B&W film at Kodak growth

Discussion in 'Kodak' started by Michael Scarpitti, Sep 28, 2003.

  1. "Since 1997, Kodak's amateur black-and-white film use has increased
    dramatically, with a compounded annual growth rate of 37 percent over
    the last three years."
    http://www.kodak.com/US/en/corp/pressReleases/pr20030807-01.shtml


    Which films would this constitute? Only C41 B&W products? Kodak has
    begun labelling all conventional B&W films as 'professional' in recent
    years.
     
    Michael Scarpitti, Sep 28, 2003
    #1
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  2. From the context of the release, it sounds as if they're referring to their
    B&W disposables. Do these cameras use C-41 film?
     
    David Nebenzahl, Sep 28, 2003
    #2
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  3. Michael Scarpitti

    Frank Pittel Guest

    : On 9/27/2003 7:53 PM Michael Scarpitti spake thus:

    : > "Since 1997, Kodak's amateur black-and-white film use has increased
    : > dramatically, with a compounded annual growth rate of 37 percent over
    : > the last three years."
    : > http://www.kodak.com/US/en/corp/pressReleases/pr20030807-01.shtml
    : >
    : >
    : > Which films would this constitute? Only C41 B&W products? Kodak has
    : > begun labelling all conventional B&W films as 'professional' in recent
    : > years.

    : From the context of the release, it sounds as if they're referring to their
    : B&W disposables. Do these cameras use C-41 film?


    Yes, the disposables use the C-41 B&W. On the positive side B&W photography is
    gaining popularity Kodak just built a brand new plant to make their B&W film.
    That plant isn't going away.It is an asset that in the worse case will be sold.
    --




    Keep working millions on welfare depend on you
     
    Frank Pittel, Sep 28, 2003
    #3
  4. Michael Scarpitti

    Mark A Guest

    : > "Since 1997, Kodak's amateur black-and-white film use has increased
    The new plant for conventional silver films (actually it was an existing
    plant, but it was "new" to the films that were moved there) was an economy
    move to consolidate production.
     
    Mark A, Sep 28, 2003
    #4
  5. Michael Scarpitti

    Frank Pittel Guest

    : > : > "Since 1997, Kodak's amateur black-and-white film use has increased
    : > : > dramatically, with a compounded annual growth rate of 37 percent over
    : > : > the last three years."
    : > : > http://www.kodak.com/US/en/corp/pressReleases/pr20030807-01.shtml
    : > : >
    : > : >
    : > : > Which films would this constitute? Only C41 B&W products? Kodak has
    : > : > begun labelling all conventional B&W films as 'professional' in recent
    : > : > years.
    : >
    : > : From the context of the release, it sounds as if they're referring to
    : their
    : > : B&W disposables. Do these cameras use C-41 film?
    : >
    : >
    : > Yes, the disposables use the C-41 B&W. On the positive side B&W
    : photography is
    : > gaining popularity Kodak just built a brand new plant to make their B&W
    : film.
    : > That plant isn't going away.It is an asset that in the worse case will be
    : sold.
    : > --
    : The new plant for conventional silver films (actually it was an existing
    : plant, but it was "new" to the films that were moved there) was an economy
    : move to consolidate production.

    I stand corrected. The point I was hoping to make is that that B&W film is a
    cash cow for Kodak and I'm sure they know it. If for some reason Kodak doesn't
    see that or they go belly up they have a profit operation at that facility.
    Either they sell it off on their own or it gets sold off at their liquidation.

    The board will have a hard time explaining closing it down after spending millions
    there.

    --




    Keep working millions on welfare depend on you
     
    Frank Pittel, Sep 28, 2003
    #5
  6. Michael Scarpitti

    Mark A Guest

    : The new plant for conventional silver films (actually it was an existing
    Film is definitely a cash cow. Kodak announced this week that it is cutting
    its stock dividend and stopping all R&D in silver based photography. They
    will use the extra cash to invest in digital technology and services.
     
