Prof. Ed Bukszar explains challenges, opportunities ahead for Eastman Kodak

The following was originally published in the Burnaby Now newspaper on January 27, 2012.

BY JANAYA FULLER-EVANS, BURNABY NOW

The Eastman Kodak company filed for Chapter 11 reorganization last week, but the company says the Burnaby division will not be affected.

“The Chapter 11 filing directly impacted only our U.S. operations and subsidiaries,” Christopher Veronda, Kodak’s manager of corporate communications, wrote in an email to the NOW.

The Kodak Graphic Communications Group, located at 4225 Kincaid St., will remain focused on digital business for commercial businesses in the areas of graphics, enterprise services and solutions, and digital and functional printing, he added.

Veronda also pointed out that the reorganization isn’t the end for the company.

“A Chapter 11 reorganization allows a company to restructure operations to emerge as a profitable, sustainable enterprise,” he wrote.

Ed Bukszar, an associate professor at Simon Fraser University, agreed that the reorganization could have a positive outcome overall.

“With a tighter focus on a smaller market, I think they have a chance of turning it around,” he said.

Bukszar has lectured on the topic of Kodak’s business strategy for a decade.

“They had kind of a monopoly for a while,” Bukszar said. “They competed in photography and dominated the (film and print segments of the) industry for years.”

But by the mid-’90s, it became clear that digital images were going to become a significant threat to Kodak in the future and would eventually replace existing film-based technologies, he said.

“It was kind of one of these slowmoving accidents that you can watch for a really long time because each year, the digital technologies were going to get better and better and better.”

Kodak was always able to get by on the quality of its chemically based technology, Bukszar pointed out, something that may have contributed to the company’s inability to transition well enough, because the company never had to rely solely on its digital technology.

The company invested to “force migration to digital imaging,” he said, but it was a difficult process.

There are still many difficulties the company could face – the reorganization will require cost cutting, something that is a challenge for Kodak as it has a relatively high cost structure, Bukszar explained.

“It’s tough for an innovator to cut costs,” he said. “They’re not thinking about how to cut costs, they’re thinking about how to create the next big thing.”

The company could lose some top people as opportunities for advancement dry up, with Kodak competing in low-growth printing industries, he added.

But if the company focuses on providing high-quality print and publishing technologies, things could eventually turn around for Kodak, Bukszar said.

The Burnaby division is a good example of where the company has done this, he added.

“There’s a tremendous amount of technological sophistication in that company,” he said.

For now, the company will likely work quietly on developing strategies to focus on the print and publishing markets, and regain customer and supplier confidence, according to Bukszar.

Kodak could also sell parts of the company or its entire patent portfolio for funding to move forward, he added.

The company has closed 13 manufacturing plants, 130 processing labs, and reduced its workforce by 47,000 since 2003, according to a press release from the company.

The company received a $950 million line of credit for the next 18 months from Citygroup, to keep the company going during the reorganization, the release stated, and plans to complete the restructuring in 2013.

See the full article at Burnaby Now at: http://www.burnabynow.com/business/Kodak+city+exempt+from+bankruptcy/6060430/story.html