Kodak: The Rise and Fall of an American Tech Giant

[AgX]

And as a result, we still have excellent Kodak Portra, Tri-X. the TMAXes and now even E100 again. Agfa on the other side ...

Sometimes we as analog community benefit, if companies have less "superior insight", carefully step into any trap they can find in the market, and still somehow stay afloat through a barrage of true miracles.

Yes of course, we benefit. And I did spare how most questionable that move by Agfa was (state prosecutor, and high court got involved).

However my comment, as that by Agulliver, was only about how managements decided and how most similar manufacturers once about factor 4 apart in revenue, size etc. now are about equal.

 

[Sal Santamaura]

...This is...above you...

No, it's not. In fact it just about typifies the membership here.

... APUG members.

No such people exist today. This is PHOTRIO.

 

[jtk]

Michael Lewis didn't bother to address Kodak's dithering demise. George Eastman saw it coming.

https://www.amazon.com/s?k=michael+lewis+fifth+risk&i=stripbooks&ref=nb_sb_noss_1

 

[DREW WILEY]

I worked for 40 years as a professional buyer, and often interacted with both CEO's and other high executives of major manufacturing corporations. Lots of things became awfully predictable beginning in the 80's, then accelerating in the 90's, when the "armchair quarterbacks" most certainly were not people like me, expected to make an honest living through hard work, but many of those big shots themselves imported from previous roles where they didn't have any real experience either, rapidly wrecking one longstanding corporation after another, yet themselves getting richer every time through golden parachute contracts, induced stock market upward burbs linked to smoke and mirrors "market-share" myths, and similar nonsense really bad for the long-term health of the corporation itself. Anyone from GE was the worst. Every time one of those guys got planted as head of a manufacturing company, I knew the end was near, and started looking for a new supplier. Just like politicians and big developers, these were high-energy types excellent at back-slapping schmoozing and throwing big parties, but otherwise incompetent. It didn't take all that much to know that anyone even slightly in the know from real hands-on experience knew a LOT more than that kind of CEO. Sometimes it was simply ludicrous.

But whenever I encountered a manufacturer headed by an engineer who had worked his way from the bottom up, I knew I had found a winner. Most of those were involved with Euro privately-held corporations, and extremely knowledgeable, while most US mfgs gaming the stock market were already jumping ship as fast as they could going international to avoid taxes and labor laws, and outsourcing to China to obtain bait-and-switch inventories as cheaply as possible, yet sold at high markup. A totally predictable trainwreck. No I'm no expert in the camera and film side of it; but distinct parts of that story are no doubt analogous. And at least in the aspect I was entrusted with juggling, I did it well enough to make my employers a helluva lot of money, and myself a decent retirement.

 

[Sirius Glass]

I worked for 40 years as a professional buyer, and often interacted with both CEO's and other high executives of major manufacturing corporations. Lots of things became awfully predictable beginning in the 80's, then accelerating in the 90's, when the "armchair quarterbacks" most certainly were not people like me, expected to make an honest living through hard work, but many of those big shots themselves imported from previous roles where they didn't have any real experience either, rapidly wrecking one longstanding corporation after another, yet themselves getting richer every time through golden parachute contracts, induced stock market upward burbs linked to smoke and mirrors "market-share" myths, and similar nonsense really bad for the long-term health of the corporation itself. Anyone from GE was the worst. Every time one of those guys got planted as head of a manufacturing company, I knew the end was near, and started looking for a new supplier. Just like politicians and big developers, these were high-energy types excellent at back-slapping schmoozing and throwing big parties, but otherwise incompetent. It didn't take all that much to know that anyone even slightly in the know from real hands-on experience knew a LOT more than that kind of CEO. Sometimes it was simply ludicrous.

But whenever I encountered a manufacturer headed by an engineer who had worked his way from the bottom up, I knew I had found a winner. Most of those were involved with Euro privately-held corporations, and extremely knowledgeable, while most US mfgs gaming the stock market were already jumping ship as fast as they could going international to avoid taxes and labor laws, and outsourcing to China to obtain bait-and-switch inventories as cheaply as possible, yet sold at high markup. A totally predictable trainwreck. No I'm no expert in the camera and film side of it; but distinct parts of that story are no doubt analogous. And at least in the aspect I was entrusted with juggling, I did it well enough to make my employers a helluva lot of money, and myself a decent retirement.

It is frustrating to put together a well thought out, concept based on the best engineering practices, research & development, testing, ... to have it all tossed out based on the the CEO had for breakfast or whether the spouse accommodated them the night before. Take as an example the engineering work on possible o ring failure do to cold temperatures on the propulsion rockets being tossed out based on schedules and the incentive schedules to then the rocket boosters fail and the astronauts killed on the shuttle launch.

