Posted on 01/22/2004 5:08:49 AM PST by 2banana
MASSIVE LAYOFFS AT KODAK
Number may reach 15,000 worldwide; local job losses uncertain
By Ben Rand Staff writer
PAULINA REID and KEVIN M. SMITH Eastman Kodak Co. said today that it will eliminate 12,000 to 15,000 jobs worldwide over the next three years because of accelerating declines in film sales and a need to be more aggressive in digital imaging. When the dust settles, the cuts likely will trigger an epic change in Rochester’s economic landscape as its share of the work force, historically the largest among local employers, continues to decline. [Day in Photos]
(January 22, 2004) — NEW YORK — Eastman Kodak Co. will eliminate 12,000 to 15,000 jobs worldwide over the next three years because of accelerating declines in film sales and a need to be more aggressive in digital imaging.
When the dust settles, the cuts could bring an epic change in Rochester’s economic landscape.
Kodak said it could not project how many of the cuts would take place in Rochester — but history and logic suggest it will be a high number since the region is home to Kodak’s largest manufacturing base. As a result, Kodak could surrender its title as the region’s largest employer — a designation the company has held longer than almost anyone can remember.
Job cuts at Kodak have a ripple effect on the area’s economy, cutting into everything from retail sales to capital investments to property taxes in the region.
“We understand this is going to be painful for everyone to go through, but if we don’t change, there is a bigger price to pay,” Chairman and Chief Executive Officer Daniel A. Carp said in an interview. Kodak released the news at 3 a.m. today.
In addition to cutting 20 percent to 25 percent of its global work force, Kodak will also drastically reduce its physical presence here and around the world.
The company expects to close or sell about a third of the square footage it now occupies for offices, manufacturing, research and other functions.
The new cutbacks are part of an increasingly historic shift in priorities at the company, known around the world for products that convert special moments into memories.
The cuts were to be announced this morning in New York City, where the company is discussing fourth-quarter and year-end financial results with investors and analysts.
Calculating in previously announced cuts, and assuming that any acquisitions Kodak makes would not dramatically increase the Rochester work force, local employment could fall to between 13,000 and 15,000 workers.
Kodak said the cuts were necessary to stay ahead of the biggest threat to the company in its history.
The growing popularity of digital cameras has triggered a permanent decline in sales of photographic film, Kodak’s marquee product.
“These plans are the consequence of market realities, and they will help us to fund a future for Kodak of sustainable, profitable growth,” said President and Chief Operating Officer Antonio Perez in a statement.
“They are absolutely required for Kodak to succeed in traditional markets as well as the digital markets to which our businesses are rapidly expanding.”
Kodak will use a combination of layoffs and early retirements worldwide to counter what is expected to be a precipitous drop in operating profit delivered from film.
An estimated 2,500 to 3,500 layoffs will take place worldwide in 2004.
The entire package of reductions will target manufacturing, corporate administration and portions of the company’s traditional photographic business, such as wholesale photofinishing.
The new reductions are on top of an already sizable package of layoffs announced last year.
The cuts should reduce costs $800 million to $1 billion a year by 2007, Kodak said.
The company will use that money to finance even more aggressive investments in such new opportunities as consumer digital photography, home inkjet printing, commercial printing, consumer electronics, radiology and more.
The new digital opportunities, Kodak says, will help build a company that is more successful and financially sound because it is less tied to the fortunes of a single product. Carp, in a statement, described the moment as “the dawning of a new, more competitive Kodak.”
Carp acknowledged the good news-bad news nature of the announcement for the Rochester work force. And on Wednesday night, he reaffirmed Kodak’s commitment to the region.
“We plan to be there a long time,” he said, “but Kodak will look different than it does today.”
Kodak’s accelerated strategy for digital imaging was initially announced in September.
Since then, the program has drawn fire from former employees, analysts and institutional investors.
Critics say the overall plan is risky and say it could lead Kodak into financial turmoil — perhaps even forcing the company to sell itself off in pieces.
Kodak Park is the company’s largest manufacturing site and is heavily vested in the production of film and traditional photographic products. It employs about 15,000 people and stretches across several miles of Rochester and Greece.
At the end of 2002, Kodak said it employed about 21,000 people in the Rochester area. In July, 2003, Kodak announced a round of 2,000 to 3,000 layoffs.
If just a third of the new cuts are local, Kodak’s Rochester work force would fall to between 13,000 and 15,000 people by 2007.
BRAND@DemocratandChronicle.com
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Officials' opinion The Democrat and Chronicle was unable to reach public officials for comment prior to press time, but here are comments made in previous reports: “While we may not be able to do anything to help Kodak as it continues to downsize and lay off people and do what it has to do to survive, we can create the business climate in this community so that when people do lose a job at Kodak, there is a better opportunity for them to be absorbed into a work force here.”
Maggie Brooks, now Monroe County executive Oct. 12
“At a time when Kodak is asking its workers to make sacrifices and this community to make sacrifices, it doesn't seem inconsistent to ask something of shareholders. It seems they are at least being even-handed at a difficult time. They could keep the dividend, but how would a worker feel if investors still were to make money when Kodak wasn't keeping resources.”
Assemblyman Joseph Morelle, D-Irondequoit Sept. 26, reacting to news of change in Kodak's business plan
"Daddy, what is film?"
My guess is they are covering a move to 'offshore' - killing maybe 20,000 US jobs, while adding 3,000-5,000 in Mexico, China, or other low-wage location.
Swordsmiths went out of work when firearms became widespread, as did buggy-whip makers with automobiles.
Just wait for the economic calamity when they finally figure out how to construct molecular fabricators - IN THE FUTURE!
I can't ascribe to big-E Evolution, but it is clear at least that "survival of the fittest" is a viable and provable concept...
I am still waiting for the cars with the gull-wing doors that as a child I was promised would be - IN THE FUTURE! And personal robots! And food pills! And vacation service to the moon! (And Woody Allen's Orgasmatron, for that matter!)
Agfa, however, has expanded out into the digital radiology field. I can remember when they used to be into phototypesetting supplies, but they got out of that fairly quickly when phototypesetting became obsolete in the mid '90s.
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