Peavey Electronics Corporation
Address:
P.O. Box 2898
Meridian, Mississippi 39302-2898
U.S.A.
Telephone: (601) 483-5365
Fax: (601) 486-1278
Statistics:
Private Company
Incorporated: 1965
Employees: 2,200
Sales: $210 million (1993)
SICs: 3651 Household Audio & Video Equipment
Company Perspectives:
Since its founding in 1965, our company goal has always been to build the best products available while at the same time making them affordable through the use of the most modern computer-assisted design manufacturing methods available.
Company History:
The Peavey Electronics Corporation, founded in 1965 by Hartley Peavey, is a major manufacturer of guitars, amplifiers, speakers, electronic keyboards, and other electronic audio-enhancement equipment. In 1993, the company, solely owned by Hartley, then chairman, and Melia Peavey, his wife and president of the company, had sales estimated at $210 million. Exports to more than a hundred countries accounted for an estimated 40 percent of sales. Peavey Electronics, with more than 1,600 different products, is also the tenth largest manufacturer in Mississippi, with more than a million square feet of warehouse and manufacturing space in east-central Mississippi, including a 40-acre headquarters site known as Peavey City in Meridian. The company also has manufacturing operations in Foley, Alabama, and in Corby, England, and distribution centers in The Netherlands and Canada. Its chief competitor is Yamaha, the Japanese conglomerate. Founder Hartley Peavey, whose "hometown boy makes good" story made him a local legend in Mississippi, has been the recipient of numerous awards for entrepreneurship, including the "E Star" award for success in international markets from the U.S. Department of Commerce. He was also inducted into Hollywood's "Rock Walk of Fame" in 1990 for his contributions to rock 'n' roll music.
Musical Ambitions in the 1950s
Hartley Peavey grew up in Meridian, Mississippi, and had early aspirations of becoming a rock 'n' roll guitar player. As a teenager in the late 1950s, he worked in the Peavey Melody Music Store, owned by his father, J.B. "Mutt" Peavey, and tinkered with building amplifiers for local musicians. When, as he once confessed to Inc. magazine, he turned out to be a "pretty lousy guitarist," Peavey decided his future was in making amplifiers.
In 1965, after graduating from Mississippi State University with a degree in marketing and management, Peavey, then 23, took the remaining $8,000 in his college fund and formed Peavey Electronics, working out of his parents' basement. As he later recalled in "Music and Sound's Greatest Hit," published by Peavey Electronics for its 25th anniversary: "I would build one (amplifier) a week, go out and sell it, come back and start on another one." The amplifiers were inscribed with the lightning bolt logo that Peavey had designed as a college freshman.
A year later, Peavey moved the business from the family's basement to an attic in the building that had housed his father's music store. By then, his father had sold the music store but still owned the building. Peavey also hired his first employee, a salesman, so he could concentrate on building amplifiers.
In the mid-1960s, however, there were many larger, better-known companies making amplifiers, and Peavey soon expanded into building public address systems to keep his young business afloat. In the company's 25th anniversary retrospective, Peavey explained that as "I traveled and talked to music dealers, I realized there was no shortage of instrument amplifiers. But if you wanted a PA system there were essentially only two available and both were expensive systems.... Most folks think I got into the music business with guitar amps. Not necessarily so!"
Staying in Meridian
By 1968, business was good enough that Peavey decided to borrow $17,500 to build a small "factory" in Meridian. Over the next five years, Peavey Electronics enlarged the building seven times, and having grown to more than 150 employees, in 1973 the company began construction on Plant #3, which would become its main manufacturing facility. To hire enough skilled employees, Peavey Electronics established training courses at Meridian Community College.
Over the years, Peavey was often asked about his decision to keep the company in Meridian. In 1985, he told Inc. that Mississippi "unfortunately runs dead last in everything. You don't have the skilled people you need, you don't have the suppliers, you don't have the access to the freight network.... Back in 1965, when I got into this, I was too damn dumb to know it couldn't be done." He went on to say that he had "lost count" of how often he wished he had built Peavey Electronics somewhere else. In a later interview with his hometown newspaper, The Meridian Star, Peavey explained, "What I tried to say in the Inc. article was that Mississippi presented many difficulties in starting a high-tech business. And some of these difficulties exist to this day." In 1982, the City of Meridian honored its hometown industrialist by proclaiming April 21 as Hartley Peavey Day.
In the late 1980s, when the company was considering building its first U.S. manufacturing facility outside of Mississippi, then-Governor Ray Mabus worked with Peavey Electronics and Meridian Community College to create The Meridian Partnership, the first private-sector use of the Job Skills Education Program, a technology and basic-skills program originally developed by the U.S. Army. In the early 1990s, Peavey Electronics opened a 58,000-square-foot training center, complete with its own recording studio, for its employees and more than 1,200 dealers. In 1993, Peavey told The News in Boca Raton, Florida, where he and his wife had a second home, "People ask me why Mississippi and I say, "Where do you think rock 'n' roll was born?"
Vertical Integration in the 1970s
It was in the early 1970s that the company began the vertical integration that would make it unique among major electronic musical equipment manufacturers. Unable to purchase reliable speaker components for its high-power amplifiers, Peavey Electronics began making its own loudspeakers. Eventually, Peavey Electronics would build everything it needed for its musical instruments, from cabinets and metal work down to making its own circuit boards and running its own advertising agency.
