Update on the Vinyl Record Supply Chain
In my first post on this subject, I discussed how the resurgence in vinyl record production has been a struggle. There are a limited number of producers all working 24-7, and it’s difficult to keep up with demand. The renewed interest in purchasing music in this physical medium has meant a massive increase in sales, year over year, but it has also meant slowed production, and availability delays. The challenges are even greater for small independent record labels, as their orders often get pushed out in favour of large orders from bigger music companies. In the 6 months since I wrote that post, the tides have begun to shift in the vinyl record supply chain. There are new vinyl pressing plants opening on a regular basis. The latest has made a lot of press in Canada, and it is poised to become the second-largest vinyl pressing plant in North America. Talk about a shakeup! I got in touch with Gerald McGhee, who has been the President of Isotope music for two decades, but he is now also the Executive Vice President of Precision Record Pressing, based in Burlington Ontario. I asked him a few questions about their business plan, and their supply chain challenges. Why did you decide to take this project on? And why such a large scale? What we noticed at Isotope, was that our suppliers Warner, Universal, and Sony were having a bad supply issue. We wanted to help, and they said that if we went ahead with this project, they’d support it. So it seemed like the next logical step for us to venture into the manufacturing end of the music business. What are the biggest business challenges you had in setting this up? Finding machines! The old ones are not reliable, and even if they were usable, they were not being used. People either wanted too much money or were not willing to sell to keep the market under-fulfilled and keep out new competition. There is a great demand for this product, how do you plan to fill the supply gap? Taking care of the Canadian labels and independents first. This will help us eliminate their problem of not being able to get pressing time with other plants. And we have new reliable machines! Also, my partner’s been pressing records for 65 years, that’s a lot of expertise. It gives us a solid base and we feel confident with these factors will help change the industry and turnaround times. How many units do you think you’ll be producing per week/month/day? For 2017, we expect to produce 4 million units, so that’s 330,000 per month, around 12,000 per day. If you can believe it, we are already talking of expanding. What issues do you foresee with your supply chain, in order to get the raw materials you need? None! Since our partner GZ has made the machines, they will also supply us with all components needed. So, no supply issues? How much raw material do you need from GZ to support the business? All our compound will come from GZ. They make their own, which is specific for these new machines. Also, we bought a printing company which will allow us to make the album jackets, download cards, etc. all in house. One issue we talk about a lot in supply chain circles is competing demands. How do you plan to balance demand from large companies (Warner) and small companies (indie)? How would you handle this to please all your customers? Our presses are perfect for smaller runs. Which, we intend to leave space for the smaller indie labels and bands but because we have 10 presses this will allow us the capacity to handle the bigger orders as well from the majors. You wouldn’t get into this without doing heaps of research and due diligence. What does the future hold for vinyl records, in your opinion? They project 30% growth for the next few years. Like all things, there will be a slowdown. But if you are leading with quality, technology and great service this will go on for a very long time. I was told in 1996 that I would last 3 years. We are now in our 20th and growing tenfold over the past 5 years. The guys who said I would not last are all gone now! What an interesting story. Thanks so much for sharing it with us Gerald!