This could be big trouble for us: http://www.msnbc.msn.com/id/13145804/
Here's the text of it:
On the Volga, key to rock 'n' roll sound faces ax
Battle lines drawn over vacuum tube plant at center of raw rock guitar tone
By Preston Mendenhall
Correspondent
NBC News
Updated: 10:24 a.m. ET June 6, 2006
SARATOV, Russia - A once-flourishing Soviet scientific hub, this
decayed-but-reviving city perched on a wide stretch of the Volga River is an
unlikely battleground for the future of rock and roll.
But battleground it has become, one electrifying rock guitarists - from the
greats to the greenhorns - from around the world.
Leading the charge on one side is a 64-year-old bluesman turned businessman,
Mike Matthews, the American creator of some of rock and roll's most famous
sound effects. On the other side is the sometimes shadowy world of Russian
business.
The prize battle is a vacuum tube factory called ExpoPUL, located on a
corner of a disused former military-industrial complex in Saratov.
For musicians, ExpoPUL represents the raw, reverberating sound of true rock
and roll guitar.
For the Russian company targeting ExpoPUL for a takeover, the factory and
its production capabilities constitute a prime piece of real estate.
"They picked a fight with the wrong group," said Matthews, speaking by phone
from his office in New York. "We're going to fight, and we're going to win."
Rock and roll legend
The story begins with the solid state semiconductor (aka the transistor).
Many music companies, along with TV and radio manufacturers, long ago
replaced tubes with the more reliable transistors. And though guitarists,
who covet the broad range and "warmth" of tube amplifiers, were horrified by
the new sound coming through their speakers, there was little they could do
little to keep the vacuum tube industry from collapsing.
That's where the Bronx-born Matthews came in. Sensing business opportunity
and a way to save classic rock and roll sounds from extinction, he bought
ExpoPUL in 1999.
"All the companies that made vacuum tubes in the West had closed," Matthews
said. "It's an archaic business. It's a niche business."
In seven years, Matthews quadrupled production and more than doubled the
workforce at ExpoPUL. Today the factory supplies more than two-thirds of the
world's tubes used for music, sold to music giants like Fender, Peavey and
Korg. Matthews' $500,000 investment has paid off handsomely, with ExpoPUL
selling $600,000 a month in tubes.
Guru for guitar greats
Before buying ExpoPUL, Matthews was already a legend among rock musicians.
The inventor of the "Big Muff" guitar pedal, he has been recognized by
guitar greats like Jimi Hendrix and Carlos Santana.
"Almost every rock star has used one of our pedals somewhere along the way,"
said Matthews, a keyboard player and one-time promoter of Hendrix.
So the rock and roll world joined in a chorus of protest last fall when a
Saratov company called Russian Business Estates, or R.B.E., made an
unsolicited attempt to buy ExpoPUL for $400,000. "That's less than I
invested when I bought the factory," Matthews said. "I wrote them a polite
letter saying no."
That's when the trouble started.
"They've used jackhammers to stir up dust in the facility," Matthews said.
"They shut down the elevator where we remove toxic waste. And they illegally
turned off the electricity."
Attempts to get R.B.E.'s side of the story proved difficult. One company
director, Vitaly Borin, ordered security guards to remove an NBC News team
from an R.B.E. office in Saratov. Another representative, Alexander
Bandarov, said by phone that the fire department, not R.B.E. turned off
ExpoPUL's electricity, citing safety problems. "We have no problem with
ExpoPUL," Bandarov said.
ExpoPUL's director, Vladimir Chinchikov, says the tactics are typical of
some Russian businesses, which pay off government officials and judges to
help them "steal" companies by employing heavy-handed methods.
"It's corruption, plain and simple," Chinchikov said. "They want us to
vacate the building. We hear they want to build some kind of entertainment
complex. They are not interested in the production line."
Rock and roll livelihoods
Though few of ExpoPUL's 930 workers have ever met Mike Matthews, they are
keenly aware that the survival of what was a dying industry - and their
jobs - depend on a graying American rocker's ability to fight off what he
calls "racketeers."
"We know Mike will fight for us," said Svetlana Shlyatsin, who has assembled
tubes for 36 years at ExpoPUL.
Matthews is preparing for battle. He has ordered a $100,000 transformer and
an independent natural gas supply to prevent further interference from
Russian raiders. And he has rallied his music industry friends and clients
to turn up the volume of protests. Fender, Peavey and Korg have written to
the Russian government while U.S. Ambassador to Russia William Burns and
Saratov's governor have pledged their help.
