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Sign of the Times

Maybe you noticed this story around and about this morning:

Eastman Kodak Co, which invented the hand-held camera and helped bring the world the first pictures from the moon, has filed for bankruptcy protection, capping a prolonged plunge for one of America’s best-known companies.

No doubt there’ll be a lot of sic-transit-gloria-mundi-ing going on over the next few days, but that’s not the Sign that caught my eye. There are plenty of companies around today that aren’t doing what they were set up for any more*, and it’s Kodak’s own fault for failing to see the end of film and preparing itself adequately. Shell doesn’t transport or trade very many shells these days. And – one for my fellow jocks – it was only John Menzies’ retail arm that was taken over by WHSmith back in the ’90s: the firm’s still around, doing corporate logistics and whatnot. I saw one of their crates just the other day, in fact.

No, the bit that struck me as significant was right at the bottom of the Fox Business piece. Here it is:

It is unclear how Kodak will address its pension obligations, many of which were built up decades ago when U.S. manufacturers offered more generous retirement and medical benefits than they do now.

Remind you of anyone we know?

The company had promised to inject $800 million over the next decade into its UK pension fund. It now remains unclear how that country’s pension regulator might seek to preserve some or all of the company’s obligations to British pensioners.

Yeah, tricky one, that. I wonder if the difficulty of paying out money that doesn’t exist will penetrate any bureaucratic skulls.

*On the other hand, the Aberdeen Shore Porters’ Society was founded in 1498, and is still porting stuff around the shore at Aberdeen (and elsewhere). It’s often cited as being the oldest company in the world, although, as you can tell from the name, the definition of “company” gets a bit murky when you go that far back. Until 1850 it was a sort of co-op under the control of the Town Council. Still, even 160 years as an independent business is pretty impressive.

11 Comments

  1. NickM says:

    I was sad to hear of Kodak’s demise. I may have supplanted my old Z7590 with a Sony Alpha 55 but in many respects the Kodak has nicer controls. It’s a good camera I’ve had for years.

    I hadn’t though heard or thought of the pensions aspect. Now that is scary.

    As to the oldest company in the world. I’d heard it was some outfit in Essex that supplied oysters and the oldest manufacturer is Beretta. But you’re right in that it is an almost meaningless question considering the changes in company law and indeed the very conception of a company.

    What puzzles me about Kodak is the line being trotted-out by the BBC has been that Kodak saw digital coming but considered it early on as a pro format. Hmm… That does not compute. AFAIK Kodak never even attempted to market a pro digital SLR or anything similar and steadfastly stuck with the snap-shot market in digicams. Is it perhaps the case that Nikon and Canon’s decision to do both worked wonders for their cheap little digicams both technically in terms of tech trickle down and also in terms of public perception in much the same way car companies that build supercars give an “aura” to their more mundane offerings. An extreme example of this is perhaps SAAB which for donkey’s years traded on it’s reputation of not so much it’s increasingly lack-lustre motors but on also making fighter jets.

    From a personal point of view I am a bit scoobied as to why the RAF never saw the SAAB Grippen (export models assembled in Lancashire) as a 1-1 replacement for

  2. MickC says:

    Aaargh! Replacement for what? Hasn’t shown up!

    Jaguar? Tornado?

  3. MickC says:

    With regard to Beretta, they are a good example of how to survive in manufacturing.

    Their products (i.e. the guns not the other stuff marketed under their name) cover a range of grades and therefore sectors of the market. The engineering is good, no matter what grade, and they kept up with modern engineering practice. No doubt the reputation of the high grades does sell the lower down stuff-but the quality is still good.

    The British gun trade stayed with the higher end, “hand-made” bespoke stuff and effectively went under. Now, of course, they have taken on modern technology, but only under non-British ownership. Just like the car industry.

  4. NickM says:

    Jaguar Mick. The server had an “episode”.

  5. Nelsontouch says:

    Everyone quotes that Kodak took the pics on the moon. But I recall they used Hasselblad cameras, modified for vacuum and with large pads for use with spacesuited hands. Did Kodak do the film, or did they own Hasselblad? Anyone know?

  6. RAB says:

    Oldest company in the world? Gotta be the London Inns of Court surely? Certainly the oldest closed shop trade union/Guild, that’s for sure.

