Sunday, March 17, 2013

Bob Dain Brings Vintage Guitars and Local Equipment Back to Bridgeport

 312 Vintage Guitars has only been open for 4 months, and it is already on the map. It’s been featured on DNA Info, mentioned in TimeOut Chicago, and this Tuesday, March 26, it will play host to a live segment for the You and Me This Morning show on WCIU.

Its 35th Street location doesn’t see crowds of pedestrians strolling past, but it is visible to streams of drivers making their way to the Dan Ryan Expressway, and it’s the kind of shop drivers will stop for. Owner Bob Dain, age 26, says he watched one customer drive by, back up, park and walk in off the street. He bought 2 guitars on the spot – a Gibson Les Paul, because he’d had his eye out for one, and a Fender Stratocaster, because he liked the price. He paid over a thousand for each instrument, then went back on his way.

Dain’s career, in fact the span of his life, fits within the emerging market for vintage guitars. The year he was born, Gibson Guitar was a tired brand struggling under foreign ownership and a diminished reputation, production was down to 1 model of electric guitar, and the company was bleeding money. That was 1986, the year Gibson was purchased by a couple young guys with business degrees. Their turn-around plan centered on the company’s heritage, and the reissue of “classic” guitars.

By 1994, the heritage plan was working. Sales had multiplied sevenfold and CEO Henry Juszkiewicz was telling the New York Times he had visions of making Gibson the biggest instrument maker in the United States – a position once traded among Chicago firms.

The Chicago makers lost their lead in the 1960s and 70s, when the center of guitar manufacture moved to Asia. But in the 1980s, Asian buyers holding strong currency also had an appreciation for old American made instruments, and prices were on the rise.

In 1999 Eric Clapton auctioned 100 of his instruments to raise money for a drug and alcohol recovery center, and set record prices. One of his Fender Stratocasters raised $450,000. In 2001, when he held a second auction, retail giant Guitar Center paid $959,000 for his favorite Stratocaster, then made its money back by selling well made copies of it.

Reissues of classic designs, peppered with fabulous prices for celebrity instruments, stoked a market for originals through the 2000s, or at least through that part that was exuberant. Looking back in 2011, Guitar Afficionado observed that a vintage Les Paul Gold Top Gibson was worth $5,500 in 2002; 4 years later, in 2006, the same instrument could fetch $85,000. Then the price crashed to about $30,000, so if you’d bought it in 2002 you’d still be pretty happy, maybe less so if you’d bought it much later than that. Today, Dain says a top quality equivalent from the late 1950s might raise $50-60,000 at auction.

Dain is a musician himself, his band, The Sweeps, plays clubs from Simone’s to the Double Door. He plays vintage instruments, but he is less likely to buy a rarefied specimen in perfect condition than to buy something that is interesting for other reasons, and modify it for his own use.

Dain bought his first vintage guitar at a church estate sale when he was 15, a couple years after Guitar Center bought its Clapton Stratocaster. Vintage Gibson’s were beyond reach for most teenagers by then. Dain bought an Airline brand electric guitar, made by Chicago based Valco Manufacturing Company in the 1950s and 1960s. Dain describes it as having a particular tone, playability, and a “New Agey, Jetson’s type” look. Today, big names like Jack White of the White Stripes and Dan Auerbach of the Black Keys play them. But back then, he says, they were still undervalued.

Dain’s been buying and selling vintage instruments ever since. The crash in prices in the late 2000s made a lot more bargains available. And the market has widened, buyers have come to appreciate more instruments, for more various reasons.

Dain recently sold a Grestch Fury amplifier built by Valco in 1968. Valco was known for its mid-market brands. In 1968 it was going out of business, it assembled the Gretsch Fury from parts it had lying around the warehouse. Today the amp is hard to find, but it’s also appreciated for its clear sound, and the fact it handles effects pedals very well, a quality that wasn’t realized in 1968.

Dain sold the Fury over the internet for $1,800, even though he says they can fetch $2,500 - $3,000, depending on their condition. He says the guy who bought it from him turned around and posted it on a European classifieds list for $5,500.

From the 19th Century, Chicago was a dominant force in the mass production of musical instruments of all kinds, and for some of the same reasons it came to dominate other industries: its innovation in modern production techniques, its situation as a logistical center, but also its place as world capital of the mail order catalog. The catalogs all offered large selections of instruments. In fact Sears Roebuck & Co once acquired the Harmony Company, one of the nation’s largest instrument makers, in a bid to corner the ukelele market. The Airline guitar Dain first bought was a brand that Valco made for Montgomery Ward.

