Kodak Price Increase and Hiring Spree 2023: What Do You Want Kodak to Focus on Moving Forward?

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I don't know. The still photographic film manufacturing part of Eastman Kodak is a relatively small part of Eastman Kodak's business, but I expect that there are targets built into the agreement between them - targets for both sides.
And of course there is a synergy between the other things done by Eastman Kodak's division that makes still film and the still film production itself. So if still film ended, it would affect the profitability of their motion picture film and other coating business - e.g. their growing circuit coating business.
Does the Ford Motor Company have requirements to make cars - could they just decide to make trucks?
Anything is possible, but there are consequences if changes are imposed to existing arrangements.

Both sides being stuck with each other is not good business practice in general. If either side gets dissatisfied for any reason with the other's performance, then what? This also could affect the higher pricing for Kodak films at the retail level. Who decided to start up Ektachrome 100 again? Who has the power to decide these things per the bankruptcy provisions? Who's in charge?
 

koraks

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Both sides being stuck with each other is not good business practice in general.

Perfectly sensible logic - as long as you're in the business of making, let's say, injection moulded plastic trinkets or galvanized screws, AND you're incapable or unwilling to think beyond economics 101 as taught at Western highschool level. However, in many industries, instances of all sorts of dependencies are extremely common and often unavoidable. In other words: the real world works differently, whether you like it or not.
 

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Both sides being stuck with each other is not good business practice in general. If either side gets dissatisfied for any reason with the other's performance, then what? This also could affect the higher pricing for Kodak films at the retail level. Who decided to start up Ektachrome 100 again? Who has the power to decide these things per the bankruptcy provisions? Who's in charge?

It is a marriage and they love each other.
 

Overrank

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The bankruptcy is long over, and has no relevance.
Back at the time of the bankruptcy, Eastman Kodak and Kodak Alaris entered into a contract respecting the distribution and marketing of Kodak branded still film man.
That contract has since been revised, due at least in part to the hugely disruptive role played by a world wide pandemic.
Eastman Kodak has always been free to contract manufacture non-Kodak branded film for sale by others under their name.
Do you know if EK do the packaging for the non-Kodak branded film ? The lack of finishing capacity seems to be the issue which is driving the shortage of 35mm colour film and the silly prices that are being charged
They are also now able to sell some other product - e.g. the non-remjet Vision film to Cinestill.
But the marketing and distribution rights for Kodak manufactured, Kodak branded, regular still film in regular packaging designed to be sold in the retail market still belong to Kodak Alaris. Eastman Kodak completely lacks the infrastructure to market and distribute that sort of product.
 

MattKing

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Do you know if EK do the packaging for the non-Kodak branded film ? The lack of finishing capacity seems to be the issue which is driving the shortage of 35mm colour film and the silly prices that are being charged

I don't know, but I doubt it.
Although it may be that they have excess capacity to do some things - e.g. 120? - without having the excess capacity to do others.
 
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Perfectly sensible logic - as long as you're in the business of making, let's say, injection moulded plastic trinkets or galvanized screws, AND you're incapable or unwilling to think beyond economics 101 as taught at Western highschool level. However, in many industries, instances of all sorts of dependencies are extremely common and often unavoidable. In other words: the real world works differently, whether you like it or not.

It is a marriage and they love each other.
Name other marriages in business where divorces aren't possible.
 

koraks

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Name other marriages in business where divorces aren't possible.

The possibility of getting divorced later on is not necessarily a reason to not get married.

Depending on whom you ask, of course. I know you recently got advice from someone to not go there anymore, but not everyone is equally jaded by some bad experiences. And in business, partnerships ALWAYS come with tension. Again, that's not a reason to not go there.

Like I said, plenty of examples of marriages that worked at least for some time, sometimes even for a very long time, to the benefit of all involved.
 
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The possibility of getting divorced later on is not necessarily a reason to not get married.

Depending on whom you ask, of course. I know you recently got advice from someone to not go there anymore, but not everyone is equally jaded by some bad experiences. And in business, partnerships ALWAYS come with tension. Again, that's not a reason to not go there.

