Kodak Comeback, Quick Read

Steve Smith · Mar 26, 2012

Trasselblad said:
Realistically speaking and in my personal view, there are only two ways for Kodak to go with still film production: One, to down-scale significantly as the demand today does not justify the capacity of the coating plant. Two, license the coating to another operation which can make it profitable, whilst keeping, say, the final quality control and branding in house.

If they went for option two, that doesn't leave them much to make a profit on. I think option one is the only viable option. become a much smaller but profitable film company.

Steve.

CGW · Mar 26, 2012

Trasselblad said:
Realistically speaking and in my personal view, there are only two ways for Kodak to go with still film production: One, to down-scale significantly as the demand today does not justify the capacity of the coating plant. Two, license the coating to another operation which can make it profitable, whilst keeping, say, the final quality control and branding in house.

I read an interview long time ago with Mr. Maitani, the designer of the Olympus OM series. He explained that at the end of the series in the 90'ies, the whole production line, tooling etc. had to be dismantled and sold as scrap to recover at least something because at the capacity it had, if run even for a few weeks at full speed, it would cover the market demand for a year. Considering that starting up and shutting down a complex production line takes some serious planning and doing and that letting it "idle" is not an option, it became a simple decision governed by practicalities. The nail in the coffin during the interview was when the reporter asked him to confirm if, for this reason, there would never again be an OM series camera body built again and Mr. Maitani dryly replied "That's right. Never again.". Just like that. End of story.

On the other hand, the Olympus photo division was practically dead in the water by that time, mostly for never having made the leap to AF. Another case of trend blindness, I guess?

David Callard · Mar 26, 2012

I exclusively shoot color reversal film in formats from 35 thru 4x5. I particularly lament the loss of Ekta VS and Elite Chrome. I am certainly happy to place an annual order if necessary.

David Callard · Mar 26, 2012

Steve Smith said:
If they went for option two, that doesn't leave them much to make a profit on. I think option one is the only viable option. become a much smaller but profitable film company.

Steve.

I agree with both those options. I have openly speculated in this forum and others whether licensing might be a way out - perhaps to China or maybe some Eastern European country (Poland?).

steven_e007 · Mar 26, 2012

Steve Smith said:
I still find it strange that American companies can have control and access to pension funds. My company pension is controlled by a separate company. i.e. a company which specialises in pensions and insurance.

Steve.

I find it very odd, too. I worked for a company that went bust about 20 years ago. I worked there for 10 years. I've just received my pension statement from the company they paid the pension too. It is still sitting there, safe and sound until I retire.

Of course, some Companies in the UK do rifle the pension scheme. Robert Maxwell and his Mirror newspaper, for example. I think it's called "fraud".

Is it really the case in the US that the pension scheme is dependant on the company remaining solvent and profitable? :confused:

keithwms · Mar 26, 2012

steven_e007 said:
Is it really the case in the US that the pension scheme is dependant on the company remaining solvent and profitable? :confused:

In this particular case, apparently it is. There should be an entirely separate entity, though... and most Americans have that, as far as I know. It's true though, it should be the rule that retirement savings are legally separate. But then we have the Federal govt dipping into social security funds, not exactly setting a good example. Most in my generation assume social security will be long gone by the time we retire.

CGW · Mar 26, 2012

But then we have the Federal govt dipping into social security funds, not exactly setting a good example.

You're wildly OT but I'd really like a fiscally informed explanation of this, please.

Steve Smith · Mar 26, 2012

steven_e007 said:
Of course, some Companies in the UK do rifle the pension scheme. Robert Maxwell and his Mirror newspaper, for example. I think it's called "fraud".

I'm not certain but I think after this became public knowledge, controls were put in place to prevent it happening again.

Steve.

railwayman3 · Mar 26, 2012

steven_e007 said:
Of course, some Companies in the UK do rifle the pension scheme. Robert Maxwell and his Mirror newspaper, for example. I think it's called "fraud".

When Gordon Brown (UK Chancellor of the Exchequer) rifled Private Pensions Schemes in the late 1990's he called it "a reformation of the corporation tax system" rather than "fraud".
At least Robert Maxwell had a bit more style to him than most politicians.

keithwms · Mar 26, 2012

CGW said:
But then we have the Federal govt dipping into social security funds, not exactly setting a good example.

You're wildly OT but I'd really like a fiscally informed explanation of this, please.

