Could traditional photography products go the way of the micro-brewery?

[DeanC]

BTW, the decrease in film sales is far beyond what anyone here comprehends. Kodak was once in the $20 B US in film sales and now is in the high $M or very low $B US in film sales. (IDK what the figure is but it is not in the billions like it was anymore. Revenues are coming from digital sales now.

Well, according to their recent filing statements with the SEC, Kodak had the following segment net sales (in millions) for the 3 months ending 30-Sep-2006:

Consumer Digital Imaging Group: $640
Film and Photofinishing Systems Group: $1,074
Graphic Communications Group: $880
Health Group: $597
All Other: $13

ALL of these were down over the same quarter last year.

With the following earnings (loss), in millions, before interest, taxes, etc:

Consumer Digital Imaging Group: $24
Film and Photofinishing Systems Group: $139
Graphic Communications Group: $31
Health Group: $68
All Other: ($48)

It looks to me like traditional photography is still Kodak's largest (and most profitable) business line.

Now, that's not to say all is sweetness and light over there: "Net worldwide sales of the consumer film capture SPG, including consumer roll film (35mm and APS film), one-time-use cameras (OTUC), professional films, reloadable traditional film cameras and batteries/videotape, decreased 25% in the third quarter of 2006 as compared with the third quarter of 2005, primarily reflecting industry volume declines." But, in an industry where Kodak can still sell $1B/qtr there's going to be plenty of room for cottage players to step in. After all, someone still (profitably) makes and sells canvases and oil paints...

Dean

 

[Photo Engineer]

Ben;

My small machine if you look closely coated 5" wide and the low estimate was based on that premise. The design of the machine used a 'helical' dryer that minimized space but maximized area.

Art;

Is that film or combined film + digital. The figures I have put digital ahead of film in this last quarter and film production at about 1/5th of previous production.

PE

 

[Photo Engineer]

Dear PE,

that is definitely not true. Please read Kodaks quarterly reports they had to publish for their shareholders and the stock market.
Kodaks profits are coming from their traditional analog products, not from the digital products. With their digital products they loose a lot of money. That's the situation for years.

Best regards,
Henning

Henning;

Read the Rochester D&C. The last quarterly report said that Kodak digital sales surpassed conventional sales for the first time. Digital products were paying for themselves for the first time.

Kodak reorganized so that each division had to be self supporting.

PE

 

[gr82bart]

Is that film or combined film + digital. The figures I have put digital ahead of film in this last quarter and film production at about 1/5th of previous production.

Sorry Ron,

I clarified my post with supplementary information. $14B is total sales - all segments in 2005. It was $8B digital and film segment sales in 2005.

Kodak's Q3 2006 SEC filing looks interesting:

For the third quarter of 2006:
• Sales totaled $3.204 billion, a decrease of 10% from $3.553 billion in the third quarter of 2005, largely attributable to a 19% decline in traditional sales. Third-quarter traditional revenue totaled $1.402 billion, compared to $1.725 billion in the year-ago quarter, while digital revenue totaled $1.793 billion, as compared to $1.814 billion in the year-ago quarter.
• The company’s earnings from continuing operations in the quarter, before interest, other income (charges), net, and income taxes, were $2 million, compared with a loss from operations of $123 million in the year-ago quarter.
• On the basis of generally accepted accounting principles in the U.S. (GAAP), the company reported a third-quarter net loss of $37 million, or $0.13 per share, which
includes after-tax restructuring costs of $202 million, or $0.70 per share. By comparison, the third quarter 2005 GAAP net loss was $914 million, or $3.18 per share. The difference is largely driven by the inclusion in last year’s third quarter of a $778 million, or $2.71 per share, non-cash charge to record a valuation allowance against the net deferred tax assets in the U.S.
• Digital earnings were $105 million, compared with $7 million in the year-ago quarter, marking the first time that the company’s quarterly digital earnings growth exceeded the quarterly decline in traditional earnings. This performance was primarily due to operational improvements throughout the digital portfolio, the impact of a non-recurring licensing arrangement within the Consumer Digital Group, and strong results in the Graphic Communications Group.

Regards, Art.

 

[Donald Miller]

It seems that this thread has degenerated into a "My look at how bad the film industry is because of Kodak's history...and furthermore because Kodak is having these bad results that means that film is going away in the next six weeks if not sooner". This is a very limited view of things at the very best interpertation.

Come on get real, for a moment. Sure there have been reorganizations and we now have some different products...the selection has narrowed in some respects and broadened in others. But Kodak alone does not the film based industry make.

JandC Photo is coming to market with their own products, Ilford is back in the swing of things, Efke is selling a lot of film. Michael and Paula are coming to market with an Azo replacement. Do you think that for one moment if there were no money to be made that these companies or individuals would be in business?