Like I said, plenty of examples of marriages that worked at least for some time, sometimes even for a very long time, to the benefit of all involved.

You didn't answer the question. Name another business arrangement that cannot end, where both parties are stuck with each other for ever more?
 

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You didn't answer the question. Name another business arrangement that cannot end, where both parties are stuck with each other for ever more?

Maybe if you think of it another way, it'll seem less unusual. Kodak Alaris seems free to sell any product manufactured by anybody and Eastman Kodak seems free to sell its film to anyone they want (as long as it's not then branded Kodak). If you think of it as a brand-licensing arrangement, it's not unusual.
 

koraks

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Alan, your question doesn't make sense to me.

The problem seems to me that you're trying to understand something from a purely normative perspective. As a result, any answer you get, you reject, because it doesn't fit how you believe things should be done. It's up to you to decide if you want to start to ask truly open questions, or if you want to keep asking rhetoric questions that are designed to prove you're right (but only succeed in showing your limited understanding).
 

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Alan, your question doesn't make sense to me.

His question is simple. He's asking for an example of another relationship between two otherwise independent companies, where one has to, by legal arrangement, always produce a product for the other.
 

koraks

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I understand Don. The issue is that his question won't help him understand the Kodak situation any better for the reason I explained above.

If someone were to put a gun to my head, I'd offer an example like ASML and Carl Zeiss SMT. The latter has exclusively made the optics for ASML's lithography equipment, and has been the sole supplier for this critical component for decades now. They're independent companies, but their relationship is a very exclusive one. Although there have been tensions between both companies, which is a matter of course if you're doing business very intimately at the very edges of what's physically possible, they relationship remains a productive and mutually beneficial one for both parties. In fact, it's such a successful relationship that everything we do that involves computer technology ultimately relies on the fruits of this very relationship.

The problem, again, is that this excellent example is not going to help one whit in helping someone to understand something that they actively reject before trying to understand it.
 

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If someone were to put a gun to my head, I'd offer an example like ASML and Carl Zeiss SMT. The latter has exclusively made the optics for ASML's lithography equipment, and has been the sole supplier for this critical component for decades now. They're independent companies, but their relationship is a very exclusive one. Although there have been tensions between both companies, which is a matter of course if you're doing business very intimately at the very edges of what's physically possible, they relationship remains a productive and mutually beneficial one for both parties. In fact, it's such a successful relationship that everything we do that involves computer technology ultimately relies on the fruits of this very relationship.

So Zeiss is legally compelled to manufacture what ASML wants?

Alan undoubtedly understands that one company can exclusively manufacture a part or product for another, independent company. He was asking for an instance where one company must do it, by permanent legal arrangement.

What I said above (that if he thinks of it in terms of who is allowed to sell films branded "Kodak", then it doesn't seem as unusual) is probably a better explanation.
 

koraks

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So Zeiss is legally compelled to manufacture what ASML wants?

Of course there are legal obligations to that effect between both parties. But more important than the legal obligations are the other mechanisms that tie these organizations together. The same undoubtedly is true for the Kodak case. The legal dimension is just one of several dimensions an alliance like this contains.

PS: there's a very rich literature on alliances that for the most part dates back to approx. the late 1980s/early 1990s, but has continued from there on in myriad directions. I don't feel like regurgitating all arguments for and against alliances or the mechanisms through which they succeed or alternatively fail. It's all there for anyone to read and take inspiration from. It's the kind of material that helps in understanding why situations like Kodak's exist, what the limitations are of such instances and to what extent they may (or may not) be sensible business practices. Reading that sort of stuff makes a whole lot more sense than trying to flatten out a complex topic into just a legal construct or comparing it to conceptually dissimilar constructs like a marriage.
 
