Musical Instrument Manufacture
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Industry Overview
The US musical instrument manufacturing industry includes about 550 companies with combined annual revenue of $2 billion. Major companies include Fender and Steinway. The industry is highly concentrated: the 50 largest companies generate more than 80 percent of revenue.
Competitive Landscape
Demand is largely driven by consumer income and education demographics. The profitability of individual companies depends on cost efficiencies. Many large companies benefit by offering a wide range of products. Small companies can compete effectively by specializing in high-end or niche instruments. The industry is labor-intensive: average annual revenue per employee is about $125,000.
Products, Operations & Technology
Major products are string instruments (including violins and guitars); electronic keyboards; pianos; and woodwinds. String instruments account for about 20 percent of the market; keyboards, pianos, and woodwinds for 10 percent each. Other products include brass wind instruments, percussion instruments, and organs. Replacement parts and accessories, such as strings, mouthpieces, and music stands, account for a significant portion of industry sales, about 25 percent.
Lower-cost instruments are often made on assembly lines, while higher-quality instruments are produced at clusters of workstations. Typical tools include cutting tools, molds, sanders, lathes, presses, and drills. Production involves manufacture of components and final assembly. Components, especially electronics, are often bought from other manufacturers.
Raw materials vary, depending on the instrument type and quality. Professional wind instruments are usually made using silver, gold or brass (70 percent copper and 30 percent zinc). Student versions are often made of nickel brass or silver-plated brass. High-end pianos and string instruments contain hardwoods such as maple, beech, spruce, and basswood, while lower-quality versions contain cheaper woods and plastics.
The fundamental physical construct of an instrument doesn't vary from one maker to another. The key differences among high-end and low-end versions of an instrument are the quality of the materials and level of craftsmanship. Because most instruments contain many intricate parts, labor content is high.
Technology is used in automation of assembly lines and through the use of computer-controlled machine tools. Computer systems are used in distribution to dealers and to manage inventory. Large retail chains require manufacturers to use business-to-business electronic ordering and purchasing systems.