I will make a bold statement at this juncture...Make a jump to coating your own film and paper at this time and I can guarantee that you will see the demise of all film and paper. In fact I will take any and all bets on that.

The sky is not falling...

It seems to me that one individual is trying to frighten others into seeing things in a very limited way. For what purpose this is being done, one can only wonder.

 

[ben-s]

My small machine if you look closely coated 5" wide and the low estimate was based on that premise. The design of the machine used a 'helical' dryer that minimized space but maximized area.

I think I've missed something :confused: Do you mean the machine you referred to in your post with the overview of the process? Or is there an image or more info on a machine somewhere that I've missed?

 

[ben-s]

I will make a bold statement at this juncture...Make a jump to coating your own film and paper at this time and I can guarantee that you will see the demise of all film and paper. In fact I will take any and all bets on that.

The sky is not falling...

Quite correct. I'm thinking more in the long term, and for making commercially unavailable emulsions. Or, simply for the fun of it. The process intrigues me.

 

[gr82bart]

It seems that this thread has degenerated into a "My look at how bad the film industry is because of Kodak's history...and furthermore because Kodak is having these bad results that means that film is going away in the next six weeks if not sooner". This is a very limited view of things at the very best interpertation.

I don't see this thread degenrating that way Don. I do think, to which I am a guilty contributor, that it is slightly off track in looking at Kodak's financial health.

I will make a bold statement at this juncture...Make a jump to coating your own film and paper at this time and I can guarantee that you will NOT {my addition} see the demise of all film and paper. In fact I will take any and all bets on that.

The sky is not falling...

I agree with this, but I do see opportunities for traditional to 'elevate' itself. Which I think is the intent of the analogy to the micro-brewery. (ie beer from a MB is real beer compared to the left over mop slop coming from Coors or Bud)

Regards, Art.

 

[Photo Engineer]

I think I've missed something :confused: Do you mean the machine you referred to in your post with the overview of the process? Or is there an image or more info on a machine somewhere that I've missed?

Ben, I said that the machine coating would make 4x5, 120, and 35mm. Sorry if that was unclear but implied in it was the fact that it made a maximum of 5" wide coating for 4x5. Thier is no image.

That machine will coat at about 100 feet / min max and is about a 2 car garage in size not including the air conditioners. It probably costs close to $1M and can be run by two people.

PE

 

[Photo Engineer]

Art;

Thanks for the clarification.

This:

"• Digital earnings were $105 million, compared with $7 million in the year-ago quarter, marking the first time that the company’s quarterly digital earnings growth exceeded the quarterly decline in traditional earnings."

And this:

"Third-quarter traditional revenue totaled $1.402 billion, compared to $1.725 billion in the year-ago quarter, while digital revenue totaled $1.793 billion, as compared to $1.814 billion in the year-ago quarter."

were the two things I was looking for, but I was looking in the wrong place.

It shows digital $300M over analog in that second paragraph.

Now, I have seen figures which separate out color from B&W and MoPic from consumer color. When you look at B&W the figures are rather dismal.

Donald is missing the point that this is relevant to show what the trends are. It is not a Kodak issue, it is an industry and trend issue that we are using Kodak as an example for. He is not wrong though in saying that we are diverging from the topic in some senses by going this way.

PE

 

[Henning Serger]

Henning;

Read the Rochester D&C. The last quarterly report said that Kodak digital sales surpassed conventional sales for the first time. Digital products were paying for themselves for the first time.

Kodak reorganized so that each division had to be self supporting.

PE

Hallo PE,

sorry, it seems that I've missed their last quarterly report.

Best regards,
Henning

 

[Sean]

The sky is not falling...

Also keep in mind APUG is most likely a VERY tiny segment of the film shooters out there globally. I think some see APUG and say "wow, only 18,000 film shooters left!".. far from the case I think..

From what Ron says it looks like it may be possible to have a 1million dollar 'micro-brew' coating plant, so if someone built this and there was potential to make just a fraction of what Kodak is currently making then they would do quite well I would think. I'm basically hoping that in the distant future something can be done to re-invent the production of films and papers bringing small plant ownership down to a reasonable level. Maybe we can all play some role in this..

 

[Donald Miller]

Quote: "Donald is missing the point that this is relevant to show what the trends are. It is not a Kodak issue, it is an industry and trend issue that we are using Kodak as an example for. He is not wrong though in saying that we are diverging from the topic in some senses by going this way."

It seems that your view of "trends" is coming solely from Kodak since that is all that has been mentioned.

I would go on to say that it seems to me that your remedy to this dismal view is to further dilute the economy of scale that existing manufacturers and suppliers enjoy. I wonder how beneficial this dilution will be in the long terrm.

