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Roughly three-quarters of respondents to this week's RBJ Daily Report Snap Poll say Eastman Kodak Co. is important to the future health of Rochester's economy. More than two-thirds, however, think it is not likely that an independent, Rochester-based Kodak will return to sustained growth and profitability.
Kodak's stock plunged Friday after published reports said the company was considering bankruptcy. It has been a roller coaster ride since. Kodak stock lost more than half its value on Friday but regained most of that ground Monday. On Tuesday, shares sank again.
Kodak issued a statement saying it "is committed to meeting all of its obligations and has no intention of filing for bankruptcy." However, Fitch Ratings and Moody's Investors Service Inc. downgraded the company earlier last week-with Fitch saying the move reflected its belief that a "default of some kind appears probable"-in the wake of Kodak's decision on Sept. 23 to draw down $160 million from its revolving credit facility.
At last count, Kodak employed 7,100 people in Rochester, down from roughly 16,000 when Antonio Perez took over as CEO on June 1, 2005, and from peak local employment of more than 60,000 in 1982. In the first half of this year it posted a loss from continuing operations of $428 million.
Nearly 690 readers participated in this week's poll, which was conducted Oct. 3 and 4.
In your opinion, how important is Kodak to the future health of Rochester’s economy?
Very important: 30%
Somewhat important: 46%
Not very important: 20%
Not at all important: 4%
In your opinion, how likely is it that Kodak—as an independent, Rochester-based company—will return to sustained growth and profitability?
Very likely: 5%
Somewhat likely: 28%
Not very likely: 51%
Not at all likely: 17%
More than any other Rochester company/organization, Kodak is the icon that places Rochester on the global map. Rochester can't let that disappear. Also, besides the loss of 7,100 jobs and the pain to families that entails, many Kodak employees-because they had well-paid jobs with good benefits-have been very involved in the community, actively participating in civic life of Rochester, giving back to the community that made them successful. Can we afford to lose them?
Twenty or 30 years ago, Kodak dying would have turned this into a ghost town. It really speaks volumes about all the small-business leaders we have that have helped transform our region into not being dependent on Kodak. Having said that, the anxiety by retirees about their future health care needs if Kodak were to die (and even pension worries) isn't good for our area. Not to mention, even at its lowest point it still provides a lot of jobs.
The beginning of the end was when Kay Whitmore edged out Phil Samper for the CEO position in 1990. Samper understood digital (he had arranged for Kodak to buy 10 percent of Sun Microsystems) and could have established Eastman Kodak as a premier digital imaging company (not a chemical company). But the board went for the film and chemical business by virtue of choosing Whitmore, who immediately put $5 billion into Sterling Drug (owner of Minwax, Lysol and other strong digital brands).
Under current leadership, it is unlikely that Kodak will return to profitability. I think the company should be taken private. The new owners can clean out the entire top level and then focus on maximizing all the good that is left in the company.
Kodak is more symbolic than indicative of the Rochester economy. Sadly, poor decisions by a group of now-wealthy, retired executives set the foundation for the company's current untenable position.
Kodak must make it through the woods. There must be no other option. It is such a source of pride for Rochester and one of the most recognizable brands in the world. I hope the leadership has the fortitude and endurance to see this through the right way.
—David Mammano, NextStepU.com
Kodak was important—but that has already been factored out of our local economy. It will never get beyond its “catch-up” mode in the digital world, and they’ve yet to really redefine who they want to be in the 21st century.
Kodak has spawned a lot of smaller vibrant companies that make up the majority of the current Rochester economy. The main assets are their knowledge and their patents. The knowledge will be spread out to other local companies; however, the patents will be sold to pay off their debt. Unfortunately, Kodak will eventually fold, or be sold for the name.
—Tim Wilson, Fairport
When the management of one of the greatest companies that existed took for granted its place in the local, national and global community, it began to die. Everyone who ever dealt with Kodak saw this coming. Mr. Eastman would be disgusted.
My impression is that Kodak needs to expand with the times and develop more in the way of creative technology while using photography and being proactive in movie development. They need to ask what is hot now and attach their name to whatever that might be. What is the USA without Kodak?
Kodak's importance to the Rochester area is one of image rather than substance. The area has absorbed many of the employees displaced by Kodak's decline. The services and products provided by Kodak are available from many sources. It would be a psychological blow to lose its name forever.
