Eastman Kodak: Next Insolvency?

H

HHPhoto

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Hi,

a topic so far not discussed here, but nevertheless very important for all of us film shooters:
Eastman Kodak is the manufacturer of all current Kodak photo films.
All these Kodak films are distributed by Kodak Alaris, a company founded after the Eastman Kodak insolvency / chapter 11 in 2011 / 2012.

After its insolvency Eastman Kodak tried to focus its operation on the printing industry. Film products are only about 10% of its revenue today.
But:
The focus on industrial printing unfortunately failed! Kodak is loosing much money in this business (which is globally under pressure and declining). At the end of last year they had to fire about 400 workers. Kodak stock crashed at the NYSE.
Lots of experts and business analysts fear that Eastman Kodak is facing the next insolvency :(.

Their film production is not the problem, because it is profitable. But it is only 10% of the whole business, so film cannot compensate the losses of the rest of the company.
So we cannot do much to improve the situation, as buying more Kodak film would not change anything.
So "hope and pray" is unfortunately all we can do.
Especially hoping that if the worst case is happening, finally the film department will be separated from the crappy rest and be independent (or united with Kodak Alaris).

For more than 15 years now Eastman Kodak is trying to "re-invent itself" and trying to find a working business model (outside photography).
All that failed.
The company declined from about 145,000 workers to now less than 4,000.
In the same time Fujifilm gets stronger and is now bigger and more successful than ever. In lots of different areas, including photography.

I really really hope that whatever happens to Eastman Kodak, the profitable film production can be kept alive, separated from the not-working rest.
I've said it several times: We need all of the current film producers: Kodak, Fujifilm, Ilford, Adox, Foma, Film Ferrania. With all of them a sustainable, long-term film revival will be possible. Let's support all of them!

Cheers, Jan

P.S.: Some further information can be found here:
https://www.photrio.com/forum/threads/kodak-stock-down-to-5-45.154891/
 
ulrich.von.lich said:
Kodak Alaris is both the manufacturer and the distributor of traditional photographic supplies. The UK Kodak Pension Plan (now Kodak Alaris) got the whole thing, which means the original Eastman Kodak doesn't have anything to do with its old film division now.

http://www.bbc.co.uk/news/business-22351676
Click to expand...

Sorry, but that is totally wrong!! With all respect to BBC, but in this case they did not a proper reporting.

Kodak Alaris is not the manufacturer of the photographic film!
They never have been!
The production of the films has remained at Eastman Kodak in Rochester. That has been again and again explained in detail by both companies.
At Photokina, biggest photo fair in the world, Kodak Alaris also has confirmed that to me.
In the insolvency process Alaris wanted the film production, but Eastman Kodak did not want to give it away, because it was profitable.

Kodak Alaris had the photo paper production. But they closed their factory in Harrow near London about three years ago.
The Kodak photo papers are now produced by Carestream in Windsor, Colorado. Carestream is the former healthcare department of Eastman Kodak (sold more than a decade ago). They also produce x-ray film.

Cheers, Jan
 
The amount of the settlement was £419m. I can't imagine Kodak Alaris paid that amount of money for merely the distribution right, instead of the property. It simply wouldn't make any sense.

Wikipedia also states Kodak Alaris now owns the film division.

Could it be possible that Eastman Kodak is manufacturing films in Rochester for Kodak Alaris?
 
ulrich.von.lich said:
The amount of the settlement was £419m. I can't imagine Kodak Alaris paid that amount of money for merely the distribution right, instead of the property. It simply wouldn't make any sense.
Click to expand...

Kodak Alaris bought the distribution rights - not the manufacturing! - for photo films (not movie films!), they bought the photo paper manufacturing, the photo kiosk business, and some other (digital based) products.
80% of Kodak Alaris is about digital imaging, only about 20% of their business is about film.

ulrich.von.lich said:
Wikipedia also states Kodak Alaris now owns the film division.
Click to expand...

OMG! You quote Wikipedia? Honestly?
It is one of most unreliable sources on the internet, because every idiot can write something there.

ulrich.von.lich said:
Could it be possible that Eastman Kodak is manufacturing films in Rochester for Kodak Alaris?
Click to expand...