    Mark A, Sep 28, 2003
    #6
  7. Michael Scarpitti

    David Foy Guest

    Black and white film consumption worldwide is about 97% color and 3% black
    and white, according to the most recent PMAI survey. There is no reason to
    believe it contributes substantially to Kodak's revenues. Kodak discontinued
    all research and development into b/w many years ago (I believe Bill Troop
    wrote that it was in the early '80s) and put those resources to work on
    digital technology. They recently consolidated their older brands into the
    plant used to make tabular films, which makes sense.


    David Foy
     
    David Foy, Sep 29, 2003
    #7
  8. Michael Scarpitti

    Frank Pittel Guest

    That is of course correct. The last new B&W film from Kodak was the Tmax films.
    It's also a very small percentage of Kodak's revenue. However by its self the
    income from B&W is large and it is profitable.

    This reminds me of a phone call I made to a sales rep at Motorola a number of
    years ago. I had a project for a new design that required an embedded processor.
    I had used the Motorola 68hc11 series chip in the past and it was easily up to
    the task. Unfortunately it was a mcu that was introduced over twenty years earlier
    and I was afraid that it might be discontinued. The response I got when I voiced
    my concern was that they were selling them by the millions and since they were
    cheap to make and the development costs and production lines had been made up
    The money they got for the chips was nearly all profit. He went on to say that
    making 68hc11s was like printing money.

    As we all know to a company like Kodak it's the profit margin that's important
    not the dollar of income.


    : Black and white film consumption worldwide is about 97% color and 3% black
    : and white, according to the most recent PMAI survey. There is no reason to
    : believe it contributes substantially to Kodak's revenues. Kodak discontinued
    : all research and development into b/w many years ago (I believe Bill Troop
    : wrote that it was in the early '80s) and put those resources to work on
    : digital technology. They recently consolidated their older brands into the
    : plant used to make tabular films, which makes sense.


    : David Foy

    : : > : > : > "Since 1997, Kodak's amateur black-and-white film use has
    : increased
    : > : > : > dramatically, with a compounded annual growth rate of 37 percent
    : over
    : > : > : > the last three years."
    : > : > : > http://www.kodak.com/US/en/corp/pressReleases/pr20030807-01.shtml
    : > : > : >
    : > : > : >
    : > : > : > Which films would this constitute? Only C41 B&W products? Kodak
    : has
    : > : > : > begun labelling all conventional B&W films as 'professional' in
    : recent
    : > : > : > years.
    : > : >
    : > : > : From the context of the release, it sounds as if they're referring
    : to
    : > : their
    : > : > : B&W disposables. Do these cameras use C-41 film?
    : > : >
    : > : >
    : > : > Yes, the disposables use the C-41 B&W. On the positive side B&W
    : > : photography is
    : > : > gaining popularity Kodak just built a brand new plant to make their
    : B&W
    : > : film.
    : > : > That plant isn't going away.It is an asset that in the worse case will
    : be
    : > : sold.
    : > : > --
    : > : The new plant for conventional silver films (actually it was an existing
    : > : plant, but it was "new" to the films that were moved there) was an
    : economy
    : > : move to consolidate production.
    : >
    : > I stand corrected. The point I was hoping to make is that that B&W film is
    : a
    : > cash cow for Kodak and I'm sure they know it. If for some reason Kodak
    : doesn't
    : > see that or they go belly up they have a profit operation at that
    : facility.
    : > Either they sell it off on their own or it gets sold off at their
    : liquidation.
    : >
    : > The board will have a hard time explaining closing it down after spending
    : millions
    : > there.
    : >
    : > --
    : >
    : >
    : >
    : >
    : > Keep working millions on welfare depend on you
    : > -------------------
    : >



    --




    Keep working millions on welfare depend on you
     
    Frank Pittel, Sep 29, 2003
    #8
  9. Michael Scarpitti

    Mark A Guest

    Kodak is $13 billion company (annual sales). Film sales in the US decreased
    10% in 2002 from 2001 results. The reduction in film sales is accelerating
    fast. Sure, Kodak can operate a successful and profitable B&W business for
    years to come, just like Ilford.

