Wed August 14, 2013
Legendary Steinway Piano Company Set To Change Hands
Originally published on Wed August 14, 2013 4:20 pm
The 160-year-old piano maker, Steinway, is set to change hands. Last month, a private equity firm emerged as the likely buyer.
That was until today, when hedge fund manager John Paulson made an offer of $500 million. The billionaire now looks set to take control of one of the oldest manufacturers in the country.
But, Steinway’s workers don’t think a change of ownership will mean much of a change for them.
JEREMY HOBSON, HOST:
The 160-year-old piano maker Steinway is set to change hands - not to a private equity firm, as had been expected. Today, hedge fund manager John Paulson made an offer of $512 million, and he will take control of one of the oldest manufacturers in the country. But as Ilya Marritz reports from member station WNYC, Steinway's workers don't think a change of ownership will mean much of a change for them.
ILYA MARRITZ, BYLINE: Outside the gates of the Steinway factory in Queens, there's a breakfast cart manned by a guy people call Johnny Pancakes. Every morning before their shift begins, tuners and technicians show up here for coffee.
UNIDENTIFIED MAN: Johnny, good morning.
MARRITZ: At first blush, what's going on with Steinway may sound familiar. There's a devoted factory workforce. The new guy has been on the job 16 years. But here's where this story veers off script: Steinway isn't struggling. It actually paid off its debts last month. And these workers aren't particularly worried about their jobs. Bruce Campbell has worked at Steinway 25 years. He's what's called a final voicer.
BRUCE CAMPBELL: I make the piano sound the way it's supposed to sound.
MARRITZ: So you sound pretty kind of sanguine about this thing.
CAMPBELL: I'm confident that, you know, things will be the same, maybe even get better. We're it, though. We're, you know, the finest piano in the world.
ARNIE URSANER: This is not woodshop in high school.
MARRITZ: Arnie Ursaner with CJS Securities says workers are right to be confident. Ursaner is the only stock analyst writing reports on Steinway. He says the land Steinway sits on, in a dense urban neighborhood, is tremendously valuable, but so is the workforce. If you want to make top-notch pianos, you have to be here.
URSANER: The skills involved in building a custom-made, handmade piano are unique. I've been to the factory. If you try to match up the two veneers in a piano, the person that does that has been trained to do that for 10 years.
MARRITZ: So here's an example of an industrial business in a major American city that's actually doing well. So why is Steinway going private? Ursaner says it all began around two years ago with an activist investor, David Lockwood, who thought the company should consider splitting the band instruments business - like trombones and tubas - from the piano business. That set in motion a strategic review, and in the end, a healthy company decided to sell itself.
URSANER: It has strong cash flow, had an excellent balance sheet. It has a very stable business. This was an opportunistic review of processes, rather than a defensive one.
MARRITZ: As the start of shift at 7:30 draws near, people leave Johnny Pancakes and head into the complex of low, red-brick factory buildings. With a few changes, this has been the rhythm of life at Steinway since it was founded by a German immigrant before the Civil War. Joseph Di Mambro(ph), a piano polisher, counts himself lucky.
JOSEPH DI MAMBRO: This is it. Tomorrow, you'll see the same people here every day, talking, hanging out. I can't see it. It's too good, everybody here - we're happy. We are.
MARRITZ: The sale of Steinway isn't yet a done deal. There's a deadline of midnight tonight for another bidder to make a higher offer on a piece of living history. For NPR News, I'm Ilya Marritz, in New York. Transcript provided by NPR, Copyright NPR.