Eastman Kodak: Next Insolvency?

[Skiff]

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.

Thank you Vince.
You have described the current situation absolutely precisely.
It could not have be better described.

 

[Skiff]

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.

Again, thanks Vince!
Perfect description of the situation.

 

[brbo]

Perfect description of the situation.

It's a description that doesn't tell us anything about the supply agreement in place between Eastman Kodak and Kodak Alaris. Maybe people here should stop guessing at the nature of that agreement. Would you transfer your multi billion claim + additional money into a "promise" that someone will or will not sell you some or none of the product that they are or are not even interested in making?!

I've worked in a business that had supply agreements with the buyer so tight that they practically owned (parts of) the production.

 

[Skiff]

It's a description that doesn't tell us anything about the supply agreement in place between Eastman Kodak and Kodak Alaris. Maybe people here should stop guessing at the nature of that agreement. Would you transfer your multi billion claim + additional money into a "promise" that someone will or will not sell you some or none of the product that they are or are not even interested in making?!

You are again missing the point:
Building 38 is so big that it needs several film product groups to be run economically:
- movie film (camera film and archival film)
- pcb films
- photo films (unfortunately currently the smallest part).

The biggest segments are movie film and pcb film.
And all that is in the hand of Eastman Kodak.
If Building 38 cannot be run economically anymore, then Kodak Alaris cannot change that, no matter how the supply agreement was.
As Vince said:
The deal was bad for the UK Pension Fund / Kodak Alaris, but it was the best deal they could get: That or nothing.

But all that is not the main point today:
The main point is:
Eastman Kodak is making huge losses in their main sector industrial printing. In which way will these losses affect the film production? Will the small profits in film production again burned in their other activities (that is for about 15 years Kodaks problem!)? Can EK avoid another insolvency? What happens with the film production if EK is going again in chapter 11?
No one knows at this time.

 

[brbo]

You are again missing the point:...

No, I'm not.

If Building 38 cannot be run economically anymore, then Kodak Alaris cannot change that, no matter how the supply agreement was.

An agreement or contract could force or incent Kodak to invest into downsizing their production lines when before the agreement such incentive just wasn't there. If Ektachrome isn't just a stunt they are doing their first steps into adjusting production to current demand. Of course, no one here really knows if Ektachrome has anything to do with Kodak Alaris agreement.

Can EK avoid another insolvency? What happens with the film production if EK is going again in chapter 11?
No one knows at this time.

Correct. You should reread your quote a few more times.

Speculation about Kodak stopping all film production is like speculating which Fuji film will be discontinued next.

 

[Paul T.]

Such an informative and civil thread, this one.

 

[Skiff]

An agreement or contract could force or incent Kodak to invest into downsizing their production lines when before the agreement such incentive just wasn't there.

For years the film production at Kodak is downsized as much as possible. No possibilities for further scaling down.

Ektachrome has nothing to do with scaling down. It is all about Kodak needing reversal film for a success for its Super 8 camera. Because the S8 enthusiast want reversal film and real projection.
To make such a new reversal film production possible, you need the additional amount of 35mm film from photographers.
That is why Eastman Kodak want to offer Ektachrome in S8 and Kodak Alaris in 35mm photo film.

Speculation about Kodak stopping all film production is like speculating which Fuji film will be discontinued next.

Please read the postings here correctly. I have not written with one word that Kodak will stop all film production. Nor anyone else had.

 

[brbo]

Ektachrome has nothing to do with scaling down.

Kodak plans to make Ektachrome in far smaller scale than when it was discontinued. I would call that scaling down.

Kodak even said it will be not be made on old machines. It wasn't possible to do that in 2013 and now it suddenly is?! Unless some serious R&D happened to make that possible I'd say that they simply weren't that interested in making small quantities of slide film in 2013 and now they are. Could be the same for "building 38 is too big" mantra.

Of course, Ektachrome project could still turn out infeasible or even a pure PR stunt.

Please read the postings here correctly. I have not written with one word that Kodak will stop all film production. Nor anyone else had.

The OP lays it down pretty clear and literary writes that this time the survival of Kodak film production is in God's hands. Now, maybe he actually believes in divine powers, but for my agnostic soul that reads like a sure prediction of the imminent end of it.

 

[kkdanamatt]

Kodak is hurting while Fuji is Flourishing!

