Sovtek in potential trouble?

Nicholas Dedring · From: Beacon, New York, USA

http://www.nytimes.com/2006/05/16/business/worldbusiness/16cheat.html?_r=1&oref=slogin

Might want to stock up on tubes, folks. There are apparently people trying to maneuver Sovtek out of business in Russia.

Ray Minich · From: Bradford, Pa. Frozen Tundra

Wow, just goes to show ya the Law of the Jungle at it's most basic form.

It's not just a uniquely Soviet behavior. A short time ago we had a local tax clerk deliberately omit sending tax bills to a landowner, so that their taxes would go into default, and then the tax clerk's son could buy the property at sherrif's sale. Dirty tricks abound...

Larry R · From: Navasota, Tx.

Which raises a question for those buying tube amps and preamps- what will the market hold for those in 5 yrs that have these products? We can all look around us and see the turmoil in every country in the world. Solid state products are not exempt either. I've been told that one particular audio-electronics company claims they can no longer get FET's (Field Effect Transistor)for replacement parts of their products. It appears we (the world in general) are buying products that may only have a service life of 2-5 yrs. At the end of the life of such prods, you just throw it away. That hurts if your favorite preamp or effects unit cost you initially $300 plus.
Ouch!!!

Jim Sliff · From: Lawndale California, USA

I keep a large stock of NOS and pulls - RCA, Amperex, Mullard, GE, Sylvania etc.

I throw Sovtek tubes away whe I work on an amp.

Ben Jones · From: Seattle, Washington, USA

No one has to worry about not having any tubes in 5 years. Tube amps have been around for a long time, new ones are still being manufactured, and new companies are making quality tubes for these amps...companies like JJ's. If sovtek goes under, there are many other manufacturers to choose from. It may however be a good time to buy that sovtek mig 60 or 100 head tho before the prices suddenly skyrocket.

Ben Jones · From: Seattle, Washington, USA

I stand corrected:

its not for me to say how our tubes "sound" or whether or not you "good old days" kinda idealists are right or wrong... but these are the facts:
the reflektor factory in saratov russia, which is owned by mike matthews, is the worlds largest commercial tube factory. new sensor corp. (EH, SOVTEK, Tungsol, Mullard) has 70 something percent of the world the market share of the tube business, or 8.5 million $ yearly (its not very big anymore). our tubes are used by every major manufacturer of tubed musical instrument and hifi equipment even if it has another label on it. Fender and Korg (who owns Marshall), for example, represent large scale consumers of vacuum tubes. if that factory goes, you all are facing the end of industrial scale tube production in the world. slovakia (JJ) and china combined produce less than 30% of the world's current demand. if you know anything about the quality and delivery rate of those sources, you will understand what the contempoary tube equipment manufactuer is facing.

jc morrison
senior engineer
electro-harmonix

Keith Cordell · From: San Diego

And you can rest assured that if Sovtek goes down the prices you pay for new tubes is going way up- take away the primary competition and there is no reason to control prices if the major competition is gone. And Jim you just feel free to save those tubes you've been tossing and I'll send you postage to send them to me! They work fine in my stuff.

Nicholas Dedring · From: Beacon, New York, USA

I don't play tube stuff myself... maybe I just am too cheap to buy it

I know that when I was looking at ampegs a few years ago, the only company that brought back the specialty tubes was sovtek, and I do know that they are a pretty big player in new tube production (not NOS, which is clearly a limited quantity on earth), and thought it might be a good thing to know.

Who knows, maybe a few letters to the Russian Embassy would be a good thing? If you use their stuff, or play tube equipment in general, it might not be a bad idea to let people know that it matters to you. There aren't a whole lot of places that still make them.

The embassy address is below, just in case. Just guessing here...

2650 Wisconsin Avenue, NW
Washington, D.C. 20007

Marlin Smoot · From: Kansas

Correct me if I'm wrong, but it seems like we had a tube shortage scare many years ago. Wasn't that why Marshall put something in their amps besides a 6L6 & EL34's (was it a 5500?) anyway, it seems like this discussion comes up every so often.

Don Scott · From: Upland,California, USA

It would be more effective to send the President of Russia a letter or email. He has in the past interceded in scams against Americans. You can reach him here. http://president.kremlin.ru/eng/articles/send_letter_Eng1a.shtml

Don

John Billings · From: Ohio, USA

I wish someone would print out the article here, cuz I ain't registering with the NYT for no reason!

Keith Cordell · From: San Diego

SARATOV, Russia — Mike Matthews, a sound-effects designer and one-time promoter of Jimi Hendrix, bought an unusual Russian factory making vacuum tubes for guitar amplifiers. Now he has encountered a problem increasingly common here: someone is trying to steal his company.

