Tess Vigeland: It’s the corporate equivalent of getting stripped of your medals. That legendary brand, Kodak, has been warned that it will get the boot from the New York Stock Exchange if it can’t rise above pennies a share. There’s been talk for months of a Chapter 11 bankruptcy for what was once a giant in photography. The Wall Street Journal reports today that the filing could come within weeks if Kodak can’t get a good price for its digital imaging patents.
Our Economy 4.0 correspondent David Brancaccio recently reported on the Kodak story in the company’s hometown of Rochester, N.Y. He joins us now.
David Brancaccio: Hello there, Tess.
Vigeland: Let’s start just, maybe you could remind us. What went wrong here?
Brancaccio: Well, selling and processing film — remember that stuff? — used to be a license to print tons of cash for Kodak. Digital photography came — Kodak itself invented that. Now the money is in digital cameras, camera phones, printer ink. I talked to Willy Shih — interesting guy — he now teaches at the Harvard Business School, but he used to work for Kodak running their consumer digital division.
Willy Shih: Well, I think that the story of Kodak is a company that had one of the great industrial research labs of the 20th century. But one that failed to find other businesses that failed to find other businesses that could replace the franchise it had in consumer photography.
Vigeland: Yeah, sad story. Apparently they just went in the wrong direction. But David, let me ask you this: If this really is the end, does Rochester survive?
Brancaccio: Well, point No. 1, Chapter 11 — if does come to that — the idea there is to keep the company going, probably in a reduced state — a further reduced state. But here’s the thing: While the ghost of Kodak haunt Rochester — even when you visit today — you can go over to what was once called Kodak Park and it’s now a patchwork of green lawns and not as many factories. You have to understand that Rochester is not a single company town — University of Rochester, Bausch & Lomb — lots of other things going on there. So there was a time when everybody, and probably their uncle, worked for Kodak. Those days were over long ago. But what we need to think about now is, of course, the 38,000 Kodak retirees.
Vigeland: Wow, so what does happen to them in Chapter 11? Even if it’s restructuring and they don’t go out of business, it’s got to be hard times?
Brancaccio: Well, they’re following these headlines moment to moment. I talked to Bob Volpe, who’s president of the retirees association there. He worked for Kodak for 32 years. Here are his thoughts.
Bob Volpe: I’m concerned about these people suffering — effectively — economic disability. Where they fall from the middle class as a result of their costs go up significantly by not having the income opportunities in order to be able to offset that.
Brancaccio: Kodak’s liabilities are supposed to be somewhere around the $2.5 billion range. And it’s possible that Kodak retirees will see their pension benefits continue at least partially, because the government will do that. What’s the big concern is the health care benefits. Kodak has been trying to scale that back for years now — spouses aren’t as eligible. But it could be a big impact for Kodak retirees when it comes to paying out of pocket moving forward.
Vigeland: David let me ask you to take this down to a personal level. I know you’re a photographer, I’ve seen your work. Is it a strange world without Kodak?
Brancaccio: Yeah, you know, I still have a dark room in the basement and I still have yellow Kodak packets all over the place. Tri-X film, Microdol Developer, maybe I’ll keep them for posterity now.
Vigeland: Oh, wow, put them in a museum. Marketplace’s Economy 4.0 correspondent David Brancaccio. Thanks so much.
Brancaccio: You bet.