The photography giant Eastman Kodak announced yesterday that it is to shed up to 15,000 jobs worldwide, or about 20 per cent of its workforce, as it struggles to adapt to a new landscape of digital photography and amputate areas dedicated to businesses associated with traditional paper and film.
The news, although devastating to many of its workers, was not entirely unexpected. Last September, Kodak, based in Rochester, New York, warned that radical changes would have to be made, without being specific.
The plan that has now laid out will include taking charges of up to $1.7bn (£920m). But the savings expected could reach an estimated $1bn by 2007.
Exactly where the deepest of the cuts will be made is still not clear. Among those under threat, however, could be the 1,500 workers at Kodak's photographic paper facility in Harrow, north London.
Most pain is likely to be felt in Rochester, however. A few months ago, Kodak shut a plant making disposable cameras there and moved it to China. Two decades ago, Kodak employed about 60,000 people in the city. Today that number has already dwindled to 21,000 workers.
"Obviously, when you have to lay off as many people as we have, that's gut-wrenching, but we know we are doing it for the better good of the whole company," said Kodak's chief executive, Daniel Carp.
Wall Street reacted well, sending shares soaring to their highest level in seven months, even as the company announced an 83 per cent decline in fourth quarter income.
"This is something they've had to do, everybody told them they had to do it," said Christopher Hayes, chief investment officer for Hayes Fischer Capital Management, which holds Kodak stock and bonds among its $140m in assets
The shifting priorities of Kodak have been evident for some time. Last year, the company made a risky decision to move into disparate digital markets, including health imaging. The focus meanwhile is shifting away from traditional cameras and photography.
"This is not rocket science," said Antonio Perez, president of the company. "This is what you have to do with a business in decline."
As evidence of the changed marketplace, Kodak saw sales of its most basic digital cameras soar by 87 per cent last year. Even though more than 120 million rolls of film are sold industry-wide around the world each year, Kodak's own sales volume of film worldwide grew a meagre 8 per cent in 2003.
The company has announced plans to buy the remaining 41 per cent of the shares of Japan's Chinon Industries, a maker of cheap digital cameras, that it does not already own.
Kodak has, meanwhile, abandoned the re-loadable film camera market in the US, Canada and Europe.Reuse content