It's complicated

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund#Recent_attention

Basically, the health of the trust fund relies on the health of the Federal bond market; there is no stack of gold or whatever that is set aside. So borrow-and-spend practices directly endanger the solvency of the fund. If the US were to face, say, several years of 5% 10 yr bond yields such as we now see in Spain and Italy, the fund would be in severe danger.

CGW · Mar 26, 2012

keithwms said:
It's complicated

http://en.wikipedia.org/wiki/Social_Security_Trust_Fund#Recent_attention

Basically, the health of the trust fund relies on the health of the Federal bond market; there is no stack of gold or whatever that is set aside. So borrow-and-spend practices directly endanger the solvency of the fund. If the US were to face, say, several years of 5% 10 yr bond yields such as we now see in Spain and Italy, the fund would be in severe danger.

Not quite...

http://www.nytimes.com/2010/08/16/opinion/16krugman.html

keithwms · Mar 26, 2012

Ah yes well Krugman is well known for almost always taking the view that spending is good and cutting is bad. Even if you agree that we should've had more stimulus, most of Krugman's ideas are politically impossible. And his usual defense is: look! we haven't seen substantial inflation or big problems with bond yields. Well yeah, inflation isn't a problem until it becomes a problem... and then it's a *big* problem. For younger people like myself, Krugman may as well be the wizard of Oz, he's stuck somewhere back in the 1950s with old ideas about government driving growth.

We must become much more responsible, for the sake of our citizens and our businesses, and tend our bond yields. We are at ~2% on the 10 yr mostly because of euro-zone flight risk. It's certainly not because we miraculously became solvent last year and will always be. If our bond yields spike, there will be pain and it will be acute... and the trust fund will certainly lose value.

CGW · Mar 26, 2012

keithwms said:
Ah yes well Krugman is well known for almost always taking the view that spending is good and cutting is bad. Even if you agree that we should've had more stimulus, most of Krugman's ideas are politically impossible. And his usual defense is: look! we haven't seen substantial inflation or big problems with bond yields. Well yeah, inflation isn't a problem until it becomes a problem... and then it's a *big* problem. For younger people like myself, Krugman may as well be the wizard of Oz, he's stuck somewhere back in the 1950s with old ideas about government driving growth.

We must become much more responsible, for the sake of our citizens and our businesses, and tend our bond yields. We are at ~2% on the 10 yr mostly because of euro-zone flight risk. It's certainly not because we miraculously became solvent last year and will always be. If our bond yields spike, there will be pain and it will be acute... and the trust fund will certainly lose value.

I'll take a Nobel laureate and the facts over right-wing fear-mongering and fabulism any day, thanks.

keithwms · Mar 26, 2012

Ah yes, the predictable Nobel comment. One of the most controversial modern economists and yet because of the Nobel, the masses treat his every word like gospel. Fortunately, some of us don't place all of our faith in theory.

By the way, at no point have I declared or implied any agreement with right wingnuts. But it's high time that liberals and conservatives both realize that the other side does have a point.

Roger Cole · Mar 26, 2012

This sort of thing never solves anything and never changes any minds. (FWIW I'm pretty much in Krugman's camp, but I don't pretend anyone here will change their mind based on what I write.)

I'm 20 years out from retirement and pretty confident of having social security. This has nothing to do with Kodak though.

wblynch · Mar 26, 2012

Social and financial responsibility knows no boundary by decade. Time has shown over thousands of years, how the rules work. Things are no different now. The 1870's, 1920's and 2000's in the US all fit the same pattern. It takes the same solutions to crawl out of the ditch. Krugman is right. FDR was too.

Young bucks love to blame gray hairs and believe that the rules are different for their younger generation but guess what, they are still the same.

The merger mania, vulture capitalism, incessant tax cuts, spending cuts and pension cuts began right after a certain US presidential election in 1980. The trend has lead directly to our current situation.

The pension problem started by corporations seeking permission to underfund the pensions. Each year they went back and asked for lower and lower limits until they got so deep they flat did not want to pay the money back. They claim duress, then bankruptcy, to eliminate their responsibility and "emerge a fresh, revitalized company".

Kodak is just following the recipe laid out by United Airlines, General Motors and hundreds of others. In the end they will sell off the rights and equipment and it will be up to the buyers to determine if we still get to buy film. Perez and his minions will retire to the Hampton s with the spoils.

Photo Engineer · Mar 26, 2012

Guys;

Kodak does not administer its pension plans. Thats right, planS plural! They have several. They administer one plan for the "highly compensated" or very senior members of the staff. Only those will lose their pensions, and only regarding the part that was paid into when they went over a certain pay grade.

