Quantegy update 1/30/05

[nacho459]

http://www.montgomeryadvertiser.com/NEW ... gy130w.htm

Troubled plant woos investors

By Kevin Taylor
Montgomery Advertiser

Race Cannon remembers years ago when Ampex was one of the top employers in the Opelika area.

Now, Ampex is no more. The 1,800 employees it once had during its heyday in the 1980s at the audio and videotape producer now number less than 50 under the name of Quantegy.

Cannon, who grew up just a few miles from the Quantegy plant, is in the process of investigating the status of the company after it filed for Chapter 11 bankruptcy on Jan. 11 and considers himself a potential buyer.

"I want to make this a local company with local leadership," Cannon said referring to the fact that Quantegy's current CEO, Richard Lindenmuth, lives in Raleigh, N.C. "I know this company can still make money, so I've started to do some research, talked with customers and employees to get a better idea of what has gone wrong."

The fact that Cannon is looking to purchase Quantegy is good news for the company's clients, who range from music recording artists to federal agencies like NASA.

Still, Quantegy's downsizing did not come as a shock. Through advances in technology, audio and video tape have not been in as much demand now that most recordings are done digitally. In 2004 audio tape accounted for $6 million of its $30 million in business.

The company also fell into trouble when it lost one of its top videotape clients in July. The company got into a money crunch and, on Dec. 31, it closed its doors to about 170 employees because it couldn't meet payroll.

Lindenmuth now hopes that a Chapter 11 reorganization will allow him time to find new investors. Cannon could be one of those investors, but not the only one.

"I have met with (Cannon)," Lindenmuth said. "He seems very serious about becoming an investor in the company. So far there have been more than 12 potential investors I've talked with. They are just in the discovery stage right now. It will be interesting to see how many would actually move forward and invest in the company."

Lindenmuth reportedly said that about $10 million would save the company, but the company still has outstanding debts. Cannon said about $12 million is owed to at least three creditors -- Cerberus, Foothill Capital and Bank of America Chicago.

Tom Bennett, who worked with Ampex and Quantegy for 22 years, said that the market for audio tape will not grow.

"This audio tape is still important for those like NASA and other federal agencies, but as technology improves then the demand for this audio tape will fade," Bennett said.

But James Lakin, who also worked for Ampex and Quantegy for 27 years, says the best way to keep Quantegy alive is through other video technology.

"You can't open that plant and make money unless you add new technology," Lakin said. "If you get into the video technology, you are going head-to-head with Sony. If you can compete with Sony, then you are a viable company."

[nacho459]

Tom Bennett, who worked with Ampex and Quantegy for 22 years, said that the market for audio tape will not grow.

I don't know if I agree with this. With tape machines becoming more affordable recording on a tape machine has moved more from a necessity to an artistic choice. I wouldn't be surprised if in the next few years tape sales actually grew. If we end up going from one tape manufacturer to zero to two or three manufacturers tape prices may actually go down. If Quantegy restructures and decides to only make 456, 499 and/or GP9 it would seem to cut costs, and if manufacturers look at tape as a cult niche market and not a dying format I think we may see a growth in tape use.

Everyone loves classic cars, what's different with classic tape machines.

[rpowell]

Tom Bennett, who worked with Ampex and Quantegy for 22 years, said that the market for audio tape will not grow.

I don't know if I agree with this. With tape machines becoming more affordable recording on a tape machine has moved more from a necessity to an artistic choice. I wouldn't be surprised if in the next few years tape sales actually grew. If we end up going from one tape manufacturer to zero to two or three manufacturers tape prices may actually go down. If Quantegy restructures and decides to only make 456, 499 and/or GP9 it would seem to cut costs, and if manufacturers look at tape as a cult niche market and not a dying format I think we may see a growth in tape use.

Everyone loves classic cars, what's different with classic tape machines.

When recording on tape moved from a necessity (before digital) to a choice, it reduced the potential market. The recent affordability of used machines is just one factor in the choice. Tape costs, necessity of maintenance, etc. all play into it.

Yes, classic cars and analog tape are lovable. But just like 1957 Bel Airs, they don't make tape machines anymore. There are less 1957 automobiles on the road now than there were in 1957, just as there will be less Ampex MM1100's and Studer 827's "on the road" in the year 2030. If analog decks were to go back into production, IMO it would be an extremely limited and expensive operation. If NAPA or Pep Boys had to depend on vintage cars for their parts business, they would look a lot different than they do now.

I think the best that can be hoped for is a small but extremely loyal and stable customer base for analog tape. And that may be enough to sustain it, especially if there is a lone manufacturer with high standards. If there were 3 manufacturers to come to the plate today, I'd bet 1 or 2 would be out of business in 2 years.

RP

[aurelialuz]

i just want to say thanks for these updates. keep us aboob.

