| SPECIAL REPORT
SUNDAY, SEPTEMBER 1, 2013
KodakNext
OUT OF BANKRUPTCY, INTO A NEW ERA
CAN ICONIC
INNOVATOR
REINVENT
ITSELF?
KODAK HAS A
STRATEGY TO CHANGE
ITS FORTUNES. HERE’S
THE PLAN, AND ITS
PROSPECTS.
ROCHESTER
REINVENTING
OUR SELF-IMAGE
7G
THE FUTURE
EASTMAN PARK
POISED TO GROW
6G
TIMELINE
MOVING BEYOND
THE BANKRUPTCY
4G
IMPACT
CH. 11 RIPPLES
ACROSS REGION
5G
Matthew Daneman :: Staff writer
I
t looks like a magic trick. A sheet of ordinary office paper rotates
rapidly on a spinning drum. In literally the blink of an eye, the sheet
is covered in black text, using drops of ink measured in picoliters — a
picoliter being a millionth of a millionth of a liter.
Eastman Kodak Co. scientists in this Lake Avenue research hub
are tinkering with the technique, called Stream Inkjet Technology, to improve performance. Nearby, scientists are working on further perfecting its SquareSpot laser-writing technology and potentially toward
breakthroughs in spatial atomic layer deposition, bonding an atomiclevel layer of film onto the contours of a surface.
Done right, such work could find its way into even higher-speed printing presses and products such as foldable smartphones, a new generation of solar cells and wearable gadgets that monitor vital signs.
More immediately, the hope is that this kind of technology can save a
121-year-old company emerging from 20 months of bankruptcy this
week.
The question of whether Kodak can succeed will take years to answer.
But, sink or swim, the company is now officially entering its next era
with a much smaller workforce, dramatically cut costs and a narrower
focus on a specific set of markets and offerings.
See FUTURE, Page 2G
D&C
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VIDEOS,
INTERACTIVES,
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6G
WHAT’S THIS?
Through joint ventures with UniPixel Inc. of Texas and Kingsbury
Corp. of Rochester, Kodak hopes
to revamp the way consumer
devices like smartphones and
tablets are made. Most touchscreens are made of glass and use
a compound to detect fingertip
motion. Kodak and its partners
plan to “print” virtually invisible
lines of silver or copper on a film
base to create flexible touchsensitive sensors.
ILLUSTRATION BY JOANNE SOSANGELIS
Page 2G Sunday, September 1, 2013
KodakNext
DemocratandChronicle.com
OUT OF BANKRUPTCY ...
Even though Kodak has made big changes, it’s not certain
it will be successful after exiting bankruptcy.
KODAK BEFORE
3.2
The Eastman Kodak Co. that filed for Chapter 11 protection in January 2012 and the company that exits
bankruptcy this week share the same name and some
of the same DNA. But they’re more akin to cousins
than older and younger versions of the same. Consider:
2.9
» The desktop inkjet printer line that just a couple
short years ago was to be one of its star businesses has
been shut down.
2.6
2.5
» Tens of thousands of retirees now have to find their
own health care coverage.
2.7
» A $2.8 billion shortfall in the pension fund covering
British Kodak retirees has been written off.
» Kodak Gallery has been sold, as has a portfolio of
roughly 1,100 patents surrounding digital imaging —
the very field Kodak invented in 1975 with the first
digital camera.
» Kodak’s document scanner business and its storebased photo kiosks are being sold off, as is the camera
film business that made the company a household
name.
BEYOND KODAK
When Eastman Kodak Co. exits bankruptcy, roughly
3,200 workers — including 700 locally — will no longer
be Kodak employees. The company is selling its Document Imaging and Personalized Imaging businesses to
the pension fund covering its United Kingdom workforce.
BY THE
NUMBERS
$219M
KODAK
PROJECTIONS
Total spent on
professional fees
such as attorney
and auditor costs
in Kodak’s
bankruptcy (as of
the end of June)
SALES
IN BILLIONS OF DOLLARS
Actual film manufacturing for the Personalized Imaging business, which includes Kodak’s iconic camera film
lines, will continue to be done by Kodak in an agreement with the pension fund.
Pension fund executives did not comment about plans
for the former Kodak businesses. But the local economy is full of companies that once were part of Kodak
before being sold or spun off.
For Rochester image sensor company Truesense Imaging Inc., the 2011 divorce from Kodak “has been a
really good experience,” said CEO Chris McNiffe.
“When you’re a division of a big company, you have a
strategy that’s set to serve the big company. Today,
everything we do, from when we come to work until
the time we leave, is focused on making Truesense a
long-term successful company. That’s to say nothing
bad about Kodak. Kodak had a strategy that made
sense for the overall company.”
167
209
287
360
PROFITS
(NOT INCLUDING CERTAIN
NON-CORE EXPENSES)
IN MILLIONS OF DOLLARS
2013 2014 2015 2016 2017
TERRY TABER
Reinventing
an American institution;
conversations with
recent Kodak hires
Maria Celeste
“Cel” Tria (below)
and Pablo Biggs
The new old technology
Stripped to its basics, the company has always been one of the world’s foremost experts at
coating. It became a household name by layering
a plastic base with light-sensitive chemicals and
selling it in little yellow boxes by the billions. Essentially, Kodak’s plan for survival is to continue
putting stuff atop other stuff.
Kodak has bet its immediate survival in part
on commercial printing. But for tomorrow, it has
that atomic layer research and other similar
technology, bonding microscopically thin materials to surfaces.
It’s a fitting technology for Kodak. For the
company that brought photography to the
masses, smartphones and computer tablets
were too rich a realm to pass up.
The company has signed agreements with
Kingsbury Corp. and Uni-Pixel Inc. to churn out
miles worth of thin sheets of touch sensors at
Eastman Business Park to be used in screens of
consumer electronic devices. The touch-sensor
module market is expected to reach $32 billion
by 2018, according to Kodak.
Kingsbury plans to start building and assembling its silver-based sensor coating equipment
this month. Uni-Pixel is in the midst of installing
its copper-based manufacturing site. Both sensors promise to be far cheaper and boast better
touch response than what’s on the market today.