Amplified guitars were developed on parallel tracks in Chicago and Los Angeles in the 1920s, partly to make them audible through the din of dance orchestras. In Los Angeles, the National String Instrument and Dobro Manufacturing companies both developed self-ampliphonics, but the Chicago firm Stromberg-Voisinet, which started out in the 1890s, making mandolins, is credited with making the first electric guitar for commercial production in 1928. By the mid-1930s, National and Dobro merged and migrated to Chicago to be near the center of things.

Over the next decades, Chicago’s guitar makers were a case study in agglomeration effects. Companies like Harmony, Kay (heir of Stromberg-Voisinet) and Valco (heir of National Dobro) sold guitars and amplifiers under dozens of brands, they occasionally merged, acquired or succeeded one another, and they consistently made parts, amps or whole instruments to be sold under one another’s brands.

They all prospered on the post war triumph of the guitar. They built acoustics for the folk movement, electric guitars and amps for blues and rock and roll. In the mid 1940s, the Harmony Company, which first set up shop on the present site of the Civic Opera building in 1892, moved its production to 3633 S. Racine, on the edge of Bridgeport’s Central Manufacturing District. It produced up to 350,000 instruments a year in the early 1960s – and it couldn’t produce them fast enough.

Under the British guitar band invasion, demand would not stop growing. But the fade-out of American made guitars was a staggered effect that started while sales were still peaking. One commentator observes that the Harmony Company found itself confronted with a choice between building its production capacity to meet the clamor for instruments, and making the market wait. He says it took the second option, effectively stepping aside to let cheap foreign imports fill the gap.

It was another Chicago businessman who saw the opportunity to fill that gap with inexpensive Asian made guitars. Jack Westheimer established connections with Japanese guitar makers in the 1960s, and sold them through Sears, JC Penny’s and Montgomery Wards. In the early 1973 he created a Korean based manufacturer, originally called Yoo-Ah, then Cor-Tek, it is still one of the largest guitar makers in the world.

Kay and Valco merged, then went out of business together in 1968, when Harmony’s sales were near their height. Then by the early 1970s, Harmony was struggling. Gibson was seeing record sales in the early 70s, but by 1975, Harmony stopped production, auctioned the contents of its warehouse, and licensed its name to Asian imports. In 2009, the Northbrook based Westheimer Corporation bought the name back and has began to reissue a series of “classic” Harmony guitars.

A decade after Harmony wound down, Bridgeport helped launch a new era of instrument manufacture. Ian Schneller, a sculptor trained at the School of the Art Institute, moved into a former lamp factory on Archer Avenue [a building his web-site describes fondly as a “labyrinth of funny little spaces”] in 1986. He began to build musical instruments, first for his own band, and for the bands of friends, under the name “Specimen Products” -- a wink to the anonymity of modern production.

Over time, especially after he’d moved shop to Wicker Park during 1994, he became known for his distinct designs and his skills as a luthier. In 2005, after years of fielding resumes from aspiring guitar builders, he launched the Chicago School of Guitar Making, which has trained over 1,000 students so far. In fact, Bob Dain was one of them. He took a class in guitar repair in 2011 to solidify skills he’d picked up working on instruments on his own.

Dain moved from the suburbs to Bridgeport in 2006, because he’d heard there were cheap rents, and because it would bring him closer to the clubs where his band plays. When he was ready to open his own retail store, Bridgeport was a natural location. There is a density of musicians in the Pilsen- Bridgeport area, he observes, including music studios at all points of the compass (from Hinge Studios in Pilsen and 35th Street Studios to the west, to Alien Audio in Canaryville) but no place to buy guitar strings. Until now.

Dain says that today, about half his sales are still made to Asian buyers over the internet. And it seems only fair that Asian buyers should help finance Bridgeport’s new guitar shop, and the synergies that are already circulating through the shop.

Pete Galanis, a Bridgeport based studio musician has arranged to teach guitar lessons at the shop; Ken Bonner, who also lives in the neighborhood, provides expert services in amplifier repair. Now Bonner is starting up his own business, Bridgeport Amplifier Co, to make boutique, hand wired equipment.

