By SHERRI CRUZ

At a Fullerton workstation built by electric guitar icon Leo Fender, Cesar Alonso screws a Lucite template to a block of maple wood.

He traces the outline with a pencil, takes out the screws and removes the template, leaving behind holes to be filled later.

The holes are a hallmark of G&L Musical Instruments—other guitar makers reproduce them by machine just to give their instruments a handmade look.

Alonso then cuts out the guitar’s body with a high-speed saw and sands it smooth. Eventually, the guitar is painted, finished, fretted, adjusted and shipped to the musician who ordered it.

Past customers include Carl Perkins, Peter Frampton, Neal Schon of Journey and Jerry Cantrell of Alice in Chains.

They’ve been making guitars largely by hand at G&L since 1979.

G&L, on Fender Avenue in Fullerton, was Leo Fender’s last venture. Today it is part of Huntington Beach-based BBE Sound Inc., a family-run maker of signal processors and other electronic music gear. John McLaren, who heads both companies, bought G&L after Fender died in 1991. BBE, including G&L, has yearly sales of about $21 million, according to Englewood, N.J.-based industry publication The Music Trades.

G&L caters to musicians willing to pay as much as $3,800 for custom guitars made from specialty woods such as birds eye maple and Louisiana swamp ash. The company makes about 50 guitars a day in Fullerton.

Most other guitar makers also offer custom models. But they don’t handcraft their offerings the way G&L does, contends David McLaren, G&L’s vice president of global sales and marketing.

G&L is one of several guitar makers with ties to Orange County.

What’s billed as the first electric guitar came from Santa Ana-based Rickenbacker International Corp., which counts yearly sales of about $14 million, according The Music Trades.

Others, including CBS Musical Instru-ments and Ernie Ball Inc., also have strummed in OC.

But the guitar business isn’t what it used to be—strong American brands making guitars in America. Competition is fierce. U.S. guitar makers are being rocked by their greatest threat yet—China, which is cranking out quality instruments cheaper, driving down prices for everyone.

Last year, U.S. sales of both electric and acoustic models rose 11% to 1.9 million guitars, according to The Music Trades. But falling prices meant the value of guitars sold last year was flat with 2001.

Custom shops are holding their own. Some 73,000 of guitars sold here were priced more than $1,000, according to The Music Trades. That’s a small percentage—nearly 4% of all sales—“but it’s an important dollar component of the market,” said Brian Majeski, the publication’s editor.

It’s the entry and midrange markets guitar makers are battling over. And G&L is joining the fray.

To compete with Asian rivals, G&L tapped a South Korean company to make its midrange line of guitars. In January, G&L launched its import line dubbed “Tribute.” The lower-priced “functional” models cost $595 to $855.

Producing overseas is a reluctant necessity for American guitar makers. The musical instrument industry is tied to the “Made in America” value system, said Scott Robertson, spokesman for the International Music Products Association, a Carlsbad-based trade group that puts on the NAMM trade show in Anaheim.

“It’s an area of sensitivity in our industry right now,” Robertson said.

Scottsdale-based Fender Musical Instruments Corp., also started by Leo Fender, is the guitar industry’s leader with yearly sales of about $244 million, according to The Music Trades. Nashville-based Gibson Guitar Corp. is about half that, according to the publication.

Then there’s Japan’s Yamaha Corp. Its U.S. Buena Park headquarters has yearly sales of $694 million.

Fender, started in Fullerton in 1946, is something of a rival and a sibling to G&L.

The companies don’t have any common ownership, but Leo Fender’s widow, Fullerton-resident Phyllis Fender, is honorary chairman of G&L and is dubbed the matriarch of both companies.

Fender, which was sold in 1965 to CBS Musical Instruments and later bought out by managers, used to operate in the same industrial park as G&L’s 22,000-square-foot Fullerton plant before moving production to Corona and Ensenada in the 1990s.

“So that the Fender vibe is available to everyone,” the company offers an American-made line and a Mexican-made line, spokesman Morgan Ringwald said.

Fender’s American guitars go for about $1,150. The same Mexican-made guitar costs about $500.

New to importing, G&L says it is working out the kinks in its South Korean line.

“Their standards aren’t as high as we want them to be,” David McLaren said.

G&L continues to make the pickups—sort of a microphone for the strings on an electric guitar—on its import line. That’s one way G&L tries to control the line, McLaren said.

The imports are essential for growth, and G&L plans to look for more opportunities overseas, McLaren said.

“That way this can stay as Santa’s workshop,” he said of the Fullerton plant.

G&L employs 30 people, while parent BBE counts another 20.

While Leo Fender didn’t invent the electric guitar, he is the industry’s Henry Ford. His key contribution was mass producing the solid-body (no hole) electric guitar, said Dan Del Fiorentino, curator of the Museum of Making Music in Carlsbad.

G&L’s modest one-story Fullerton facility is a throwback to the 1950s.

“Leo did everything from scratch,” said John McLaren Jr., the plant’s manager.

Fender welded the benches where workers craft guitars on today. Fender, whose name can well up a guitarist’s eyes, was not a musician himself. He was a practical man who gave out cases of tuna to his employees for Christmas and was glad to make use of the empty tins.

Fender’s intact lab at G&L is a testament to his lasting influence.

The inside is as he left it up until his death—Listerine bottles, strewn unlabeled tin cans filled with nuts and bolts, a $20 bill in an envelope, naked guitar necks, his magnifying headgear and blueprints for boat designs, an interest he developed later in his life.