Likewise, Kodak wants to turn semiconductor production on its head. Today, making these
building blocks of virtually all digital products is
an onerous, laborious process. Big, industrial
clean rooms are needed, with work done in sterile vacuum chambers. The staff is often covered
head to toe in special protective clothing to eliminate the chance of even the slightest mote of
contamination or dirt.
A breakthrough in spatial atomic layer deposition could fundamentally change how semiconductors are produced, essentially “printing”
them onto circuit boards and eliminating the
need for those vacuum chambers.
Length of
bankruptcy
to date, in days
DE JESUS STAFF
Kodak chief technology officer
KODAK MOMENTS
Number of
court filings
as of Aug. 29
An example of
spatial atomic
layer deposition
— a way of
chemically
bonding a thin
film onto the
features and
contours of a
surface, with
applications
ranging from
solar cells to
flexible
electronics. MARIE
“We have creative, innovative people. ...
We’ve been able to maintain and
encourage and motivate, and that passion
is going to be unleashed.”
Continued from Page 1G
4,999
592
Kodak also has been busy selling idle properties. In
June, Monroe Community College bought a portion of
Kodak’s State Street complex for $3 million. The college plans to move its downtown campus there. The
move could come as soon as fall 2016.
Future
494
PHOTOGRAPHER
‘On the top’ in printing
When Mercury Print Productions Inc. of
Rochester installed its first Kodak Prosper
press in April 2011, “it was a train wreck,” said
company President Christian Schamberger.
“They were on the bottom on image quality.”
But then came a series of upgrades and new
inks. “Now,” he said, “they’re on the top.”
Kodak today often sends prospective customers to Mercury to see the Prosper technology in
action; Mercury has two Prosper presses for its
textbook and educational material printing
work. Mercury owner John Place is hoping that
Kodak will further formalize its relationship
with Mercury, making it a test site for new Kodak printing technology.
“They need someone like that,” Place said.
“That’s one of the problems Kodak’s always had.
They’ve got to give (prospective customers) a
wow experience. They need a partner to show a
wow experience. They’re very bad at that.
They’re very good at technology, but bringing it
to the market …”
Added Schamberger, “We always joke,
they’ve been a company of engineers. They just
don’t know how to market it.”
However, Place said, Kodak’s technology is
good enough to ensure its survival in the commercial printing industry. “They’re really the
top in a lot of areas,” Place said. “They’re positioned very well for the future.”
Even if the company itself stumbles and falls,
he added, “I think their technology is that good;
somebody will buy it out.”
And as functional printing — layering materials, not ink — becomes a bigger part of Kodak,
Place said he sees it becoming a bigger part of
Mercury’s business. “We’re going to hook right
onto Kodak and be their guy.”
While it has banked for some years on its highspeed inkjet printing presses to be one of its success stories, sales have not been inspiring. Kodak last year had only about 5 percent of the market, according to industry watcher Infotrends.
And in such realms as black-and-white digital
presses and toner color presses, Kodak also lags
well behind such competitors as Xerox Corp.,
Hewlett-Packard Co., Ricoh Co. Ltd. and Canon
Inc. in market share, according to Infotrends.
The printing industry itself is in the midst of a
steep decline. Commercial printing in the United
States in 2012 was a $78 billion industry — down
more than 20 percent from a 2001 peak of $101
billion, according to the National Association for
Printing Leadership. Consider that Xerox has
seen its traditional printing technology business
eclipsed by its foray into business services,
which now accounts for more than half of the
company’s sales.
Even if the print market is declining, Kodak
Chief Technology Officer Terry Taber said, the
digital printing portion is growing. “We’re wellpositioned for that transformation,” he added.
In printing, particularly the high-speed inkjet
world, “I think it’s their market to lose,” said
Frank Romano, professor emeritus at Rochester
Institute of Technology’s School of Print Media.
Kodak has sold many digital inkjet printheads
that attach onto traditional, non-digital printing
presses. “They’re ahead of most of their competition because of their experience in inkjet.”
Big plans
If all of Kodak’s plans pan out, it will stop a
slide in revenues that dates back to 2005 — the
last year Kodak grew. Kodak projections have it
bottoming out this year with sales of $2.5 billion,
and then slowly growing to $3.2 billion in 2017.
And by one measure of profitability, Kodak
expects to be in the black this year after two consecutive years of losses, and then grow from
there. That growth, the company told U.S. Bankruptcy Court, is expected to be the result “of both
Kodak’s increase in the installed base of new
products introduced in the last four years ... plus
a strong focus on new growth markets and new
product introductions that drive higher gross
profits, as well as the concerted actions to reduce corporate cost structure.”
Post-bankruptcy, “Kodak is not for the most
part a big revenue growth story at all,” testified
David Kurtz, global head of the Restructuring
Group of Lazard Frères & Co. LLC, one of Kodak’s bankruptcy consultants, in U.S. Bankruptcy Court last month. But where the company
does expect to see big growth is in its cash flow
through tighter control of expenses and as it
shifts its business mix, Kurtz said.
However, the company has a lengthy history
of promising that it’s finally turned the corner
and starting next year, things are going to be better. In early 2011, CEO Antonio M. Perez told a
DemocratandChronicle.com
KodakNext
Sunday, September 1, 2013 Page 3G
... INTO A NEW ERA
Rich Beck of Gates, lead operator, holds a sheet of printed film taken from the large printer at left at a pilot production line at the joint project between Kingsbury and Kodak at
Eastman Business Park in Rochester on July 10. SHAWN DOWD/STAFF PHOTOGRAPHER
MEET THE NEW BOSSES
Six of the nine men on Kodak’s new board of
directors take their seats after the company
emerges from bankruptcy. The three holdovers:
» Kodak CEO Antonio M. Perez.
» William G. Parrett, former senior partner at
accounting giant Deloitte & Touche USA LLP.
» James V. Continenza, president of telecommunications company STI Prepaid LLC.
Joining them:
» Mark S. Burgess, chairman of plastics packaging company Clondalkin Group.
» George Karfunkel, chairman of consulting
firm Sabr Group.
» Jason New, head of special situation investing
for GSO Capital Partners.
» Derek Smith, managing principal with BlueMountain Capital Management.
» Matt Doheny, president of investment firm
North Country Capital LLC.
» John A. Janitz, chairman of investment firm
Evergreen Capital Partners.
Only Perez is local. BlueMountain, GSO and
Karfunkel have pledged to buy any Kodak stock
not bought by the company’s unsecured creditors.