Dain’s display case features other local, small batch brands. Souldier brand guitar straps have appeared on the Grammy’s and episodes of Saturday Night Live – they are hand tooled from a manufacturing facility in the Carroll Street corridor. Daredevil is a brand of special effects pedal made from a musician’s apartment in Logan Square. Dain met the guy who makes them at a gig; he carries Daredevil’s pedals because they’re hand-wired, well finished and “do what they do very well.” Soon, he will also carry Emperor brand speaker cabinets – known for their sturdy, dovetail construction and custom sizes -- they are built from a plant in one of the historic warehouses that line Pershing Road.

Dylan Patterson, who founded Emperor Cabinets once told GearWire that Chicago is a great market for custom equipment, because nearly everyone in Chicago seems to be in some kind of band. 312 Vintage Guitars is already reaping the benefits, and doing its part to multiply the effects.

Saturday, February 2, 2013

Citizens Watch

The February CAPS meeting should be packed after the masked gunman incident at Kevin’s Hamburger Heaven last week. Lots of people will want to know if the police have made any progress in the case, and what they’re doing about all these criminals coming into the neighborhood to rob and shoot people in general.

So far, the comments on EveryBlock range from reminiscence about the old days, when everyone knew each other and handled a lot of mischief and thuggery without calling the police, to calls to shut down those Pershing Road truck stops altogether. They’ve been a magnet for big scary guys for years before this happened. Is it true that Kevin’s Hamburger Heaven keeps armed security? Someone mentioned it on EveryBlock, but I’m probably not going to trot over there to confirm.

I feel like I owe some kind of Hardscrabbler amends though, because when I wrote about public safety issues last summer I made it sound like there were a lot of hysterical people overly worried about criminals coming in from other neighborhoods, and that was distracting them from our real crime problems, which originate here.

Then, over the next 6 months there was a long list of predatory incidents confirmed by police, most of them in broad daylight – a rash of people held up for their smart phones, an attempted carjacking, a couple drive by shootings – once I heard the shots myself at 7am on Sunday morning, and saw the blood on the sidewalk on my way to Sunday school.

I don’t want to get hysterical myself just because some of it happened close to where I live. I bet it’s still safer for a woman to walk down the street at night in Bridgeport than it is in Lincoln Park, in fact I bet that frequently. This is still a neighborhood where people know each other, and where a lot of them take personal pride in the safety of their streets.

Just before Christmas, a young Chinese woman got robbed on Princeton. She ran to the nearest random house, rang the bell, and 3 men from the house ran out and caught her assailants. You don’t necessarily want your neighbors risking direct confrontations like that, but that story, confirmed at a CAPS meeting, sure warms my heart.

A lot of people keep an eye out for trouble. Like Paul, a proud Vietnam vet – he lives east of Halsted now, but regularly patrols Morgan and Carpenter Streets in his wheelchair, those are the streets where he grew up.

And Joe, who shows up at CAPS meetings to follow up on calls he’s made. He’ll say “I saw a guy walking up my street checking out people’s gangways, so I followed him to 31st Street and from Princeton to Parnell.” It sounds different from what you might hear in other neighborhoods, or even in Bridgeport in a different era. It isn’t “I saw a black guy where he didn’t belong so I got my friends and we chased him out of the neighborhood,” but it isn’t “I saw someone trying doors in the alley, so I went home, called police and hoped it all worked out,” either.

Tom Bailey coordinates the Bridgeport Citizen’s Group’s neighborhood watch. After patrols he’ll go back on his own to paint over graffiti, or to patrol particular hot spots with his son in law late at night. He’s always looking for recruits to make more patrols, more often. If you’re concerned about crime you should talk to Tom about coordinating with his patrols – you can meet him at CAPS meetings at the 9th District station, they start at 6:30pm the 2nd Tuesday of every month.

Of course, crime is random and you can’t always catch it on patrol. It will be more effective in the long run to stop it where it lives. And there is a fair amount of trouble that lives here in Bridgeport, often in buildings with landlords who aren’t around.

Alderman Balcer helped the neighbors around 3309 S. Carpenter Street put the creeps who plagued them this summer out of that house, but bad tenants of absentee landlords aren’t limited to Carpenter, and the field of Bridgeport apartments run remotely isn’t shrinking.