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I had an exclusive Greater NYC Area dealership with a building automation manufacturer. After a few years, they decided to open their own branch office in NYC and dumped me. Our contract gave me a year to move on. I should have negotiated a better deal, maybe three years. The point is Eastman Kodak cannot get rid of Kodak Alaris. They're stuck with them even if they don't like how they handle their distributorship. Eastman can only manufacturer film labelled and packaged as Portra, Ektachrome, Tri-X, Tmax, Ektar for Alaris. Hardly anyone is going to buy Kodak film labelled Shanghai even assuming the bankruptcy agreement allows Eastman to do that. Alaris seems to have the better part of the deal. But then again, it was Eastman that owed Alaris when they went bankrupt and had to make Alaris whole.

For our concern as film users, this may account for some of the higher prices for Kodak film. If Alaris's retirees who own Alaris grow in number, then Alaris needs to raise prices to create more profit. Of course, they could go back to Eastman and tell them to lower their profit margins and lower Eastman's prices to Alaris. But Eastman could say they need a certain gross margin to stay in business. They tell Alaris to pay their retirees less to keep prices down and sales up. So they fight back and forth. Who knows what really is going on in the board rooms of both companies? Who knows what the actual bankruptcy terms affecting both companies really are and how these things are settled, if they are? So they're stuck with each other making Kodak film more expensive and less competitive.

In the end, it's a poor business relationship because there's little flexibility for either company.
 
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Maybe if you think of it another way, it'll seem less unusual. Kodak Alaris seems free to sell any product manufactured by anybody and Eastman Kodak seems free to sell its film to anyone they want (as long as it's not then branded Kodak). If you think of it as a brand-licensing arrangement, it's not unusual.

But Alaris has exclusive representation in perpetuity. Eastman can't get rid of them if they aren't doing a good job as a dealer and distributor. Would you want to be stuck with a spouse who's cheating on you?

Also, the brand belongs to Eastman not Alaris. It's not a brand licensing arrangement. 99 out of 100 people wouldn't know who Alaris is. Alaris can't terminate the agreement either and have other film makers make Kodak film because the brand belongs to Eastman.

Like the Siamese twins, they're stuck with each other, for better or worse.
 

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The point is Eastman Kodak cannot get rid of Kodak Alaris.

Sure they can - when the term of their current agreement is up, they can comply with whatever terms of that agreement mandate about how they end their relationship, and leave.
The business world is full of long term agreements. When Harman bought the assets of Ilford from the receiver, they entered into a 30 year (IIRC) lease for the premises. There are many such long term leases and other business arrangements out there.
The agreement between Kodak Alaris and Eastman Kodak is just that - an agreement. If it is a well crafted agreement, it reflects the needs of both parties. And, most likely, it includes provisions that help provide long term certainty for each party.
Alan, with all due respect, the deal you entered into reflected an imbalance of power. It sounds like a fairly typical example where a larger entity takes advantage of its power over a smaller entity. In the case of Eastman Kodak and Kodak Alaris, the agreement reflected a fairly good balance of power. Eastman Kodak couldn't afford to keep operating their incredibly expensive - bankruptcy inducing expensive! - worldwide distribution and marketing infrastructure. And the Kodak Limited Pension Plan had both cash and the ability to take that on (through the corporation they created - Kodak Alaris), provided that they had access to long term supply of product. As a result of the Agreement, Kodak Alaris became the larger of the two, and Eastman Kodak became the smaller.
But Alaris has exclusive representation in perpetuity.

I've never seen any evidence of that. Such an agreement is unlikely, because in most jurisdictions "agreements in perpetuity" are unenforceable.
 

MattKing

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If Alaris's retirees who own Alaris grow in number

Alaris' employees have their own separate post-employment arrangements with Kodak Alaris. Any that formerly worked for Kodak Limited ended that employment at the time of the bankruptcy and commenced new employment with Kodak Alaris. The Kodak Limited Pension Plan was capped at the time of the bankruptcy - no further enrollment.
There are, of course, people who made contributions to, and had vested interests in that Kodak Limited plan, and are now accruing new interests in any plan (if there is one) offered by Kodak Alaris because they are working there now.
When they reach retirement age, they can make claims against the Kodak Limited Pension Plan, plus any plan they may have acquired rights in before they worked for Kodak Limited, plus any plan they may have acquired rights in after they worked for Kodak Limited.
 