[nacho459]

Yes, classic cars and analog tape are lovable. But just like 1957 Bel Airs, they don't make tape machines anymore. There are less 1957 automobiles on the road now than there were in 1957, just as there will be less Ampex MM1100's and Studer 827's "on the road" in the year 2030. If analog decks were to go back into production, IMO it would be an extremely limited and expensive operation. If NAPA or Pep Boys had to depend on vintage cars for their parts business, they would look a lot different than they do now.

Well If you think about it ATR makes 1/2 new tape machines. I mean they make new electronics, and that's half of the machine.

People are making new Mellotrons today, they are selling.

I just don't think tape is going to continue to decline, I think it's hit a shelf. I think there are more tape machines out there than tape users. I know people who are all about HD and just keep their 2" machines around incase a client brings a reel in. As these people let go of their machines I think were gonna see them go into the hands of people who will put them in regular use.

in 2015 there will be Studer hot rod competitions, and alignment races, and Analog swap meets at the fairgrounds and what not.

[Dave Nutz]

in 2015 there will be Studer hot rod competitions, and alignment races, and Analog swap meets at the fairgrounds and what not.

do the entry fees include complementary hernia surgery?

[rpowell]

Well If you think about it ATR makes 1/2 new tape machines. I mean they make new electronics, and that's half of the machine.

Yes, and a fine job they do, at a price. What happens when they run out of vintage Ampex machines to rehab?

People are making new Mellotrons today, they are selling.

And Roland probably sells 10,000 synths for every mellotron sold. Mellotrons and their tape loops are a labor of love more than a money maker. But I dug 'em back in the day.

I just don't think tape is going to continue to decline, I think it's hit a shelf. I think there are more tape machines out there than tape users. I know people who are all about HD and just keep their 2" machines around incase a client brings a reel in. As these people let go of their machines I think were gonna see them go into the hands of people who will put them in regular use.

You may be right. OTOH, many machines might be bought by bright-eyed amateurs and semi-pro's, only to be left in the corner like their previous owners did, after a brief infatuation.

in 2015 there will be Studer hot rod competitions, and alignment races, and Analog swap meets at the fairgrounds and what not.

And hopefully not any Demolition derbys.

RP

[soundguy]

nacho, youre not REALLY serious, are you? I mean, Im with you full on with the wishful thinking and stuff but honestly, take a look around at the industry. Tape manufacturers made money when there was demand for tape which was based around a need rooted in no alternative. Today, not only is that NEED not there, but there IS alternative. Looking at the music industry only and forgetting about everyone else, people are looking at this like "oh, nobody is using tape anymore but in my example everyone would use tape". The real question here is how many people with budgets even make records anymore? What are the figures for the amount of production coming from companies that could afford to have realistic tape budgets? Seems to me like every big major label that could cough up a few $k for tape per project is far more interested today in rerelasing their back catalog than making new records let alone developing new talent to make a new record with down the line. You cant look to indie rockers and kids with $7K project budgets to support a tape manufacturing industry because from where Im standing THOSE are the people that are actually making records. There is just not a tremendous amount of output from the big giant companies right now and where there is, from what Im in touch with, it doesnt involve tape machines. To think that tape machines will be anything but a fetish item is IMO a little silly. Certainly people have not stopped using guitar amps and tube electronics have not gone away, but the market is soooo fetish in relationship to the industrial process that it takes to make a tube that you can still get tubes that were made for the military, and while there may be millions of those kicking around, there is no american tube manufacturing company either. If there was the amount of stock of tape that there is american tubes there wouldnt even be a discussion about what to do right now.

My friends that grew up engineering on tape who have decent enough resumes and win awards and get interviewed in magazines cant work unless they work on computers. Its not their choice and they mostly hate it but its what they do to hang in there. My friends that own studios cant book their rooms unless there is a computer in there. I refuse to put a computer in my place for now (I cant even believe that Im qualifying "for now" already) and the shit I have to go through to get people to record in an all analog, all discrete transistor, get the biggest hardon if you talk about it on the internet studio, is fucking unbelievable. I know of one other studio around me that is tape only and the two of us comiserate like freaking mammoths.

People will continue to use tape and people will contine to rely on tape but to think there will be some rebirth of tape and some new heyday and some circumstances where all the people will get together and smash their computers and come running to my place is the wildest of fantasies. Music is forever changed, for worse or better, by computers and we are well well well well into the next phase, whatever nonlinear is turning out be. There were guys saying that stereo was a fad and mono will make a rebirth and rule the day and look at where they are, right? I see saying the same thing about tape coming back to be prosperous to be on the same level. Not trying to be some pessimistic asshole, just trying to look at it realistically. The people that will use tape are now pretty much just the people that really care and there is no industrial machine that will ever make a dime off of exclusively servicing the percentage of the industry that really cares unless you are talking about boutique fan belts and hoses for porches or ferraris. Unfortunately, the average tape user cant afford a porsche or a ferrari.

you know what is a great parallel to this? Go try to buy a new car with a standard transmission. Its nearly impossible, either car companies dont make them at all in new cars or european car manufacturers wont go through the trouble of qualifying their emmissions for two transmissions so even though they make standards, they dont export them to the USA. Its fucking maddening, but the only people who are gonna buy a new car with a stick are drivers that give a shit and most companies are just simply not interested in trying to profit in serving the drivers that give a shit when they can do just fine selling automatics. Just like tape and tape machines you can buy a new stick but the day when you could pick any car made and have a choice of either transmission is forever gone, servicing us that give a shit is far too much trouble when people with money are willing to easily pay for "good enough".

