Kaman Music Corporation

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Kaman Music Corporation

20 Old Windsor Road
Bloomfield, Connecticut 06002
U.S.A.
Telephone: (860) 509-8888
Fax: (860) 509-8891
Web site: http://www.kamanmusic.com

Wholly Owned Subsidiary of Kaman Corporation
Incorporated: 1966 as Ovation Instruments, Inc.
Employees: 370
Sales: $145.4 million (2003)
NAIC: 339992 Musical Instrument Manufacturing; 423990 Instruments, Musical, Merchant Wholesalers

Kaman Music Corporation manufactures Ovation, Adamas, and Hamer guitars and is also the largest independent distributor of musical instruments and accessories in the United States. Created by pioneering helicopter designer Charles Kaman in the mid-1960s, the firm's revolutionary "roundback" fiberglass composite body Ovation guitar has been embraced by such musicians as Paul McCartney, Glen Campbell, and Jon Bon Jovi.

Roots

Kaman Music's origins date to the mid-1940s and a young aerospace engineer named Charles H. Kaman. Kaman had grown up in Washington, D.C., the son of a German immigrant who worked as a construction supervisor on projects like the U.S. Supreme Court building. Though his hopes to be a pilot were dashed because he was deaf in one ear, Charles Kaman studied aerodynamics at Catholic University in Washington, where he graduated in 1940. He then took a job at the Hamilton Standard division of United Aircraft, where famed helicopter inventor Igor Sikorsky worked. Although Kaman was made head of aerodynamics in 1943, he left the firm two years later when his suggestions for improvements to helicopter rotor systems were ignored.

The 26-year old Kaman then decided to form a helicopter company of his own, Kaman Aircraft, with $3,000 in savings and $1,000 each from two friends. Starting out with a test rig in his mother's West Hartford, Connecticut, home that he built from scavenged parts, Kaman and a team of eager young inventors soon moved into a World War II gymnasium, where they worked seven days a week to develop the K-125 helicopter using Kaman's "servo-flap" rotor principles. The design proved a success, yielding a more stable and easy-to-fly helicopter, and the company went on to create and build a number of innovative models over the next several decades, including the first gas turbine powered helicopter in 1951 and the first remote-controlled helicopter in 1957. Kaman's rugged HH-43B "Huskie" model proved durable in a range of uses including in the Vietnam war, where it was used to rescue downed pilots. It would prove to be the first helicopter to go through its service life with no accidents or loss of life attributed to the helicopter itself.

Over the years, Charles Kaman found time to pursue a number of different interests, including breeding German Shepherd dogs (he helped create a line which was virtually unaffected by debilitating hip dysplasia) and playing the guitar. In the late 1930s, he had in fact won a contest that gave him the opportunity to play with the Tommy Dorsey Orchestra, whereupon the duly impressed Dorsey offered him a $75-a-week contract, which Kaman respectfully declined.

Diversification in 1960s Leads to Guitars

In 1964, after Kaman Corporation had lost an important defense contract, the company's board began seeking ways to diversify away from government work. While considering the manufacturing of boats, golf clubs, and tennis racquets, Charles Kaman happened to take an acoustic Martin guitar he owned to that company's factory in Pennsylvania for repair. After seeing the labor-intensive, old-world techniques Martin used to create its legendary instruments, Kaman began thinking of ways to harness modern technology to make the process more efficient and made an offer to purchase Martin.

When the offer was rejected, Kaman turned his attention to designing a guitar of his own which would sound natural but be made of modern composite materials. While creating a successful helicopter involved eliminating vibration, a successful guitar design had to create attractive musical tones, and Kaman pursued this logic as he worked with a team of engineers on a design that would produce what he described as a "clean, uninterrupted sound" to the New York Times. The resultant guitar combined a round-backed (rather than flat-backed) fiberglass body (the same material used for helicopter blades) and a laminated sprucewood top, along with strong bracing and a warp-proof neck. When Kaman played the first prototype instrument for a group of friends and co-workers to an enthusiastic response, one commented that it deserved an "ovation." The word stuck in his mind, and in 1966 Kaman Corp. formed a new company called Ovation Instruments, Inc. to market the guitar.

