Kodak plans to reduce costs, find new markets
ROCHESTER, N.Y. - Grappling with the rapid rise of digital photography,
Eastman Kodak announced yet another reorganization Thursday aimed at cutting
costs and accelerating growth in consumer and commercial imaging.
Kodak hired Hewlett-Packard veteran James Langley to run commercial-printing
operations, a new business that reflects Kodak's struggle to find new
markets to compensate for the slump in sales of traditional, chemical-based
Even scarier is the last part of the article:
The consumer and professional photography businesses, which account for about 60 percent of Kodak's annual sales of $12.8 billion, were consolidated last month in an effort to pool resources.
The switch by consumers to digital photography is coming on faster than expected, cutting deeply into the film, paper and photofinishing businesses that anchor Kodak's profits and image. Industry analysts say that by the end of the year, digital cameras will begin outselling film cameras in the United States for the first time.
Kodak is slashing 4,500 to 6,000 jobs this year, shrinking its global payroll to around 62,000 from a peak of 136,500 in 1983. Kodak blames the three-year slump in film sales largely on a sluggish economy and the rise of filmless digital cameras.
About half the cuts, mainly in the traditional-photography divisions, will be made in Rochester, where Kodak is based and employs about 22,000 people. Three weeks ago, Kodak said it is shifting its 35 mm film-finishing operations to Mexico and China and eliminating as many as 900 jobs in Rochester.
I am not too worried. I feel pretty confident that as the big players bow out, specialty shops will actually see an increase in revenue (places like J&C Photo, Bergger for example). As long as these smaller shops can keep it together I will be happy enough. And there is always the worst case scenario of making our own plates! hehe
I am still waiting to see what happens when digital cameras no longer need to increase pixel count (for consumers I think this has already happened). From what I hear 3 megapixels can make good 8x10's so who needs more? Eventually the consumer will be thinking "do I buy a 3 megapixel camera for 50 dollars or a 50 megapixel camera for 2,000 dollars?". It just seems there is no need to keep increasing pixel count for the consumer market (increasing pixel count seems to be the basis of their marketing engine). So they'll be left with consumers who do not want or need 50 mpixel cameras, then what, develop higher pixel counts for the professional market? I can see this now "Nikon 65 mpixel vs. Cannon 63 mpixel, vs. Sigma prototype 66 mpixel"... This will happen to the point a 20megapixel difference between models doesn't matter so who will buy the cutting edge models. Also there is the lens resolution to think about - can a lens resolve more detail that 50-100 megapixels? If not why buy a 300 megapixel camera if a lens can only record 100 megapixels? Seems like the digital market will tank when they hit these types of pixel levels. I'm no expert though...
Aggie, any sane person would think like you, but that is not what the wonder MBA's think. I wonder what they teach them in school now a days?
Ever since I got involved in photography I have seen Kodak make mistake after mistake, their stock every year is lower and these geniuses cant seem to see the writing on the wall...for some reason they just cant seem to pick a direction and stick to it. Look at Ilford, they decided to make paper for printers, and seem to be doing very well, they dont do printers, digital cameras, inks or any other stuff, they are doing one thing and doing it well.
Ah well, who cares? when Kodak goes under I will switch from 400 tmy to efke or bergger...at least those people seem to want to do what they are doing....
Kodak Definition: We can't hit our ass with both hands.
It is very easy to explain. The business paradigm is about return on investment for share holders NOW. American business does not look at long term trends or try to weather recession or short economic downturns. If the stock price starts to fall the battle cry is cut jobs, drop products, consolidate brands, ship production overseas. No one looks at the long term ramifications for their particular industry or the nation as a whole.
Business decisions today are not based on logic and rationale but knee jerk reactions to other companies knee jerk reactions. many decisons in industry today are designed to try to boost stock price through cost cutting, but little thought is given to better servicing existing customers or growing your customer base. When companies do try to gain market share it is often a keeping up with the joneses. Smaller and smaller amounts of capital are going into R&D at the biggest corporations like Kodak.
Remember, CEOs and directors need to protect those fat nest eggs and bonuses.
Or to make a long sad story short, It's not what have you done before but what is the stock price this quarter.
And to just repeat what i have said before, there will always be film available. It will all be manufactured in China, Malaysia, Phillipines, Mexico, Vietnam etc. In other words, almost any place they can get away with using virtual slave labor considering the wages that are paid.
Jim I agree with you, but the funny thing is that Kodak`s stock prices have been going down since the early 90's. I would think even the dumbest MBA would have realized by now that their current strategies for boosting short term stock prices are not working.
IMO the problem is not in the search for the quick buck, but in the dumb search for the quick buck. Actually I think that a manager or CEO who is looking for quick profits has to be smarter and more on the ball than those who take the long term view, as they are taking quick risks and making intuitive desicions instead of using all the data available to them.
Hasn't Kodak being doing this since about 1982! I remember somebody mentioning Kodak more or less killed thier film R&D department off then. Firing all the film people and replacing them with people who would be digital. This was the early 80s.
Oh and the guy the new guy is replacing. Wasn't he a digital guy brought in a year or two ago?
They are also again claiming digital camera sales will pass film cameras. You know one year they'll be right but it'll be a long time until the number of digital cameras in use pass the number of film cameras in use.