MERIDIAN — That eminent philosopher, and adopted Mississippian, Dizzy Dean, used to say in his inimitable style and syntax, “It ain’t braggin’ if you done it.”
So, let’s pose a question. What do the following facilities have in common: Beau Rivage Hotel & Casino, Opryland Convention Center, the U. S. Senate, the Penn State Football Stadium, Cologne Germany’s Congress Center East, Sydney Australia’s Opera House and Beijing China’s Hall of the People?
If your final answer is, “They are all equipped with a Peavey Electronics MediaMatrix sound system manufactured in Meridian,” you’d win a big smile from 58-year-old Hartley Peavey, the one and only founder, and owner, of Peavey Electronics. He ain’t bragging — he’s done it. You’d also win a “Wow!” from anyone unfamiliar with the worldwide reach, scope and ambitions of Hartley and his firm.
In an oft-repeated story in the best tradition of Horatio Alger, it all started about 1955 when Hartley was in the sixth grade and became the youngest student to ever be allowed in Meridian High’s Ross Collins Vocational School. He took a course in electricity.
“I loved to tinker and entered, and won, just about every science fair,” Hartley recalls. “I really wanted to be a rock star, but didn’t have the talent.”
After a business degree from Mississippi State University, in 1965 he began building amplifiers with used parts in his father’s basement.
“I started this for purely selfish reasons — I needed a job. It turned out that the musicians needed good gear at a fair price,” he said.
The “good gear” was quality stuff and had a lifetime guarantee. Uncle Sam came up with restrictions in the 1980s that eliminated the guarantee, but any original product is still repaired free of charge. That kind of old-fashioned quality product and money-back policy created a fast growing market.
But it had its growing pains.
Jere Hess, director of public relations and education, came to work for Peavey in 1978 and can relate hair-raising stories about his early days with the company. It was — and still is — a privately held firm, so mostly the stories have to do with Hartley Peavey’s paranoia about divulging any financial information.
Hess recalled one period when there was a cry from Bob Peavey, treasurer (and Hartley’s brother), “We’ve got a payroll next week and unless we get enough cash in, we’re not going to able to meet that thing.”
“Borrowing money was not an option,” Hess remembered. “Hartley said, ‘We ain’t gonna borrow any money,’ and we didn’t.”
Revenue bonds offer tax advantages to new and expanding industry, so Bob and Jere talked Hartley and Melia, Hartley’s wife, who had a major voice in the company, into using bonds in 1984 to build a plant in nearby Decatur.
“Guess who bought the bonds,” Hess said with an ironic smile. “Hartley and Melia, and worse than that, they paid them off in two years, thus losing many of the tax advantages. Hartley`s outlook was, ‘It’s still debt.’”
Today, just the dry numbers on Peavey Electronics are staggering. Aside from the fact that their 3,000 products can be spotted all over the globe, they employ approximately 2,000 people worldwide (1,600 in Mississippi with a $38 million payroll) in 32 facilities — they’ve had a plant in Corby, England for 15 years. They have been Mississippi’s top exporting company since 1983 and hold 120 active patents.
Peavey even has its own flight operations center that includes a jet that can fly from Meridian to Europe without refueling. There’s also a very interesting company historical museum with a full-time curator.
Peavey is the first to say that the musical instrument and sound equipment industry requires a high degree of technological sophistication in today’s rapidly changing world.
“Every year, I think it will get better, but it never is,” Hartley said. “We’ve skirted disaster so many times.”
When his wife, Melia, died after a long bout with poor health in March 1998, many observers questioned the future of the company. She had played a major role in the management and expansion of the firm. In addition, Hartley Peavey’s mother and father — who had been instrumental in the founding of the business — passed away within the following 13 months. “That was a terrible time for me,” he recalled.
“One thing about me,” he said now, “I’m blessed with stickability. Other people quit, but I can do it.”
Peavey revamped the company.
Walter Lutz, a Dartmouth MBA graduate, was employed as president and chief executive officer, and he installed such “radical” concepts as budgets and business plans.
“He runs a business like a business,” Hess said. “It wasn’t run like a business before, so what happens is when you do a disciplined approach to business, a lot of the risk-taking, the fun and the excitement — a lot of that goes out.”
Well, maybe (Hess is retiring Dec. 31). Lutz was quoted in The Meridian Star on May 26 that plans are to double the size of the company in the next five years.
“Right now, our focus is on efficiency and consolidation. We must change to meet the demands of the marketplace,” Peavey said.
Like all privately-held firms, Peavey has five options: (1) issue stock and become a publicly-held firm, (2) borrow enough money for expansion, (3) stay the same, (4) sell out (and there have been numerous offers), or (5) enter into strategic partnerships with other corporations. It’s obvious that Hartley considers the first four not only distasteful, but unacceptable. The first partnership is with General Music, an Italian firm, who will supply keyboards, and another cooperative venture is in the offing.
How will that affect total employment? Peavey offered a straightforward answer.
“The expansion will be mostly outside Mississippi,” he said. “Look, 96% of the world’s population is outside the United States and 100% of electronics are produced offshore. I’m as patriotic as anyone you can find, but we’re forced to change.”
Those changes are coming internally as well.