One of the board’s top priorities: Hiring Perez’s successor.
James Chwalek, advanced development manager for Kodak, uses a loupe to take a close look at fine letters while checking
the quality of the inkjet printing at Kodak Research Lab last month. MARIE DE JESUS/STAFF PHOTOGRAPHER
crowd of financial analysts that 2012 would be a
profitable year for Kodak. “It’s almost inevitable
we get to that point (of sustained profitability).
This is going to happen.”
Perez, who has been in charge since 2005, has
announced plans to step down within the next 12
months, though he will remain as a paid consultant. He declined requests to be interviewed for
this special report.
That printing-centric strategy is one of Perez’s key legacies, one he latched onto when he
came to Kodak in 2003 and saw the inkjet technology the company had in its labs, said Art Roberts, head of the Kodak retiree group EKRA Ltd.
And the strategy largely reversed steps Kodak
took in the 1990s that jettisoned printing from
the mainstream of Kodak as the company was
expanding its presence in China with photographic film and paper plants, Roberts said.
Kodak has argued that bankruptcy gave it the
ability to essentially catch its breath and unload
a variety of costs — including retiree health care
coverage and some pensions — and it is ready to
soar. Now comes the challenge of taking that revamped and slimmed-down Kodak and making it
into something the old Kodak has not been for
years: consistently profitable.
Chapter 11 in the first place has not really been
rectified,” said Robert Rock, senior counsel with
the bankruptcy practice at Tully Rinckey PLLC.
“The core problem Kodak had was that its
core business no longer existed,” Rock said. “Nobody uses film anymore. My suspicion is that Kodak has a very good chance of succeeding because its underlying pathology ... was abundantly obvious and has been dealt with. The question
becomes, is what is left independently economically viable?”
Moody’s Investors Service in July was fairly
pessimistic as it rated the odds of Kodak defaulting on its various bonds.
While printing gives Kodak “the most promising opportunity to resume revenue growth,” its
future is also tied to an ongoing decline of printed materials, Moody’s said. And while Kodak has
slashed billions of dollars worth of liabilities,
“there is limited visibility in whether the company has sufficiently stabilized its operations and
cut expenses … to stem further weakening of its
financial obligation.”
“Jack Welch, the very successful CEO of General Electric, had a rule of thumb of GE that if
you can’t be number one or number two in market share, you’re not going to be successful,” said
retired Kodak Vice President Terry Faulkner.
“That’s going to be the problem (for Kodak) as I
see it. It will be limited on its resources; how is it
successfully going to compete with these other
(commercial printing) companies that are much
larger and much richer?”
But Kodak also has its champions who see big
potential and opportunities.
David King McMullin, president of WhiteSand Research LLC, an investment firm that
specializes in companies in bankruptcy and
turnaround, said that while Kodak faces competitive challenges in its business-to-business strategy, its recent cost-cutting should help its business focus. “Should the newly appointed CEO effectively execute the company’s go-forward
business plan, we believe Kodak would have
nearly all the necessary ingredients needed for
success — a patent-differentiated business model ... growth prospects, a streamlined cost structure and a well-capitalized balance sheet.”
EKRA’s Roberts said that if anything gives
retirees confidence in the company’s future, it’s
that different investment groups bought the
IOUs of unsecured creditors at more than what
Confidence and doubt
“I’m not sure my job will change” with the end
of bankruptcy, said Pablo C. Biggs, who was
hired in fall 2011, just a couple of months before
the bankruptcy, to oversee strategic alliances
and partnerships for Kodak’s business solutions
and services group. But, he added, “I think it’d be
a good place to have a long-term opportunity.”
Even though Kodak has made big changes, it’s
not automatic that it will be successful this time.
At least statistically speaking, it’s not inconceivable that Kodak might end up in Chapter 11
bankruptcy again in a few short years. According to the University of California at Los Angeles
LoPucki Bankruptcy Research Database, roughly one in five companies ends up back in bankruptcy in five years.
While a court approving a reorganization
plan, as happened with Kodak on Aug. 20, is supposed to be an indicator that the company is on
solid financial ground, “I think what happens
frequently is that in the reorganization process,
the underlying pathology that led the debtor to
Kodak was going to pay — the implication being
that those investment groups wanted the IOUs
because it gave them a way of buying stock in the
new Kodak before it begins trading openly.
“There’s some analysis these places are doing
that says there’s value, and they’ve got access to
a lot deeper kinds of analysis than any one of us
do,” Roberts said. “If they’re saying, ‘We’re willing to buy (one of those IOUs) for 17 cents or 18
cents on the dollar’ … while Kodak is saying the
claims are going to be paid out at about 5 percent
... there are some financial markets that are valuing Kodak. So that would say to me they don’t
look at it as a fool’s errand or else their jobs are in
jeopardy. That gives you a little confidence, a little wind in your sail, if you will.”
Always a challenge
Even in promising technology, the challenge
for Kodak and its partners Kingsbury and UniPixel is that a number of other companies — such
as an old film nemesis, FujiFilm — also are looking at that touch-sensor market, said Kingsbury
CEO Bill Pollock. But given the potential size of
that industry, he said, “Neither of us is going to
dominate. We want very much to succeed, so we
want Uni-Pixel to succeed.”
As far as Kodak’s Taber is concerned, the
company is ready for its comeback story. “We
believe in what we’re doing. We have creative,
innovative people. We have strong technology
platforms. We’ve been able to maintain and encourage and motivate (during the bankruptcy),
and that passion is going to be unleashed.”
The latest generation of Kodak employees is
trying to focus on the potential, not the pain of
downsizing and lost glory. Maria Celeste “Cel”
Tria of Greece started with Kodak in the summer of 2011as a research scientist specializing in
functional printing.
At the time, the company already was dealing
with growing rumors about its potential insolvency. And the bankruptcy definitely “dampened the mood,” she said.
“At first I was worried. But the way I see how
we’ve progressed during the bankruptcy ... and
we have the right direction and focus. Now I can
really see the brighter future.”
[email protected]
Twitter.com/mdaneman
KODAK MOMENTS
Inside look at
Kodak’s research
labs; Mercury’s
Christian
Schamberger
(below)
touts Prosper
presses
Page 4G Sunday, September 1, 2013
KodakNext
DemocratandChronicle.com
ANATOMY OF A BANKRUPTCY
As the world embraced digital imagery and abandoned film,
a once-mighty company struggled to survive.
