Paul Reed Smith Guitars, the Eastern Shore company that makes guitars for Carlos Santana and other well-known musicians, has received a $10 million private equity bond from the state to help pay for a major expansion of its headquarters, company and economic development leaders said yesterday.
The bond, which is tax-exempt and provides the company with a low interest rate for repaying the loan, will be used to help finance an 84,000-square-foot addition to the company's manufacturing facility at the Chesapeake Bay Business Park in Stevensville. The current facility is 25,000 square feet.
The expansion, which is expected to be completed next year, is slated to create 60 new jobs, bringing the company's total work force to 250 people.
The bond was issued by a private lender through the Maryland Department of Business and Economic Development. DBED also approved a $1.5 million loan in 2005 to help pay for the expansion.
"Paul Reed Smith is really one of those homegrown success stories that you always hope you'll be able to keep in the state," said Karen Glenn Hood, a DBED spokeswoman. "They have been working on this expansion for a few years now, and we wanted to be a part of that and give them any assistance we can."
The company said the added space will also allow it to expand to different product lines, including acoustic guitars and amplifiers. It will also be able to begin selling guitars at a wider price range, including some that are more affordable for the average person. Prices currently range from $450 to $20,000.
"There are some large segments of the market we should be addressing," said Paul Reed Smith, who founded the company more than 30 years ago. "We have the skills and the supplies and the talent to do it. But we were out of room, and now we won't be out of room."
Smith said the company is working with musician Ricky Skaggs to design the acoustic guitars and well-known amplifier builder Doug Sewell for those products.
Smith got his start in 1976 when he repaired guitars from a room he rented above the Rams Head Tavern in Annapolis. He would make one guitar a month in between repairs.
On weekends and nights, he'd sneak backstage and place the guitars in the hands of the musicians. He moved into a larger Annapolis space in 1985 and to Stevensville about a decade ago, building the company into a major force in the music industry.
Santana began using PRS guitars in 1980. PRS guitars also are played or have been used by Axl Rose of Guns & Roses, Melissa Etheridge, Michael Bolton and the groups Creed and Linkin Park. PRS guitars are made mostly by hand at the Stevensville manufacturing plant.
An industry expert said PRS is an example of manufacturing that isn't dying.
"They reflect the state of manufacturing that we're trying to promote so people understand what modern manufacturing is about," said Mike Galiazzo, executive director of the Regional Manufacturing Institute of Maryland.