One thing that we do know is that each and every displaced purchaser, either prior or existing, will continue this dilution and diminishment of the economies of scale. It seems to me that this displacement can and will occur as much through "hand coating" or small "botique type endeavors" as it will through the switch to digital capture. This "trend" will continue until such time that the existing manufacturers and suppliers are no longer profitable.

So in the interest of supporting film based photography, I would encourage all to view how their own conduct serves to support the existing status on the basis of their choices and behavior.

 

[Roger Hicks]

It seems that your view of "trends" is coming solely from Kodak since that is all that has been mentioned.

Dear Don,

A trap that Kodak often falls into. Yet another retired Kodak scientist (from the UK) told a number of amusing stories about this; I cannot retail them or give his name without his permission. Other sources, still more sensitive, suggest that Kodak's problems are at least as much in top-level management as in the shrinking market. Kodak has a history of appointing CEOs from outside the industry who know nothing about photography and have no wish to remedy this situation.

Yes, the film market is shrinking.

So is the number of manufacturers.

Some of the few that survive report that they are doing very nicely, thank you.

Draw your own conclusions.

Cheers,

R.

 

[Photo Engineer]

Hallo PE,

sorry, it seems that I've missed their last quarterly report.

Best regards,
Henning

Some of this was quoted by Art in his post. I clipped the pertinant parts and posted them in a follow up message. You can refer to them.

PE

 

[Photo Engineer]

Donald;

So, the trend is coming solely from Kodak? Ok then, I guess we will have to refer to Agfa's quarterly report for info. Ooops, where is it? Hmm, I guess they vanished for some reason other than declining sales?

Lets try Ferrania. Oh, in bankruptcy but still producing? Ok, Fuji? Oh, big decllines in sales. Hmm, is there a trend here somewhere that tells us something.

IDK.

Kodak is a reasonable microcosm of the entire industry in view of what is going on and can perform as a sounding board for generalizations useful to this discussion.

PE

 

[juan]

I've posted before that my present job has taken me inside a number of small manufacturing facilities, and I've been surprised at what is being made by rather small companies. As a result, it seems entirely possible to me that film and paper could be made in a micro-brewery type facility. The question becomes would we be willing to pay the cost to produce it?

For instance, a lot of automotive technology and manufacturing goes on inside a NASCAR garage - a building about the size of a small strip mall. However the cost of the automobiles manufactured there would be prohibitive to the average consumer.
juan

 

[Donald Miller]

Donald;

So, the trend is coming solely from Kodak? Ok then, I guess we will have to refer to Agfa's quarterly report for info. Ooops, where is it? Hmm, I guess they vanished for some reason other than declining sales?

Lets try Ferrania. Oh, in bankruptcy but still producing? Ok, Fuji? Oh, big decllines in sales. Hmm, is there a trend here somewhere that tells us something.

IDK.

Kodak is a reasonable microcosm of the entire industry in view of what is going on and can perform as a sounding board for generalizations useful to this discussion.

PE

Kodak is certainly an example of a poorly managed company if nothing else. I am not sure that Kodak is a reasonable microcosm of much more than that. That having been said, you failed to respond to my other considerations and concerns about what you propose as a remedy. Juan in his post has summed it up pretty well.

As I reflect upon your posts about this "remedy" over the time that I have been aware of you on this forum, one thing appears to be consistant. You seem to totally disregard why we should be reinventing the wheel, other than your view that the sky is falling. You seem to totally disregard. the long term financial effects upon us as photographers.

You claim to have a wealth of knowledge about the formulation, methodology, and production of photographic emulsions. Yet on the other hand you seem to be struggling to produce emulsions that exhibit the good characteristics of materials that are already available from a variety of sources. Not only that but also these emulsions of yours have the distinction of being variable in their performance characteristics for different parts of the country or perhaps it is phases of the moon.

I guess I don't see what you see and I know that I am not blind. Most importantly I choose to make photographs rather than spending my time concocting the latest witches brew. I have said all that I am going to say. I wish you well in your endeavors.

 

[Photo Engineer]

In response to both Juan and Donald, I can only say this. If is as easy to start making film as it is to start making cars, how come only relatively big companies are making film? The reason is due to technology. The same reason no one is out there making their own cyclotrons. Too complex and costly.

As for management, I have a lot of friends who moved from other companies, and they say Kodak is a model of good management compared to some. And, until George Fischer, there were no managers hired from outside the company, all were promoted from within and that may have been part of the problem. Some say George brought in some new, fresh approaches and ideas.

Also, it is easy to criticize from outside and reading only newspaper reports, just as it is easy for me to defend Kodak, but I know more and have less to gain from defending it I think. So, I'll stand by what I have said.