There are also recent lapses in payment to the outside manager of the plan(s) that Kodak failed to make. These are noted in the debt that Kodak owes to outside banks and investment firms.

The only part that Kodak administers for all is the health care plan. That they can discontinue with a wave of the hand. It is not guaranteed nor is it funded from anything. My understanding is that it is paid monthly or quarterly by EK. All I do know is that EK has asked to discontinue this health care plan.

So, an average worker will keep his pension but lose health care. We lost dental care 2 years ago. It has been gradually eroded.

A highly compensated worker will lose about 1/2 of his pension and health care.

PE

Roger Cole · Mar 26, 2012

So they get to keep everything that was promised, with the possible exception of a few of the very richest who least rely on it, and lose something that, while nice, was never guaranteed to begin with.

That isn't nearly so bad as it sounded before the clarification. Thanks PE.

While I still sympathize, most retirees don't have health coverage from former employers. They have medicare and a private supplement.

Photo Engineer · Mar 26, 2012

The one thing you missed is the fact that Kodak "guaranteed" health care to us, and our financial planning is based on that fact. That "guarantee" is what prevents their stopping it altogether. They have to go to court to get that guarantee abolished so that they can discontinue that plan.

And for some employees, about 50% or more of their pension will vanish. As you say, these may be the very wealthy, but it can still hurt them a lot.

So, here I have medicare + a private supplement (paid by EK). This private supplement will stop, and I will then have to pay up to about $250/month that I didn't have to pay before. There goes my financial plan. How easily could you afford that sudden and unexpected change to your budget?

PE

Roger Cole · Mar 26, 2012

Ok, sorry, I misread your previous post. I took this:

The only part that Kodak administers for all is the health care plan. That they can discontinue with a wave of the hand. It is not guaranteed nor is it funded from anything.

to mean that this was never guaranteed. I see now you meant that it was "guaranteed" in that Kodak promised to pay it, but they never had it backed by anything more tangible.

That's bad and I do sympathize. I hope something can be worked out better than "poof, it's gone."

MattKing · Mar 26, 2012

The Kodak Canada pension plan is similar. As of the end of 2010, the independent department of the Ontario government that serves as a "watchdog" over private pension plans has evaluated that plan as being 96.2% funded (actuarial valuation of projected obligations vs. actuarial valuation of capital on hand plus projected investment return). Not perfect, but not disastrous either.

Kodak Canada retirees have another thing in common with Eastman Kodak retirees - their health benefits are paid for them. Those funds are paid from operating profits of the current company.

The two fundamental differences are:

1) health coverage is much, much cheaper in Canada. There is a small monthly premium in some provinces for the majority of health care, with an additional premium for "extended" benefits like dental care, prescriptions, physiotherapy, etc.
2) Kodak Canada is not in bankruptcy, but it is a wholly owned subsidiary of Eastman Kodak, which is in bankruptcy.

I've caused my father (a Kodak employee for 37 years and a retiree for the last 26 years) great consternation by wondering if Kodak Canada might end up being sold by the bankruptcy trustee to Fuji (like many Kodak "lifers", my Dad is fiercely loyal to Kodak and quite partisan about the "competition").

Photo Engineer · Mar 26, 2012

I might mention that when I retired, the US retirement fund was over-funded by quite a bit. Somehow, someway those in high places managed to deplete it. I guess it was by not paying into it, and that during a bad market.

So, that is another point here to consider.

PE

keithwms · Mar 26, 2012

Photo Engineer said:
I might mention that when I retired, the US retirement fund was over-funded by quite a bit. Somehow, someway those in high places managed to deplete it. I guess it was by not paying into it, and that during a bad market.

But Krugman says there's no problem! Maybe he'll divert some of his Nobel winnings to your retirement account...

But seriously, what happened is that the social security fund(s) were never intended to become a retirement account. There is a big difference between a minimal safety net and a full pension.

wblynch · Mar 26, 2012

There are tens of millions of American seniors that have only Social Security for their income.

I think if anyone was able to measure it, there probably never were more than 10 or 20 percent of American workers that were ever covered by a 'pension'.

What to do about the other 80-90%?

Throw us to the wolves, I guess. Thank God (and FDR) for Social Security.

Ken Nadvornick · Mar 26, 2012

Therein lies the more fundamental problem. In our society 80-90% end up with essentially nothing, no matter how hard they work and try to save.

What to do with them? Soylent Green, I guess...

Ken

Kodak Comeback, Quick Read

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