The days of the old Kodak—where 60,000 Rochesterians made a fantastic salary, great benefits and retirement, plus a substantial bonus—are regrettably long gone, it seems also with the salaries of Delco, and other big companies of what is now the past of both Rochester and the United States. The famous (Rochester Democrat and Chronicle Seen and Heard columnist) Henry Klune once remarked, "If Kodak closes, take a spray paint can up to the Rochester airport runway and write CLOSED.” It might be close to the truth, but if we are to survive, we have to embrace the philosophy that we can succeed again, and bring prosperity back to our region. Let's hope for the best.
—Joe Wierzbowski, Plymouth Photo Studio.
It has been on a death spiral since the George Fisher years of slash and burn. It's boomed.
—Jim Duke, Victor
Although Kodak is only a fraction of the size that it was during its peak, it is still a very large local employer and is very important to our economy. If a new company were to move into Rochester with 7,100 jobs, champagne corks would be popping everywhere, as that truly would be an immense boost to our economy. So, we should not be cavalier about the fate of a company that currently employs 7,100 people (i.e., Kodak), as we cannot afford to lose those jobs. We do need to continue to diversify our economy, to attract new business, and to grow our current businesses. However, Kodak is still very important to the economy of our region, and they should be treated as such.
If EK had gone bankrupt in 1982, it would have devastated the local economy. But with the gradual attrition over the last 29 years—it's sad to say this—but it would barely cause an economic ripple.
—Frank Gerham Jr.
Kodak was a chemical company in a digital world and didn't realize it until it was too late. Now it is a small cap company worth more dead than alive. However to the question, Kodak is important to Rochester because it is a part of the fabric of our community. Kodak supports thousands of pensioners for income and for health care. Kodak supports our culture like its support for the Eastman House, the Strong Museum and the philharmonic hall. ESL Federal Credit Union began as Eastman Savings and Loan. Kodak occupies hundreds of thousands of square feet of commercial and industrial space, and "Kodak people" live in hundreds of homes—all which could flood our market. Totally overlooked is the effects that all of those Kodak chemicals have on our environment. I suspect that we all looked the other way as Kodak plumes of smoke rose in the sky and as Kodak chemical residuals wound up in our ground. What happens when there is no Kodak to rely upon to clean up its mess? As a community and as a region we need to identify which company or companies can replace Kodak as our corporate leadership and we need to get behind those companies and insist that our government and our leaders get behind those companies too. If not—South Buffalo and Flint, Mich., here we come.
This is a typical example of a badly run company (over 20 years) managed by CEOs who know nothing about Kodak or real life. Why do these company boards continually recruit Harvard graduates who have never really worked a day their life? The majority of the best CEOs are organically promoted through the ranks or the person who started the company; in this case George Eastman is dead. For Rochester’s sake, I hope Kodak can restructure into a profitable and relevant company.
As they said on MSNBC's Morning Joe this morning, "Remember Polaroid?" Kodak is dead in the water. It's sad, but the one silver lining, at least, is that the brand name will still live on in "Kodak moments." I wonder what George Eastman would think about all of this?
—Phoebe Brady, Wegmans
It is so unfortunate that a company that once hired over 1,000 professional-level people in one year, has become an irrelevant entity. Kodak patented digital photography in 1975, and the rest of the world embraced it long before Kodak would barely acknowledge it. A truly incompetent management.
—Rick Corey, Penfield
From where I stand, I have not seen anything resembling innovation come from Kodak since Perez took over. Oh, I forgot, they came out with a printer, but isn't that what 20 other companies already have in the marketplace? And didn't the White House put Perez on a "special" national committee for improving economic development? That makes a lot of sense, right? Not!
While Kodak is extremely diminished in terms of its revenue, market share and capitalization, one should never discount the enormous effects that a bankruptcy of this magnitude would have on our community’s physiological mindset. On purely an economic scale, the potential bankruptcy of Kodak would most likely be absorbed in our overall economic size, however for so many around the nation, Kodak defines our image and while news of bankruptcy would cause many to share our pain, this type of news only would reinforces a negative image that we have tried in vain to shed.