koraks

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I had an exclusive Greater NYC Area dealership with a building automation manufacturer. After a few years, they decided to open their own branch office in NYC and dumped me. Our contract gave me a year to move on. I should have negotiated a better deal, maybe three years.
So in this relationship, what you brought to the table was an asset (access to a market) that was relatively easy and cheap to imitate or otherwise substitute for the manufacturer. No matter how you negotiated, you held the short straw from the very beginning. This is also why I don't think your example is a useful point of reference for the Alaris/EK alliance, since the assets on both sides appear to be more complementary, valuable and to a large extent partnership-specific. More importantly, the interests of both partners closely align on crucial points. It's a proper alliance, in contrast with the distributorship you were part of.

In the remainder of your post, you appear to assume that there's opportunistic behavior on either side of the Alaris/EK alliance. We have yet to see firm evidence of this, and it's in fact quite likely this doesn't happen since one partner offering junk film and the other party doing a crap job distributing it would harm both partners' business. The assumption that either party is screwing over the other is one that's commonly made in overly simplistic economics and traces back to basic assumptions about economic actors, such as that they're inherently opportunistic and that they're rational actors (and a host of other assumptions). Time and again, research and practice have shown that these assumptions are often not accurate. Moreover, the reduction of vast and complex entities like these two firms into atomic economic actors and then applying simplistic (and often erroneous) assumptions to them just doesn't make sense. This extends btw to the shareholders of companies, especially in those cases where a company is not publicly traded (and even if it is, not all shareholders are out for short-term gains at the cost of long-term profitability).

Another assumption you appear to make is that the alliance lacks a form of flexibility that would somehow be beneficial to both partners, and by extension for consumers. The problem with reasoning of this kind is that it's equally abstract and if you work out the details, it's just as easily can flip in the opposite direction: i.e. that the partnership is better capable (through its combination of complementary assets etc.) to respond to market dynamics. One particularly strong argument for this view is in the very existence of the alliance in the first place. Apparently, there's a very strong perceived benefit on both sides of the deal to keep it this way.

The conceivable argument that the legal framework between both parties would be the only knot that ties them together, in practice doesn't hold any water. Look at any number of alliances where either party decided to bail out, and you'll find that substantial legal measures were taken to make exactly this very unattractive - and yet, it happens. It's very similar to the situation where you were left in the dust by the building automation manufacturer: even if you had negotiated a better deal, as long as you didn't bring any more valuable bargaining chips to the table, in the end the power imbalance would have played out in their favor. If you run into a long-standing alliance, it always turns out there are strong and lasting ties that keep the parties together, and these ties invariably trace back to things that are both valuable and difficult to imitate or substitute.

Perhaps the above starts to explain my earlier somewhat exasperated responses to your suggestions - and I apologize for the antagonistic formulation of those. I have some difficulty going along in the too shallow assumptions that are being made by you and also others in trying to 'understand' why Kodak film (in particular color film) isn't cheaper than it is. There are very good reasons for this, and opportunistic behavior, price gouging, imbecile management etc. etc. are not the first ones that come to mind.
 

Sirius Glass

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Alan is being a New Jersey lawyer, which is rated several stories below a Philadelphia lawyer.
 
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Sure they can - when the term of their current agreement is up, they can comply with whatever terms of that agreement mandate about how they end their relationship, and leave.
The business world is full of long term agreements. When Harman bought the assets of Ilford from the receiver, they entered into a 30 year (IIRC) lease for the premises. There are many such long term leases and other business arrangements out there.
The agreement between Kodak Alaris and Eastman Kodak is just that - an agreement. If it is a well crafted agreement, it reflects the needs of both parties. And, most likely, it includes provisions that help provide long term certainty for each party.
Alan, with all due respect, the deal you entered into reflected an imbalance of power. It sounds like a fairly typical example where a larger entity takes advantage of its power over a smaller entity. In the case of Eastman Kodak and Kodak Alaris, the agreement reflected a fairly good balance of power. Eastman Kodak couldn't afford to keep operating their incredibly expensive - bankruptcy inducing expensive! - worldwide distribution and marketing infrastructure. And the Kodak Limited Pension Plan had both cash and the ability to take that on (through the corporation they created - Kodak Alaris), provided that they had access to long term supply of product. As a result of the Agreement, Kodak Alaris became the larger of the two, and Eastman Kodak became the smaller.