1992
$34.13*
1982
$10.82B
2003
$28.26*
1982
$27.06*
1992
$16.95B
2003
$12.89B
2011
$6B
SALES
STOCK PRICES
*ANNUAL AVERAGES
ON AUG. 30,
KODAK STOCK
CLOSED AT
2011
$2.73*
5.5¢
PROFITS
LOSS
$1.16B
$1.15B
KEY EVENTS 1
“Life Never Looked So Good.”
1982
That was the tagline on Eastman Kodak Co.’s Kodacolor VR line
of films introduced in 1982, but it very well could have been the
company’s motto at the time. Despite a recession, Kodak
basked in the success of its disc camera and Kodacolor HR disc
film. Rolled out that year, more than 8 million disc cameras had
been shipped from Rochester by year’s end.
$265M
$764M
EMPLOYEES LOCAL/WORLDWIDE
DECISION
MAKERS
CEO/Chairman
Walter A. Fallon
1972-1983
Kodak was seemingly everywhere, from making vitamins and
the ingredients for penicillin to turning out polyester used for
knit apparel.
1982 60,400/ 136,500
Locally, Kodak employment reached 60,400, an all-time high.
But citing the economy, the company said that it would cut its
workforce through voluntary early retirements and layoffs in
1983. And consumers ultimately turned away from the disc
camera and its relatively poor photo quality; the company discontinued its manufacture just a few years later.
Digital technology was making its way into Kodak products —
for example, in the processing of film disc negatives, for image
sharpening.
1992
Kodak founder George Eastman started Eastman Kodak Co. in
1892. A hundred years later, the seams were starting to show.
The year before, it consolidated 17 autonomous imaging businesses into five business units. As a result, 8,000 positions were
cut. In 1992, Kodak also sold a variety of businesses.
Kodak still was hugely diversified. Through its Sterling Winthrop pharmaceutical and health products subsidiary purchased
in 1988, Kodak’s products included Bayer aspirin and Phillips’
Milk of Magnesia. Eastman Chemical was spun off in late 1993.
1992 39,300/132,600
CEO Kay R. Whitmore
1990-1993
Imaging President Leo J.
Thomas. Health President Wilbur J. Prezzano.
“A challenging year.”
2003 21,600/63,900
Digital technology increasingly was driving Kodak product offerings, most notably the Photo CD platform of products. Introduced in 1992, Photo CD converted film and paper images to
disc. But film still was king, and that year the company rolled
out the Fun Saver 35 single-use camera and three lines of EXR
film for motion picture and television imaging.
2003
As digital technology increasingly became the norm in the imaging world, Kodak announced big steps to keep up. In 2003, it
said it would cut 12,000 to 15,000 positions over the next three
years and eliminate operations worldwide, shrinking its real
estate footprint by a third.
The company also pegged increasing hopes on commercial
printing, forming a commercial printing and database management business. It purchased digital inkjet printing company
Scitex Digital Printing, renaming it Versamark. And early in
2004, Kodak said it would take over the NexPress digital printing press joint venture it had with Heidelberger.
LOOKING FORWARD
CEO/Chairman
Daniel A. Carp
2000-2005
President/Chief Operating Officer Antonio M.
Perez
Early in 2004, the company agreed to sell its Remote Sensing
Systems operation to ITT Industries Inc. Today, that business is
part of ITT spinoff Exelis Inc.
2011
Kodak poured money into a handful of areas, hoping to see
them grow enough to compensate for its rapidly shrinking film
business and its increasingly troubled digital photo business.
All of Kodak’s growth businesses were up 17 percent from a
year earlier. But the problems were bigger than that.
Digital capture devices, which included digital cameras and
picture frames, accounted for 15 percent of the company’s revenues in 2011 — about half of what they did a year earlier. In
early 2012, the company would announce it was shuttering its
digital camera business. Kodak that year would also apparently
decide it couldn’t continue to invest in its home printer business
and said it was ending its desktop printer line.
On Jan. 19, 2012, Kodak filed for Chapter 11 bankruptcy protection.
2011
5,100/17,100
CEO Antonio M. Perez
2005-present
Co-presidents Laura
Quatela and Philip J.
Faraci.
2014
Kodak sees its focus on commercial and packaging printing, on
services serving those industries,
and on the use of printing technology as a form of manufacturing — i.e., “functional printing.”
Through its bankruptcy, Kodak
hacked at its financial liabilities,
particularly those tied to retirees,
and shut down or sold numerous
business lines and assets. During its
bankruptcy, it also cut more than
20 percent of its workforce, including deep cuts among management ranks.
Kodak in turn is expecting 2014 to
be its first growth year since 2005,
with projections showing revenues
growing 24 percent by 2017.
DemocratandChronicle.com
KodakNext
Sunday, September 1, 2013 Page 5G
BANKRUPTCY’S ONGOING IMPACT
The effects of the Chapter 11 filing continue to resonate for
both Kodak workers and the greater community.
CHARITABLE GIVING
ECONOMIC DEVELOPMENT MOVING FORWARD
During its bankruptcy, Eastman Kodak Co
cut off its corporate philanthropy, including
$3 million a year to the local United Way
campaign. Even so, Rochester-area Kodak
employees gave nearly $700,000 to the most
recent United Way campaign.
Part of the job of pitching a community to
new or expanding businesses involves always finding the silver lining or accentuating the positive.
No matter how you look at it, getting laid
off is a stressful experience. But for Greg L.
Miller and others, it also is an opportunity
to reinvent themselves and move forward.
Since at least the 1980s, Eastman Kodak Co.
has been known as a company that hired
and promoted women, people of color and
people of various sexual orientations.
So how to address the bankruptcy of Eastman Kodak Co. — long the company almost
synonymous with the Rochester region? “It’s
both a challenge and an opportunity,” said
Greater Rochester Enterprise’s Mark Peterson.
Miller spent 31 years with Kodak. He first
worked on anti-aircraft shell fuses, became
a mechanic for automated warehouse
operations, then an R&D technician and
finally a software engineer in copy products.
Laid off in February 2012, he started work
within weeks as a software engineer at
Rochester gear manufacturer Gleason
Works.
