Forte closure

[Petzi]

I have found an interesting news article about the Forte closure. The source is: http://www.portfolio.hu/en/cikkek.tdp?cCheck=1&k=2&i=10745

Hungarian Forte finishes forlorn fable

Tuesday, 16, January 2007 12:07:00 PM

Hungary's once great photo chemicals producer Forte incurred losses of over HUF 150 million in 2006 and is forced to close down for good. Forte, which makes black & white film, photographic papers and other photo materials, will stop production in February and lay off every worker, news portal index.hu has reported on Tuesday.

Forte posted revenues of HUF 1 billion last year but its losses amounted to HUF 150-200 million, János Máté, chief executive and part owner said, adding the company would be closed by end-February at the latest.

According to Court of Registry data, Forte has a subscribed capital of HUF 405 m.

Investors based in Csurgó (southwest Hungary) bought the troubled Forte in 2005 and renamed it Forteinvest Tőkebefektető Kft. While the plant remained in Vác and properties leased in the capital city were retained, the headquarters was moved to Csurgó.

At that time it seemed Forte could be saved and the company even made a profit in 2005. They believed Forte had a long-term future in B&W photography, as it would have absorbed several billions of forints to switch to colour photography.

However, Forte's big competitors also succumbed. Two major players on the Europan B&W market, a German and a French company also folded and Forte expected their fall to open new possibilities for them.

Quite the contrary, the closure of the two companies had an immense amount of finished products flood the market, which Forte simply could not cope with. Máté said it would have taken them at least HUF 300 million worth of investment to sit out the depletion of the oversupply.

Forte will lay off about 150 employees.

 

[Petzi]

Another one from the same site: http://www.portfolio.hu/en/cikkek.tdp?cCheck=1&k=2&i=10833

Forlorn fable of Hungarian Forte may turn to sweet story

Tuesday, 23, January 2007 04:21:00 PM

A French and a German investor are contemplating to keep the Forte brand name and save the closure-slated Hungarian photo material producer from its fate, local news portal index.hu has reported on Tuesday. Forte is set to close down for good in February and part with its entire staff of some 150 people.

Forte, a maker of black & white film, photographic papers and other photo material since 1922, posted revenues of HUF 1 billion last year while incurring losses of about HUF 150-200 million.

The news portal said Bergger of France and Germany's FilmoTec were interested in keeping up production at Forte, but the Hungarian owner says he has been waiting for a concrete offer for months. The professional investors would retain 80 jobs.

FilmoTec was established in the early 1990s on the ruins of ORWO, a partner of Forte in the German Democratic Republic.

“We have been in talks with investors led by Bergger since November, but we have not received a concrete offer up to date," said János Máté, one of the owners of Forteinvest Kft. (the official name of Forte). The investors would need at least HUF 300 million to fulfil their plans. The Hungarian owners had similar ideas but their tender submitted to the Economics Ministry did not win.

Máté said Forte is a supplier of the foreign companies he has been negotiating with and so they know the companies technologies and have all the information about the operations of Forte. He added, however, that Bergger also wanted to carry out due diligence at the company, while they failed to come up with an offer in three months.

“We are open to any kind of offer, but I feel that if they haven't made one so far, there is little chance they will do now," Máté said.

The potential investors have not yet given up on Forte, said András Váczi, communications director at the Hungarian Trade and Development Agency (ITDH). The Bergger-FilmoTec team would carry on the Forte brand and give job to about 80 employees, while introducing a new, modern technology at the Vác-based plant, he said.

They would bring a new production line and start producing photo papers for digital prints, which would be a partial switch of profile, given that Forte has been famed internationally for its B&W photo materials.

Bergger informed ITDH that they lacked the necessary information to make an offer. ITDH offered its help to both the owners and the potential buyers to carry on with talks in days. Meanwhile, the 22 February deadline (for the closure of Forte) is drawing closer.

Forte in brief

According to Court of Registry data, Forte has a subscribed capital of HUF 405 m.

