Eastern Shore guitar maker Paul Reed Smith is introducing a new product line to compete in the important mid-price market. (Jamie Smith Hopkins/Baltimore Sun video)

— Until recently, Paul Reed Smith Guitars sold only American-made instruments for more than $2,000 and Korean-made guitars retailing for about $700.

To fill the gap — and with something U.S.-made, no less — the Eastern Shore company needed a design that could go from wood to instrument in dramatically less time. Guitars in its core, high-end line take about 20 hours to manufacture.

Finding efficiencies is tricky enough when you mass-produce widgets. Imagine the challenge for a company whose niche is high-quality guitars — instruments that have to look and sound good enough to tempt buyers away from the better-known Fender and Gibson brands.

"The engineering team was basically tasked with a pretty tall order," said Jack Higginbotham, president of the company, which goes by PRS. "Figure out how to make … a guitar that you'd want to keep a lifetime in about a third of the amount of time."

PRS believes it's done it. The company said it already has a four-month backlog of orders for its new S2 series — "S" for Stevensville. The guitars hit stores in August, priced from $1,179 to $1,399.

The company planned to eventually develop a mid-priced line of guitars and other new products when it decided to expand five years ago. It more than quadrupled its space in a business park just over the Bay Bridge.

But when the expansion got underway, in what Higginbotham called "the worst timing ever," the economy tanked. PRS laid off nearly 30 people in 2009 as guitar sales sank.

The industry as a whole still isn't back to its pre-recession sales. But PRS said its revenue of $43 million last year was up by more than a quarter over 2007. Its employment stabilized at around 240 workers. The recent sales growth was fueled by the company adding acoustic guitars and amplifiers to its product line, Higginbotham said.

And now it has mid-priced electric guitars. The goal is to sell seven of them for every 10 of the higher-priced models.

Paul Schein, guitar sales adviser at Chuck Levin's Washington Music Center in Wheaton, said the mid-priced segment of the market isn't what it used to be, given continued pressures on the middle class. But it's still important for manufacturers. It makes perfect sense that PRS founder Paul Reed Smith would want to be there, Schein said.

"If he can compete in that market, he should," said Schein, who has worked at the music center for 33 years. "Anybody should."

Now PRS can go after customers who might otherwise have bought a Fender American Standard Stratocaster or Gibson's Les Paul Studio and SG Standard guitars, all of which sell for about $1,200 to $1,300, Schein said.

It won't be easy. The biggest two guitar makers control 70 percent of the market, according to research firm IBISWorld. The company estimates the PRS market share at about 3 percent, making it one of the largest manufacturers among the many small, privately held shops that account for the remainder of the market. (PRS believes it's the third-biggest electric guitar maker.)

"Gibson and Fender dominate because they have the big plants in China and Mexico that ship in the cheap and middle-range guitars," said Dale Schmidt, an IBISWorld industry analyst. "Brand recognition is huge for them, too."

One advantage of such decades-old brands, Schein said, is the ability to traffic in rock history. The 28-year-old PRS can't trade on iconic '50s and '60s models.

Its draw is the guitars themselves, which have earned the company and its founder a passionate fan base.

"He's sort of like Lexus, if you will," Schein said. "He's this young upstart that produces a superb product."

An UltimateGuitar.com review last year of one of PRS' most popular guitars — priced at $2,700 — sums up both the love and the price challenge: "Paul Reed Smith is an evil man. For years his sole purpose in life has been to make ridiculously awesome guitars that few of us can afford."

That's where the S2 series comes in. In reviews of the three guitars, MusicRadar said they feel like "the top-flight core line" and pretty much sound like those instruments, too, for significantly less money.

"Game-changer is an already over-used phrase, but it seems the most appropriate term to describe this new S2 guitar," wrote reviewer Dave Burrluck, author of a book about the company.