 

[DREW WILEY]

A co-coworker and I basically pioneered the overwhelming trend toward pneumatic nailing and stapling machinery being routinely used for construction in this country. Yes, certainly models existed on an a limited scale for industrial applications already, or as crude extremely heavy construction tools; and then, afterwards, a firm evolution began of very high quality far more ergonomic versions of these US made. But all hell broke loose once the cut-corners, outsourced era of bright-eyed, bushy-tailed marketing MBA's and drop-in CEO's began. Suddenly die-cast items easily capable of twenty years of heavy use with a little common-sense maintenance were turned into disposable guns with a two-month or six-month lifespan. And talk about O-rings! - there was almost no consistency - what worked in one production run would totally change the next, with nothing really standardized. We had by far the biggest repair dept in the West for this kind of gear, maybe in the whole country, and there were literally aisles of O-rings, gaskets, and other malleable parts involved. But if it was a pneumatic tool from China, why bother, just toss it and start over.

Manufacturers who once had real pride in their product were now a bunch of cynical smart-asses literally sitting around bragging how much money they made by firing their own engineers and experienced sales and assembly personnel (I heard my share of it in person). Then they ended maintenance facility and accounted that as another boost in "profit"; and then the next quarter sell the property, and voila, a huge boost in "market share" before people recognized they were buying just junk under a formerly reputable brand name, along with a dramatic year-end spike in the CEO bonus, which is what it is really all about in the first place.. Yep, there's a lot of quick profit in selling off your own blood and organ and limbs; but you don't live long.

 

[cmacd123]

Yep, there's a lot of quick profit in selling off your own blood and organ and limbs; but you don't live long.

and that accounts for the "zombie" brands like Crosley and so on, (their are hundreds of them), that sound like a long time quality brand, but are lowest common denominator junk.

 

[AgX]

Another aspect:
Some years ago there was a statement by Agfa management that they doubted to survive the last world-economic-crisis. This was an impact even off classic photochemical industry consideration. Well, it first had effect via the printing and mechanical industry, but on the long run would have effect on amateur markets too. Least or rather latest affected would be the medical sector. However such considerations applied on all other industries too. I mean, one could have adapted to new consumption trends for ones industry in time and still be hit hard, if not having diversified.

 

[Montegoblue]

Having occasionally perused this forum for years, I finally became compelled to chime in, with due gratitude to the members here from whom I've increase my knowledge and lifetime interest in film photography. Eastman Kodak company has been an exemplary model of an American company, caught in a situation outside of their control or avoidance. A new technology had come along, and the American companies that perpetuated it chose to offshore their production to a country that did not collect confiscatory taxes from the America companies, unlike their home jurisdictions, and with an available labor force any times that in the US. A country bent on world domination through manipulation of currency. The new technology spread like wildfire, due to price. and volume. Kodak was consumed and left in ashes, as were may industries.
Some years later as we know, an American leader had emerged that had identified the problem and taken effective steps to halt it. For 3 years prosperity was once again flourishing in his country that he loved. Then a disease appeared from that other country, the economy stumbled, and the domestic malcontents of that leader's own country finally succeeded in their previous 3 years of non-stop coup attempts.
The end of the story is not hard to portend. Eastman Kodak was a good company that produced the finest quality goods of their kind in the world, and employed the finest in employees with sturdy substantial family values. And it provided amply for these people, and the company stockholders. They did nothing wrong.

 

[Adrian Bacon]

Their digital cameras sold really well from the nineties to the early two thousands.
They didn’t make much profit though.

I’m pretty sure Canon, Nikon, and Sony would disagree. It might not have been the absurd profit levels that Kodak was used to, but the digital camera market is not exactly a tiny, low profit market.

 

[Helge]

I’m pretty sure Canon, Nikon, and Sony would disagree. It might not have been the absurd profit levels that Kodak was used to, but the digital camera market is not exactly a tiny, low profit market.

Well, it's heading in that direction.

Kodak had trouble turning profit with their cameras for a number of reasons, most important of which, is that they used other manufacturers bodies, went into bed with enemy so to speak (same as with the difficult relationship with Polaroid). And that they never really became serious about hardware production, as they had been up till the seventies.
Granted there is a heck of a difference between an Instamatic and an electronic camera, but the basics is the same.

Their cameras, even those that had their own superior sensor, never really had that "extra something" that would set it apart in the fickle and vapid market.
Be it price, design, proprietary technology or quality as with the old Kodak cameras.

 

[Helge]

This is easily explained. The people at the top were idiots, and it looks like not much else has changed over the years. Stealing Polaroid's technology and having to pay out nearly a billion dollars on the lawsuit which followed was incredibly dumb. Who or what in their company had the stupidity to OK this enterprise?