Private investors based in Csurgó (southwest Hungary) bought the troubled Forte in June 2005 and renamed it Forteinvest Tőkebefektető Kft. While the plant remained in Vác and properties leased in the capital city were retained, the headquarters was moved to Csurgó. This year they posted a profit of HUF 9 million, but in 2006 their balance turned red and the company incurred losses of HUF 150-200 m.

The company's woes were triggered by the fact that two of its largest competitors, major players on the Europan B&W market, a German and a French company, crashed. Their closure companies saw an immense amount of finished products flood the market, which Forte simply could not cope with.

Máté said it would have taken them at least HUF 300 million worth of investment to sit out the depletion of the oversupply.

Bergger in brief

Founded in 1995, Bergger Photographic combined from its inception the talents of chemist engineer Guy Gerard and economist and business expert Daniel Boucher.

Guy Gerard's experience in research and development creating innovative films and papers was perfected during his thirty year tenure at Guilleminot, France's oldest and most respected photographic products resource. The company's closing in the early 90s prompted Gerard to seek out his friend and colleague Daniel Boucher.

Boucher's Ph.D. in economics and talent for business strategy had served him well as manager of the Rothschild Bank, and, coupled with Gerard's technical expertise, would make the unique partnership of Bergger Photographic complete.

Bergger Photographic is proud to be continuing the grand tradition of photographic excellence in the country of the medium's origin. Today, Bergger Photographic is well-known around the world for:
-the industry's finest array of classic silver papers;
-premium black and white films;
-antique and alternative processes products;
-fine darkroom chemistry;
-progressive new inkjet papers.

FilmoTec in brief

FilmoTec GmbH produces a wide range of high quality photographic film at its factory in Wolfen, Germany, at the site where motion picture film has been manufactured since 1910, and where film has been produced under the ORWO brand ever since 1964.

Currently, FilmoTec's product range incorporates black and white negative film for motion picture production, duplicating film, sound recording film and leaders for the processing and distribution business.

Specialised film is also manufactured for bank security, traffic surveillance, and personal identification.

The company further provides a range of support services for inspecting mechanical, optical and photographic facilities and equipment.

 

[Aurelien]

Why not launching a subscription in order to help the keeping of Forte?

 

[David Henderson]

"Why not launching a subscription in order to help the keeping of Forte?"

If you mean keep it going as a discrete business rather than having its best products produced by a new owner elsewhere, its not that simple. If you could generate 1000 participants to produce a break even scenario, your share would be about £400/$800 for one year. With every probability that you'd need to spend the same or more next year and forever. Even that may not be enough to dissuade the owners from closing the facility to redevelop the land.

I think the best hope for the continuation of Forte products is to make them in a more efficient/highly utilised facility where it can also piggyback existing sales and marketing/admin infrastructures rather than have to fund its own. Frankly a business turning over £2.5million employing 150 people is not likely to be sustainable, Much better to bite this bullet and hopefully get the best products produced by a more endurably sustainable business which might even be more secure with the Forte volume within it.

 

[aldevo]

Thanks for the postings.

To provide a bit of context, 1 US Dollar = 190 Hungarian Florint.

In effect, Forte would have needed about $1.3 million USD to tide them over while the excess inventory was consumed.

Mirko Boddecker of fotoimpex did believe that Forte's ownership was not compelled to make an immediate decision on the future of the planty and property after the closure - so this may yet drag on a while.

I agree 100% with David's analysis that a Bergger-FilmoTec buyout is the best offer. Hopefully there are some distributors, retailers who are also willing to get involved.

 

[Photo Engineer]

An additional point should be added. The huge inventory at Forte is getting old. Photo products don't keep forever, and relabeling with a new expiration date is legal but not good. You will probably see a decrease in quality.

The problem is that when Kodak left the B&W paper business, there was panic buying to some extent, and also the feeling that this business that used to be Kodak's would transfer to 2nd and 3rd tier companies and so they ramped up production. It was a feedback loop that caused some 'pulses' in the supply and demand chain and finally resulted in warehouse overstock.