    But when everyone goes digital and that 97% goes to almost nothing, then the
    3% B&W revenues and profits (even assuming that digital B&W will not happen,
    which is a big assumption) will not solve the dilemma that Kodak faces.
     
    Mark A, Sep 29, 2003
    #9
  10. Michael Scarpitti

    Frank Pittel Guest

    : : > That is of course correct. The last new B&W film from Kodak was the Tmax
    : films.
    : > It's also a very small percentage of Kodak's revenue. However by its self
    : the
    : > income from B&W is large and it is profitable.
    : >
    : > This reminds me of a phone call I made to a sales rep at Motorola a number
    : of
    : > years ago. I had a project for a new design that required an embedded
    : processor.
    : > I had used the Motorola 68hc11 series chip in the past and it was easily
    : up to
    : > the task. Unfortunately it was a mcu that was introduced over twenty years
    : earlier
    : > and I was afraid that it might be discontinued. The response I got when I
    : voiced
    : > my concern was that they were selling them by the millions and since they
    : were
    : > cheap to make and the development costs and production lines had been made
    : up
    : > The money they got for the chips was nearly all profit. He went on to say
    : that
    : > making 68hc11s was like printing money.
    : >
    : > As we all know to a company like Kodak it's the profit margin that's
    : important
    : > not the dollar of income.
    : >
    : Kodak is $13 billion company (annual sales). Film sales in the US decreased
    : 10% in 2002 from 2001 results. The reduction in film sales is accelerating
    : fast. Sure, Kodak can operate a successful and profitable B&W business for
    : years to come, just like Ilford.

    That's correct. There's also no reason to stop making B&W film as long as it
    is highly profitable. After all it's virtually free money.

    : But when everyone goes digital and that 97% goes to almost nothing, then the
    : 3% B&W revenues and profits (even assuming that digital B&W will not happen,
    : which is a big assumption) will not solve the dilemma that Kodak faces.

    I've seen B&W prints made from scanned negatives and the results have me looking
    into a scanner and printer! The revenue generated by B&W film is far to small to
    effect the survivability of Kodak. If Kodak goes under the B&W film division will
    be sold off as part of the liquidation and the production will continue.

    Once again as long as the production of B&W film is profitable its manufacture
    will continue. Also as long as the Kodak B&W films (tri-x, tmax, tech-pan, etc)
    are profitable their manufacture will continue. That's with or without Kodak.
    The formula and production lines are an asset and it's an asset that won't simply
    be thrown away.
    --




    Keep working millions on welfare depend on you
     
    Frank Pittel, Sep 29, 2003
    #10
  11. Michael Scarpitti

    David Foy Guest

    I won't argue about that, because you're certainly not wrong. But if I may,
    let me try to add a little to the discussion from a different perspective.
    Cash flow is far more important than unit profitability (and profitability
    is important, of course). A small-volume product line that contributes very
    little to cash flow, no matter how it contributes profits to overhead, is
    unattractive if it has no future. Resources must be devoted to growth.
    Unfortunately, the reality is that even a giant like Kodak has limited
    resources. They can't spend resources to support low-volume products unless
    there is growth available. Color print film gives Kodak something like 97%
    of their dollar volume. B/W and slide film combined give them something like
    3% (remember these figures are educated guesswork based on worldwide volumes
    as reported by an industry group). Film sales generate the cash today that
    they need to create the digital products they need to stay on top of the
    heap. A little increment in cash flow from the 97% is worth having. Even a
    big increment in cash flow from the 3% is only worth having if it comes at a
    *very* low cost in resources applied.
    If you view the picture the way Kodak's decision-makers must, you see a
    critical need for resources to apply to a life-threatening problem.
    Resources include money, of course, but also plant, talent, attention,
    ingenuity, and people's time, all of which are in short supply, even at
    Kodak. Consider marketing -- as the market changes, money and the time of
    talented people must be spent on research and analysis, for example, because
    you have to change with it, and if you have a choice of spending that money
    and talent, wouldn't you prefer to spend it where the return is far greater?
    Ask yourself -- would I like to take the resources presently devoted to less
    than 3% of the market and apply them to dealing with this 900-lb gorilla
    that's sitting across the table from me? I think you can see it's not an
    easy question to answer. The answer so far has been, no, I'll leave those
    resources where they are, generating less than 3% of our cash flow. But in a
    world that is changing at a much faster rate than even Kodak predicted,
    where these decisions are reconsidered quarterly (and maybe even monthly, or
    weekly), I am very appreciative of how little b/w really means to Kodak in
    the grand scheme. I am not predicting it will disappear, because it won't.
    But in any business environment, a product line does one of two things,
    grows or shrinks. Stasis isn't an option. We all know which it will be.