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Michael Falco for the New York Times
A vacuum tubes for use in guitar amplifiers.
Sharp-elbowed personalities in Russia's business world are threatening this factory in a case that features accusations of bribery and dark hints of involvement by the agency that used to be the K.G.B.

Though similar to hundreds of such disputes across Russia, this one is resonating around the world, particularly in circles of musicians and fans of high-end audio equipment.

Russia is one of only three countries still making vacuum tubes for use in reproducing music, an aging technology that nonetheless "warms up" the sound of electronic music in audio equipment.

"It's rock 'n' roll versus the mob," Mr. Matthews, 64, said in a telephone interview from New York, where he manages his business distributing the Russian vacuum tubes. "I will not give in to racketeers."

Yet the hostile takeover under way here is not strictly mob-related. It is a dispute peculiar to a country where property rights — whether for large oil companies, car dealerships or this midsize factory — seem always open to renegotiation. It provides a view of the wobbly understanding of ownership that still prevails.

In Russia's early transition days, amid the collapse of authority and resulting lawlessness, organized crime groups wielded great influence. Teams of armed thugs used to carry out takeovers, arriving at a businessman's door with little to back them up but the threat of violence, even murder. Indeed, contract murders reached a frequency of more than one a day in the mid-1990's.

Later, law enforcement, from the tax police to special forces units, played a role in forcing transfers of property in the scramble for assets of the former Soviet state.

In what became known as "masky shows," police officers, their faces often hidden behind ski masks, swarmed into a business to intimidate employees and force concessions from owners. The headquarters of the Yukos oil company, for example, were the scene of a series of high-profile masky shows. .

Now, the trend in business crime in Russia is decidedly white-collar — with the faking of documents, hiring of lawyers or payoff of judges — but no less insidious, Mr. Matthews and other business owners say.

In a puzzling case in Moscow in April, for example, thieves stole a shipping container with thousands of files on company registrations from the yard of a tax inspectorate office, using a crane and a flatbed truck.

"It cannot be excluded that so-called independent raiders, those who seize others' businesses, showed an interest in the tax documents," an article in Gazeta reported.

The article suggested the theft was a coup by corporate raiders who intended to use the papers much as identity thieves in the United States turn documents rifled from trash cans into profits through fraudulent credit card operations. In this type of crime, however, entire companies are at stake.

The tax authorities act as a registrar for small businesses. With the files gone, ownership is anybody's guess, the newspaper reported. Another common tactic of the new takeover artists is faking sale agreements for company shares and then voting out the legitimate management. Tracking down the true owner can be impossible if the authorities have been bribed — or the original papers are mysteriously missing.

The problem has become so pervasive among small and medium-size businesses that it has been discussed in the Parliament, where a committee on state security addressed the issue and cited more than 1,400 cases of fraudulent takeovers in 2005.

Across Russia, the Interior Ministry has opened investigations into the theft of 346 enterprises.

"Dozens of major deals for the purchase and sale of companies take place in Russia every month," Yuri Alekseyev, a chief ministry investigator, was quoted as saying by the Interfax news agency. "The process is ever more frequently accompanied by gross violations of the law."

"Those seizing enterprises are usually not interested in production, and just steal or sell the most liquid assets, in the first place real estate," he added.

Foreigners are not immune. Recently, the Canadian owners of the Aerostar Hotel and the French owners of an auto dealership in Moscow were maneuvered out of their businesses.

Here in Saratov, a river town on the rolling southern steppe, the battle began last autumn when Mr. Matthews received a letter with an offer. For $400,000, a company called Russian Business Estates, or R.B.E., would buy Mr. Matthews's 930-employee factory, called ExpoPul, with a turnover of $600,000 or so a month. Mr. Matthews quickly refused.

Skip to next paragraph

Luke Tchalenko for The New York Times
An employee at the American-owned Expo-Pul factory in Saratov, Russia, works on a vacuum tube.
Next, a letter arrived warning that the factory would have troubles with its electricity; in March, the power went off. Intruders then came and used jackhammers to raise dust that entered the factory's clean rooms. Strange young men in leather jackets loitered outside the factory gate.

Mr. Matthews, a legend among guitarists as the inventor of the Big Muff guitar pedal, rallied makers of musical equipment who rely on tubes from Russia and promised a fight.

R.B.E.'s director in Saratov, Vitaly V. Borin, said he wanted to buy Mr. Matthews's factory for the building it occupies and then sell it to an unidentified investor. He acknowledged that his company was pressuring Mr. Matthews, but he said it was using only legal tactics. If Mr. Matthews does not agree to sell, Mr. Borin said in an interview, the factory might run afoul of national security rules.

"We have instructions of the F.S.B, where it is written in black and white that a military factory cannot exist beside a company with foreign capital," he said, referring to the Federal Security Service, a successor to the K.G.B. Just near ExpoPul is a factory that makes electronic components for military hardware.