Much of that reputation was built during
the same period that the company was
shrinking. Kodak won’t provide exact percentages, but insists its diversity is better
now than it was when the company was at
its peak of employment in 1982.
“Surprisingly, the Kodak folks have been
very good donors,” said Jonathan Roberson
Jr., senior vice president at the United Way
of Greater Rochester.
But good is relative in times of corporate
downsizing. Kodak simply isn’t the charitable giving leader it was for many decades.
Charities have remade their goals and strategies to reflect that.
United Way downsized its annual goal by
more than $10 million and developed a
website to make giving easier for small and
medium companies. The umbrella charity
saw 90 new company campaigns this year.
Kodak gave the first $100,000 for the endowment of the Urban League’s Black
Scholars program and used to make other
annual contributions. As Kodak’s gifts dwindled, the Urban League had to abandon its
annual gala.
“The challenge was, it was very visible in the
national media and the end of a story we all
knew about for the last three decades, that
things had changed in that industry and
Kodak was no longer going to be the giant
it once was,” said the president of the
nonprofit economic development group.
“It was also an opportunity for us to redefine ourselves as a community. ... So this
gave us an opportunity to really tell that
story and to say our economy is very vibrant,
that a lot of it has to do with technologies
and people and talent that was acquired
and developed here by Kodak, but now
those talented people and technology are
being used in another way to create new
companies and new jobs and that’s the story
of Rochester today.”
“We’ve had to work a lot
harder and a lot smarter to
receive gifts.”
One big asset of Kodak’s — Eastman Business Park — increasingly has become an
industrial park housing a variety of nonKodak operations.
WILLIAM G. CLARK
And the migration of companies there likely
will accelerate after bankruptcy, Peterson
said. “I think maybe there was a time when
there was a lot of stuff on hold because the
disposition of the park and maybe ultimately the disposition of Kodak was somewhat
in question.
Urban League president and CEO
Because of Kodak’s past generosity, charities
were too reliant on corporate giving 20
years ago, said Jennifer Leonard, CEO of the
Rochester Area Community Foundation.
Today, the community has a healthier balance. “That’s added millions of dollars to
community giving that in the past would
have come disproportionately from the
corporate side,” she said.
— Diana Louise Carter
That shift to a new employer in a totally
new industry “is a lot of learning,” admitted
the 56-year-old Clarendon, Orleans County,
resident. “I like what I’m doing.”
Despite the years of downsizings at Kodak,
the company also has traditionally been a
place that workers were loathe to leave.
“For 30 years, Kodak was a great company
to work for. A great group of people to
work with. I don’t think I would’ve pulled
the trigger any sooner. That whole thing
about Kodak people not leaving Kodak
unless they’re forced out the door is fairly
true.”
It is probably fair to say that Miller more
than landed on his feet after Kodak. “Other
than the drive being a little longer ... it’s
been good,” he said. “It really has.”
“Getting laid off from Kodak
was a lucky thing. It wasn’t
much fun anymore.”
GREG L. MILLER
ex-Kodak employee, now at Gleason Works
DIVERSITY
Some diversity efforts have been put on
hold during bankruptcy, according to Mary
Anne Detmer, director of global diversity
and worldwide talent, inclusion and engagement for Kodak.
But others have not, such as cultural awareness training and designating a senior
manager to connect with each of what
Kodak calls affinity groups: clubs or professional associations within Kodak based
around gender, ethnicity or other characteristics.
William G. Clark, president and CEO of the
Urban League of Rochester, suggested that
even if Kodak jobs have been replaced by
jobs at small companies, diversity was lost.
“It’s the large corporations that really, really
had the push for diversity at all levels,”
Clark said. “Now that we have more medium-size companies — the tool and die and
construction — while some of them may
cherish diversity, it’s not a corporate culture.”
Detmer noted, “Obviously, our objective in
Chapter 11 was company survival.” With
downsizing, she said, “We have lost great
talent across gender and across all races.”
But once the Kodak emerges from bankruptcy and is profitable again, it will strive
to reconnect with diverse recruitment avenues, she said.
“I think that’s becoming much clearer. A lot
of the challenges and the slowing of making decisions that might have existed a year
or two ago are virtually gone.”
— Matthew Daneman
“Gleason’s making money — they’re busy as
can be. I know guys who got laid off (from
Kodak) last February, who have worked a
couple jobs here and there, who are having
trouble finding employment.”
— Matthew Daneman
LAID-OFF WORKERS
NEW HIRES
RETIREES
SUPPLIERS
Like many ex-Kodakers, Dominic D’Agostino
has a slightly complicated relationship with
Eastman Kodak Co.
Pablo Biggs’ grandmother, born in 1909, had
every version of Eastman Kodak Co. cameras
and recorded every part of the family’s
history.
The comfortable existence that Eastman
Kodak Co.’s 56,000 retirees and their
spouses expected in their golden years has
been threatened by the company’s bankruptcy. As part of the reorganization, Kodak
cut off health care coverage for retirees and
their dependents in January, sending those
older than 65 into the Medicare system,
resulting in some modest co-payments.
Eastman Kodak Co. submitted an order a
couple weeks ago to Teke Machine Corp. for
some custom rivets. Not a big order, a few
hundred bucks. And Teke was happy to
accept the work.
On one hand, it was home for more than 30
years, until he was laid off last year. “How
can I be here almost 31 years and not want
to see them survive?” said the Rochester
60-year-old. “It was almost like family. You
can’t help but want them to do well.”
On the other hand, he had tried to take a
buyout more than once but was exempted.
And he put his retirement paperwork in
only days before Kodak filed for Chapter 11
bankruptcy protection in January 2012,
which ended any hope of taking his pension
in a lump sum. So he stayed in his project
management job, overseeing maintenance
of Kodak operations on Manitou Road and
the east end of Eastman Business Park, until
he was let go in May 2012.
Now he gets a monthly pension check for
the rest of his life. Between that and his
wife’s income, the couple are able to spend,
in recent months, days driving across Alaska
and days more out of state seeing their new
grandchild. He’s also spending roughly
$10,000 a year for health care benefits.
“I’m going to get even,” D’Agostino said
with a laugh as he took out his e-cigarette.
“I’m going to live forever. That’s why I quit
smoking.”