I'm a betting man, and would bet that Kodak the company will not be around much longer. It will break into little companies. Good riddance. This is a perfect example of cause and effect. All I want from them is an occasional roll of Tri-X, and I now buy slightly expired rolls of it from individuals to make sure that Kodak doesn't get a dime on the deal.

They didn't steal anything, Kodaks ideas was much better and markedly different.
They where producing all of Polaroids film to begin with. This is very typical of the post Edwin Land Polaroid, and todays Polaroid too really: Eager to make a big buck on the past, but hellbent in never ever spending as much as 10% on RnD.
The whole trial was extremely stupid. Polaroid basically tried to monopolise the whole idea of instant photography (only in the US though).
Read up on the "details".

 

[Helge]

@Helge there is a radio interview with Ron Mowrey, in which he explained Kodak's reasoning. The were a company run by chemical engineers, not computer scientists, and as a result they did not grok the implications of Moore's law. They expected digital photography to be acceptable to amateur customers by 2010. Kodak invested big in a massive coating facility in the late 90ies and was totally caught off guard, when digital cameras became popular in the early 2000s.

Their whole behavior since 2000 followed Sun Tzu's teachings "when on desperate ground: fight". They did try to maneuver into all kinds of digital domains, albeit with very little success.

http://insideanalogphotoradio.solidsight.net/articles/ep-130.html

I was one of the guys being a pest, pushing for the saving the programs and making them available, mainly for the RM/PE programs.
Can't take any credit for it happening though. That's all Paul Greens and iandvaags doing: #53

You made me listen to the program again, thanks.
PE isn't exactly saying what you paraphrase. He is saying that advice was taken from film engineers. Not that they where the deciding factor or the only source of advice and guidance.
He also touches on what was likely the real pan-organisation reason for the latency and viscosity of movement: Fear.
Fear of losing ones job. Fear of the shareholders. Fear of being the one to screw up. Fear of accusations of being monopolistic.

The only way a big corporation has ever succeeded in doing a real turnaround and doing something that would really screw with the companies bread and butter product, was by doing a (secret) skunkworks, pirate group to work on the product with a clear deadline and budget, but otherwise pretty free reigns and free of meddling from the rest of the day to day limps of the corporation (Sales, marketing, clueless board or shareholders).
Kodak didn't seem to have it in their company DNA to do such projects or groups.
They had a tonne of good research. But it really only made it's way into product when it was immediately applicable to the reigning "paradigm".

 

[AgX]

A new technology had come along, and the American companies that perpetuated it chose to offshore their production to a country that did not collect confiscatory taxes from the America companies, unlike their home jurisdictions, and with an available labor force any times that in the US. A country bent on world domination through manipulation of currency. The new technology spread like wildfire, due to price. and volume. Kodak was consumed and left in ashes, as were may industries.

As I indicated in my reference to Agfa, that new technology neither came out of the blue, the photochemical industry had to cope with it for decades before (but not on a market which is typically looked at here at Apug), nor was that technology alien to the industry, it still is imaging.
Out of the blue though came the last world-economic crisis.

 

[Rudeofus]

Given Kodak's heritage as specialty chemical manufacturer and thin film coater (making film is essentially these two) one could consider the digital sensor one such "skunk works" type project. They built up tremendous capability in this area, they did supply the sensors for both Canon's and Nikon's pro level dSLRs back then.

If Kodak still did not see digital sensors as viable consumer product before 2010, then the wrong people made market forecasts. Ron's claim, that chemical engineers did not fully appreciate Mr. Moore's law, sounds quite credible in this context.

 

[Rudeofus]

As I indicated in my reference to Agfa, that new technology neither came out of the blue, the photochemical industry had to cope with it for decades before (but not on a market which is typically looked at here at Apug), nor was that technology alien to the industry, it still is imaging.

Kodak was well aware of digital sensor technology, but they were not familiar with exponential increases in performance over time. Just as with the corona virus response world wide, people without years of experience are ill equipped to understand the true impact of exponential growth, until it hits them straight in the face.

 

[AgX]

Even before the digital sensor chip, the photochemical industry lost quite a market by scanner technology and electronic exposure. So they knew already in the 80's that something was coming up. Also in the medical world the change started before it did in the amateur photographer market.I know a hospital that got their X-ray imaging digitised already in the 90's. One must look further than just our types 135 and 120...

 

[Helge]

Given Kodak's heritage as specialty chemical manufacturer and thin film coater (making film is essentially these two) one could consider the digital sensor one such "skunk works" type project. They built up tremendous capability in this area, they did supply the sensors for both Canon's and Nikon's pro level dSLRs back then.

