02/13 11:34 PM

If you dig through some of their annual reports, (maybe a year ago?) they mention that Boston was not doing so well. It's expensive to build in Japan was the thought.
Posted by: Larry C

Re: Steinway News - 01/03/13 08:34 AM

I worked for a few Fortune 100 firms and there are several non-invasive ways of determining a customer's net income / net worth ... and I agree w/ the line of thought that Steinways are just pricing themselves out of the market ... that said, I bought a Steinway K-52 upright for my home and a Mason and Hamlin upright for my 2nd house each in the last 3 years ... Both American made pianos and I had a preference to an American made piano ... the Mason was 60% the cost of the Steinway and if I had to do it again, I'd buy two Masons they are a better value in my opinion

In this day where digital pianos are the volume sellers, Steinway must be more competitive and (in my opinion) they should stay American based as it is a deciding factor for many
Posted by: Steve Cohen

Re: Steinway News - 01/03/13 09:20 AM

Originally Posted By: 4evrBeginR
If your marketshare is only 2% of your TAM, how long can you keep up that product line?


The same could be said of Rolls Royce, Ferrari, and the high-end German piano manufacture's who "survived" despite two world wars that devistated their entire market.

Does the fact that Steinway has "survived" for 150 years give you a hint that your suppositions are poor?

Perhaps you should argue that bumble bees can't fly.
Posted by: AndyJ

Re: Steinway News - 01/03/13 12:06 PM

Originally Posted By: 4evrBeginR
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.

Wow. My in-state tuition at Berkeley in 1973 was $637.50/year. My brother's tuition at an Ivy League university was $4,000/year.
Posted by: 4evrBeginR

Re: Steinway News - 01/03/13 02:43 PM

Originally Posted By: Steve Cohen
Originally Posted By: 4evrBeginR
If your marketshare is only 2% of your TAM, how long can you keep up that product line?


The same could be said of Rolls Royce, Ferrari, and the high-end German piano manufacture's who "survived" despite two world wars that devistated their entire market.

Does the fact that Steinway has "survived" for 150 years give you a hint that your suppositions are poor?

Perhaps you should argue that bumble bees can't fly.


Neither Rolls Royce nor Ferrari were independent for a very long time. Rolls Royce were at times owned by Ford and VW while Ferrari is owned by Fiat. This is the model for most high end niche brand today. High end niche brands need to seek shelter under the wing of a large mass market company. If that's surviving, then Steinway will probably survive. Steinway by Pearl River, haha. Just kidding.
Posted by: Del

Re: Steinway News - 01/03/13 03:01 PM

Originally Posted By: Nash. Piano Rescue
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.

Disclaimer: I have no idea whether Steinway’s management is considering any kind of move or not. Offhand I can think of several reasons to support arguments both for and against such a move. But this is not among them.

Skilled and dedicated workforces are not found; they are made. Competent people are hired, they are trained well and they are paid and treated with reasonable respect. I have no doubt that Steinway pianos—perhaps with some minor revisions to the assembly process—could be built just as competently in Tennessee as they are in NYC. Of course there would be problems with the transition; there always are with transitions of this sort, but they can be managed and minimized.

And, while I am a vocal advocate of efficient and useful public transportation systems, it is unlikely that the lack of such a system would be a critical factor were assembly to be relocated to an area like Gallatin, Tennessee. It’s been close to 25 years since I’ve driven through the area but I rather doubt the cost of owning and operating a private car is as high in Gallatin as it is in NYC. Nor is it likely that traffic congestion is quite the same problem.

ddf
Posted by: Ed Foote

Re: Steinway News - 01/03/13 04:26 PM

Originally Posted By: Del


And, while I am a vocal advocate of efficient and useful public transportation systems, it is unlikely that the lack of such a system would be a critical factor were assembly to be relocated to an area like Gallatin, Tennessee. It’s been close to 25 years since I’ve driven through the area but I rather doubt the cost of owning and operating a private car is as high in Gallatin as it is in NYC. Nor is it likely that traffic congestion is quite the same problem.
ddf
[/quote]

Hmm, we park them in the fields around here, if we want. Or in the yard. Heck, most people I know have had reason to drive in their yards at some time or another...
And traffic jams in Gallatin ?? Whoo hop, I heard that one guy last week had to sit through TWO green lights before he could get through the intersection, so who knows what the world is coming to?.
Regards,
Posted by: Del

Re: Steinway News - 01/03/13 04:32 PM

Originally Posted By: Ed Foote
Originally Posted By: Del
And, while I am a vocal advocate of efficient and useful public transportation systems, it is unlikely that the lack of such a system would be a critical factor were assembly to be relocated to an area like Gallatin, Tennessee. It’s been close to 25 years since I’ve driven through the area but I rather doubt the cost of owning and operating a private car is as high in Gallatin as it is in NYC. Nor is it likely that traffic congestion is quite the same problem.
ddf


Hmm, we park them in the fields around here, if we want. Or in the yard. Heck, most people I know have had reason to drive in their yards at some time or another...
And traffic jams in Gallatin ?? Whoo hop, I heard that one guy last week had to sit through TWO green lights before he could get through the intersection, so who knows what the world is coming to?.

What?...he couldn't get the old beater restarted?

ddf