TP120- followup

jerry gitomer wrote:

Gordon Moat wrote:

[ really big, big snip ]

If Kodak really wants to give the highest shareholder value, they should move more production off
shore. I don't like this any more than most people, but it is a reality of the future. If their
competitors are moving production to lower cost, higher profit regions of the world, they would
be ignoring reality to not do the same. In general, what is good for profits, stock growth, and
share prices, is often bad for working individuals. That is the harsh reality of the world we
have created.

Gordon,
I am not sure that producing film in a low labor cost area
offers any significant economies over producing it in upstate
New York.

If it were in California, there are some higher employment cost issues, though I am not completely
familiar with similar issues in New York. Of course, the cost of shipping is another issue with moving
off shore. The offset would need to be compared to what the average Chinese workers (for example) gets
paid. My guess is that employees at Lucky Film get paid less than half of what workers in Rochester
were making.



Film manufacture is a process industry. Human beings thread the
film base, dump chemicals in the appropriate hoppers, push the
start button, and stand back and watch. Even when using high
cost labor the total labor cost to manufacture the product is
not significant when compared to materials costs, maintenance
costs and the amortization of the manufacturing equipment.

Yes, probably a limit on those. These items make the largest cost variable that individual on each
machine. Either replace them with a machine where possible, or reduce that labour cost, and those are
the only reductions.

Recall that Kodak bought into Luck Film, so quite a bit of that equipment was already there. The
chemicals are more of a shipping issue, depending upon sources of those chemicals. It would be
interesting to see the actual numbers, though I would still guess that Kodak saved some expenses by
buying into Luck Film in China.



More than one manufacturing engineer I know has told me that due
to higher maintenance and transportation costs it often costs
less (for process industries) to manufacture in the United
States than to manufacture in low labor cost countries.

If there was no economic advantage to buying into Lucky Film, then why was that move made? Were most
of the 15000 workers for Kodak in the US involved in manufacturing film? There was a direct cost
savings to Kodak by eliminating those 15000 workers, and I would bet that even 15000 workers in China
would not be paid at the same level, which seems to me to indicate a reduction in expenses. If the
labour cost was the least issue, and costs of producing film in China were higher, or the same, then
why would Kodak make such a move?

Ciao!

Gordon Moat
A G Studio
http://www.allgstudio.com Updated!

Gordon Moat wrote:

paid. My guess is that employees at Lucky Film get paid less than half of what workers in Rochester
were making.


1/2? I'd be impressed if they're getting 10% of the total salary [cash
plus benefits]


Recall that Kodak bought into Luck Film, so quite a bit of that equipment was already there. The
chemicals are more of a shipping issue, depending upon sources of those chemicals. It would be
interesting to see the actual numbers, though I would still guess that Kodak saved some expenses by
buying into Luck Film in China.


They also got better access to the Chinese market.

Nick

Gordon Moat wrote:

paid. My guess is that employees at Lucky Film get paid less than half of what workers in Rochester
were making.


1/2? I'd be impressed if they're getting 10% of the total salary [cash
plus benefits]


Recall that Kodak bought into Luck Film, so quite a bit of that equipment was already there. The
chemicals are more of a shipping issue, depending upon sources of those chemicals. It would be
interesting to see the actual numbers, though I would still guess that Kodak saved some expenses by
buying into Luck Film in China.


They also got better access to the Chinese market.

Nick

jjs wrote:

Even Fuji is unlikely to take Kodak. Who wants a losing public company?

A "losing" company???

jjs wrote:

Even Fuji is unlikely to take Kodak. Who wants a losing public company?

A "losing" company???

Fuji probably couldn't buy Kodak for anti-trust reasons in the USA and
Europe, due to the effectively controlling market share Fuji would get
over film sales by buying Kodak's film biz (e.g., 75% or more?).

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