Kodak cuts 600 jobs and shuts two plants as digital toll rises

Eastman Kodak, the world's largest photographic company, announced it was cutting 600 jobs in the UK and 270 in France yesterday.

Eastman Kodak, the world's largest photographic company, announced it was cutting 600 jobs in the UK and 270 in France yesterday, as it pressed on with its strategic refocus, brought on by the shrinking of demand for film photography and the growth of digital cameras.

The cuts come as part of a 15,000-strong cull, announced in January, which the company plans to complete by the end of 2007, generating potential cost savings of $1bn (£560m) a year.

In a statement, the group said the UK job losses would come from the closure of its Annesley plant, near Nottingham, which produces consumer photographic equipment, and from its Harrow site, in London, where it plans to close its photo sensitising unit. In France, the jobs will be lost through the closure of its film and colour photographic paper units at its Chalon factory, near Valence.

Etienne Bourgeois, Kodak's European manager, said: "Such actions are essential for Kodak to reinforce its leading position in digital imaging products and services, whilst sustaining and extending its worldwide leadership in traditional photographic products."

Kodak has suffered as the take-up of digital cameras has been faster than expected, sparking a sharp decline in film and traditional camera sales. Last year, the group was forced by falling profits to make a 73 per cent cut in its dividend - the first in the company's history.However, profits have recovered in 2004 as the company's digital transformation has begun to take shape. Kodak's shares are up more than 30 per cent this year to about $30.50 as investors have taken comfort from the turnaround.

However, unions criticised the announcement yesterday, arguing that so many job cuts were unnecessary to aid Kodak's strategic objectives. Joe McGowan, a regional officer for the union Amicus said: "Amicus does not accept the economic rationale behind the decision to announce 600 job losses and the closure of the Annesley site.

"This is another blow to UK manufacturing. We will be demanding no compulsory redundancies and for the company to reconsider their decision to close the Annesley site."

Daniel Meek, a vice-president for Kodak, said: "These are very difficult actions because they impact people who have for decades demonstrated great skill and unwavering commitment to serve our customers with quality products, but they are required in light of declining overall demand for traditional photographic products.

"All employees affected will be treated with respect, with Kodak ensuring they receive proper severance, access to counselling support, as well as outplacement services," he said.