So, you will see bargain film out there from all defunct brands, including Agfa. It remains to be seen if these are good or not. IMHO, Agfa film was very good, but not noted for its good keeping qualities. IDK about their paper.

I like to think of APUG and Photo Net users (particularly MF and LF people but not excluding 35mm) as being professional in their work attitude and demands, and so this possible loss in quality may be important. That is why I mention it.

BTW. I have seen some products go through an intermediate period where they improve in quality for a time before they go downhill due to keeping. If you see some particularly spectacular results, you may find it to be a one-of-a-kind event, that will never be quite duplicated in the future.

PE

 

[uraniumnitrate]

An additional point should be added. The huge inventory at Forte is getting old. Photo products don't keep forever, and relabeling with a new expiration date is legal but not good. You will probably see a decrease in quality.

The problem is that when Kodak left the B&W paper business, there was panic buying to some extent, and also the feeling that this business that used to be Kodak's would transfer to 2nd and 3rd tier companies and so they ramped up production. It was a feedback loop that caused some 'pulses' in the supply and demand chain and finally resulted in warehouse overstock.

So, you will see bargain film out there from all defunct brands, including Agfa. It remains to be seen if these are good or not. IMHO, Agfa film was very good, but not noted for its good keeping qualities. IDK about their paper.

I like to think of APUG and Photo Net users (particularly MF and LF people but not excluding 35mm) as being professional in their work attitude and demands, and so this possible loss in quality may be important. That is why I mention it.

BTW. I have seen some products go through an intermediate period where they improve in quality for a time before they go downhill due to keeping. If you see some particularly spectacular results, you may find it to be a one-of-a-kind event, that will never be quite duplicated in the future.

PE

Forte haven't got any inventory in stock! The last two years everything had been manufactured according to orders. The products which is left is out and are the property of the Dealers. The manufacturing plant is empty exept some rolls which are to be cut and delivered as do to those last orders.

 

[copake_ham]

Forte haven't got any inventory in stock! The last two years everything had been manufactured according to orders. The products which is left is out and are the property of the Dealers. The manufacturing plant is empty exept some rolls which are to be cut and delivered as do to those last orders.

This fact, in itself, says much about how shaky the business was. They were apparently manufacturing to order, which means they lacked sufficient cash flow to build inventory.

Without carrying inventory (including work-in-progress) you cannot meet future orders. So, in fact, are not really marketing your products.

In other words, the buy out investors "milked" the company dry.

 

[Photo Engineer]

Forte haven't got any inventory in stock! The last two years everything had been manufactured according to orders. The products which is left is out and are the property of the Dealers. The manufacturing plant is empty exept some rolls which are to be cut and delivered as do to those last orders.

Posts elsewhere here claime otherwise, IIRC.

PE

 

[uraniumnitrate]

Posts elsewhere here claime otherwise, IIRC.

PE

I wonder where do they get all that information.

 

[uraniumnitrate]

This fact, in itself, says much about how shaky the business was. They were apparently manufacturing to order, which means they lacked sufficient cash flow to build inventory.

Without carrying inventory (including work-in-progress) you cannot meet future orders. So, in fact, are not really marketing your products.

In other words, the buy out investors "milked" the company dry.

You are very right in all aspects.

 

[david b]

Luckily, all of the ilford products I buy are fresh.

 

[aldevo]

This fact, in itself, says much about how shaky the business was. They were apparently manufacturing to order, which means they lacked sufficient cash flow to build inventory.

Without carrying inventory (including work-in-progress) you cannot meet future orders. So, in fact, are not really marketing your products.

In other words, the buy out investors "milked" the company dry.

Milk what??!!! B&W film and paper is a moribund market! It really doesn't offer investors a return in the short-term. If you look at Forte's 2005 profit - it's equivalent to a couple tens of thousands of dollars.

The theory that the investors really were looking to sell off the land sounds a lot more plausible.

No inventory? OK, so a retailer wants the stuff and hasn't got it. He picks up the phone and orders it and once the factory has enough orders to do a run - they make one. Calumet, Freestyle, B&H, Fotoimpex call the shots here...there's no value whatsoever in Forte keeping inventory lying around. The stuff has pretty limited shelf life after all.

