Chain of Thought

Phonies Threaten Supply Chains

Gibson Guitar and the Federal Government have something in common. Both of their supply chains are plagued by counterfeits flowing through them. Obviously, the ramifications of phony electronic components in strategic weapons systems are a lot more serious to this country's population than a shipment of phony electric guitars, but the consequences are just as dire to Gibson's existence.

During a recent session of the Senate Armed Services Committee hearings, Senator John McCain noted that the committee uncovered over 1,800 incidents of counterfeiting, totaling over 1 million counterfeit electronic parts in the defense supply chain. “It begs the question: if one million counterfeit parts were caught in the supply chain, how many were not?” the Senator asked.

So it amazes me that with so much more iceberg to go after deep in the Defense Dept.'s supply stream that federal authorities, accompanied by armored SWAT teams with automatic weapons, recently invaded three Gibson factories and its Nashville corporate headquarters, terrorizing employees, to issue a warrant under a conservation law called the Lacey Act and strip Gibson of almost all of its imported Indian rosewood and some of the other materials that establish the authenticity of a Gibson guitar.

The issue for the Feds is not phony Gibsons, but how those materials were exported to this country. The Wall Street Journal reported that Gibson insists it got permits and followed foreign laws on exports of finished products, such as the prepared slats of Indian rosewood used on guitar fingerboards. The U.S. government claims the products weren't finished enough. Does that mean our own government would rather the guitars be “finished” overseas and imported for U.S. consumption rather than have Gibson make their products in America?

Now Gibson has millions of dollars either tied up in seized products or committed to legal fees. "The travesty is that we have not been charged, so there's no due process here," said Gibson's CEO, Henry Juszkiewicz.

It seems that we have warring priorities in our government. Al Will, a retired Marine Colonel and logistics specialist who also happens to be on MH&L's editorial advisory board, wrote me an angry e-mail about this, likening it to the government's efforts to thwart Boeing from locating a new production facility in South Carolina because of opposition from the National Labor Relations Board. He called these incidents “outlandish examples of government intrusion into business.”

The Feds are taking action to root out counterfeit electronic components in the DoD chain. For example, one of the Department's agencies is working with Applied DNA Sciences on an 18 month, million dollar pilot using DNA marking and authentication technology. We've reported on this technology and it has great potential for authentication in the private sector as well.

Being authentic is among a company's best competitive advantages. Phoniness is often the competitive advantage of politicians. U.S. citizens should take up a common cause: accentuate the former, eliminate the latter.

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