That is the case!
That is what I have told you here. And that has been confirmed by both companies again and again for years.
If you don't belive me, just ask Eastman Kodak and Kodak Alaris. Or go over there to photrio.com (former apug).
There are Kodak employees from Rochester who will tell you that the Kodak photo films are produced by Eastman Kodak in Rochester, and Kodak Alaris has the distribution rights to sell them worldwide.

Cheers, Jan
 
HHPhoto said:
OMG! You quote Wikipedia? Honestly?
It is one of most unreliable sources on the internet, because every idiot can write something there.
Click to expand...

Calm down. Not every idiot can edit Wiki pages (and make it stick). Every idiot can write any bull**** on RFF, though.

So, will you tell us, please, the details of the Kodak Alaris - Eastman Kodak agreement regarding film distribution? How much does Kodak Alaris pay for film, can Eastman Kodak charge whatever they want for their film? Is there any obligation for Eastman Kodak to produce film for Kodak Alaris at all? Cause, you make it sound like there is none.
 
brbo said:
Calm down. Not every idiot can edit Wiki pages (and make it stick). Every idiot can write any bull**** on RFF, though.
Click to expand...

The endless number of wrong or outdated (not updatetd data for years) articles on wikipedia is proof enough that their editor system is'nt working well.

brbo said:
So, will you tell us, please, the details of the Kodak Alaris - Eastman Kodak agreement regarding film distribution? How much does Kodak Alaris pay for film, can Eastman Kodak charge whatever they want for their film? Is there any obligation for Eastman Kodak to produce film for Kodak Alaris at all? Cause, you make it sound like there is none.
Click to expand...

I've never said that.
Facts are
- that Eastman Kodak is producing the films
- only Kodak Alaris has the right to distribute these films
- the coating plant in Kodak Park in Rochester, called Building 38, has a too high capacity for being only sustained by photo film production: to run this huge coating machine economically further products like movie film and pcb film are needed.

In an interview Eastman Kodak CEO Jeff Clarke said that in 2014 they have been "short before closing Building 38 and stop all film production". It was then saved by a bigger order for movie film by the major Hollywood studios.
That cleary indicates that Eastman Kodak is the more powerful partner, Kodak Alaris being the weaker one, and EK has the power to "pull the plug" if they have to.

Cheers, Jan
 
Well, to be completely honest, I have better things to do than caring about the fate of Kodak photographic films. If they go away, I'll switch to other offerings.

With all due respect, I still trust Wikipedia more than online forums.

According to the few online articles I read, Kodak Alaris got Personalised Imaging and Document Imaging businesses from the settlement, and the Personalised Imaging business "includes still camera film products, photographic papers, retail print solutions and souvenir photo products sold at theme parks and other venues."

http://www.photographyblog.com/news...onalised_imaging_document_imaging_businesses/

https://www.prnewswire.com/news-rel...nd-document-imaging-businesses-222197521.html

You can find more articles but they all suggest the same thing.

I was only wondering whether it could be possible that Eastman Kodak was manufacturing films in Rochester for Kodak Alaris, the new owner.
 
ulrich.von.lich said:
Well, to be completely honest, I have better things to do than caring about the fate of Kodak photographic films. If they go away, I'll switch to other offerings.

With all due respect, I still trust Wikipedia more than online forums.
Click to expand...

With all respect, I expect you not to trust online forums but Eastman Kodak and Kodak Alaris themselves!
They know better than any questionable media what they are producing and what not.
I have asked them directly, and I have got the correct answer.

Just have a look at their latest announcement. In that they absolutely clearly say what is the case:
"Eastman Kodak will produce KODAK PROFESSIONAL EKTACHROME Color Reversal Film for distribution by Kodak Alaris."

https://www.kodakalaris.com/en-gb/a...ris-reintroduces-iconic-ektachrome-still-film

That was Kodak Alaris.
Here the statement from Eastman Kodak, confirming that:

"Kodak will produce EKTACHROME at its film factory in Rochester, N.Y., and will market and distribute the Super 8 motion picture film version of EKTACHROME Film directly.
Kodak Alaris, an independent company since 2013, also plans to offer a still format KODAK PROFESSIONAL EKTACHROME Film for photographers in 135-36x format. "

https://www.kodak.com/corp/press_center/kodak_brings_back_a_classic_with_ektachrome_film/default.htm
 
I'm afraid it is not absolutely clear to me as it is to you, although you still might be right. The truth is most people won't care that much.