The Bridgeport Citizen’s Group is lining up strategies to make landlords accountable for the tenants they keep. We’ve been turning to Canaryville for advice on how to do it. Canaryville’s neighborhood watch is almost legendary, and they have a dedicated specialist in housing court. Chris Martin has been pursuing bad landlords through the courts for 7 years. In January he and Pat Arloe, Canaryville’s Beat Representative in the Police Department, sat down with a group from Bridgeport who want to get something similar started here.

Pat and Chris work closely together to identify which they should prioritize, and to document what is wrong with them. They say that neighbors should start calling in complaints for every nuisance that occurs; they’re also creative about getting photos of code violations, and video of bad behavior. Their goal is to build a rap sheet they can use to get the building placed on the city’s troubled building list, get it inspected, and sent into court.

Chris says the Canaryville neighbors have managed to get 4 “rat-hole substandard” buildings demolished that way. But it took some persistence –in one case it took 14 court appearances, and on average, the process took 19 months.

But it doesn’t have to go that far. Chris says most landlords will go to some lengths to avoid court appearances, fines and costly repairs. They may decide to sell, or, in the best case scenario, they keep the building but change their ways.

Some of the members of Bridgeport Citizen’s Group are landlords themselves, so there has been talk about how to help those who have found themselves with bad tenants navigate the eviction process, which takes some diligence in itself.

Chris emphasizes that a landlord’s best strategy is still to screen his tenants carefully before they move in. He points out it costs just $7 to run a background search on CheckIllinois. He has occasionally actually paid to run background searches for landlords with really bad tenants, just to get them to cooperate. He says he’s never had to go to court for a landlord who lives in the neighborhood – though he adds that 4 of the worst buildings in Canaryville are owned by landlords who live right here in Bridgeport.

Saturday, January 12, 2013

The Home Borrowers' Progress

By one measure after another, the housing market stuttered back to life in 2012. Home sales sped up, prices rose, new construction re-started, giving the drywall industry a boost. For New Year’s, Trulia’s chief economist observed the glut of unsold homes dropped through 2012, and predicted the question for 2013 will be at what point inventories will hit bottom, so the rebuilding can start in earnest.

Nationwide, a share of those inventories are being sopped up by investors. Frustrated by low interest rates and poor returns on other kinds of investments, they have been buying up foreclosed properties in bulk, at discount, and renting them out. That’s probably good for owners who want to sell, but less good for small buyers with less easy access to financing, and it’s not so great for the neighborhood either.

In the 1970s, financing was so scarce in urban neighborhoods, especially low income and minority ones, that Congress passed the Home Mortgage Disclosure Act, requiring banks to report where they were lending, and to whom, in detail. The numbers take awhile to assemble, regulators make them public in fall of the subsequent year, which is too late to show the latest ticks in the housing market. But it still shows how banks impact neighborhoods over time.

The activity of big investment firms won’t show up there – where they buy whole portfolios of foreclosed properties from banks, they aren’t taking out home mortgages to do it. But the HMDA reports show that investors have been buying up individual properties too. In Chicago, loans to non-occupants started to pick up in 2010; they continued their increase through 2011, even as overall mortgage lending continued to decline.

In Greater Bridgeport, the Home Mortgage Disclosures show the impact of lending practices that look like redlining in reverse. The neighborhoods south and west of Bridgeport enjoyed an abundance of loans during the boom. These tracts, spreading through Brighton Park and Back of the Yards, have lower incomes and more minorities than many tracts in the eastern part of the map. They were also the neighborhoods where loans dropped most sharply during the bust.

Of course, lending reached new heights, then plunged, almost everywhere. In the Chicago area, the boom was fueled as much by existing homeowners repositioning themselves, and sometimes cashing out new value from their homes in the process, as by actual property sales.

But after the bust, refinances were still available. They were made less frequently than at the height of the boom, but they did not drop off so sharply as home purchase loans. And they surged in 2009, the year federal, state and county programs to avert foreclosures came on line. Foreclosures mounted anyway, but the ability to refinance probably helped slow foreclosures from mounting faster. Refinances have kept far ahead of foreclosure filings across the region as a whole.

That hasn’t been true everywhere. Among the neighborhoods that surround Bridgeport, New City, the community area that combines Canaryville and Back of the Yards, makes a striking example. New City topped the chart of loans made in the area in 2005. Then it fell to the bottom of the chart.

