More Trouble at Kodak

[m0002a]

NEW YORK (Reuters) - Eastman Kodak Co. (EK) on Wednesday said it

would cut up to 6,000 jobs this year, reflecting a need to cut costs

at its flagging photographic film business, even as it reported a 60

percent decline in second-quarter profits.

 

The leading maker of photographic film, which has been scrambling for

alternative markets as demand for film shrinks, said it would cut

4,500 to 6,000 jobs, or between 6 percent and 9 percent of its work

force. Cuts will come in administrative, manufacturing, and research

and development departments as well as in its consumer imaging and

Kodak professional operations.

 

"Our traditional consumer film and processing operations continue to

face challenges associated with the increasing popularity of digital

photography as well as persistent economic weakness ... price

pressure and an associated decline in travel and tourism," said Dan

Carp, Kodak chief executive.

[john_cook1]

It saddens me that the hotshot MBA's at Kodak have never figured out how to run a low-volume, high-profit niche business. It seems that if they can't move "a million units a minute" of something, they just quickly give up and discontinue it. That kind of thinking will put them out of business very soon, I'm afraid.

[gareth_harper]

Surely the move to digital just means a different kind of buisness.

I was under the impression that photography was more popular than ever. Those who have gone totally digital, still need paper, ink, software and often proffessional manipulation and printing services.

Most I know who have gone digital return to firms like bonus print, supasnaps etc to get their flash cards printed, only the enthusiasts continue to do most it themselfs.

Sounds like Kodak management needs a kick up the ass.

 

Ilford (ok a much much smaller company) gives the impression that it is thriving and rising to the challenge.

Little firms like Nova Darkrooms as well seem to be turning their buisiness round to take advantage of digital while continuing to supply the still strong traditional (mostly amatuer now) B&W market.

[henningsen]

I second Johns statement. Scary thing when the only answer to reduced profits are cutting off, holding back and discontinue. What about efficiency? When a market segment declines in value the profit ratio doesn't automatically decrease. Accepting a smaller volume while increasing their efficiency in production, administration and marketing would still make a nice income.

 

The "hot-shot" MBA's are in fact trained at adult kindergardens with very little understanding of the background and nature of the businesses they are administrating. Its all about pleasing the stockholders with short-term numbers for the quarterly reports.

 

regards, Henning Jansen - Stavanger - Norway

http://www.henning-jansen.com

[frankl]

Ilford's already cut half their production lines over to making inkjet papers instead of photographic paper. They also said they dont expect to be releasing any further updates to their emulsions. This was quoting ilford's general manager in "Black and white photography" magazine a few months back.

[lex_jenkins]

I don't expect to see Kodak totally discontinue making traditional film and light sensitive paper in my lifetime but it wouldn't surprise me to see them cut back to the tiniest handful of such offerings.

 

Right now the only 110 film I ever see on the shelves at grocery stores is Kodak Gold 200. I can envision Kodak in a few years cutting back to producing only their T-Max lineup and nothing else. I can only hope Ilford doesn't follow suit.

 

In 10 years or so our main sources for traditional film and papers will be specialty "boutique" items from independent European and Asian sources. Prices will be high but I expect quality will be as well.

 

I can just imagine the folks at Cosina coming up with a partnership to promote a true old style, silver rich, thick emulsion film to accompany its lineup of retro Voigtlander cameras. Their cameras will remain affordable but the film will cost ten bucks a roll.

 

At such prices I'll put my motor drives away for good.

[jon_porter1]

It's too bad they didn't breakdown sales between digital and traditional. What I read in

the news release is that Kodak hasn't been able to buffer declining sales in traditional

film products with increased sales in digital goods. There's the heart of kodak's

problems; they're never going to have the market share in digital photography that

they enjoyed in film. Sure, they make inkjet paper, but HP and Epson sell a trillion

times more, plus they've got the printer market locked up. The digital camera market

is flooded, so I doubt Kodak has a significant share of that. I don't know how well

Kodak's professional digital products are doing, but as others have stated, Kodak's

core business practice has always been selling high volume mass market. One

possibility I see happening is that Kodak's traditional film business will be spun off as

a much smaller Eastman Kodak Company, and their digital and other products will

form a new company such as "KoTech" or some other name. This has happened a lot

with companies having static, but still viable, product lines.