I've never seen any evidence of that. Such an agreement is unlikely, because in most jurisdictions "agreements in perpetuity" are unenforceable.

Not having access to the agreement or bankruptcy arrangement, we're all just speculating on these details.
 
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So in this relationship, what you brought to the table was an asset (access to a market) that was relatively easy and cheap to imitate or otherwise substitute for the manufacturer. No matter how you negotiated, you held the short straw from the very beginning. This is also why I don't think your example is a useful point of reference for the Alaris/EK alliance, since the assets on both sides appear to be more complementary, valuable and to a large extent partnership-specific. More importantly, the interests of both partners closely align on crucial points. It's a proper alliance, in contrast with the distributorship you were part of.

In the remainder of your post, you appear to assume that there's opportunistic behavior on either side of the Alaris/EK alliance. We have yet to see firm evidence of this, and it's in fact quite likely this doesn't happen since one partner offering junk film and the other party doing a crap job distributing it would harm both partners' business. The assumption that either party is screwing over the other is one that's commonly made in overly simplistic economics and traces back to basic assumptions about economic actors, such as that they're inherently opportunistic and that they're rational actors (and a host of other assumptions). Time and again, research and practice have shown that these assumptions are often not accurate. Moreover, the reduction of vast and complex entities like these two firms into atomic economic actors and then applying simplistic (and often erroneous) assumptions to them just doesn't make sense. This extends btw to the shareholders of companies, especially in those cases where a company is not publicly traded (and even if it is, not all shareholders are out for short-term gains at the cost of long-term profitability).

Another assumption you appear to make is that the alliance lacks a form of flexibility that would somehow be beneficial to both partners, and by extension for consumers. The problem with reasoning of this kind is that it's equally abstract and if you work out the details, it's just as easily can flip in the opposite direction: i.e. that the partnership is better capable (through its combination of complementary assets etc.) to respond to market dynamics. One particularly strong argument for this view is in the very existence of the alliance in the first place. Apparently, there's a very strong perceived benefit on both sides of the deal to keep it this way.

The conceivable argument that the legal framework between both parties would be the only knot that ties them together, in practice doesn't hold any water. Look at any number of alliances where either party decided to bail out, and you'll find that substantial legal measures were taken to make exactly this very unattractive - and yet, it happens. It's very similar to the situation where you were left in the dust by the building automation manufacturer: even if you had negotiated a better deal, as long as you didn't bring any more valuable bargaining chips to the table, in the end the power imbalance would have played out in their favor. If you run into a long-standing alliance, it always turns out there are strong and lasting ties that keep the parties together, and these ties invariably trace back to things that are both valuable and difficult to imitate or substitute.

Perhaps the above starts to explain my earlier somewhat exasperated responses to your suggestions - and I apologize for the antagonistic formulation of those. I have some difficulty going along in the too shallow assumptions that are being made by you and also others in trying to 'understand' why Kodak film (in particular color film) isn't cheaper than it is. There are very good reasons for this, and opportunistic behavior, price gouging, imbecile management etc. etc. are not the first ones that come to mind.

A partnership is successful until it isn't. Just what the terms are to break it up in this case is unknown but seems rather limited.
 

koraks

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A partnership is successful until it isn't.

Well, the explanatory power of that theory is rather limited, I think :wink:

Just what the terms are to break it up in this case is unknown but seems rather limited

There's always a way out. But sometimes it can take quite a long time before there's a good reason to try and get out. It all depends. That's also one of those powerful theories.
 

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Friends, Romans, countrymen - can you just stop going on and on and on with the flogging of this horse? It's dead and fetid and needs to be buried.
 
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