Mayor Tom Richards portrayed the decision to seek Chapter 11 reorganization as more of a psychological blow than an economic one to Rochester, where Kodak had been the engine of commerce for most of the company’s 132 years. Its payroll in the medium-size city along Lake Ontario has slipped below 7,000 from a peak of 60,400 in 1983.
“We have a broader-based economy which is no longer dependent on one industry and one company,” Richards said. “We’re better off for it. Not what I wish this would happen, but it has happened, and we’re just going to need to deal with it.”
Kodak, the company that brought photography to the masses at the dawn of the 20th century and was known all over the world for its Brownie and Instamatic cameras and its yellow-and-red film boxes, was brought down first by Japanese competition and then by its inability to keep pace with the lightning shift from film to digital technology.
The company said it has secured $950 million in financing from Citigroup and expects to continue operating and pay its employees while in bankruptcy.
In the meantime, Kodak will try to execute its plan for recovery. Since 2005, it has poured hundreds of millions of dollars into new lines of inkjet printers that are on the verge of turning a profit. Home photo printers, high-speed commercial inkjet presses, software and package printing are viewed as Kodak’s new core.
Kodak’s executives are hoping the printer, software and packaging businesses will more than double in size by 2013 and account by then for 25 percent of its revenue, or nearly $2 billion. The rest of the company’s revenue comes mainly from traditional film, disposable cameras, photographic paper and chemicals.
Kodak got out of the business of making film cameras years ago, and its digital cameras are losing money.
The long-expected move to seek protection from its creditors was “a necessary step and the right thing to do for the future of Kodak,” CEO Antonio Perez said.
One strength Kodak can take into a restructuring effort is its powerful brand name, said Eli Lehrer, who heads the nonprofit Heartland Institute’s Center on Finance, Insurance and Real Estate in Washington. However, “that doesn’t necessarily translate to people keeping their jobs, or stockholders keeping anything,” Lehrer added.
Photographer Steve McCurry said the prospect that Kodak might soon fade into history is upsetting to huge numbers of Americans who remember not that long ago when its dominance in film photography was indisputable.
“That’s just the nature of the world we live in,” McCurry said. “We all die. Civilizations all die and famous corporations, too. Yeah, it’s a sad occasion, but there’s great, great respect for American brands that have endured for so long.”
Best known for a Kodachrome portrait of a green-eyed Afghan refugee girl that landed on the cover of National Geographic in 1985, McCurry relied heavily on “probably the best color film ever made” for all but the last five years of a 36-year career and was entrusted with the very last spool of Kodachrome manufactured in 2009.
Veteran employees said they are scared the crisis could sink careers that somehow dodged so many previous cutbacks. And Kodak’s 25,000 retirees in Rochester fear that already diminished health benefits could disappear altogether.
“Because it’s unfunded and discretionary, Kodak can actually say tomorrow that we’re going to drop health care,” said Bob Volpe, who runs a Kodak retiree association with 3,000 members.
The company did not rule out the possibility of layoffs. It also resolved to “fairly resolve legacy liabilities,” which suggests that it might try to cut its retiree health care costs, estimated at $132 million in 2011.
Kodak stock dropped in over-the-counter trading Thursday and closed at just 30 cents per share after the bankruptcy filing prompted the New York Stock Exchange to delist the securities. Perez alone owns 6 million shares.
As for the company’s creditors, they could be forced by the courts under Chapter 11 to take less than they are owed.
Around Rochester, Kodak and other faded titans like Xerox Corp. and eyewear maker Bausch & Lomb are already overshadowed in the city’s employer rankings by the University of Rochester and grocery-store chain Wegmans, which together employ around 34,000 people.