Wednesday, October 10, 2007

Re-Tune Your Piano Business

If you're going to survive the Chinese challenge:

The company, founded in Paris by the Austrian composer Ignaz Pleyel, has struggled through two world wars, the emergence of electronic music and the rise of Japanese pianos. To stem three decades of losses and tackle the latest threat - competition from China - the last piano maker in France is cutting annual production to 30 of the most expensive instruments from 600. It is eliminating upright pianos from its repertoire.

"I can't fight against the Chinese," said Arnaud Marion, the chairman of Pianos Pleyel. "I have no choice but to focus on quality, become the Herm├Ęs of piano manufacturing," he added, referring to the French maker of luxury scarves and handbags.

Pleyel is banking on a new grand piano, the P280, that is 2.8 meters long, or 9.2 feet, to put the company's instruments back into concert halls. Two of the P280s, with a price tag of more than €100,000, or $141,000, have been sold in Japan, and one in China. Its classic baby grands start at €30,000; those decorated by artists like Marco del Re begin at €80,000. By comparison, a concert grand made by Steinway, the U.S. piano maker, sells for almost €114,000.

Hmm. That means Pleyel's annual revenue would only be about $ 4-1/4 million dollars. Meaning wages would have to be kept verrrry low, to make a manufacturing business work. Because, later in the article, we read:

Pleyel reported a net loss of about €1.9 million in 2005 on sales of €4 million.

The numbers are playing a grim song:

French consumers can buy a Chinese-made Pearl River piano for €1,500. It costs Pleyel €2,500 just for the raw materials to produce a similar instrument.

Pleyel's soundboard is made from red spruce that grows on the northern face of the mountains in the Fiemme Valley of Italy. The white keys of concert pianos are made from the tusks of prehistoric Siberian mammoths, a few of which are exhumed each year.

"The material gives a piano its primary personality," said Cyril Mordant, a tuner at Pleyel.

At the beginning of the 20th century, there were 100 piano makers in France, and Pleyel's original factory in Saint Denis was the world's largest, said Marion, the company's chairman. It made 3,600 pianos in 1913, selling them in London, New Orleans and Sydney. Today, Pleyel's domestic market is shrinking: About 10,000 new pianos are sold in France each year, down from 45,000 two decades ago.

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