    Or perhaps the Allo Sailor, looking for a good time deary? Collective.

    So is that it for wind on film that the purists swear by?

  7. Bod says:

    It’s important to note that this is a Chapter 11 reorganization which means it’s quite likely that Kodak as a brand name will continue, possibly still located in Rochester, New York (for some bizarre reason, because Rochester’s got all the charm of Skegness and the climate of the Outer Hebrides). This kind of bankruptcy is nothing like any kind of proceedings you’d normally see in a UK winding-up exercise.

    The process will allow Kodak to shed many of its obligations, and I suspect that while the defined benefit plan would normally be behind the banks, many of the bondholders and the IRS, it won’t be wiped out. On the other hand, fortunately, the US government is is no position to stiff the bondholders and give the business to whoever’s offered the biggest vote count to the democrats in the November elections.

    The judge who presides, in conjunction with the firm that put up the DIP financing have a lot of discretion in the exact terms of who gets a haircut, and who doesn’t, and for that matter, who is told to suck it up and gets sent away with a lump of coal for Xmas. If the distressed team at Citi working this deal are any good (and I have no idea of who the personnel are, and it’s usually down to the team leader as to whether the team’s any good), then the assets that are worth anything could easily help ensure that none of the debtors walk away with 3 cents in the dollar.

    As that newspiece articulates, Kodak’s imaging and coated polymer businesses are valuable, and if the reorganization plan is not totally cocked up, Kodak might end up looking a bit like a niche BASF spliced with Dolby Labs as they were in the 70′s. In a few years, you could see Kodak back on the NYSE doing very well for its shareholders, albeit with a much smaller market cap than it has now.

    One thing you won’t see is shelves of 120 roll film in nice boxes with “Kodak Ektachrome” printed on them, and when you lose your Kodak digital cameras’ recharging cable, it’ll come with a Radio Shack (or in your case, Tandy or something) label on it.

    Of course, with hindsight, one could opine that Kodak could have followed a different route and negotiated some Private Equity arrangement with such as … oooh … I dunno, Bain perhaps, and served their shareholders and debtors better, but then, looking at how Kodak has been managed, and its self-perceptions over the last decade or so, I’m not sure the would have made the call, or, if any PE guys would have picked up the phone.

    The best way to look at Kodak, in hindsight is that the nearest industry comparison would be something like steelmaking or textiles manufacturing (or maybe cars). As a business, it’s only one step removed from a rust-belt business. It might not have been before the late 90′s, but they’ve had 15 years to wake up and smell the coffee, and they did very little.

  8. Andrew Duffin says:

    “Remind you of anyone”

    Not really; it’s entirely obvious how the British public sector pensions disaster will be paid for, no mystery about that at all.

    Kodak’s pensioners, otoh, may be about to get screwed.

    And as for Menzies, indeed they are very much around; they still do all (afaik) of Scotland’s retail newspaper distribution, which is a logistics operation of a complexity and detail rarely to be seen.

  9. Terryg says:

    @Nickm,

    kodak were pretty much pioneers in digital imagery in both pro and mass markets. Both Nikon and Canons first DSLRs used kodak CCD chips – look up kodak DCS. Definitely aimed at pro (mainly newspaper) photographers.

    They were (are?) among the front runners in CCD manufacture, though perhaps more in terms of quality than volume – leica use their chips in their range of digital rangefinders, for instance. Top end stuff indeed!

    Their ccds, in a variety of sizes, are used in a wide range of fields – medical, scientific etc. as well as general photography.

    Their decline has perhaps been a result of bad marketing more than anything else, I think

  10. Sam Duncan says:

    “it’s entirely obvious how the British public sector pensions disaster will be paid for, no mystery about that at all.”

    Indeed, Andrew. That was really the point I was rather inexpertly trying to make: both organisations are in the same position, but only one of them is having to face up to the reality of it. And the one that doesn’t have to is supposed to help it.

  11. PeterT says:

    If the sponsor of a defined benefit plan goes bust the liabilities and assets of the plan get taken over by the Pension Benefit Guarantee Corp (equivalent to the Pension Protection Fund in the UK). Presumably the value of the pension gets reduced by some formula, as it does in the UK, but the pensioners aren’t left pennyless.

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