WHY PRS IS GAINING SHARE IN THE GUITAR MARKET
When word began leaking out about two years ago that Paul Reed Smith was developing a new guitar that would have single-coil pick-ups and a bolt-on neck, guitar forums lit up with negative comments. Players who associated PRS with gracefully carved tops, figured woods, set necks, and glass like finishes, were quick to declare the sight unseen prototype, a betrayal of sorts. As one commented, “You do not have permission to do this!!” The reaction was hardly unexpected. Guitarists don’t much like surprises from their favorite guitar makers. They typically want them produce instruments that conform to a narrowly defined style, and they react badly when they don’t.
The real surprise is what happened when PRS finally unveiled its single-coil, bolt-on neck model—the John Mayer Silver Sky. The previously snarky postings quickly gave way to enthusiastic praise. Expressing a widely held opinion, a posting on Music Radar described the guitar as “a superb vintage and experience-informed three single-coil bolt-on. Build, playability, sound and typical PRS attention to detail and quality.”
The enthusiastic posts have been followed by stellar reviews and numerous reader’s choice citations. Smith is a student of the guitar industry and was well aware of the commercial risks involved in deviating from the signature style he had carefully developed over the past 35 years. Would players actually buy a single-coil guitar with a PRS logo on the headstock, he asked himself. At a moment of doubt, when the online criticism was particularly harsh, John Mayer encouraged him to forge offering some well-timed advice. Smith relates, “When it was announced that John had joined the Dead & Company Tour, the reaction on social media was all negative. But it didn’t bother him, because he said ‘We’d been in rehearsal for a year and I know what we had to offer.’ I figured the same held true with the guitar. I knew what we had, and I knew it was special.” Mayer’s “official” association with Paul Smith began about three years ago, when PRS built him a custom “Super Eagle” Private Stock guitar that was later offered to consumers through two limited edition runs. Mayer was sufficiently pleased with the Super Eagle guitar that was developed to fulfill his role in with the Dead & Company tours, that he later reached out to Smith to develop a new take on the style of guitar he had grown up playing. This request led to an intense collaboration between two borderline obsessive personalities, marked by daily phone conversations, and hours spent deliberating on details like the proper finish for the knobs and the number of winds on the pickups. Smith, who has developed guitars for a lengthy list of renowned artists over the past 35 years said, “I’ve never had a player involved like this before. John had input on every screw.” The result of their joint effort is diplomatically described in company literature as “based off of Mayer and Smith’s favorite elements from 1963 and 1964 vintage instruments, resulting in an idealized version of a vintage single-coil guitar.” Anyone else would say it’s derived from the Stratocaster. There’s no denying the Strat influence, but to call the Silver Sky a “copy” doesn’t do it justice either. The instrument and all its components, from a unique bridge and jack plate to the pick-ups, to the distinctive scoop on the lower horn, were designed from the ground up. While the Silver Sky bears little outward resemblance to the “core” PRS line of guitars, it shares the same playability and build quality. This explains the positive reviews. Tim Pierce, a top L.A. studio guitarist, provides a compelling and unsolicited endorsement in a widely viewed YouTube video, where he compares the Silver Sky favorably to a $20,000 vintage instrument.
How well has the Silver Sky been accepted? There are currently over 4,000 on back order, and it contributed to a 27% sales gain at PRS in 2017. Jack Higginbotham COO, says “It’s almost like we’ve gotten into a new business. It’s expanded our customer base.” Demand for the guitar continues unabated, putting PRS revenues on track to advance 20% to $60 million in 2018. For President Jamie Mann, staffing up to keep pace with the increased demand has become a daily challenge. “It takes six weeks to three months to get people on the factory floor up to speed,” he says. “A major focus of ours is attracting and retaining people.” Paul Smith has always maintained that great guitars are the result of a multitude of well executed details. Similarly, while the Silver Sky is a bright spot, he attributes his company’s current upward trajectory to number of policies and practices adopted over the past decade. “We’re reaping the results of seeds we planted several years ago,” he says. Among these “seeds,” he points to a revised pricing structure that improved relationships with retailers, a revamped line of imported acoustic guitars, and the addition of lower-priced U.S.-made instruments in the form of the S2 Series. However, the most important component driving the company’s current fortunes is a relentless emphasis on quality, which he defines as “building guitars that are ready, right out of the case, for stage or studio.” It’s why production of premium Private Stock guitars are at an all-time high, why sales of the “core” line of U.S. built guitars are up about 45% of the past three years, and why the imported SE line has posted an 85% sales gain in the same time frame. PRS has an unusual approach to production quality that has evolved organically from the company’s earliest days as a small workshop shop in Annapolis. Higginbotham, who was one of the first employees, working in the sanding department, relates, “In those days, we couldn’t afford a separate quality assurance team so quality control became everyone’s job. If someone handed me a body to sand that wasn’t right, it was my job to flag the problem and get it fixed.” PRS now has a well-staffed quality control team that inspects incoming raw materials and gives each guitar a thorough inspection prior to shipment. Yet, each of the 220 employees on the factory floor continue to view themselves as integral to the quality process. Their attention to detail at every step of the production process is the major reason why PRS guitars get such high marks among players and retailers. Jim Cullen, who directs sales, explains, “We make sure we don’t build ‘boomerang’ guitars. Our goal is to ship them perfect so they don’t come back.”
