Seven years ago, Engadget had the opportunity to tour Grado Labs, a renowned audio manufacturer nestled in the Bay Ridge section of Brooklyn. The company, known for its high-quality headphones and phono cartridges, has a rich history that spans over six decades. Founded by Joseph Grado, who invented the world’s first stereo moving coil cartridge in 1953, Grado Labs has remained a family-run business, now under the leadership of John Grado, Joseph’s nephew.
The visit to Grado Labs revealed a company deeply rooted in tradition yet responsive to the evolving audio landscape. John Grado, known for his blunt and candid views on the audio industry, was the host during the tour. He has overseen the company’s operations since taking over from his uncle, navigating it through both prosperous and challenging times. The tour highlighted the company's unique position in the audio market, where it has balanced maintaining traditional manufacturing methods with adapting to the digital age.
Grado Labs’ factory, housed in a converted multi-story building that once served as a fruit store and machine shop, is a testament to the company’s longevity and adaptability. The building, purchased by Grandpa Grado in 1918, utilizes every inch of space to accommodate the production process. Despite the factory’s modest appearance and dated equipment, Grado’s dedicated team of technicians and workers efficiently produce a wide range of products, including 17 models of phono cartridges and 10 models of headphones.
The tour of the factory underscored the meticulous craftsmanship that goes into each Grado product. In the basement machine shop, molds for headphones are crafted with precision, while the assembly of phono cartridges and headphones takes place on the upper floors. The setup might seem chaotic to an outsider, but it’s a well-oiled machine that has been honed over decades. The factory operates at full capacity, a sign of Grado Labs’ success in both the headphone and phono cartridge markets.
Grado’s journey in the headphone market is particularly noteworthy. In the early 1990s, the company struggled to gain a foothold in the market. The first three years were especially challenging, with Grado admitting that the company made no money from its headphone business during that period. However, the explosive growth of portable audio, driven by the success of Apple’s iTunes and the iPod, transformed Grado’s fortunes. What was once a struggling part of the business became a significant revenue stream. By the time of the tour, the company was running at full capacity, with a large volume of products awaiting shipment.
While most of Grado’s products are manufactured in the United States, the company has outsourced the production of certain models, such as the iGrado and their in-ear models (GR10, GR8, and the iGi), to China. Despite this, Grado remains committed to marketing the majority of its products as "Made in the USA," a point of pride for the company.
The resurgence of vinyl records has also played a significant role in Grado’s success. Although the phono cartridge market isn’t as robust as it was during its peak in the 1970s and 1980s, the renewed interest in vinyl has provided a boost to Grado’s cartridge sales. In the 1970s, Grado produced 10,000 phono cartridges a week and was back-ordered for six months. By 1980, the company was still selling 10,000 cartridges a month, but the advent of digital audio led to a sharp decline in sales. By 1990, sales had dwindled to just 12,000 units for the entire year.
However, by 2005, Grado was back on track, selling 60,000 units and struggling to keep up with demand. The company’s most popular cartridges, the Prestige Gold1 and Prestige Green1, have been particularly well-received. While audiophiles continue to favor Grado’s more expensive wood-body cartridges, such as the Platinum and Sonata models, the entry-level cartridges have found a niche among younger consumers, who are just beginning to explore the world of vinyl.
Despite the success in the phono cartridge market, John Grado remains cautious about the future of the headphone business. He acknowledges that the market has seen ten years of growth, but he also notes that the market is beginning to plateau. With an influx of new products from various competitors, Grado has had to reassess its offerings and consider new directions. The company has several new headphone models in development, a recognition that not all consumers prefer open-ear headphones. Additionally, Grado plans to ramp up production of its headphone amplifier, which has taken a backseat due to the overwhelming demand for its other products.
Grado’s approach to marketing has also evolved. Under the guidance of Marketing Director John Chen, the company has forged partnerships with other audio manufacturers, such as VPI and Woo Audio. These collaborations have helped Grado reach new audiences and strengthen its presence in the market. Despite the rise of online sales, which now account for 75% of Grado’s total sales, the company remains committed to its brick-and-mortar and online retailers that have supported the brand for decades.
The tour concluded with a reflection on Grado’s place in the audio industry. While the company doesn’t participate in the audio show circuit, its products are a staple at such events. Grado’s headphones, particularly the venerable SR60i, are often compared to more expensive models from competitors like Audeze, AKG, and Sennheiser. Despite the competition, Grado’s products continue to be praised for their distinctive sound quality and exceptional value.
In summary, the tour of Grado Labs offered a glimpse into the workings of a company that has stayed true to its roots while adapting to the changing audio landscape. John Grado’s leadership, combined with the company’s commitment to quality and craftsmanship, has ensured that Grado Labs remains a respected name in the industry. As the audio market continues to evolve, Grado is well-positioned to navigate the challenges ahead, continuing its legacy as a Brooklyn success story.
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