"The F.S.B. hasn't gotten involved only because we haven't gotten them involved," he said. Writing a letter to Moscow would be all he needed to shut the factory, Mr. Borin said, as he pretended to write a letter on a napkin.

For Mr. Matthews, more is at stake than property.

In the hulking pile of brick wrapped in pipes and smokestacks that is the building, most of the employees are women. Dressed in blue robes and hair nets, they join together delicate bundles of wire, wafers of rare metal and glass bulbs with fingers trained by years of work.

"No man would want to make a tube," Lyudmila V. Afanasieva, 54, said, nimbly sliding wires into a glass cylinder. She worked on the same tube model when it went into nuclear submarines that prowled off the coast of the United States.

ExpoPul makes two-thirds of the world's vacuum tubes used for music. Outside the old Communist bloc, the technology nearly became extinct. Vacuum tubes are made on an industrial scale only in China, Russia and Slovakia.

Tuned in to the music industry's needs, Mr. Matthews increased sales to 170,000 tubes a month in 2005, from 40,000 in 1999. The company has more than doubled its work force. It sells to Fender Musical Instruments, a maker of guitar amplifiers based in Scottsdale, Ariz., and the Japanese keyboard maker Korg.

While most of the Soviet electronics industry has disappeared, rendered obsolete by Japanese makers and Silicon Valley, ExpoPul, which opened in 1953, is thriving. It is a rare example of a Soviet-era factory that became a success without painful reforms. Hidden in this provincial town, its 1950's vintage technology survived long enough to become a worldwide hit.

If the tube factory dies, so will the future of a rock 'n' roll sound dating back half a century, the rich grumble of a guitar tube amplifier — think of Jimi Hendrix's version of "The Star-Spangled Banner" — that musicians say cannot be replicated with modern technology.

"It's nice and sweet and just pleasing sounding," Peter Stroud, the guitarist for Sheryl Crow, said in a telephone interview from Atlanta. "It's a smooth, crunchy distortion that just sounds good. It just feels good to play on a tube amp."

He added: "It would be a catastrophe for the music industry if something happened to that plant."

Mike Pace · From: O.S. CT. USA

If I recall, wasnt the original E.H. factory in Long Island shut down due to some sort of Teamsters manuveur?

It seems Mr. Matthews cant catch a break when it comes to this stuff!

Jim Sliff · From: Lawndale California, USA

"If the tube factory dies, so will the future of a rock 'n' roll sound dating back half a century, the rich grumble of a guitar tube amplifier "

Oh, please. First, it won't "die" - the Russians are too smart to shut it down if it makes money. And if it did shut down, it would merely mean that Czech and Chinese production would have to ramp up. Groove Tubes already makes tubes in China (the supposedly "US - made" GE-6L6 is mostly made in China) and most of THEIR tubes are the same ones EH sells. When you figure the most-used instrument amp tubes are 6L6's, EL34's, 6V6's EL84's, 12AT7's and 12AX7's ALL of those are made in places other than just Russia. So Fender switches to JJ tubes? IMO all that would happen is a minor cost increase and a huge tonal improvement.

The tube world will survive if Mike Mathew's ventures don't. He's always "played the edges" - sometimes those edges bite back.

FWIW if you read years of reviews of tubes, you find lots of comments about Sovtek/EH such as "durable" and "rugged"...but not too many praises for their tone.

Some of their tubes aren't even what the label says - the huge selling (inexpensive) small-base 5881 is not a 5881. It is not a 6L6 either. It's a Russian airplane servo tube with the same pinouts that happens to work in amplifiers at fairly high plate voltages. It was not designed by Mathew's group - it was already there, but not in amplifiers...since the 50's! And their original 6V6 was a relabeled 6L6 that didn't pass tests for 6L^ use, but could handle the lower voltage requirements of 6V6's.

LOTS of games in the tube world. JJ plays pretty stright-up, so if I need new tubes for someone I recommend those...but I use NOS tubes and tested pulls in my own amps, with a few JJ's here and there.

James Quackenbush · From: Pomona, New York, USA

There are very few high end tube amp companies that use Sovtek's in their amps .....Generally speaking , most of your low to mid end amp manufacturers are using Sovtek's only because of durability and cost issues ....Most low to mid end amps can benefit from a simple tube change to a better tube anyway .... I doubt very seriously that anyone who enjoy's GOOD tube tone would be willing to go to a Sovtek tube anyway for a cost saving measure ....TONE will always rise to the top, and the cost when it comes to tubes I doubt would matter with todays prices .. .... I for one would not miss Sovtek tubes .... Big companies can cut corners when using these tubes in large quanities , but like Jim S said , the worst thing that could happen would be that said companies would now have to use better tubes, and we would have to suffer with better tone ....Worse things have happened !!....

........Jim

John Billings · From: Ohio, USA

Thanks very much Keith! Luckily, I have enough NOS tubes to outlast me!

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