The press release only states Kodak is the producer, Alaris is the distributor, but doesn't state who is the owner.

Here is an article which I find more relevant:

https://www.photocounter.com.au/2013/kodak-photo-business-now-kodak-alaris/

"Where will manufacturing happen for paper, chemicals and film?

 All of our paper manufacturing capability around the world will move to the new company. Our (Kodak Alaris) consumer and professional film will continue to be made in Kodak’s world-class film factories via a supply agreement. This gives us the best of both worlds: the ability to continue to innovate on thermal and silver halide paper where Kodak Alaris’ Personalized Imaging already has scale, and to enjoy the manufacturing scale provided in partnership with Kodak, which will continue to make motion picture and commercial film."

Therefore it seems clear to me Kodak Alaris now has the ownership of still camera films, and Eastman Kodak is producing them for Kodak Alaris under a supply agreement.

Whether Eastman Kodak can shut down the building 38 without paying damages to Kodak Alaris should be clear once you read the agreement.
 
I know votes aren't the same as facts, but I will throw in my hat with HHPhoto here. I know several Kodak employees (both Kodak Inc. and Alaris) and I believe the business arrangement is as HHPhoto describes it:

Kodak Inc. manufactures all Kodak film.
Kodak Inc. owns rights to distribute and market Kodak motion picture film.
Kodak Alaris (indeed the Kodak pension plan) owns the rights to distribute and market Kodak film for still photography.

No one really likes the arrangement, but that's how it all fell out of the bankruptcy.

Alaris is quite a small company, with few resources.
 
vdonovan said:
Alaris is quite a small company, with few resources.
Click to expand...

So you think that all that Kodak Alaris got for $3bln is the right to distribute some film that they have to pay for?!

That is absolutely nuts. Even in the Kodak universe.
 
This article from PetaPixel kind of explains it. Kodak, and Kodak Alaris are definitely two separate entities.

Somewhere else a couple of months ago I read an article where an engineer at Kodak was explaining they are in the process of making new machines to handle the smaller batches of film, so they can make more than one type of film at a time, and in more economical portions.

If you ask me, it's all the other stuff the folks at EK are getting into that could be their downfall.

PF
 
brbo said:
So you think that all that Kodak Alaris got for $3bln is the right to distribute some film that they have to pay for?!

That is absolutely nuts. Even in the Kodak universe.
Click to expand...

As noted by others above, that article contains some sloppy reporting. Alaris didn't pay anything for the marketing rights. It was given to them in exchange for their claim to pension payments from Kodak.

Prior to bankruptcy, Kodak had a multi-billion dollar liability toward the UK retirement fund. (See this article) (And this one) Giving the retirees the rights to sell Kodak film was a way for Kodak Inc. to reduce this pension liability while giving the retirees an income stream. (Kodak still pays some money to the retirees, but as a result of this deal it is much less than before).

Since Kodak was in bankruptcy, the UK pension fund didn't have much choice. The Kodak still photography business had a positive cash flow, so it was better than nothing, which was the alternative.

Kodak did not give the retirees the factory because they did not have the resources to manage it.
 
That is all true.

But bankruptcy doesn't mean that your assets are zero. Kodak UK Pension Plan had a claim of $2.8bln. Sure, they would get far less than that if Eastman would've been shut down for good, but they would get something. Plus, they paid several hundreds of millions of dollars to get Kodak personalized imaging and document imaging. If you pay that kind of money you don't just get "marketing rights" and be a slightly bigger Freestyle (or whatever you have in US) so that you can buy Kodak film priced at whatever Eastman Kodak wants for it and sell it at whatever market allows.

We might never know about the detail of the supply agreement but I seriously doubt that agreement allowed Eastman Kodak to just stop making film with no repercussions...