As B&W film and paper demand contineus to plunge (and it's clearly going to continue to plunge) - "manufacture to order" is the only chance the suppliers have.

And the only chance we have for that matter...

 

[Photo Engineer]

Unfortunately, manufacture to order is somewhat difficult, but not impossible. I agree though with what you say.

PE

 

[aldevo]

I also agree manufacture to order would be hard to accomplish.

I think intermittent runs would be hard enough as far as emulsion making and coating would go. But I could see other factors being a problem.

You don't want to be buying silver in anything other than extremely small or extremely large quantities. And by "extremely large" I'm talking about several million troy ounces a months as several central banks in Asia are doing. There are also operations in India that buy several tens of millions of ounces for jewelry making purposes (India has HUGE demand for silver during its wedding season).

If you are stuck purchasing silver in large, but not very large quantities - you don't want to be using Forints to do it.

I would expect that it would be extremely difficult to get film and paper bases manufactured for your operations with this sort of model. I could be wrong.

Manufacturers are going to have to find a way to minimize working capital - because nobody on the outside is going to finance its creation...

 

[Photo Engineer]

Since a machine must be threaded with paper or film support, and the entire track or alley, as we called it, can be up to a mile long, rethreading a machine and getting it up to speed takes a master roll and then some of support which cannot be used. Therefore each shutdown can use more than a blank master roll.

In addition, for uniformity, all products are blends of ingredients from the previous batch. No product that I worked on was the result of a single run, but rather was a blend of a blend of a blend going back to the first run of that particular emulsion.

BTW, it seems like you are agreeing 100% with you, right? Not that I mind, but I did get a laugh out of it.

PE

 

[aldevo]

Since a machine must be threaded with paper or film support, and the entire track or alley, as we called it, can be up to a mile long, rethreading a machine and getting it up to speed takes a master roll and then some of support which cannot be used. Therefore each shutdown can use more than a blank master roll.

In addition, for uniformity, all products are blends of ingredients from the previous batch. No product that I worked on was the result of a single run, but rather was a blend of a blend of a blend going back to the first run of that particular emulsion.

BTW, it seems like you are agreeing 100% with you, right? Not that I mind, but I did get a laugh out of it.

PE

Yes, ha ha, I saw that, too. Which is why I changed the first line of my previous post.

 

[JBrunner]

As B&W film and paper demand contineus to plunge (and it's clearly going to continue to plunge) - "manufacture to order" is the only chance the suppliers have.

And the only chance we have for that matter...

I personally don't see the B&W market "continue to plunge" as I think it bottomed some time ago, and if anything, may rebound a slight bit as the increased popularity of photography in general begins to trickle back to the foundation. B&W hasn't been huge for a long time. It seems clear that Forte's woe's have to do with the closure of AGFA, and resulting B&W product bubble, and an outdated plant. Agfa's closure was not due to its B&W line, but rather the decline for its other products, and poor management. I think we are experiencing market corrections and consolidations that are normal to the current enviroment for B&W products, and that a stability will soon be reached, with slightly higher prices, and a bit less choice. I think this thread is important, but it has allot of unwarrented doom and gloom. I love Polywartone, but if I can't get it, I'll switch to something else. NBD. Color on the other hand, will continue to suffer beatings, excepting paper (lightjet etc.) and it will remain to be seen if there will be enough of a market for anyone but Fuji.

 

[aldevo]

I personally don't see the B&W market "continue to plunge" as I think it bottomed some time ago, and if anything, may rebound a slight bit as the increased popularity of photography in general begins to trickle back to the foundation. B&W hasn't been huge for a long time. It seems clear that Forte's woe's have to do with the closure of AGFA, and resulting B&W product bubble, and an outdated plant. Agfa's closure was not due to its B&W line, but rather the decline for its other products, and poor management. I think we are experiencing market corrections and consolidations that are normal to the current enviroment for B&W products, and that a stability will soon be reached, with slightly higher prices, and a bit less choice. I think this thread is important, but it has allot of unwarrented doom and gloom. I love Polywartone, but if I can't get it, I'll switch to something else. NBD.

