By Marilyn Odendahl, Truth Staff
WALTHAM, Mass. -- Steinway Musical Instruments Inc. tried to put a positive spin on its 2006 fourth-quarter and year-end results that recorded nearly a $4.5 million loss primarily because of the continuing strike at its Vincent Bach plant in Elkhart, Ind.
The labor dispute that began April 1, 2006, created "a lot of noise in the financial results," Dana Messina, Steinway chief executive officer, said during a Thursday conference call.
He maintained, however, "Overall I would say it was a good quarter for Steinway."
The musical instrument maker recorded steep losses of about $20 million in sales in its band division that were offset by healthy results from its piano division.
In contrast to the release of the 2006 third-quarter results, Messina did not heap praise on the replacement workers now in the Vincent Bach plant.
Workers in the Vincent Bach factory are producing horns that are of "excellent" quality, Messina said, but he noted the workforce is still learning and, although it is steadily increasing production levels, the plant is building an average of only about 20 to 30 instruments a day.
"The plant is running at about 35 percent of where we need to be, and we're running about 50 percent of where we were pre-strike," Messina said. "We're focusing our efforts on producing high-margin professional instruments in that plant and we're making some progress."
The goal is to produce 125 horns each day to fill two years worth of back orders, Messina said.
The company is developing some new Bach professional instruments that Messina said may be built in its other domestic brass plants and the company has taken delivery of some new Bach student trumpets from offshore suppliers, including China.
Customer feedback on those student horns has been good, Messina said, and the profit margins have been "substantially higher" than what was produced domestically.
He pointed out several times that the financial picture would have been better if not for the strike, but Messina did not provide any hope for a resolution.
"We are very far apart on terms," he said. "We continue to negotiate with them but at this point, I think we're so far apart, I'm not optimistic as to where that's going to turn out."
Steinway will continue to negotiate with the striking workers, represented by United Auto Workers Local 364, until the union decides it wants to stop or the workers inside the plant vote to decertify the union, Messina said.
He did not say when a decertification vote would be taken.
By October, the company had all the striking workers replaced, according to Messina. However, with the recent announcement that musical instrument manufacturer Yamaha is closing its Grand Rapids, Mich., facility, Steinway placed ads in the local papers because of a need to "hire some more experienced people" for the band division.
Messina fielded few questions about The Woodwind & The Brasswind bankruptcy and volunteered little.
In November, the South Bend music retailer declared bankruptcy and a few weeks later, Steinway posted a $40.5 million bid for the business. It eventually withdrew the offer and may lose the $2 million deposit it paid when it entered the bidding process.
The company recorded a 21 percent increase in operating expenses for 2006 was attributed to "an increase in bad debt expense primarily related to The Woodwind & The Brasswind bankruptcy," Messina said.