Gibson Guitar CEO: Raid by feds to cost company $2 to $3 million

It sounds like a case of government overreach: federal agents raiding guitar factories in Memphis and Nashville, Tenn. and confiscating wood imported from India. But why the raids occurred are still open questions, according to Gibson Guitar CEO Henry Juszkiewicz.

Juszkiewicz discussed the raid on Hugh Hewitt’s radio show Monday night. He said he was unaware of what the federal government wanted, but said their operations would be costly for his company.

“Well, total — you know, this second raid and all-inclusive — my personal guess is somewhere in the neighborhood of $2 million to $3 million,” Juszkiewicz said.

Reportedly the imported wood was confiscated because it was exported while in violation of Indian labor law. But at a time when job creation is key to President Barack Obama’s future political success, questions are arising about the use of U.S. government resources to enforce its interpretation of foreign law in a way that hurts a thriving business.

Juszkiewicz explained that Gibson had been hiring, despite the economic downturn.

“We employ approaching 2,000 people here in the United States, and we have hired just in the last two years something like 580 new employees in the United States,” he said.

In 2009 Gibson Guitar faced a similar raid for wood that violated Madagascan law, over environmental concerns. But this time Juszkiewicz said they were being singled out while other companies and industry that use the same product weren’t.

“We don’t what is motivating it,” Juszkiewicz replied. “It is one, clear to me that there is some terrific motivation because we are not the only company that uses this type of wood. Virtually every other guitar company uses this wood and this wood is used prominently by furniture and architectural industries, and to my knowledge none of them have been shut down or treated in this fashion.”