    David Foy
     
    David Foy, Sep 29, 2003
    #11
  12. films.

    Yes, and Xtol was probably the last conventional black-and-white
    *product*... as I understand it the b&w research division was closed down
    after Xtol came out. Presumably C-41 b&w films are classified as a color
    product.
    Right, let's hope Kodak sees it this way!
    Which is also why we still have primitive PIC microcontrollers... In the
    microcontroller market I tell people, "there's always room at the bottom."
    That is, everybody wants the cheapest processor that will do the job, in
    order to hold down the cost of a consumer product.

    I'm not sure film works quite the same way -- but as you point out, b&w film
    is already invented and developed; just keep making it!
     
    Michael A. Covington, Sep 30, 2003
    #12
  13. People still make a profit manufacturing oil paints and (ask an artist) the
    paints are better than ever. Maybe the same is true of chemical
    photography.

    One difference is that you need a much bigger factory to make film.
     
    Michael A. Covington, Sep 30, 2003
    #13
  14. Michael Scarpitti

    Mark A Guest

    A person can make a profit selling lemonade at the end of their driveway.
    The problem is maintaining their size as a $13 billion (annual sales)
    company in a shrinking market. Film sales in the US declined 10% in 2002
    from 2001. Obviously this decline will accelerate rapidly. If they shrink
    into a much smaller, but still profitable company, that may seem OK to you,
    but not to shareholders or the 75,000 employees.
     
    Mark A, Sep 30, 2003
    #14
  15. Michael Scarpitti

    David Foy Guest

    I don't disagree, but I'm struck by the thought that there are many costs
    associated with a product line like black and white which have nothing to do
    with the actual factory. I think the phrase is "opportunity cost." The
    opportunity to make some money in b/w carries a cost in resources devoted to
    it that could be put to use elsewhere to make considerably more.

    Let's assume you're right that the b/w factory is generating profits for
    Kodak, and I agree it's a highly reasonable assumption.

    Put yourself in the shoes of a Kodak executive looking at the need to add
    another ten people to work on the marketing team for a new dig**al
    thingamabob that has huge opportunity for growth.

    Good marketing people are hard to find, recruiting is expensive, and if you
    noticed that your b/w marketers are very good, are well integrated into the
    Kodak culture, and that they are working in a department with shrinking
    volume and zero opportunity for growth, you might be suddenly struck with a
    brilliant idea.

    If (actually, not if, but when) Kodak dumps b/w, they'll probably be
    shutting down a factory that makes a little money, because the resources
    devoted to it are needed to make a lot of money. And believe me, they won't
    spin it off or sell it, because that would strengthen a competitor. No Kodak
    film asset has ever been spun off or sold when a product line was
    discontinued (e.g., Instamatic film). They'll shutter it and scrap the
    machines.

    DF


    ....
     
    David Foy, Sep 30, 2003
    #15
  16. Michael Scarpitti

    Frank Pittel Guest

    : I don't disagree, but I'm struck by the thought that there are many costs
    : associated with a product line like black and white which have nothing to do
    : with the actual factory. I think the phrase is "opportunity cost." The
    : opportunity to make some money in b/w carries a cost in resources devoted to
    : it that could be put to use elsewhere to make considerably more.