When he started with Kodak in 1981, the
company was hiring like crazy — he was
interviewed and offered a job as a maintenance electrician, over the course of a
phone call: “At the time, everyone in my
family worked for Kodak. It was a job for
life.”
Today, he’s not hugely optimistic about the
company’s chances for survival. And if a
young relative were offered a job at Kodak,
what would D’Agostino counsel?
“Run the other way,” he said. “Run.”
— Matthew Daneman
“There wasn’t a moment
when there wasn’t a Kodak
camera put in my face to pose
since we were growing up. I
think to some degree
everybody was a Kodak
photography family at some
point.”
PABLO BIGGS
Kodak employee since October 2011
But Kodak’s path and Biggs’ crossed more
substantially in October 2011, when he was
hired as worldwide director of business
development in strategic alliances and partnerships, part of Kodak’s business solutions
and services group.
While Kodak has downsized for decades, its
story has not been entirely one of cuts,
though in the months leading up to — and
particularly during — bankruptcy, new hires
were few and far between.
Biggs, 47, of Rochester, was one such exception. Those struggles were part of the reason
the job sounded interesting, said Biggs: “At
the time it sounded like the right thing to do
— global icon going through transitions,
reinventing itself. It’s a nice time and place to
do something interesting.”
His job — building partnerships with other
companies in business services — is new, but
it has long-term opportunities for Kodak.
“We’re doing the right things to help establish and grow our business, and we will want
to continue to do that post-emergence. Will
things change? Yes. I just don’t know how.”
— Matthew Daneman
Younger retirees, though, are faced with
paying several hundred dollars a month for
other types of health care insurance.
The reorganization also ended some pensions. Depending on the size of nest eggs
and other individual circumstances, some
retirees and survivors are managing and
others are struggling.
“I could have had a few luxuries, a few
niceties in life. Now I have to be a little
careful,” said Eleanor Filowick, 79, whose
late husband worked at Kodak for more
than 30 years. But she counts herself as
fortunate, compared to others.
“I feel very sad for the retirees who lost
their pensions. I feel very sad for the company because it lost its prestige. I feel very sad
for the community because Kodak was so
important to us,” she said.
George Filowick Sr. was in the department
that processed film that went to the moon,
his widow said. “He was just so proud of
that fact,” she said. He had expected his
former employer would provide for his wife
after his death, but the promised health
care was cut off a few weeks before he died
in January.
“It’s like losing a member of your family to
have Kodak go bankrupt,” Eleanor Filowick
said. “I feel very upset because management — and it’s not just Mr. Perez — are
walking away with golden parachutes and
there are people who are actually struggling to make ends meet.”
— Diana Louise Carter
“Our challenge now is to rebuild,” Detmer
said.
— Diana Louise Carter
But if a big, tens-of-thousands-of-dollars
Kodak order came through, like the big
batches of custom screws the company
orders on occasion, Teke President Terry
Hughes might have to think about it.
The Rochester machine shop is one of legions of Kodak suppliers left with a pile of
unpaid invoices when Kodak filed for Chapter 11 bankruptcy in January 2012 — in
Teke’s case, roughly $46,000 worth.
Teke employee bonuses took a hit last year.
And they’ve been on hold this year as
Hughes waited to see what kind of payback
she could expect. Kodak is promising her 97
shares of stock with an estimated value of
around $11.
Teke today employs 22, having added three
people over the course of Kodak’s bankruptcy as it lands more work from other
customers.
Kodak has filed a number of orders since
January 2012 and is paying those bills
promptly, though the amount of work Teke
does for Kodak is a fraction of what it was
then.
“Hopefully, they’ll be
successful.”
TERRY HUGHES
Teke Machine Corp. president
If Kodak rebounds, Teke hopes to continue
to be a preferred vendor. “It could be an
opportunity,” Hughes said. “You never
know what a company like that is going to
do.”
— Matthew Daneman
Page 6G Sunday, September 1, 2013
HOTBED OF INNOVATION
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The area’s development
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LEXINGTON AVE.
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KEVIN SMITH
Kodak property
Kodak buildings
Other companies
Non-Kodak owned land
Kodak+ leased
INDUSTRIAL EVOLUTION
SEVEN SPOTS TO WATCH
1
Giovanni Lidestri found in Kodak’s former film-making and camera-making buildings the space to expand his sauce-making operation that is headquartered in Fairport. By expanding into additional manufacturing space, Lidestri Foods also created an opportunity to expand its line of products to include beverages.
2
Kodak’s Building 320 will become headquarters for Recycled Energy Development, the company that plans to take over the utility systems that run the giant
industrial park. Other tenants include a trio of high-tech startup companies fostered
by Rochester’s Trillium Group: Intrinsic, Quintel Technology and Omni ID.
KODAK MOMENT
Learn more about
Eastman Business
Park’s tenants in
our interactive
graphic online
WHAT’S NEXT
The end of
Kodak’s
bankruptcy
should help attract additional
businesses. “That
park will be a
stalwart of economic development for this
region for a number of years to
come,” said Mark
Peterson, Greater
Rochester Enterprise president.
3
4
Kodak’s giant paper mill has transformed into a commercialization center for a variety of power-related companies and initiatives. They include Natcore, which
works on solar power; NY-BEST, a testing center for fuel cells; and Cerion, maker
of fuel additives to make diesel fuel more efficient and less polluting.
Kodak’s fabrication division was spun off and sold to Arnprior. The new company,
employing 155 people, focuses on small-volume, high-precision and high-complexity
fabrication for the aerospace, automotive, medical and consumer markets. It leases
165,000 square feet in a building it shares with Kodak’s research and development
operations.
5
One of Kodak’s earliest spinoffs, Carestream Health, occupies space it purchased
and leased at both Kodak Tower in downtown and at Eastman Business Park. The
company’s products and services include medical imaging equipment and supplies.
6
A century ago, photography used to be black and white and all about silver, but
silver is still important to some kinds of imaging, including X-rays. Rochester Silver
Works was the silver capturing and manufacturing division of Kodak that was spun
off in 2011 and employs about 55 people, many of whom worked in the division
under Kodak.
7
A former research building off Lake Avenue has become a high-tech imaging incubator of sorts. Occupants include Novomer, Graphene Devices, Orthogonal,
IMAX and Truesence, several of which have purchased technology Kodak developed and are adapting it for future use.