A closer look at loans made in New City shows that refinances dropped off less sharply than home purchases, but they did less to cushion the crash than elsewhere -- the refinance revival of 2009 didn’t show up in New City at all. Foreclosures overtook home purchases quickly, they peaked in ’08 and were declining by ‘09, but they still surpass home purchase and refinance activity combined.

Something similar happened in Brighton Park – a neighborhood that rivaled New City for loans during the boom. That might make the subsequent abundance of foreclosure look like a natural outcome of excess activity during the boom.

But compare Brighton Park to the progress of the South Loop – whose high-rises stand testament to an hour of fabulous optimism. The Near South Side captures the South Loop south of Roosevelt Road. The Census shows most of its housing units were built after 2000. Home Mortgage Disclosures shows home purchases fell abruptly after 2006, but refinances lurched into the gap. Foreclosures have been on the rise in the South Loop , but they gathered steam slowly, refinances still far surpass them, they have yet to catch up with new home purchase loans.

In comparison, the Lower West Side, which captures Pilsen, south of 18th Street, was a study in moderation. Other indicators may show gentrification, but loans in the Lower West Side were made on a more modest scale than anywhere else in the Bridgeport area. Tracts in the Lower West Side share median incomes and minority populations in line with those of Back of the Yards and Brighton Park. They also share a similar pattern, if not volume, of loans: refinances dried up along with home purchase loans; foreclosures surpass them both.

Access to refinance can help avert foreclosures, so it seems unfair that borrowers in neighborhoods like Back of the Yards and Pilsen are getting fewer of them than borrowers in the South Loop. If a borrower is uncredit worthy, a refinance won’t fix that, but many loans must fall in a gray area, where banks weigh the cost of re-writing a more realistic loan against the cost of holding a foreclosed property as it deteriorates. And you would think investors would prefer to own a passel of properties in the South Loop.

At any rate, a single investor-owned property can wreak havoc on the neighborhood fabric, whether it’s vacant, or leased to tenants whose landlord can’t be reached. That has become clear in Bridgeport, where the tenants of absentee landlords have proved to be a tenacious problem on blocks of Carpenter, Lituanica, Union and Wallace.

And Bridgeport has stayed a moderate course during the boom and bust. Home purchase loans dropped after 2006, but refinances recovered. Foreclosure filings rose, they eventually reached the same rate as those in the Lower West Side, but they’ve done it gradually and then dropped off. A property in Bridgeport is still more likely to be purchased than foreclosed.

Armour Square, Bridgeport’s eastern neighbor, enjoys a similar pattern with even fewer foreclosures. McKinley Park falls somewhere between Bridgeport and Brighton Park: refinances showed some resilience, but foreclosures surpassed home purchases in 2009, and continued to do so through last year.

By 2011, residential lenders clearly favored Bridgeport. Armour Square’s loans were mostly made in Chinatown. Loans were made at a more moderate rate through Canaryville, and out the Archer corridor through McKinley Park and Brighton Park.

But overall, lending activity was still dropping in 2011. There were fewer loans in most places and in most categories than in 2010. The exception is loans to non-occupants -- those have been on the rise across the metro area for 2 years.

In the Bridgeport area, loans to non-occupants are concentrated in a few clusters, including Chinatown, and Bridgeport’s Northwest quadrant. But they are most concentrated in the census tract that falls west of Halsted Street, between 32nd Place and 35th Street -- the heart of Bridgeport’s small landlord district, it has historically had high concentrations of small apartment buildings whose owners live in the building.

Citimortgage and JPMorgan Chase are the community’s top lenders, a position they held on the eve of the financial collapse. Citimortgage made 65 loans in Bridgeport in 2011, JPMorgan Chase made 81. For comparison, locally owned Pacific Global, a Community Development Financial Institution that has ranked among Bridgeport’s top lenders throughout the boom and bust, made 30 loans in Bridgeport in 2011, less than half the volume made by each of the big banks.

They were also making different kinds of loans. The big banks were mostly refinancing loans for existing owners. All but 4 of the loans JPMorgan Chase made in Bridgeport were refinances, for instance, and a quarter of them were made to non-occupants. In fact 10 of Chase’s loans to non-occupants were concentrated in the small landlord tract west of Halsted, between 32nd and 35th. Pacific Global’s 30 loans were all loans for home purchase, they were scattered throughout the neighborhood, and only 3 of them were made to investors who wouldn’t occupy the homes.