If Kodak still did not see digital sensors as viable consumer product before 2010, then the wrong people made market forecasts. Ron's claim, that chemical engineers did not fully appreciate Mr. Moore's law, sounds quite credible in this context.

Moore’s law has little if anything to do with sensors.
And only a little bit more to do with flash memory that made digital cameras even more viable.
Kodak made/designed a large amount of the worlds sensors before 2010.
They were just really incompetent at putting them in cameras of their own making.
Sony and Canon had decades of experience in sensors too, and since they where much better product designers, they soon had a much larger total income stream from digital.

The early digital camera research was not a skunk works project. It was straight research.
A rebel groups skunk works projects aim, is a sellable product of some description.

And it was not exclusive to Kodak either.
There was a lot of research on various solid state, non-tube sensors at that point.
There was even hobby projects involving taking the top off RAM chips and using them as what later became CMOS sensors (more aptly NMOS then).
Kodak’s real contribution was in other places.

 

[cmacd123]

A new technology had come along, and the American companies that perpetuated it chose to offshore their production to a country that did not collect confiscatory taxes from the America companies, unlike their home jurisdictions,

if you are referring to digital Cameras, the folks who really pushed the availability of successful digital cameras were primarily members of the Japanese Photo industry. Sony, Canon, Nikon, Olympus, Panasonic, Pentax. All from Japan. the rise of cell Phones has endangered the actual business of making Cameras, as a small Digital camera can be easaly run from the electronics that are required anyway in a cell Phone. The Folks from Korea (samsung) really pushed that change.

as far as Taxes, I suspect that the race to the bottom will end soon.

For 3 years prosperity was once again flourishing in his country that he loved. Then a disease appeared from that other country, the economy stumbled, and the domestic malcontents of that leader's own country finally succeeded in their previous 3 years of non-stop coup attempts.

I assume you are praising a former US president. Kodak did their reorganization before he decided to change careers from a reality TV guy. Thankfully that era has ended.
QUOTE="Montegoblue, post: 2435162, member: 95972"]
The end of the story is not hard to portend. Eastman Kodak was a good company that produced the finest quality goods of their kind in the world, and employed the finest in employees with sturdy substantial family values. And it provided amply for these people, and the company stockholders. They did nothing wrong.[/QUOTE]

Kodak did suffer from a change in the market, which they were unable to Pivot from. We have the example of Fuji Film to show that a Pivot was possible. we also have AGFA Leverkusen who showed that it is easy to blow everything.

 

[AgX]

What did Agfa Leverkusen do wrong? Their task mainly was to go on with Agfa's classic consumer business, when top management seemingly already saw no future for such and thus they were sold off (or closed, depending on viewpoint) from one day to the other.

 

[MattKing]

Eastman Kodak was a large, multi-national corporation whose international subsidiaries were successful and profitable entities of their own. Each of those subsidiaries complied with their local laws and paid their local taxes, while employing a local workforce for wages and benefits that were appropriate and reasonably generous in those local economies. The tax rates in those other jurisdictions - e.g. Canada - were frequently higher than the artificially low US tax rates.
The successful Eastman Kodak was a pioneer in the world of multi-national business and would have been the last entity to support restrictions on free trade.

 

[cmacd123]

What did Agfa Leverkusen do wrong? Their task mainly was to go on with Agfa's classic consumer business, when top management seemingly already saw no future for such and thus they were sold off (or closed, depending on viewpoint) from one day to the other.

the folks at the actual factory did not do anything wrong, But the business did blow up due to some short sighted action by the folks who bought it from AGFA.

 

[DREW WILEY]

Kodak did a lot of things wrong. They were too big for their own good, an octopus that lost track of all its tentacles, and when overflowing with assets, squandered it buying back stock rather than on modernization. They dove into digital too soon, licensed it to pro labs, buried those under expensive equipment payments and mandatory service contracts, and then threw them under the bus by not honoring their own service agreements. I knew highly successful labs Kodak outright bankrupted in that manner. Other application also had the rug suddenly pulled out from under them without warning. That's how enemies are made and bad reputations get attached to a brand name. They forgot where they came from.

 

[cmacd123]

squandered it buying back stock rather than on modernization. .

for years thay also bought and sold Businesses like they were trading cards. Verbatim, Sterling Drug....

 

[AgX]

the folks at the actual factory did not do anything wrong, But the business did blow up due to some short sighted action by the folks who bought it from AGFA.

Well, the feeling is that the sale and following bancrupsy was made up. The case even became topic at teaching at a business school to show a way to cheaply get rid of an unwanted business (so much about ethics in business education...) and the state prosecutor looked at it.
Actually several Agfa factories in Germany made part of this consumer business.