FACTORY AS FAMILY
PRS management has consciously treated its staff as an extended family to foster this type of engagement. Paul Smith holds regular company-wide meetings where he explains “how your cog fits into the machine, and how your efforts are important to our success.” A strong “promote from within” ethos also contributes to the cohesive team spirit. Much of the PRS management staff is populated by people like Higginbotham, who got their start on the factory floor. Then there are the tangible rewards. After several tough years following the 2008 financial crisis, factory staff have recently been rewarded with generous year-end bonuses. The result is close zero turnover. Mann estimates that there is a combined 2,000-plus years of guitar making experience on the factory floor, and that there are skilled luthiers in every department. “People take pride in what they do here,” he says. “The ones who get into guitar making rarely leave.” An industrial engineer, who worked in management for Black & Decker before joining PRS ten years ago, Mann knows from experience that “left unattended, production quality will always stray.” To avoid this, the company holds weekly “Friday Meetings,” where a dozen or so guitars are pulled at random from the factory floor and subjected to a top to bottom inspection. Department heads, sales people, and top management participate in the process, all with a goal of uncovering any defects or opportunities for improvement. The rigorous exercise has yielded substantive improvements. Higginbotham says that tolerances on neck joints are more precise, finishes are thinner, resulting in more resonant guitars, and inlay work is neater. He adds, “We look at the quality process like painting the [Chesapeake] Bay Bridge. It’s never ending…once you finish, you have to start all over again.” This emphasis on quality also extends to the PRS SE line of imported acoustics and electrics. The set-up department in the SE department is a mirror image of the one on the nearby factory floor. On a daily basis, about 100 imported guitars a day to are subjected to the same inspection process as the U.S.-made PRS models. Truss rods are adjusted, frets are checked, and finishes are scrutinized for the slightest blemish. The result, as a recent magazine reviewer stated, “I was shocked (in a very good way) to discover that my price estimates were $1,000 to $1,200 more than the street prices of these guitars (and that was still with knowledge that these were SE series instruments). The refinement and complexity of tone in both instruments is simply unheard of in the price range that these guitars sell for.”
MORE THAN JUST A BRAND
Paul Smith started his career with a guitar repair shop in Annapolis, Maryland. Years spent on the work bench taught him the fundamentals of guitar design, as well as the strengths and weaknesses of every guitar on the market. Drawing on this experience, he hand-built his own distinctive guitar. That it was embraced by Carlos Santana, gave him the confidence to devote himself full time to guitar building. The company has since evolved into a sizable enterprise with over 300 employees, and the brand is routinely placed in the same category with the legacy companies that are credited with inventing the modern guitar industry. Yet, Smith and his team still consider themselves first and foremost guitar builders, not brand managers, marketers, or operations specialists. Necessity forces them to grapple with running an efficient factory, hustling for business in a competitive market, and turning a profit. But, what gets them excited is the process of transforming slabs of wood and bits of plastic and metal into an exquisite musical instrument. Smith sums it up, “If we make great guitars, everything else will take care of itself.” The PRS management team is also sufficiently realistic to recognize that an improved economy has contributed significantly to the company’s recent growth spurt. Improved consumer confidence has helped boost daily production to approximately 80 guitars a day, more than double the output after the 2008 financial meltdown. It’s also fueled a shift to higher priced models. Ask them if the electric guitar is really dead, and prepare for a heated reply. Paul Smith declares, “I just saw 25,000 people turn out to hear John Mayer play, and two weeks later, I saw another 20,000 at the Sweetwater Gearfest in Indiana. Don’t tell me there isn’t interest in the guitar.” Although the hardship of the last recession has engendered a lingering sense of caution, Smith concludes, “we’re in the best position we’ve ever been in.”