Fender Moving Headquarters to Arizona : Manufacturing: The guitar company needed a place where it could expand while keeping costs down. Its Corona plant will continue to operate.

A few months after its legendary founder died, Fender Musical Instruments Corp. is leaving Orange County for Scottsdale, Ariz.

Fender said it was looking for a cheap place to expand its Brea headquarters not too far from its plants in Corona and in the Mexican city of Ensenada.

The move won’t cost Orange County many jobs--only 115 people worked at the Brea headquarters--but it does break a link between the county’s recent past and arguably its most famous company.

The move is also likely to renew the debate over the county’s loss of industrial companies to cheaper areas and, indeed, Southern California’s loss of such companies to other states with less stringent regulations and lower costs.

Maker of the popular Telecaster and Stratocaster electric guitars played by rock ‘n’ rollers like Jimi Hendrix and Eric Clapton, Fender was founded in radio repairman Leo Fender’s garage in Fullerton in 1950.

Fender, who never learned to play guitar, is credited with being the first person in the world to mass-produce electric guitars, and the guitars he made are still revered as classics. They still look much the same as they did in the 1950s.

Fender’s new company prospered, and he sold it to CBS Inc. in 1964 for $13 million, just a little less than the network had paid for the New York Yankees a few months earlier.

But the company was a dud for the big conglomerate, and 20 years later it sold Fender to a group of investors--said to be Japanese interests and Fender executives--for $12.5 million. CBS promptly booked a $38-million loss on the sale.

Leo Fender never had anything to do with the company after selling it. He died in March at 81, still inventing new guitars for a new company, G&L; Musical Products.

Since the 1985 sale the company has stoked up its sales. According to a report to shareholders, sales rose from $21 million in 1985 under CBS to $90 million last year, enough to make it one of the world’s largest electric guitar companies. In addition to electric guitars, the company also makes acoustic guitars, amplifiers, sound equipment, lighting equipment and accessories under the brand names Fender, Sunn, Floyd Rose, Heartfield and Squier.

One possible reason for the increase: While the guitars made under Leo Fender’s stewardship of the company in the 1950s and ‘60s are still considered the company’s best, experts say the company is making better guitars now than it did under CBS.

The new management says it has also moved to rigidly control costs in order to compete with Pacific Rim manufacturers, who captured a majority of the world market in the 1970s with inexpensive, relatively well-made guitars.

Fender has, in a sense, joined them. It now has some of its guitars made in Japan and parts of others manufactured in Japan and Korea, as well as at the Ensenada plant.

The company’s work force, which had shrunk from 700 to 275 at the time of the sale in 1985, is now around 900, the company says.

The Corona plant, where the company’s more expensive guitars--they can run several thousand dollars in price--are made, will continue to operate, Fender says. The company said it just renewed a long-term lease on the plant and plans to expand there.

Of the 115 employees in Brea, as many as 40 will be relocated to Arizona, the company said. The rest will be offered a severance package.

The company declined to answer any questions about the move, but President William C. Schultz said in a statement that Fender needed to double its headquarters space “while holding down our expansion costs.”

Schultz said the company planned to expand its engineering and research and development departments and work with Arizona State University’s engineering department.

Until a few months ago, the company had planned to move elsewhere in Southern California.

“Orange County has been good to us, and it’s too bad we will be leaving,” Schultz said in the statement. “But from a business standpoint, the opportunity (in Arizona) was too good to pass up.”