[ferensen]

A July 22 N Y Times business page article talked about their future, medical imaging specifically. That's where they're betting big bucks.

[m0002a]

You can't compare Ilford and Kodak. Kodak is probably 25 times larger. If Kodak wanted to be the same size as Ilford, just selling in niche markets, they would do fine. But they would have to get rid of 95% of their employees and about the same amount of their stock value.

 

Kodak controlled much of the technology and distribution of analog photography products. At various times they even did well in the camera business (110, etc.). But the Japanese dominate in digital technology and all Kodak can do is sub-contract Japanese companies to make items under the Kodak name. As US companies learned in the consumer electronics business, this is not very profitable in the long term and they can't really be competitive like that.

 

Apparently many people don't realize that in the last 5 years Kodak has already got rid of 30% of its employees. The once had over 100,000 employees worldwide. Kodak has always been a great marketing company. But without control of the technology, they will slowly fade into the sunset. Don�t blame it on the MBA�s (BTW, I am not an MBA). Many people (including several different management teams) have tried to figure out what to do with Kodak, and I don�t think any of you would have clue.

 

But the good news is that the health of Kodak has little or anything to do with the future of B&W photography. In fact, B&W photography would probably be better off if Kodak sold its B&W product line.

[lex_jenkins]

I'm betting on Kodak forming a partnership with Cosina to produce "boutique" films with old-school silver rich, thick emulsions. It would fit in perfectly with Cosina's retro/nouveau Voigtlanders. They could keep selling the Bessas at giveaway prices and charge ten bucks a roll for the film.

 

Otherwise I can already see the future of Kodak's b&w film product line. It'll consist of one film, T-Max 400.

[jorge_oliveira2]

In my area of work, electronics/telecom, I've seen many spin offs, so I see as very possible a "Kodak film company", but not only to black and white.

 

Re T-Max, I really don't know if it sells more than the combined TX+PX value.

 

Re future prices, it would depend very much on the position taken by the eastern europe/asian suppliers. If there are many with good films/papers, prices will not rise; if only a few, then boutique will be the norm.

 

Let's not forget that in this respect B&W is better served than color.

 

Wait and see, there's no other option...

[m0002a]

It's hard to say what will happen to Kodak, but I don't think they would spin off the color film line. This is their cash cow that they use to invest in new technology. Of course they have already invested in many new technologies that have not panned out. But without the film business Kodak is dead in the water.

 

The problem with the Kodak B&W product line is that it is so small (in comparison to color) that even if it is profitable, it doesn�t contribute much to the company. I think they keep B&W as sort of a customer loyalty thing, especially among professionals.

[tim_delorto]

<p><i>One possibility I see happening is that Kodak's traditional film business will be spun off as a much smaller Eastman Kodak Company... -- Jon Porter</i></p>

<p>How's this for a nightmare?... They sell it to QUALEX! That way they could ruin our film BEFORE we send it to them! :-)</p>

[chris_waller]

We have to bear in mind that 96 percent of all fims sold is (was) colour negative for happy snaps. Both Ilford and Kodak reported increased sales of b+w materials last year so that market will remain stable, maybe increase if my experience is anything to go by. I run courses in b+w photography and they are always over-subscribed by a factor of at least two. Already the courses for September, for which we have 45 places, have a queue of over 100 people waiting to join. In the case of b+w the market will go to whoever hangs on longest.

[nick_bryans3]

Kodak has always tried to appeal to the masses by dumbing down photography, although they have made some fine products (Kodachrome mostly). Just look at their big ideas of the past 30 years, 110 film, APS (OK that wasn't just Kodak, but they were one of the major players), neither proved successful in the long term because they were all about convenience to the detriment of quality.

 

In the UK Kodak are currently advertising one of their films as 'specially made for Zoom cameras', it's just an ISO 800 film, but Kodak, as usual, prefer to try & fool the masses with flim flam rather than just creating quality products. With a corporate attitude like this is it any wonder they've missed the digital boat. While it's sad to see them stuggling, it's hard, at least for me to have much sympathy, except for the workers of course.

[donald_miller1]

Buying film from Kodak is contributing to the demise of film as we know it...Why do I say that? Because Kodak's emphasis is on digital and medical imaging. They see no appreciable benefit (long term) from photographic film and film product sales. They are taking what profits they presently realize from the sales of those products and using them for the development and marketing emphasis of digital products.