"Fujifilm Holdings has posted its financial results for the first three quarters of the 2017 fiscal year, and it's all good news for the Imaging Solutions division.
The segment recorded a revenue of 297.7 billion yen (approximately $2.77 billion USD), a bump of 15.6% year-on-year.
Imaging Solution operating income totaled 50.0 billion yen (approximately $465 million USD), up 76.1% over the same period during the previous year.

From the figures in its earnings presentation, it seems the bulk of the increase comes from the Photo Imaging business—read: Instax cameras—but strong sales in the Electronic Imaging business show the X-Series is starting to deliver.
Quarterly revenue for Electronic Imaging is up 39%, thanks to strong sales of the X-E3, X-T20 and X100F models, and the mirrorless medium-format camera GFX 50S and corresponding lenses.

Sales also increased in the Optical Devices business, largely due to strong sales of various industrial-use lenses, used for example in vehicle cameras or projectors.
And, finally, Fujifilm's presentation also mentions the launch of the new MK series of lenses, which are designed for cinema cameras and targeted at the growing area of video creation for online purposes.

If you want to dive into more detail, you can find all the report documents, including a video of the presentation, on the Fujifilm Holdings website.
But long story short: Fujifilm's Imaging Solutions division seems to be doing very well."

 

[Skiff]

Kodak plans to make Ektachrome in far smaller scale than when it was discontinued. I would call that scaling down.

No, that is not correct.
1. The last coating of all Ektachrome films was 2010. In beginning of 2012 they announced the discontinuation saying the remaining stock will last for probably about 9-12 months depending on demand.
So these production runs were intended for a longer time span. And it were two films: E100VS and E100G.
And it was all formats: 135, 120, sheet film, Super 8.

2. Now Kodak said in their podcast that they are again making several master rolls (not only one). But of one film, and only in two formats. And it is not intended for a longer time span.

Kodak even said it will be not be made on old machines.

You probably have misunderstood something. The main machinery you need are the emulsion kettles, and the coating machine. And that is all the same as for the current negative film production.

 

[Skiff]

From the figures in its earnings presentation, it seems the bulk of the increase comes from the Photo Imaging business—read: Instax cameras—but strong sales in the Electronic Imaging business show the X-Series is starting to deliver.

Photo Imaging department is about 69% of the photography revenue. And it is much more than Instax cameras and films: Photo film, single use cameras, RA-4 silver-halide photo paper (huge business), photo chemistry, mini labs (RA-4 and inkjet), inkjet papers.
So that is (with the exception of inkjet) their "analogue business".

Their digital photo business is about 31% of its photography related revenue.

 

[Ste_S]

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.

I think Kodak failing should be a concern for anyone who shoots colour. If Kodak fails you're left with just Fuji, and they seem to be doing their best to pull out of the non-instant film business

 

[brbo]

No, that is not correct.

Yes, it is.

You probably have misunderstood something.

No, I didn't.

Listen to the Kodakery podcast from Nov. 14, 2017. You will hear the comment that they will use "all new equipment which is much smaller scale" at around 5:20s.

 

[HHPhoto]

The OP lays it down pretty clear and literary writes that this time the survival of Kodak film production is in God's hands. Now, maybe he actually believes in divine powers, but for my agnostic soul that reads like a sure prediction of the imminent end of it.

???
I have not written anything like that.

Cheers, Jan

 

[HHPhoto]

Listen to the Kodakery podcast from Nov. 14, 2017. You will hear the comment that they will use "all new equipment which is much smaller scale" at around 5:20s.

In the podcast there is no information that they had installed new emulsion making facilities or a new coating machine.
Especially the last would also be impossible, because such a machine would cost millions of dollars. They would never get a ROI for that.
Ektachrome will be coated on the existing coating machine in B 38.

Cheers, Jan

 

[brbo]

???
I have not written anything like that.

Cheers, Jan

You wrote, and I quote 😀:

"So "hope and pray" is unfortunately all we can do."

In the podcast there is no information that they had installed new emulsion making facilities or a new coating machine.

There is also no information that they haven't. All we have from an official source is "new equipment" and "much smaller scale".

As always it's a personal matter who you believe, you or some guy from Kodak. My reply was to Skiff who claimed that I made that up or "misunderstood" what I wrote.