Diana Louise Carter is a native
Rochesterian who was reared in
Bristol, Ontario County, and spent
some time newspapering in New
England before returning to her
hometown in late 1987. She has
worked for the Democrat and
Chronicle since then and covered a
variety of topics. She has been a
business reporter since 2007. Carter
lives in the Upper Monroe neighborhood with her husband, Jim, and
their three teen-age children.
A Genencor International
B ITT Exelis
C Acquest South Park
and Optimation
D
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JC Fibers
Yaro Enerprises
Khuri Enterprises
Uni-Pixel Inc
Ortho-Clinical Diagnostics
Eastman Business Park
Micrographics and Kingsbury
J xpedx
K Theater on the Ridge,
Empire Digital Signs and
Excell Partners Inc
L Transparent Materials
M Recycled Energy
Development
GO DEEPER ON DIGITAL D&C
MEET OUR KODAKNEXT JOURNALISTS
Matthew Daneman has been a
reporter at the Democrat and
Chronicle since 1998. He has covered Kodak for six years. His beat
includes imaging, optics, printing,
telecommunications, manufacturing and a host of other topics. He
lives in Rochester’s Lock 66 neighborhood with his wife, Sheila.
OTHER TENANTS
Max Schulte is the Democrat
and Chronicle’s assistant photo
editor and has been a staff
member since 1996. The Buffalo
native has a bachelor of fine arts
in photography from Rochester
Institute of Technology. He has
hiked the length of the Genesee
River and covered stories at
Ground Zero and in Guantanamo Bay, Cuba. He lives in Rochester with his wife and two sons.
Whether it’s on your laptop, phone or tablet,
keep up to speed and read more about the
latest on Kodak with the D&C:
SHARE YOUR
COMMENTS
STAY UP
TO DATE
VIDEOS AND
MORE ONLINE
Join the conversation about
Kodak and
Rochester’s
identity: facebook.com/
Democratand
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Follow
@mdaneman,
@RocNext and
@DandC to get
the latest
Kodak news
View the Kodak
moments in this
section, interactive graphics:
Democratand
Chronicle.com
/KodakNext
KODAKNEXT PROJECT TEAM Editor & vice president/news: Karen Magnuson. Vice president/digital strategy & development: Traci Bauer. Project editor: Len LaCara. Section design: Joanne
Sosangelis, Robin Cabana. Creative manager: Sarah Crupi. Additional photography: Shawn Dowd, Marie De Jesus. Additional editing: Mark Liu, Marcia Greenwood, Bill Wolcott, Ben Jacobs.
DemocratandChronicle.com
KodakNext
Sunday, September 1, 2013 Page 7G
ROCHESTER’S IDENTITY
So we’re not a Kodak company town anymore.
But what are we?
Where we go
without Kodak
leading the way
is up to all of us,
local leaders say.
MAX SCHULTE/STAFF
PHOTOGRAPHER
OUR NEW SELF-IMAGE
Diana Louise Carter :: Staff writer
ochester’s identity used to come
wrapped in a small yellow and red box.
Ask any local resident who ever
traveled out of the area and had been
asked, “So where are you from?” More
times than not, people would respond to the answer with the one fact they knew about Rochester: It was the home of Eastman Kodak Co.
This was the town that George Eastman built,
or at least enlarged, enriched and educated. And
all of that was based on making and selling millions and millions of those yellow and red boxes.
Mayor Thomas S. Richards recalls that during
his military service in the 1960s, he’d see Vietnamese villagers offer goods for locals and
Americans to buy. A typical selection: “one banana, two bags of rice and a box of Kodak film.”
But now what?
Kodak’s local workforce last year was 6 percent of what it was during the company’s peak in
1982. Though Kodak plans to emerge this week
from bankruptcy, it will make just a trickle of
yellow and red boxes in the future. Most Rochesterians would have a hard time describing what
Kodak will spend most of its time doing. So what
shape and color is Rochester’s identity now?
Many say the new identity is emerging. It
can’t be captured in a single image or phrase anymore, but it’s coming.
“We’re not going to be known as a thing anymore,” Richards said. Rochester shouldn’t be
looking for another Kodak to define the city’s
identity, as a more broadly based economy is a
good thing. “In the long run, that will be healthy.”
R
Back to the future
Some of Rochester’s post-Kodak identity undoubtedly will harken back to its pre-Kodak
identity: a community with many layers rather
than a single dominant force. Before the yellow
box, this town was:
» The Flour City, as a river and canal coming
together provided the transit to allow the area to
become the breadbasket to a young country.
» The Flower City, as flour production gave
way to seed production and a printing industry to
support brilliantly colored seed catalogs and
packets. And those were followed by one of the
largest collections of lilacs in the world.
» The home of Susan B. Anthony and Frederick Douglass and other social reformers who
shaped American society.
In the historic preservation and women’s
rights circles in which she travels, Deborah L.
Hughes gets a different reaction when she says
she is from Rochester. Hughes is president and
CEO of the Susan B. Anthony House.
Hughes said she often finds people connect
with whatever element of Rochester history
they’re passionate about, naming Martha Matilda Harper’s contributions to business, Antoinette Brown Blackwell’s landmark ordination or
Kate Gleason’s entry into engineering.
Some of Rochester’s history may shine again
as the yellow box fades, Hughes suggested.
Meanwhile, she and others say the region’s other
employers, large and small, are coming to the
foreground of Rochester’s fame.
The big K
In William G. Clark’s travels as president and
CEO of the Urban League, it’s not always the big
K that greets the pronouncement of his hometown, but sometimes a big W or a U and an R.
“More and more, I’m finding people are saying ‘Wegmans,’ ” Clark said. Or, they have a child
applying to a college here. “The University of
Rochester is really trying to build a reputation as
one of the leading medical centers in the world,
or at least the Northeast.”
Kodak lost its spot as the area’s top employer
to UR in 2005, and dropped out of the top 10 in
2012. Rochester Institute of Technology has
grown by leaps and bounds, too.
“We may become known as a great college
town,” said Jennifer Leonard, head of the Roch-
ester Area Community Foundation.