In 1990, Peavey explained, "If somebody local had been able to subcontract for me the things I needed to build amplifiers, I would probably still be using subcontractors. We had to learn to make our own chassis, our own circuit boards, and eventually everything 'in-house.' And while we thought it was a tremendous disadvantage, and in many ways it was, we discovered that it was the best thing that could have happened."
In the mid-1970s, Peavey Electronics also began manufacturing electric guitars, again more from necessity than design. Several leading electronic instrument companies were gobbled up by conglomerates during the 1960s, including Fender Musical Instruments, which was purchased by CBS in 1964. These companies, with their immense marketing power, began encouraging dealers to sell their guitars and amplifiers as a package deal, cutting into sales of Peavey amps.
As he had when he adopted solid-state components for his first amplifiers, Peavey embraced state-of-the-art technology to produce guitars at lower cost, becoming the first manufacturer to use computer-controlled machinery to turn out guitar bodies and precision parts. Years later, Peavey recalled, "When we announced that we were making guitar bodies on computer-controlled machinery, some of the most prominent names in the industry said, 'Impossible. Everybody knows you can't make guitars with a computer.' That was a rather simplistic attitude, we thought, because, in fact, we weren't making guitars on computers. We were using ... computer-controlled machines to make precision guitar parts to tolerances that heretofore manufacturers couldn't even think about approaching. Guitar makers are always talking about handcraftsmanship. What handcraftsmanship is, in many instances, is the ability to fit together parts that are produced with a lot of 'slop' in them."
In the early 1990s, Peavey Electronics would establish a Computer-Integrated Manufacturing (CIM) system to link and track all aspects of its manufacturing, and increasingly the company was using robotics in its assembly processes. The company, however, had an unofficial no-layoffs policy and employees whose jobs were eliminated by technology were retrained for other positions. In 1994, Jere Hess, then director of public relations, told The Meridian Star, "No one in this company has ever lost their job because of automation."
Twenty-Fifth Anniversary
When Peavey Electronics celebrated its 25th anniversary in 1990, The Meridian Star published a 40-page special edition to honor the company that had become the area's largest employer. The newspaper noted that Peavey Electronics created more than 1,000 new jobs in east-central Mississippi between 1980 and 1989, including more than 850 in the Meridian area, and 73 percent of all new manufacturing jobs in Lauderdale County. Among those saluting the company was Mayor Jimmy Kemp, who said, "Of course the obvious things you think about when somebody in your community employs 1,850 people is the enormous impact it has on your city, which is fantastic. I'd hate to think what we'd do without Peavey Electronics as far as our city is concerned." Peavey Electronics was then the tenth largest manufacturing employer in the state.
In 1991, Peavey Electronics was one of 20 companies selected by the U.S. Department of Commerce to participate in a five-year program designed to stimulate export of U.S. products to Japan. As part of the program, the Department of Commerce arranged meetings between heads of the U.S. companies and Japanese officials, including Prime Minister Toshiki Kaifu and Minister of International Trade and Industry Eiichi Nakao. Peavey Electronics, which first entered the Japanese market in the mid-1970s in a short-lived relationship with industrial giant Yamaha Corporation, also agreed to participate in at least one trade show a year in Japan. Although the company contracted with other distributor, Japan was never a significant market.
In 1991, President George Bush chose Peavey Electronics as the site to give a speech on economic growth. The Meridian Star noted, "Hoping to pump fresh air into his sagging popularity, President Bush hailed the success of Meridian's Peavey Electronics Co. as proof that Americans can excel in a worldwide economic battle." The newspaper also quoted Peavey as stating that the company's "one real goal, perhaps unreachable, is to become a $1 billion company." At the time, Peavey Electronics was reported in the local media to have sales approaching $500 million a year, although company executives said that figure was greatly exaggerated. As a matter of policy, the privately held company did not release financial information, but annual sales in the mid-1990s were generally believed to be about $200 million to $220 million.
Principal Subsidiaries: Peavey Amplification Ltd. (U.K.).
Further Reading:
Armbruster, William, "US Guitar Maker Hopes For Big Hit in Japan," The Journal of Commerce and Commercial, June 3, 1991, p. 1.
Hallam, Linda, "Building Business on Caring," Southern Living, July 1991, pp. 67-68.
Moulden, Philip, "Bush, Peavey Harmonize on Economy," The Meridian (Miss.) Star, December 4, 1991, p. 1.
"Music and Sound's Greatest Hit," Meridian, Miss.: Peavey Electronics Corporation, 1990.
"Peavey 25th Anniversary Souvenir Edition," The Meridian (Miss.) Star, June 14, 1990.
Rodgers, Johna, "President's Visit Amplifies Peavey's Success," The Meridian (Miss.) Star, December 4, 1991, p. 5A.
Sheffield, Skip, "Chilling Out in Boca," The Boca Raton (Fla.) News, April 4, 1993., p. E1.
Slaughter, Jeff, "Peavey Electronics: 'Tenacious, Innovative, Responsive'," Mississippi Business Journal, August 1, 1994, p. 24.
Torgerson, Stan, "Peavey Grows with Automation," The Meridian (Miss.) Star, August 7, 1994, p. B1.
Wojahn, Ellen, "Homegrown: Peavey Electronics Does it All--Better and Cheaper--in Meridian, Miss.," Inc., May 1985, p. 136.
Source: International Directory of Company Histories, Vol. 16. St. James Press, 1997.
