The Elephant in the Guitar Shop

The number of guitars made annually in the United States today is the highest in the history of the market. Companies such as Martin, Gibson, Fender, and Taylor are making more than ten times the number of instruments annually compared to the numbers produced in the mid-1980s. The elephant in the room is the incredible number of used instruments this brings into the marketplace and how this will affect the future market for new instruments. Unlike many other products, good quality guitars can last for hundreds of years with proper care, so in many ways the biggest competition for a new instrument manufacturer is their own vintage and used products. Guitars and other fretted instruments are also collected and traded in a manner unlike most other products and typically have high resale value.

While complete industry production statistics are not available, the growth of several major instrument manufacturers clearly illustrates the wealth of instruments available today. In the mid-1980s, Taylor made less than 1,000 guitars per year, whereas today they make over 40,000 in the U.S. and many more budget models in their Mexico factory. In 1985, Paul Reed Smith and a few employees debuted their handmade prototype guitars at the NAMM Show and Bill Collings was producing handmade instruments by himself, whereas today both companies have sizable factories and continue to grow.

More than two-thirds of all the Martin, Fender, and Gibson guitars ever made in the history of these companies have been made since 1990. While both Gibson and Fender are huge conglomerates today, during the mid-1980s, Gibson was on the brink of collapse and Fender’s U.S. production was minuscule. But perhaps the most easily quantified production figures available are for Martin, utilizing their consecutive serial number system. From 1833 to 1898, Martin produced a total of 8,000 instruments. Their serial numbers hit 20,000 in 1924, 100,000  in 1947, 200,000 in 1965, 500,000 in 1990, 1,000,000 in 2004, and are at about 1.8 million today.

As evidenced by many popular acoustic and electric guitar designs, these instruments don’t quickly go out of style or become obsolete. Most fretted instrument designs popular today have changed very little since their introduction. By the mid-1930s, acoustic fretted instrument designs were much the same as they are today and virtually every electric guitar harks back to the original designs of the 1950s. There is no stigma about having a guitar that looks used. In fact, some people pay extra for new Fender and Gibson instruments which have been “reliced” to look like a vintage instrument.

Some of the greatest acoustic instruments made in the history of American manufacturing were introduced during the Great Depression. Companies had to be creative and offer the best quality possible because anything less would not entice people to part with their hard-earned cash when times were tough. During the 1930s, the finest quality materials (including air-seasoned, aged Brazilian rosewood, Adirondack spruce, and ebony) were affordable and readily available and companies such as Martin and Gibson employed skilled craftsmen, as many aspects of guitar building were done consistently by hand. Though instrument production eventually shifted to machine-oriented factory work, many processes continued to be done by hand and the quality of American-made fretted instruments remained very high through the mid-1960s.

Many professional musicians of the late 1960s through the 1970s played what we now refer to as “vintage guitars,” not so much because of their age or collector’s item appeal, but because the new ones at that time were of very poor quality in comparison. Guitar companies were taken over during the mid-1960s through 1970 by big holding companies run by bean counters who knew little about the product or the market. CBS acquired Fender in 1965, Avnet acquired Guild in 1967, and Gibson changed company presidents in 1965 prior to Norlin purchasing CMI, the owner of Gibson, in 1970. Martin was the only major guitar company which remained independent during the 1970s, though this time period was a low point for that company as well. Though the instruments produced during this era were affordable, their inferior quality led educated consumers toward used products and helped create the vintage guitar market.

By contrast, today’s new American-made fretted instruments are both affordable and well constructed. Though major U.S. instrument manufacturing companies are thriving, there are concerns as to whether this rate of production is sustainable in view of changing demographics and the fact that a well-made guitar with proper care can re-enter the marketplace countless times for hundreds of years. The commendable efforts of companies like Taylor Guitars to create sustainable and ecologically sound material sources will ensure it’s possible to continue building guitars well into the future.

Regardless of whether a dealer sells used guitars, these instruments will impact their business. Based on over 50 years as a retailer, my experience is that, on average, instruments are resold about every 15 years. The inevitable conclusion is the number of used instruments sold annually is fully as great as, or more than, the number of new instruments sold. This is a very significant market which dealers and manufacturers can ill afford to ignore, but it remains to be seen at what point the supply of new instruments will exceed the market’s demand.