JUDY WOODRUFF: And finally tonight: a once-powerful American brand struggles to stay relevant and in business.
Hari Sreenivasan has the story.
HARI SREENIVASAN: For decades, Eastman Kodak dominated the world of film photography with its iconic yellow boxes of film. But that was then; this is now. The photography pioneer filed today for Chapter 11, federal bankruptcy protection, after 132 years in business.
CEO Antonio Perez.
ANTONIO PEREZ, Eastman Kodak Company: We’re taking this step at this point in our transformation in order to build the strongest possible foundation for the Kodak of the future.
HARI SREENIVASAN: At its peak, Kodak employed more than 60,000 people at its headquarters in Rochester, New York. But trouble began in the 1980s, in the form of global competition from Tokyo-based Fuji.
Compounding the problems, Kodak was slow to shift from film in the 1990s as digital technology emerged. In 2006, this video played at a business conference promised an aggressive comeback effort.
MAN: Kodak is back. They’re taking this digital thing to a level undreamed of, pioneering technology that will redefine the digital revolution.
HARI SREENIVASAN: But the troubles have continued.
Kodak has been in the black only once since 2004. Its Rochester work force has fallen to just over 7,000. And earlier this month, Kodak stock closed at an all-time low of 37 cents a share. In a final blow, the company was unable to sell some 1,100 patents in a bid to raise cash.
Even so, a message today on the corporate home page declared it’s still business as usual while Kodak tries to reorganize.
For more, we turn to Julie Philipp, news director of WXXI Public Television in Rochester, New York, where Kodak is headquartered.
Thanks for being us.
JULIE PHILIPP, WXXI-TV: You’re welcome. Good to see you.
HARI SREENIVASAN: So, the first question is, why now? Was there a particular event that forced Kodak to declare Chapter 11?
JULIE PHILIPP: Well, I think the idea was to declare a Chapter 11 before running out of money completely.
The company already owes so much to creditors, and many of the creditors were demanding cash on delivery, meaning Kodak would have to cough up cash in order to get supplies, in order to stay in business. And that cash was running low. They wanted to have enough to play around with during bankruptcy.
So they declared it in the middle of the night last night.
HARI SREENIVASAN: So, some analysts that are covering the company are also wondering what took you so long, that this has been a very long and slow and painful decline, right?
JULIE PHILIPP: It sure has.
As you mentioned in your report, in 1982 in Rochester, Kodak employed 62,000 people. I think that number is actually below 7,000 now. The company is not confirming that. So, over 25 years, they have shed an awful lot of employees and a lot of businesses.
HARI SREENIVASAN: Now, on the one hand, the company was excellent at marketing, in the sense that it’s a household name. And when we think of Kodaks, we think of photographs.
JULIE PHILIPP: Mm-hmm.
HARI SREENIVASAN: What did they crucially miss?
JULIE PHILIPP: There are a lot of armchair quarterbacks these days pointing at different things Kodak could have done differently.
Obviously, their slowness to adapt digital is a big one. They actually invented the digital camera, but kind of stashed it away. Reports show that they were afraid others would see it, and they were still making so much money off film that they decided to hold off on that invention and keep the cash rolling in. And it was just too hard to turn a 100-year-old company around quickly enough.
HARI SREENIVASAN: Let’s talk a little bit about the relationship that Kodak has with Rochester. In some ways, it was a company town. And Kodak was the company.
JULIE PHILIPP: It was the quintessential company town. They call it Ma Kodak or Pa Kodak.
People really thought this company was going to take care of them. And it did for a very, very, very long time. Their benefits are unmatched in today’s work force. And people really depended on it for their livelihood.
It’s very difficult to find anyone in Rochester, unless they have just moved here, who doesn’t have some connection, either a family member or a business connection, to Kodak. Everybody has some connection to the company.
HARI SREENIVASAN: Because the decline has taken such a long time, there are probably a lot of ripple effects. It’s not that the doors closed in one day and everybody was out of a job.
What are some of the other impacts that — how has Rochester changed over time, as Kodak has gotten smaller?
JULIE PHILIPP: Actually, there have been some really positive impacts, because Kodak is really behind so many of the major educational, cultural, philanthropic institutions that are still going fairly strong.
They’re much smaller these days, perhaps, but they were started by Kodak or the Kodak employees. So it’s had a really positive impact. And on top of that, many of those employees who left the company took information, ideas, learning with them, and they’re starting new high-tech startups. So we have a lot of smaller high-tech startups that are connected to Kodak ideas and Kodak people.
So they’ve left a positive impact, though a much leaner, meaner, smaller impact than the big Kodak days.
HARI SREENIVASAN: And so if the company ends up having to close its doors, 6,000 people out of work would still have a significant — would put a strain on Rochester.
JULIE PHILIPP: It’s still one of Rochester’s larger employers, by no means the largest anymore. So, yes, there will be — we anticipate there will be some layoffs as part of this bankruptcy proceeding.
And that will put a strain on some of the services in the community, yes.
HARI SREENIVASAN: And what about the folks who are receiving retirement pensions? Did they get any information today?
JULIE PHILIPP: They’re nervous. They were not mentioned in the statement released by Kodak.
The general expectation is pensions are fairly safe, that Kodak has enough money to pay for those, and that money can’t really be touched during bankruptcy proceedings. There is some concern that pensions could be frozen for a little while and there could — maybe not be able to withdraw from them.
But, overall, the pensions are fairly safe. Other benefits such as health care benefits might be at risk. They could pull those for retirees who weren’t old enough to qualify for Medicare. That could be a big hit to their wallet if they have to go out and buy their own health insurance for a few years.
HARI SREENIVASAN: Let’s just clarify for folks. Chapter 11 is not the same as Chapter 7. We are not talking about liquidation. How did the company clarify that distinction today?
JULIE PHILIPP: Right.
They’re talking about a reorganization. They’re talking about getting smaller, getting more efficient, really tightening up the ship a bit. And they insist they’re going to be in business throughout bankruptcy and come out better on the other side.
HARI SREENIVASAN: And so what was the mood around Rochester today as you walked around, as you talked to people who all have these Kodak connections?
JULIE PHILIPP: Yeah, it’s really funny. Everybody saw this coming, but no one saw it coming.
Everybody expressed some sort of mild shock, at least, a lot of sadness, some anger, some bitterness particularly directed to some of the CEOs who came and went during the transformation, took away their golden parachutes and didn’t make things better for Kodak.
So it’s a lot of sadness, I guess, would be the biggest emotion that we’ve been hearing.
HARI SREENIVASAN: All right, Julie Philipp, news director at WXXI in Rochester, thank so much for joining us.
JULIE PHILIPP: You’re welcome.