 

Ilford is only surviving through the sales of digital papers. As others have stated, Ilford is converting their production lines to the manufacture of those products. In fact Ilford publically stated that they could not swear "hand on heart" that they would ever develop another black and white emulsion.

 

What is the answer? I believe that to it is to buy from small specialty marketing firms selling imported film and paper. I have tried these products. Their pricing is favorable. Their quality is superior to what Kodak now sells.

 

As others have stated, this will become a niche market. I say support the players that have the foresight and the knowledge to see it.

[russell_brooks]

Lex, I dont know why you focus on the TMAX films? I was always under the impression that Tri-X was their best seller? If they cut anywhere in B&W I would imagine it would start with some of the chemicals.

[lex_jenkins]

Russell, I was being facetious. My quip was based on the fact that the only traditional b&w film sold in our local Wal-marts is TMY in 24-exposure rolls. I'm surprised they stock it at all - I may be the only customer who ever buys the stuff there just because it's cheap and I've discovered this year that TMY pushes extremely well.

 

I agree with Donald about supporting the smaller independents who are committed to producing quality traditional b&w materials. I won't boycott Kodak or Ilford - yet - but I firmly believe that in 10 years we will be buying our films and papers from small, boutique companies that will cater to our needs without compromise. The prices may be higher but they'll be more accomodating to customers because they'll have to be.

[scott_eaton]

<i>In fact, B&W photography would probably be better off if Kodak sold its B&W product line.</i><P>If they could lose the formula for TMY 400 in the transfer we would ALL be really better off.<P>I've said it before, but Kodak's consumer film division it what's going to kill their B/W products division. They look at all product lines as competing profit margins, and eliminate the ones that have the lowest return. This is called 'voodo cost control' and they've been doing it for years. Quick and dirty way for CEO's to get their golden parachutes.<P>Tri-X Pro in the only B/W film I care to shoot made by Kodak. Happy to live with Ilford as long as they are around.

[Aoresteen]

B&W photography is a two step process - film & paper. Every year I shoot about 100 rolls of HP5+ 120 and 100 of 35mm 36exp I'm 50 and I plan to shoot until I'm 70 then just print until I die. So for film needs I need 4,000 rolls of HP5+. My freezer won't hold that much so I've been buying 100 roll lots. The day Iford anounces the HP5 is gone I will buy every roll my freezer will hold.

 

I'm guessing I don't think Ilford will drop HP5 in the next five years so the most I would have to buy is 3,000 rolls - still a lot. I could switch to Kodak or Efke/Agfa/Fuji.

 

My point is that I think SOMEONE will be making B&W film in 35mm and 120 10 years from now. I'm not sure that HC-110 will be here though.

 

As for paper, someone will be making it 20 years from now. We will bemoan the loss of MG IV like Fred Pickerd used to bemoan the loss of Dupont Varigram.

 

Now I understand the high cost of Ilford inkjet paper. They can't convert 1/2 their production lines and make LESS than they did making B&W paper. So they have kept the prices high to ensure they don't loose money on the inkjet paper.

[jon_porter1]

In terms of the "boutique-ization" of B&W photography, my local camera store has

already started heading in that direction by carrying Bergger and other nonKodak-

Ilford-Agfa papers, Photographers' Formulary developers, and very high-end

enlargers. Another store carries a good selection of Efke and Foma film. In many ways

traditional photography is in better shape than ever.

[lex_jenkins]

That's encouraging, Jon. In Fort Worth, my home, a new shop opened up last year, the first serious camera shop we've had in many years. The young owner tries to accomodate special requests whenever possible and I try to help by patronizing his store, even if it means paying a little more.

 

He ordered Diafine for me when B&H declined to ship the stuff. And he stocks Photographer's Formularly toners, etc. I may encourage him to stock some other "exotic" supplies, tho' he'd run the risk of the stuff gathering dust. The boom time for his business is coming up, when the local college photography programs start up again.

[cxc]

I recently bought a couple boxes of ektachrome 200 that expired in 1984, and the stuff is still good (enough for me). So I am greatly encouraged about the lifetime of film. So I'm with Anthony: once Tri-X and TechPan are discontinued, I will buy a lifetime supply of each and a freezer big enough to hold it all. Of course I may have to sell my car to buy that much TechPan... ;-)

 

CXC