With endorsements from renowned performers like folk singer Josh White and pop singer Glen Campbell, who used an Ovation on his popular weekly television show beginning in 1968, sales took off. To manufacture the guitar, Ovation set up a production facility in a former textile mill in New Hartford, Connecticut, and some time later added a second in Moosup, Connecticut. Over the next decade, a maker of guitar strings and several musical instrument distribution companies were purchased, including Coast Wholesale Music Co. in 1968 and C. Bruno & Sons, Inc. in 1971. An international sales unit, Kaman Music International, was established as well. The company also began making solid-body electric guitars and came up with an important technical advancement in creating a high-quality built-in microphone that allowed Ovation acoustic guitars to be played through an amplifier with good results. Within a few years, this option would be added to 90 percent of the firm's guitars. In 1977, the company introduced another new product, the graphite-faced Adamas acoustic guitar, which also drew acclaim from musicians.

By 1981, Kaman Music was taking in estimated revenues of $20 million, about 3 percent of the total earned by parent Kaman Corp. More than 100 workers were employed at the firm's two plants, who turned out a total of 72,000 guitars per year. Ovation now had approximately 60 percent of the U.S. acoustic guitar market, and the company's products were also sold in Canada, Europe, Asia, and South America. Charles Kaman's son, 30-year old William Kaman II, was now serving as vice-president in charge of research and development, while Fred L. Smith had been named president.

In the early 1980s, the acoustic guitar industry hit a severe slump. Although some suggested selling the unit, Charles Kaman (who owned 73 percent of the voting stock of Kaman Corp.) refused, citing the fact that similar problems with his helicopter business had resolved themselves. His foresight proved correct, and business began to pick up during the decade with such new developments as improved microphones for acoustic guitars that enabled their use in a rock band context, and the popularity of the "MTV Unplugged" television program and acoustic spin-off albums by the likes of Eric Clapton.

In 1986, Kaman Music was reorganized into two divisions. One would contain the fretted instruments operations (guitar and strings manufacturing and distribution), while the other would consist of percussion, sound electronic, and general music products. Both divisions' products were distributed through six regional centers. The entire operation was placed under a single corporate umbrella called Kaman Music Corp. Soon after these changes were made, William Kaman II was named president of the company.

Purchase of Hamer Guitars in 1988

In 1988, Kaman Music bought premium electric guitar maker Hamer Guitars of Chicago. Former Hamer executive Frank Untermeyer moved to the Ovation factory, where he helped improve manufacturing by soliciting the input of factory workers for new ideas. Ones that the firm incorporated into production models included an on-board guitar tuner and a touch-sensitive pre-amp to adjust volume. For some customers, Kaman made also made custom instruments such as a nine-string model made for an Indian musician and a triple-neck guitar made for musician Richie Sambora.

In 1991, the company began making "roundback" mandolins and mandocellos, and the following year saw Kaman Music acquire Trace Elliot, a British guitar amplifier manufacturer with sales of approximately $5 million. In 1994, the company boosted its distribution business again with the purchase of Hornberger Music Ltd. of Canada, which operated a musical instrument distribution company called B&J Music of Toronto. The 63-year-old company had revenues of about $8 million CAD and distributed a full line of musical instruments and accessories to all of Canada's provinces. That same year saw Kaman Music Corp. move into a new 43,000-square-foot headquarters building in Bloomfield, Connecticut. Annual sales were now in excess of $100 million, up from $40 million in 1986.

Company Perspectives:

The mission of Kaman Corporation is to achieve long-term growth for our investors by building on our core competencies in manufacturing and distribution in a fiscally responsible manner. Kaman's deep experience in aerospace manufacturing and reputation for technical pre-eminence will continue to provide a strong foundation for our future growth. We are committed to providing world-class products and services that we continually strive to improve through "lean thinking" and careful attention to the needs of our global customers. We believe that providing a work place where talented people are rewarded and inspired to creative problem solving, technical excellence and leadership is key to creating long-term benefits for our shareholders, customers, employees, suppliers and the communities in which we do business.