BTW, see the film scan posted elsewhere of a sample of LF film from a 2nd or 3rd tier mfgr, for coating quality. You will never see this in a Kodak, Fuji or Ilford film.

PE

 

[Petzi]

Ok then, I guess we will have to refer to Agfa's quarterly report for info. Ooops, where is it? Hmm, I guess they vanished for some reason other than declining sales?

That's true.

 

[Roger Hicks]

...until George Fischer, there were no managers hired from outside the company, all were promoted from within and that may have been part of the problem. Some say George brought in some new, fresh approaches and ideas.

Dear PE,

You know Kodak far better than I, but Fisher (I thought it was spelled without a 'c', but I can't remember) was appointed in 1993. One of the first headlines was along the lines of 'New CEO Fails to Maintain Profitability'. All right, Carp was a Kodak man, but Fisher was from Motorola and Perez was from Hewlett Packard if I recall aright. Perez goes beyond mere indifference to film and in his public pronouncements appears openly hostile to it. Even if he is right, it's hardly a wise stance for the CEO of the Great Yellow Father to adopt. Nor is everyone convinced that he is right.

Like Ilford (who admitted it, once it backfired), Kodak for too long treated film as a cash cow and made risky investments in 'new technologies' (or simply in 'diversification') with few or no returns. That was not just my opinion; I heard it from senior people who were in a position to know. And indeed I was tangentially involved with one of the projects they backed: the Aztek (Aztech? I forget) airbrush was invented by a friend of mine, and I did a book to accompany it.

Of course there were (and are) different viewpoints at the top, and it may well be that your reports represent a broader coalition of opinion than mine. Indeed, it would be surprising if they did not. Even so, there have been quite a few senior people inside and close to Kodak who have been distinctly unimpressed by the 'vision' of the last few CEOs.

Cheers,

R.

 

[Photo Engineer]

Roger;

I cannot disagree with anything you said. What I was pointing out was in response to another post who said that there were many Kodak managers from outside the company, but there were not. I didn't say Fisher (or whatever way it is spelled) was great, or good. He was good at Motorola and he did bring in good ideas to Kodak. But then Carp, from inside Kodak was not very good.

He was a marketing person selected over Carl Kohrt who came up through Research and many thought that this selection was very bad for Kodak, as they needed technical guidance and an overhaul of marketing. Instead they got an overhaul of research and marketing forged ahead to become what we see today. The company, in the eyes of many, was weakened by this choice.

OTOH, others disagree with that position and think Carp was a fine person for the time and that he fixed marketing and research both. Myself, I'm middle of the road.

In any event, Kodak management is not perfect, but I guess we can agree that it was better than Agfa's, and just marginally better than Ilford's former managers, right?

At least Kodak has kept itself in the running.

Now Fuji is no great thing itself. Problems abound and my information says they are afloat due to their other divisions including digital. IDK for sure, but they certainly didn't command the attention of many at ICIS this spring. Well, for that matter, neither did analog itself.

At ICIS there were about 300 attendees, but only about 20 average at the analog events.

PE

 

[Andy K]

Although declining sales were in part responsible for Agfa's disappearance, the main reason was calamitous mismanagement.

 

[Roger Hicks]

He was a marketing person selected over Carl Kohrt who came up through Research and many thought that this selection was very bad for Kodak, as they needed technical guidance and an overhaul of marketing...

PE

I once spent a delightful evening sitting next to Carl at dinner, and talked with him briefly on a number of subsequent occasions. Sometimes the Kodak FBI (or whatever they were -- the guys in the white shirts) freaked out when I called him by his first name and asked hard questions about new products at launches -- which of course he answered, or on one memorable occasion replied, "I don't know, so why don't we both go away and read the tech sheets, and if you can't find the answer, call me."

I had not realized how close he came to being CEO. That would have been marvellous: a dream, one of the great might-have-beens. What became of him? The last I heard, he was in the Far East, if I recall correctly.

Cheers,

R.

 

[Photo Engineer]

Roger;

Indeed, Carl was chief architect of the Kodak presence in China, but has been replaced by Jack Chang. Carl retired about 2 years after I did and is now president of Batelle in Ohio. You can google him and read up on it.

Carl and I were very close friends for many years. He and I shared an office for a while and worked on a series of projects together. I went to his retirement reception and supplied some of the pictures for it. His family and ours often had joint parties and we both loved Star Trek.

He broke his foot once, and we all had to go to his place for a project review. His wife served snacks while we worked and Carl suffered in not so silent agony over the foot. Well, he broke his foot more than once, and his leg a few times. That is another story which I won't tell here. Let us just say that there are some very funny stories about Carl that will remain untold.

Last time he was over, he had an Australian exchange student living with them and we spent the afternoon watching a Star Trek movie.

PE