"Now these racketeers are going to face the music," Matthews said.
Peter Stroud, who plays guitar for singer Sheryl Crow's band, said in an
interview from Atlanta that the music industry sees Matthews as "a very
unique, eccentric genius. If this tube plant closes in Russia, tubes will
become very, very scarce."
Russian rockers are also voicing their support for Matthews.
"The tubes are a real, actual Russian product that many companies in the
world use," said Vitaly Dubinin, bass guitarist for heavy metal band Aria.
"It's nice for Russia that we don't sell only oil and gas,"
NBC correspondent Preston Mendenhall is based in Moscow.
"A cheerful heart is good medicine."
Let's hope Mike Matthews wins this one......
:D :D :D
Vic
"Sometimes the beauty of music can help us all find strength to deal with all the curves life can throw us." (D. Hodge.)
Interesting story, Ric. But after looking into some background, I doubt it's big trouble for us.
When I first read it, I thought "maybe there's an opportunity here..."
I mean, I'm an entrepreneurial kinda guy. Maybe I should see what it takes to get into the tube business. So I do the math.
Matthews' $500,000 investment has paid off handsomely, with ExpoPUL
selling $600,000 a month in tubes
$600K x 12 months = $7.2 million in sales
Though few of ExpoPUL's 930 workers have ever met Mike Matthews
$7.2 million / 930 = $7,741 in sales per employee. $148 per week. That's gross - after paying for materials, electricity, rent, shipping, etc. And he's got enough left over to buy a $100K generator, make other investments, and get that handsome return on his investment.
Sorry, but now I'm getting suspicious. It looks to me like he's either understating his sales (avoiding taxes?) or overstating his importance to the industry...
Today the factory supplies more than two-thirds of the
world's tubes used for music
That makes the world audio tube market only $11 million or so. I would have thought it a lot higher. But even assuming that's the true size of the music tube market, the vacuum tube market IS a lot bigger - one British company, e2v Technologies, had 2004 sales of $178.1 million. While it's true that they serve other industries (broadcasting, medical imaging, etc.), I'm fairly certain that companies like e2v - or the 61 other vacuum tube manufacturers I found in a quick search - could pick up the slack if one company went under. Could it be that the story is really just company generated PR to get some public sentiment on their side?
From the Moscow Times, December 8, 2005:
"Matthews said he would consider selling the plant for $15 million; the delivery of $25 million of tubes over five years, to be paid with at current rates; and an option to increase the quantity during that period."
Seems kinda steep. He'll sell for a guaranteed source of supply (at current pricing) that covers five years of sales, PLUS cash - at the rate of over twice his annual gross sales. Probably three times what the place is worth from what I can determine (and thirty times what he paid for it).
Methinks there's a whole lot to the story that isn't being told.
Guitar teacher offering lessons in Plainfield IL
Maybe. Matthews has been a sharp businessman in the past, and not always aboveboard in his business dealings as I understand it. Recently he stole Svetlana's name, having noticed it wasn't registered as a trademark in the US, he registered it himself. So Svetlana's now another of his brands in the US, along with Sovtek and Electro-Harmonix, while the real Svetlanas are sold here as "Winged C" (the C is really a Cyrillic S.)
Receiving tubes like we use in our amps are still made in another factory or two in Russia, as well as in China and Slovakia. Apparently we blew up the factory in Serbia and it never got back into production. The Brits and Americans aren't about to get back into producing these kinds of tubes, there's not enough profit per unit. X-ray and certain large transmitting tubes are a different matter.
I do think the supply of new tubes for amps is a very tenuous thing, and won't continue indefinitely.
"A cheerful heart is good medicine."
The Brits and Americans aren't about to get back into producing these kinds of tubes, there's not enough profit per unit.There's the rub - they're not producing them while the bottom line makes it pointless. If everyone else stops producing them, it'll be worth their while again and we'll all have a new (albiet more expensive) tube supply.
Maybe. Maybe not. I don't know what the economics of reintroducing tube manufacturing in the West today would be. We could be back to the equivalent of the 1920s when each tube cost the equivalent of several hundred bucks today. If that happened, how many of us would have tube amps? At any rate, I don't believe it'll ever happen that US or UK receiving tube manufacture is resumed. We're a small niche market, and not such a well heeled one.
"A cheerful heart is good medicine."