—Tom Hack, Rochester
Totally mismanaged. Chemicals, medical and other imaging-related consumer goods were all spun off and are making money on their own. The company had the R and D, the patents and the brand recognition to remake itself and did not. Missed tremendous cross-branding opportunities with related technologies or dismissed them as "not what we do." The Old guard like Kay Whitmore didn’t see it coming, and the entrenched middle management was complacent. The imports like Carp and Perez were not invested because they didn’t care about the community or the company. The board didn’t care for the same reason. They were making money for themselves so that was good enough. Satisfying short term shareholder desires vs. the long term health of the company was their singular focus and in the end killed the company. You could see this coming 20 years ago for the reasons mentioned above.
I think Kodak's importance to Rochester is not as a significant financial contributor to the economy (at least not like it was when it employed 60,000+), but more as an emotional contributor. The most significant exception to that statement being the impact of their inability to maintain their continued commitment to their retirees—that would be the real tragedy. Rochester has always been proud of its headquartered national and multinational companies. The loss of Kodak would be a blow, but should also be a wake-up call to the rest of us (it should already). Kodak's decline originated years ago when it failed to respond early enough and strong enough to the disruptive innovation of digital. I realize it is easy to say this now looking back, but industry experts were saying it then as well. And Kodak's largest film rival, Fuji, has managed to adjust and turn a profit. The last time Kodak made money was 2007. Lest anyone stone me for Kodak-bashing, let me assure you of my commitment. I have never bought anything other than Kodak film or paper, nor will I ever as long as I have a choice—not the least reason being the quality. What you are hearing is not resentment, but sadness—which I suppose simply makes my point.
—Jim Garnham, Penfield
Unfortunately, the company has been on a declining path since the early 1980s. Management decisions have been reactive rather than proactive, and technological advantages have not been fully commercialized.
It doesn't take a PhD economist to look at 7,000 Kodak jobs and forecast the effect of losing even 3,500. Add the prospect of losing 500+ jobs at Paetec in the near future. In the current economic conditions, the Rochester region would certainly suffer a serious body-blow that would take years for recovery.
Once a giant in the business world, Kodak has steadily declined on the heels of numerous poor business decisions. The continued downsizing of Kodak's workforce and the reduction of their commercial footprint is obviously not working. CEOs making arbitrary decisions that impact thousands of employees and their families have not yet been able to put Kodak on the path back to success; they have merely lined their own pockets and moved onto the next business victim. George Eastman would roll over in his grave to see what has become of his beloved company. When people believe they are not important or connected to their company's goals they lose hope. Productivity drops, and apathy prevails. George knew the value of relationships with both employees and the marketplace. Clearly that lesson has been lost along the way, and Kodak has suffered the consequences. However, there is always hope; business as it has been practiced over the last few decades must change dramatically to ensure Kodak survival into the future.
Right now, Kodak is at the brink of going down the tubes. If it is going to live, somebody who isn't stupid is going to have to lead. The days of stupid CEOs and there little group of friends robbing the company blind is over; there isn't anything left. If the current CEO or anyone in the near future takes a salary of a million or more, the person needs to be shown the door. Kodak must now have a CEO who is not an idiot and only cares about his wallet and how much he or she can take. Kodak still has a lot of great products like there printer line and they must trim down till they reach a point of profit and then build a strong company all over again. The best place to start trimming down would be there worthless upper management. Since Walter Fallon and all who have followed (except Coby Chanler) have been a disgrace.
—Ken Pamatat, Creative Images
Kodak appears to be poised for an imminent buyout, either in parts or as a whole. And, if no buyer surfaces in the near future, bankruptcy. It's a company that's fallen, and it can't get up.
—Tom Shea, Thomas P. Shea Agency Inc.
Kodak was my first client when I opened my firm. This is a company with strong intellectual property, great integrity and a worldwide brand name. I'm in Kodak's corner. I think there will be better days ahead.
—Carolyn Phinney Rankin, president, Phinney Rankin Inc.
Perez is horrible. He has sold everything of value, and the rest of the business is dying. He should give every bit of compensation back.
Let's face it, Kodak as we once knew it, is not in very good shape. Mr. Perez has shown us that he is unable to lead this company in any productive way. His leadership has failed to produce ANY modicum of profitability and, in fact, has squandered the remaining wealth that Kodak had amassed over the years, producing the results we see today. Why in heaven's name has the board continued to support this empty suit for all these years. It's a shame that it has come to this. Now, Kodak is relegated to selling off the talent and intellectual property that countless, dedicated engineers and other employees worked so hard to generate. And, where are THEY now? Gone, that's where they are. With the few employees left, I'm afraid it is too late for any dream of growth to become a reality. What a pity.