AgfaPhoto's final failure had little to do with bad management. AgfaPhoto was set up with the promise of seed capital (which later failed to materialize) so that its former parent could avoid the costs stemming from the lay off of its workforce.

Most of the seed capital failed to materialize. There was quite a scandal over this last fall, but it came to nothing.

I'm still skeptical about this so-called "product bubble". Show me all the Agfa paper still lying around? It's been unavailable in N. America since the summer of 2006. Yes, Forte did sell film but given their offerings and Agfa's - wouldn't you expect Ilford and Kodak to feel more of a pinch? Agfa didn't sell sheet film after all. And if you were using Fortepan 200/Bergger BRF 200 - would you really consider APX 100 a close replacement? I've used both and I certainly would not.

"Plunging" may be too strong of a word, but the demand is decreasing. And I don't see any upturn since environmental considerations are pretty much making the teaching of analog B&W skills impossible at the community level. At least in the USA.

I've yet to see anybody outift a home darkroom without having spent a couple years hanging out in community darkrooms. And these are disappearing fast. There's a reason why prices on enlargers and lenses are so cheap on eBay...

But, as you said, life goes on. I hope, Jim, that you are proven right.

 

[johnnywalker]

This seems very reasonable to me, and I think (and hope) you're right. Just out of curiosity, is there any any synergy between the production of b&w and colour film that would make b&w more expensive to produce if colour were not around? Perhaps PE would know better than anyone.

I personally don't see the B&W market "continue to plunge" as I think it bottomed some time ago, and if anything, may rebound a slight bit as the increased popularity of photography in general begins to trickle back to the foundation. B&W hasn't been huge for a long time.

 

[JBrunner]

I've yet to see anybody outift a home darkroom without having spent a couple years hanging out in community darkrooms. And these are disappearing fast. There's a reason why prices on enlargers and lenses are so cheap on eBay...

But, as you said, life goes on. I hope, Jim, that you are proven right.

(Names Jason BTW )
Maybe it is isolated to my experience, or a local phenom- but interest in traditional and darkroom seems to be on an upswing here. Lets hope its a trend. Also, the good 4x5 enlargers seem to be very much in demand, stifled mainly by the unwillingness to ship them, while the MF and 35 seem to be a glut on the market, probably because they are shippable, and because allot of the marginal amatures went D* ( the principle market for D* is the wannabe, promising huge results for little or no effort.) have abandoned them. I would expect the supply to begin to thin at some point. Most of the really good stuff has been let go, and snapped up.

 

[Ole]

I've yet to see anybody outift a home darkroom without having spent a couple years hanging out in community darkrooms. And these are disappearing fast.

I've been in a "community darkroom". Twice.

The second time I brought my own enlarger!

 

[Photo Engineer]

B&W and color use the same coating machines and the same emulsion making equipment and chemistry. That is about it. Otherwise they are the same but different. Color and B&W TV use similar technology. They are the same but different. They are neither synergistic nor non-synergistic, they merely are produced using the same plant.

However, the synergy comes in quantity production and floor space and schedules. One competes with the other for time in production and finishing. And, if color shut down, I doubt if B&W would keep going well at either EK or Fuji. Color keeps the machines running due to quantity.

Sales are plummeting. Truly they are. You barely see the surface of this.

And, what is one aspect of bad management but failure to see that the market is falling apart very fast and you had better move fast or else.

Kodak and Fuji, for all of any complaints have made better moves at the top than Agfa certainly did or Agfa would not have come into their problems. Ilford just barely escaped. The only company doing it right from the get go is Kentmere, but then they have a rich uncle.

PE

 

[Dave Miller]

"The only company doing it right from the get go is Kentmere, but then they have a rich uncle.

PE"

And I thought it was good management of good products.:confused: Shows how wrong I can be.

 

[Photo Engineer]

Dave;

Of course you are right, but it helps to have a good investment portfolio and money in the bank.

PE