Who ever thought that some thorn that people referred to jokingly as "alls I had" has evolved into "you gotta have" if you want to be in business.

dave

[Antero]

One thing I wonder is, how much would it cost to build a pro-level tape recording machine these days, and how much could that be reduced with modern technology?

While the general use of tape seems to be on the way out, it seems to me that if shockingly expensive boutique guitar and amp makers can survive, along with dozens of mic pre and compressor makers, a tape deck maker could as well...

I guess my final opinion is that tape is going to be the sort of thing that's involved in big-budget productions, devoted tapists, and not much else. A small market, but a stable one.

[Girl Toes]

Well, I'm with Nacho 100%. I mean, 15 years ago, who thought the vinyl market would be a live and well??? Most people that i know still have turn tables, and use them. Likewise, I know a lot of musicians and work with them everyday. Most people have never seen or heard a reel to reel, but are often quite excited by the prospect of recording in analog.

I'm recording right now for the poorest bands and singers, and I have to compete with their friends who have protools. You know how I compete with them??? By recording in analog. I don't know how I could convince them to record with me if I had protools. "So what? My bassist has protools."

If theirs anything I've learned from reading tape op, its that most of my favorite records were recorded live. So that's what I do, in mono to two track. To 1/4" most of the time. Someday, maybe I'll get a 4 or an 8 track and have the option to record, but that's how I keep the cost way down. What the fuck am I going to do with 2"s of tape??? I think its ridiculous, and I'll spend more time on pre production.

People are excited by analog, but they aren't going to pay 200 bucks for it, or what ever the price is going to be. There's ways of making it work.

I like Steve Albini's business plan. Stick to your guns, make a name for your self, and work out of love not a desire for money. All I want money for anyways is to go record shopping.

And if a band is going to need 24 tracks, then I recommend them to Electrical, which is quite affordable to a moderately successful small band. I've never met any one not excited by that.

I predict stability with a very slow but steady decline. Maybe 20 years?? I dunno, who knows how iTunes and the death of the full length physical album will effect it. But, as long as bands still want to record something< i'll keep wooing...

[soundguy]

People are excited by analog, but they aren't going to pay 200 bucks for it, or what ever the price is going to be.

thank you for eloquently making my point. Before this mess a reel of 2" cost just a little less than $200. Thats the price of tape NOW, when barely anyone is using it.

this is really a discussion abotu economics. How many reels of tape pass through the machines at electrical, a place that a moderately successful small band can afford, and how many studios are like that? How many reels of tape pass through the machine under the tarp in the corner at the protools studio, and how many studios are like that? How many reels pass through the machines at the most expensive studios on earth whose clients can afford anything but chose computerworld by choice, not budget and how many studios are like that. Which way is all of this trending and can industrial process tape manufacturer make money?

Steady income, worthwhile effort? I think so. resurgence where 2" is bought by the pallette as it was in the 70's? Never happen, sorry. How many reels of tape will you personally use in your LIFETIME. How many people are there like you? We should be very very happy to be fetish industry, we should be very very happy that people are trying to accomodate our needs, but we should also be a little bit realistic about the economic position we represent.

you bought a professional tape machine for ????????? HOW MUCH ????????? That should really tell you everything long before some "tape crisis". $30K tape machine didnt get sold for $4K in wonderful condition because it was tapeop charity month or something like that...

dave

[Girl Toes]

We're also in the down years right now, I really expect tape to follow a similar, though more slight, as vinyl. A very small growth, maybe of about 1%, will probably occur sooner or later. Recording to tape is ultra hip, even if people say it more than they do it.

[nacho459]

Dave, I don't think tape is going to reach the level it was back in the day or come anywhere near that level again, but I think a small increase may hapen.

Personally I'd be willing to cut the tape cost out of my profit if it came to that. In the three years since I have had my AG440 I have only once had a client not want to mix down to it to save money. Everyone seems to be ready to put an extra $50 per reel to have their stuff mixed down to 1/4". Maybe we just come from diferent niches, almost everyone I work with have real tube amps and want to work on tape, that's why I just droped $2K on a 2" machine.

I know people who abandoned tape the day PT came out, and laugh at me for wanting to work on tape, but I come from totally different world from them and work with diferent styles of music.

Yeah, for smaller projects I have a couple reels that I recycle, But for real sessions people I work with are generally willing to drop a few hundred bucks for tape.

[Bear]

keep us abreast.

Could you ammend that to, "keep us aboob"? Thanks.

[aurelialuz]

keep us abreast.

Could you ammend that to, "keep us aboob"? Thanks.

done and done.