Business developers portray our town as one
where innovation and entrepreneurship thrive,
in part owing to the infrastructure and intellectual capital left by Kodak. Given the number of
companies that have been created by former Kodak workers, or spun off by Kodak to explore
new uses of technology developed by the big yellow box, Richards said Rochester may become
known for its way of doing things in the future.
“We are one of the innovation and high-tech
hubs of the country,” said Mark Peterson, president and CEO of Greater Rochester Enterprise.
“We still produce a level of patents and (intellectual property) per capita that’s really unusual for
a community this size. We have super-smart people, we have great universities. The challenge
for us is, it’s not easy to define us with one word.
Rochester used to be ‘Kodak.’ Now if I had to
have one word to define us, it’d be ‘talent.’ ”
Danielle Raymo, co-founder of Rochester
Brainery, a company that offers affordable
classes, sees Rochester as a place where inventive young people make their own way rather
than expect to land a job at a big corporation. Her
peers — she’s 27 — are launching online magazines or stores like Thread and Peppermint.
“Those are people my age that are starting
their own businesses,” Raymo said. “There is an
opportunity for creativity and seeing what’s
missing in Rochester.”
The city that business boosters used to proclaim as “The World’s Image Center,” is getting a
different boost these days. The greeting page at
visitrochester.com recently described Rochester as the gateway to the Finger Lakes.
“Our proximity to the Finger Lakes is a wonderful asset,” said Don Jefferies, head of VisitRochester. “The fact that you can be at the
Strong National Museum of Play and the George
Eastman House and 35 minutes later be on a boat
on Canandaigua Lake is amazing,” he said.
All that remains
Optics and imaging are still thriving industries in this area, notes Duncan T. Moore, professor of optical engineering and vice president of
entrepreneurship at UR. The creative forces
they and other companies exhibit are the reason
that Rochester, unlike some other one-industry
towns like Detroit and Fresno, Calif., will get itself back on its feet again, he wrote in an essay
last year in The New York Times.
“We’ve got a very well-educated workforce
here ... That’s a big plus. We’re a very attractive
city. People respect that,” Moore said.
“The biggest guy’s gone,” Jeffries acknowledged. And with last month’s announcement of
Bausch + Lomb moving its headquarters, another blow was dealt to the image of Rochester and
what were once its Big Three: Kodak, Xerox
Corp. and B+L. Xerox remains a large employer,
but it moved its headquarters to Connecticut in
1969 and has cut its workforce in recent years.
In their place are a constellation of other locally grown and locally headquartered companies:
Wegmans, Paychex, Carestream, Ultralife, Harris RF Communications, Sutherland, and Constellation Brands, to name a few.
Because of companies like these and others,
Moore said, every job that Kodak cut has been
replaced — and then some.
With the end of Kodak as a major manufacturer, though, came the loss of thousands of wellpaying jobs for people whose education ended
with high school. The highly skilled employees
who were cut were able to move into other jobs or
spin-off companies, Moore said. Not so much
with the blue-collar employees.
“Good jobs, well-paying with pensions (have
been) replaced with service jobs that don’t have
benefits and don’t pay well,” said the Rochester
Area Community Foundation’s Leonard. “And
people often need multiple jobs to cover the cost
of their families. We’ve lost an important ladder.”
Indeed, young people realize a college education is now required to get a decent job, the Ur-
ban League’s Clark said, but many who go to college end up moving away, leaving behind the
young people who drop out of high school and are
often unemployable.
Ron Brandwein, laid off from Kodak after 32
years and just shy of eligibility for early retirement, has seen a similar development in his family, and he thinks it’s making Rochester more
transient than in the past. “My three kids all grew
up and went to school and moved out of Rochester and have not come back,” he said. “That big
company isn’t here to keep them here.”
Leonard recognizes that trend, but another
one, too: “I also see people returning when
they’re ready to raise children at a rate that is
gratifying. ... I do see lots of people who have
come from out of town and fallen in love with
Rochester and decided to stay because it has so
much to offer. Some of it was built up in the days
of Kodak: good decisions by city fathers and
mothers to create a park system, a community of
generosity. Those pay off in ‘stickiness,’ ” she
said, using a term that means the qualities of an
area that keep and attract new residents.
“I think what makes our community such a
cool place to live in and visit is the diversity of the
knowledge,” Jeffries said. “We’re a top-notch intellectual community. If you look at the arts, you
have to go to a city twice our size to find the arts
and culture we have.”
Following in Eastman’s footsteps
WHAT DO
YOU THINK?
If you had to
describe the
Rochester area in
one word or
phrase, what
would it be?
Share your
response on
Twitter or
Facebook using
the hashtag
#rocinaword.
KODAK
MOMENTS
Rochester Mayor
Thomas Richards
recalls Kodak;
the city’s 19th
century roots.
So sure, we don’t have George Eastman building cultural edifices anymore. But we do have B.
Thomas Golisano putting up the money for hospital wings and college academic buildings.
We don’t have George Eastman endowing a
music school anymore, but we have John Nugent
and Mark Iacona, who created and run the annual
Xerox Rochester International Jazz Festival.
We don’t have Kodak leading the United Way
campaign anymore, but we have foundations,
such as the Max and Marian Farash Charitable
Foundation, stepping up to support causes.
“This town has moxie, it has resilience,
the kind of talent that will spin off
innovation. We can still play on the
world stage, I think. It’ll just be in a
different way.”
SHARON NAPIER
CEO, Partners + Napier advertising and public relations agency
We don’t have George Eastman creating a vision for Rochester anymore, but do have Michael
Philipson and Lewis Stess inventing Greentopia
and trying to turn a long-ignored river gorge into
a cultural asset.
People are still going to react to meeting
Rochesterians by mentioning Kodak for some
time, even if lately they add a note of sympathy.
Sharon Napier, CEO of the advertising and
public relations firm Partners + Napier, said,
“They ask about Kodak because it’s still one of
the most trusted brand names in the world.”
Whether that still holds true today may be arguable, but even today, people refer to having
“Kodak moments,” referencing advertising
from decades ago. “It has this impact that’s so
great, it’s interesting,” Napier said. Rochester
just needs something to rally around again, Napier said. “This town has moxie, it has resilience,
the kind of talent that will spin off innovation,”
she said. “We can still play on the world stage, I
think. It’ll just be in a different way.”
[email protected]
Twitter.com/DianaLCarter