Kaman Music had by now firmly established itself as the largest independent distributor of musical instruments in the United States. Sales of expensive guitars were also soaring, as middle aged baby-boomers sought to reclaim their youth by indulging in luxurious "adult toys." New models were continually being designed and produced, including the black "Q" Adamas model introduced in January of 1997. That same year saw production of Hamer instruments move from the Chicago area to the Ovation factory in Connecticut. While the company's high-end guitars, which started at $850, were still manufactured in the United States, Kaman had some time earlier shifted production of its entry-level models to Korea.

In June 1997, the company sold its Trace Elliot amplifier business to that firm's senior management. Kaman Corp. took a $10.4 million pre-tax charge after the sale, whose terms were not made public. A year later, in August 1998, William Kaman II stepped down as head of Kaman Music and was replaced by Robert H. Saunders, Jr., who had been serving as senior executive vice-president of the company. During the transition period, founder Charles Kaman stepped in to offer assistance.

The late 1990s saw Kaman streamline its distribution operations, adding sophisticated new software systems and consolidating distribution centers in Illinois and Georgia into a new 100,000-square-foot facility in Goodlettsville, Tennessee. In February 2000, the first Adamas signature guitar was introduced, a 12-string Melissa Etheridge model that retailed for $2,300. That year also saw the company introduce an e-commerce Web site and sign an exclusive global deal with Fred Gretsch Enterprises to distribute its renowned line of drum products. Kaman had already successfully marketed beginner-level drums under its own CB imprint, and Latin percussion instruments under the Toca name, for some time. Sales for 2000 hit $128.5 million, up from $118.4 million in 1999.

In 2001, the firm added a distribution warehouse in Ontario, California, that was similar to the new Tennessee site. It replaced one half its size in Compton, California. Both new facilities were designed to support the company's "same day shipping" policy.

Latin Percussion Bought in 2002

In the fall of 2002, Kaman acquired ownership of Latin Percussion, Inc. of Garfield, New Jersey. Latin Percussion had been founded in 1964 by Latin music fan Martin Cohen and had made a name manufacturing and distributing conga drums and other hand percussion instruments under the brand names LP, LP Aspire, and Matador. It employed 75 people and had revenues estimated at $20 million. After the acquisition, it would operate as a separate entity within Kaman Music, though some operations were folded into established Kaman units. By now, Kaman was distributing more than 10,000 products of all types for musicians of all skill levels. It continued to make the Ovation, Adamas, and Hamer guitar lines, as well as distributing Japanese Takamine models, to which it had gained rights some years earlier. Other brands Kaman distributed included Sabian and Gibraltar percussion products.

In the fall of 2003, the firm acquired Genz Benz Enclosures, Inc., a maker of speaker cabinets, Tube Works brand amplifiers, and other sound reinforcement equipment. Helped by the addition of Latin Percussion and a strong Christmas season, Kaman Music recorded sales of $145.5 million for the year. Operating profits reached $9.5 million, up from $7.2 million a year earlier.

In the summer of 2004, Kaman opened a new 156,000-square-foot distribution center in Portland, Tennessee. It replaced the Goodlettsville site, which had been opened just a few years earlier, and allowed for expansion of another 150,000 square feet if needed, as well as offering 24 loading docks.

Approaching its 40th year in business, Kaman Music had grown from a pioneering manufacturer of composite-body guitars into one of the world's leading guitar makers and the largest independent distributor of musical instruments and accessories in the United States.

Principal Subsidiaries

KMI Europe, Inc.; B&J Music Ltd. (Canada); Latin Percussion, Inc.

Principal Competitors

Yamaha Corp.; C.F. Martin & Co., Inc.; Fender Musical Instruments Corporation; Gibson Guitar Corporation; Taylor Guitars.

Key Dates:

1945:: Kaman Aircraft is founded by Charles Kaman to build helicopters.
1966:: Kaman begins making composite-material guitars through Ovation Instruments.
1988:: Hamer Guitars is bought.
1992:: British amplifier maker Trace Elliot is purchased.
1994:: Canadian distributor Hornberger Music is acquired.
1997:: Trace Elliot is sold.
2002:: Latin Percussion, Inc. is purchased.
2003:: Speaker cabinet/amp maker Genz Benz Enclosures is acquired.