    : Let's assume you're right that the b/w factory is generating profits for
    : Kodak, and I agree it's a highly reasonable assumption.

    : Put yourself in the shoes of a Kodak executive looking at the need to add
    : another ten people to work on the marketing team for a new dig**al
    : thingamabob that has huge opportunity for growth.

    : Good marketing people are hard to find, recruiting is expensive, and if you
    : noticed that your b/w marketers are very good, are well integrated into the
    : Kodak culture, and that they are working in a department with shrinking
    : volume and zero opportunity for growth, you might be suddenly struck with a
    : brilliant idea.

    : If (actually, not if, but when) Kodak dumps b/w, they'll probably be
    : shutting down a factory that makes a little money, because the resources
    : devoted to it are needed to make a lot of money. And believe me, they won't
    : spin it off or sell it, because that would strengthen a competitor. No Kodak
    : film asset has ever been spun off or sold when a product line was
    : discontinued (e.g., Instamatic film). They'll shutter it and scrap the
    : machines.

    You were doing good until that last paragraph. I was at a local grocery store
    not that long ago and they were selling Kodak instamatic 110 film. The line
    for 126 was shut down long after it was profitable and no longer salable.

    : : ...
    : > Once again as long as the production of B&W film is profitable its
    : manufacture
    : > will continue. Also as long as the Kodak B&W films (tri-x, tmax, tech-pan,
    : etc)
    : > are profitable their manufacture will continue. That's with or without
    : Kodak.
    : > The formula and production lines are an asset and it's an asset that won't
    : simply
    : > be thrown away.
    : > --
    : >
    : >
    : >
    : >
    : > Keep working millions on welfare depend on you
    : > -------------------
    : >



    --




    Keep working millions on welfare depend on you
     
    Frank Pittel, Oct 1, 2003
    #16
  17. Facilties for making film and paper could not easily be converted to
    anything else. I think Kodak, having recently invested big-time in a
    new coating facility, will try to make use of it as much as possible,
    and keep it running.
     
    Michael Scarpitti, Oct 1, 2003
    #17
  18. Michael Scarpitti

    David Foy Guest

    Once again, I'm not trying to disagree. 126 was shut down by Kodak at the
    end of 1999 when it was generating "Far less than one percent of our film
    sales ..." as their press release stated, and dropping more than 30% a year,
    in other words, like a stone. Retailers weren't stocking it and you could
    only order from the factory in 240-roll bricks.

    I agree with you that B/W has a lot of years ahead of it before things get
    that bad, maybe even a lot of decades. The point I was hoping to address was
    your suggestion that Kodak might spin off or sell their b/w business.

    What I was struggling to say was that they could have done that with their
    126 business, but didn't. 126 was dead for Kodak but not for everybody (Agfa
    made (or at least still sold) it until about a year or so ago, Ferrania
    still makes it, and my web-based retail business still sells a lot of it).
    Somebody (me, for instance) would have been willing to buy Kodak's 126
    equipment. But Kodak scrapped it. That was all I was trying to convey.

    Hard to tell how long Kodak will make 110. PMAI reports 110 sales are so low
    they don't even show up as reportable numbers in their surveys. Fuji and
    Ferrania still sell it, along with Kodak, although it is less than clear
    whether or not Fuji still makes it -- all they will say is that it's still
    available. As you noted it's still stocked in a decent-sized sample of
    retail stores. So it apparently hasn't hit rock-bottom yet the way 126 did.

    David Foy
     
    David Foy, Oct 1, 2003
    #18
  19. Michael Scarpitti

    David Foy Guest

    Yes, they have a huge capital investment there, and no real reason to
    abandon it. My guess is that capital investments like that are amortized
    over decades.

    DF

    ....>
     
    David Foy, Oct 1, 2003
    #19
  20. Michael Scarpitti

    David Foy Guest

    I hope photographers keep using it. If not, and the whole world winds up
    divided between C41 and digital, we will have lost something.

    DF
     
    David Foy, Oct 1, 2003
    #20
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