Regrettably, in its current state, Kodak represents little importance to the future health of Rochester’s economy. As a former Kodak employee of nearly 15 years, from the early-‘70s to the mid-‘80s, I’m deeply saddened by the decline of the company that was once known as “The Great Yellow Father.” I consider myself very fortunate to have been an employee at the Eastman Kodak Research Laboratories during the height of the company. As I look back on what I then-viewed as my “dream job,” I have many fond memories of enjoyable work and fantastic experiences during my employment tenure at the KRL. It’s truly disheartening to see the dramatic changes that have occurred at Kodak over the past decade. The unfortunate reality is that George Eastman’s company may not survive—a very sad situation for everyone—current and former employees, and for the Rochester area.
—Ted Benjeski, Henrietta
Kodak is still important since it supports the health insurance of its retirees and for some their retirement income. I have been following Kodak’s demise with personal interest, being one of those retirees and having been immersed in photographic research for many years. Kodak has already failed as an important manufacturer. The biggest problem is that Kodak has no leg to stand on in neither digital photography nor any of the other product areas that it launched. This was publicly known more than 10 years ago when there was still a good chance to save the company. It should have been known to Kodak management if they had evaluated their (dismal) economic strength versus that of its competitors. Kodak’s only financial pillars throughout have been the traditional photographic products, which the management has consistently and willfully downgraded, sold and mismanaged. It is known that there are niches for traditional photography which digital photography cannot touch. This also was publicly known. (Of course, digital photography has developed into a much wider niche that traditional photography never could have filled or touched.) Both technologies can live together, and Kodak, having a virtual monopoly, had here an opportunity to save what there was to save. Instead, Kodak management made every effort to destroy this opportunity and keep mum about its possibilities. Not one of their recent CEOs ever told their customers why and where they should stick with traditional film imaging. This problem started before Fischer and continued until now under Perez (53,000 employees later). It is not clear if Kodak management will make any effort to save their market, e.g. the movie-film market. I doubt they will. My conclusion has been for a long time that Kodak has no products that will sustain it once their last roll of film has been sold. Anticipating Kodak’s demise, I sold my Kodak stock at my retirement in 1997 for $56 a share (recently $0.74). I am sad to have been right.
—Ingo H. Leubner, Crystallization Consulting
Kodak (and traditional film) had a profitable 120-year-run, which was great for this community. That run now seems to be almost over. That is a very sad fact. It seems like Kodak missed the boat with digital, which is a shame since they invented digital! How much better off would our community be today if they ran with digital? Guess we will never know. Oh well, hindsight is always 20/20. The slow "fizzle out" of Kodak over the last 25 years has allowed our community to adapt to a future life without them. New ideas, opportunities and companies will surface from the many talented people who comprise our community. We will survive if Kodak does not. But we will miss Kodak for sure.
—George Thomas, Ogden
Kodak has contributed significantly to the local economy, over its rich history. It suffers from decisions made in the ‘70s to "bury" digital imaging technology, smug that "it could never replace film." Nevertheless, the community has thrived, while Kodak was a viable entity. It has become less so, enough that the local economy has absorbed the loss of Kodak jobs and contributions, and is moving on. Kodak has significant amounts of very valuable IP, in the imaging area. I believe it can survive as a corporate entity, based on that imaging IP. Motion pictures will be strong; Kodak's printing business will be strong, in the packaging arena, even if printing in general takes a hit by Internet. So Kodak can return to contribution to the local economy, by supporting growth of smaller companies, using either Kodak assets or incubation at Eastman Business Park, by continuing to spin off smaller companies via its copious IP, and/or by emergence of one or more of its imaging technologies as a new entity.
—Hutch Hutchison, In T'Hutch LTD
The viability of each company in the Greater Rochester area is important. We are all interconnected. It is sad to see the continuing decline in Kodak. One wonders when (or if) Mr. Perez, his management team and the board of directors will ever get it right. As a retiree of Kodak, I wish the current employees and their families the best.
—Mary Lynn Vickers, founder and owner, the Phantom Chef Personal Chef Service
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