Jan likes to quote a Kodak CEO from 2014 that Kodak was just about to be forced to pull the plug on film production. Well, it makes for a nice Hollywood story and looks good on your resume if you are the guy who saved the film (and all that in the first year on your job!). Either film production is weighing Kodak down or is profitable. We are hearing both (from the same people here, LOL). Which is it then?
 
brbo said:
That is all true.

We might never know about the detail of the supply agreement but I seriously doubt that agreement allowed Eastman Kodak to just stop making film with no repercussions...

Jan likes to quote a Kodak CEO from 2014 that Kodak was just about to be forced to pull the plug on film production. Well, it makes for a nice Hollywood story and looks good on your resume if you are the guy who saved the film (and all that in the first year on your job!). Either film production is weighing Kodak down or is profitable. We are hearing both (from the same people here, LOL). Which is it then?
Click to expand...

Throwing in my two cents: paradoxically both are true. Trying to remember Economics 201: profitability is a function of sufficient demand at a specific price point. At the price Kodak Aleris is able to sell film for still cameras demand is sufficient to make a profit.

However the second aspect is that price reflects production costs. Kodak's production costs are low assuming demand is sufficient to justify employing its high volume production facility. But that facility assumed demand for film from multiple volume users - including and especially for cinema. Wholesale film sales for Kodak was ALWAYS much greater than retail film sales. In short, demand for retail film sales for use in still cameras is insufficient to maintain necessary production levels.

Kodak's reprieve was the agreement a couple of years ago with Hollywood to produce a fixed number of linear feet over the next few years. But Kodak will have to secure other such agreements to continue film production. At some point the game in Rochester will be up and Kodak film will be no more.

Securing the future of film over the next few decades requires the strategy employed by ADOX in their new production facility in Berlin: small scale production with newly refurbished/rebuilt equipment manned by a new generation of technicians. Production is aimed at the retail market. The day I visited their retail outlet in Berlin this past summer, it was filled with customers - and I mean young guys - buying film.
 
traveler_101 said:
However the second aspect is that price reflects production costs. Kodak's production costs are low assuming demand is sufficient to justify employing its high volume production facility. But that facility assumed demand for film from multiple volume users - including and especially for cinema. Wholesale film sales for Kodak was ALWAYS much greater than retail film sales. In short, demand for retail film sales for use in still cameras is insufficient to maintain necessary production levels.

Kodak's reprieve was the agreement a couple of years ago with Hollywood to produce a fixed number of linear feet over the next few years. But Kodak will have to secure other such agreements to continue film production. At some point the game in Rochester will be up and Kodak film will be no more.
Click to expand...

Apropos of which, the following is from Kodak's latest SEC 10-Q, filed on Nov 8, 2017 (emphasis added):

Consumer and Film’s revenue was unchanged compared to the prior year quarter and declined $23 million (13%) compared with the prior year first nine months. Segment earnings declined $3 million and $28 million compared with the prior year quarter and first nine months, respectively, driven by the declining installed base of consumer inkjet printers, increased unit costs in the film businesses and one-time items that favorably impacted the prior year. A modification to a brand licensing agreement improved current quarter results. Kodak plans to continue to promote the use of film to utilize as much film manufacturing capacity as possible.

http://investor.kodak.com/secfiling.cfm?filingID=1564590-17-22748
 
ulrich.von.lich said:
The press release only states Kodak is the producer, Alaris is the distributor, but doesn't state who is the owner.
Click to expand...

The film factory - "Building 38" - is owned by Eastman Kodak.
They have the control over production.
If Eastman Kodak fails (I hope not, I love TMY-2) Kodak Alaris has a real problem:
They still have the right to sell films under the Kodak brand name, but that is then worthless.
Only Eastman Kodak can make Kodak films, no other one:
You need the Kodak engineers, the Kodak know-how, the original emulsion kettles and the original coating machine.

It is impossible to make a Kodak film at Fuji, at Ilfords factory, at InovisCoat, Adox or Film Ferrania. And vice versa: You cannot make a Fuji or Ilford film at Building 38.
If Kodak Alaris would go to a different manufacturer, they would perhaps get some film. But that film would have nothing to do with Kodak films. They only could put the Kodak name on it. Would there be (enough) demand for such products? I have my doubts......
 
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