 

[HHPhoto]

I think Kodak failing should be a concern for anyone who shoots colour. If Kodak fails you're left with just Fuji, and they seem to be doing their best to pull out of the non-instant film business

It would be a concern for all film shooters, including BW shooters:
- Tri-X and both T-Max films going away
- less competition in the market
- higher prices
- very bad PR for film in general, very negative effect on getting more (younger) photographers into film.

I repeat it again: We need all film manufacturers: Kodak, Fujifilm, Ilford, Adox, Foma, Film Ferrania.

Cheers, Jan

 

[Out to Lunch]

Perhaps you should post in capital letters....

 

[ulrich.von.lich]

I still think what matters the most is the supply agreement, but I do understand your point.

Unlike the Impossible Project who bought the factory while not films, Kodak Alaris bought the films while not the factory. I think it's the easiest way to put it.

In reality, some manufacturing facilities and employees were transfered to Kodak Alaris under the settlement.

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

Quote:
"A number of manufacturing facilities and employees who are dedicated to the (Personalized Imaging and Document Imaging) businesses are included in the transaction. Those major manufacturing locations include Harrow in the UK; Shanghai, Xiamen and Wuxi in China ; Windsor, CO; Manaus, Brazil; Malanpour, India; Pereslavl, Russia; and Rochester, NY."


However, photographic films are still being produced in the Building 38 in Rochester and by Eastman Kodak. Probably it's because Eastman Kodak still needs the building for the production of its motion films. Most online articles seem to have failed to mention it.

Since Eastman Kodak is manufacturing photographic films for Kodak Alaris under a supply agreement, I think it's very likely the agreement has already covered the event that the Building 38 must be shut down. The agreement could very well oblige Eastman Kodak to transfer essential facilities (machines etc.) and employees to Kodak Alaris, and the production could be restarted elsewhere. I really think it's nothing but logic, but without knowing the exact terms, I'm just speculating.

In theory, Kodak Alaris should be able to manufacture photographic films themselves. I see they enjoy emphasising their independence from Eastman Kodak.

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......

 

[Skiff]

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

Quote:
"A number of manufacturing facilities and employees who are dedicated to the (Personalized Imaging and Document Imaging) businesses are included in the transaction. Those major manufacturing locations include Harrow in the UK; Shanghai, Xiamen and Wuxi in China ; Windsor, CO; Manaus, Brazil; Malanpour, India; Pereslavl, Russia; and Rochester, NY."

Dear Ulrich,

this article is again very misleading. Journalists have no clue about film production.
Only film producers have. Therefore we have to listen to the film producers, not the journalists.

To the localities listed above:
Only Harrow, Windsor and Rochester have to do with silver-halide products. All others are about digital or regional distribution points.
Harrow was the photo paper plant. But that was shut down by Kodak Alaris. There is no production anymore. It is dismantled!

The listing of Windsor is wrong. Windsor was never part of the deal, because the factory in Windsor is owned by Carestream!
https://www.carestream.com/en/us
(Carestream was in former times the healthcare department of Eastman Kodak. But EK sold it about a decade ago (stupid decision, by the way)).
But in Windsor now the photo paper is produced by Carestream for Kodak Alaris.
KodakAlaris has no own silver-halide production factories today.

Rochester: Most of the administration of Kodak Alaris (offices) are in Rochester in Kodak Park.

Since Eastman Kodak is manufacturing photographic films for Kodak Alaris under a supply agreement, I think it's very likely the agreement has already covered the event that the Building 38 must be shut down. The agreement could very well oblige Eastman Kodak to transfer essential facilities (machines etc.) and employees to Kodak Alaris, and the production could be restarted elsewhere. I really think it's nothing but logic, but without knowing the exact terms, I'm just speculating.

Sorry, no. You cannot simply transfer B38 to different location and start production again. Too much technological hurdles and especially: Much too expensive!!
You would never get the huge investment needed for that back!
You should read Robert Shanebrooks (former Kodak engineer) excellent book "Making Kodak Film". Then you will see immediately why such a move is impossible.

In theory, Kodak Alaris should be able to manufacture photographic films themselves. I see they enjoy emphasising their independence from Eastman Kodak.

No, they cannot manufacture films by themselves. They have neither the staff, nor the know-how, nor the factory for that.