Gibson Guitar is best known for the legendary Les Paul guitars and the musicians who play them, including Jimmy Paige, B.B. King, Slash and Paul McCartney. But lately, Gibson’s been feeling the heat from the Feds after being raided on allegations of illegally importing ebony from India and failure to comply with the Lacey Act. This is the second time in two years that Gibson factories have been raided for non-compliance with this regulation.
The Lacey Act bans the import of illegally harvested wildlife and plants. It requires companies to make detailed disclosures about wood imports and forbids the purchase of goods exported in violation of a foreign country’s laws. And, as with other regulations, the price of non-compliance is high. Henry Juszkiewicz, CEO of Gibson, told the Wall Street Journal that the government raids over alleged violations of the Lacey Act have cost Gibson roughly $1 million in seized products and production disruptions alone.
The story has many interesting facets and demonstrates the risks manufacturers face from evolving compliance regulations and the complexities involved with a global supply chain.
The Lacey Act requires Gibson and others like it to track every species of wood used in all components of its guitars. It’s not enough to know that the guitar has spruce and maple in it. It’s also necessary to know what the bridge is made of, for instance. Records must show where wood is harvested and where components are made.
Numerous other regulations—such as REACH, RoHS, CA Proposition 65 and even the new Conflict Minerals law—require manufacturers to collect the same type of information for all components, whether it is to ensure that products don’t contain hazardous levels of toxic substances or to prevent use of minerals mined in areas of armed conflict and human rights abuses.
On the surface, collecting this information may seem daunting, though it need not be.
Today’s PLM (product lifecycle management) solutions and associated technologies enable manufacturers to automate the collection of product data from the supply chain and then report against multiple compliance requirements.
It’s good business for manufacturers to know exactly what’s in their products and where it came from. The value of this data goes far beyond compliance. For example, only when armed with this information can manufactures properly mitigate the risk of supply-chain disruptions and forecast cost changes based on fluctuations in the price of rare materials.
A robust PLM system with an exhaustive audit trail for each product component— showing who made it, what it is made of, and where it was made—can provide the due diligence necessary to prove compliance, and help identify and resolve potential compliance issues before they become costly problems.
Gibson continues to make headlines as the company responds to the allegations and the government presses on with a criminal investigation. Gibson contends it has not violated the Lacey Act.
Juszkiewicz defends Gibson in a Huffington post editorial. “The recent raid of Gibson, however, did not come about because the wood was illegally harvested. Rather, the U.S. government alleges that the wood was imported in violation of an Indian export restriction designed to keep wood finishing work in India. To make matters worse, although the Indian government certified that the wood was properly and legally exported under this law, the U.S. Fish and Wildlife Service substituted its own opinion and reinterpreted Indian law.”
Scott Paul, a Greenpeace official in New York responsible for forestry issues, sums up Gibson’s positive environmental efforts and the complexity of compliance in a Wall Street Journal article, pointing out that Gibson has done “great work” to promote better forestry practices. The question, he said, goes to whether Gibson did everything possible to avoid buying wood from dubious sources.