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The ‘New’ Kodak Reaping Benefits From Its Big Changes

January 24, 1988

ROCHESTER, N.Y. (AP) _ The walls tell it all at Eastman Kodak Co.

Historically, the company’s sprawling manufacturing center, known as Kodak Park, has been painted in dull and conservative factory colors like gray or brown.

But a summer painting project produced bright flames on fire doors, murals in hallways, slogans and bright colors on cement walls, and pop art next to the soda machines.

In one control room, workers can scribble milestones on the heating ducts and the ceiling. The notations date back no farther than 1986.

″Before then, writing on the walls wasn’t exactly considered the thing to do,″ said Ralph Olney, a unit manager in the film-sensitizing division, whose graffiti-prone staff works on a machine three football fields long that rolls out color film in excess of 300 feet a minute.

The new decor is the most visible symbol of the radical changes that have given the 108-year-old photographic giant a new image and a new outlook.

Gone are the days when suspicion and anxiety ruled, when employees were afraid to make suggestions and were told when to work an extra shift or when to cancel weekend plans because more work was needed.

Today, workers are urged to shut down massive production lines if they spot a problem. They’re asked to work overtime. And they’re given sophisticated statistics and information so they understand more of the big picture.

″I think what’s different is that we’re told more, so we know what’s important and what it means to make a change,″ said Rick Ladue, a production worker in Kodak’s paper support manufacturing division.

The changes have helped lead a turnaround for Kodak, which suffered six straight quarters of declining profits throughout 1985 and into 1986 before things started to pick up.

Through three quarters of 1987, Kodak’s profits of $936 million reached a record high, more than triple the same period in 1986, when they were $299.4 million.

″Coming to work at Kodak used to be like going home,″ said Ron Heidke, who’s in charge of manufacturing film and paper at Kodak Park. ″It was secure. It was comfortable. It was really nice.″

″I think what we’ve done is moved from a parent-child relationship to adult-adult and now people come to work excited about what they’re able to do, excited about what they themselves can impact,″ said Heidke.

There has never been a labor union at Kodak, partly because the company always paid top salaries and offered excellent benefits. Now the company is offering its employees something new - the chance to speak up, Heidke said.

Kodak’s transition is not unique and is one that America’s other large companies have either already started or must begin soon, said Colby Chandler, Kodak’s chairman and chief executive officer.

″Kodak was quite representative of an ’old culture,‴ Chandler said. ″People seek the comfort level of groups. They tend to take the conservative, safe routes, rather than the ambitious and daring routes.″

″It’s a kind of culture you can follow only if you can afford it and when America was so far advanced industrially, economically over the rest of the world, it could afford that kind of culture,″ he said.

Robert Waterman, co-author of the book ″In Search of Excellence″ which kicked off the ″corporate culture″ idea in 1982, agreed with Chandler’s perceptions.

″The notion of changing corporate culture has become very popular, but it’s very difficult to do,″ Waterman said from his San Francisco office. ″In many cases, it’s all talk and no action.″

A quote, enlarged and framed, from the book that he co-wrote with fellow corporate guru Tom Peters hangs in one of the hallways between elevators in Kodak’s executive offices.

The change in corporate culture, along with a strict cost-cutting program and thousands of layoffs, have helped send Kodak’s sales and profits soaring.

Chandler predicted 1987 would prove to be a record year for sales and operating earnings when results are reported in February.

The success comes after two troubling years that included the costly ($494 million) and embarrassing court-ordered withdrawal from instant photography because of violations of Polaroid Corp. patents.

Analysts are pleased with the new Kodak, but not overwhelmed.

″The company has obviously done some serious work to make this happen, and that’s good,″ said Michael Ellmann, an analyst with Wertheim Schroeder & Co. in New York. ″But the company’s also gotten some breaks.″

What made the past year so good, Ellmann said, is the same thing that made previous years so bad - things beyond the control of corporate management.

″I mean the dollar was so strong and just kept getting stronger, which just kept hurting Kodak,″ Ellmann said. ″Now the dollar is weak and Kodak is getting a big break.″

Kodak lost $3 billion in potential profit from 1981 through 1985 from translating its foreign-currency earnings into strong dollars, Chandler says. The dollar also made Kodak’s exports more expensive in foreign markets.

Since then, the situation has flip-flopped and Kodak’s fortunes have turned around.

Another ″break″ that’s helped Kodak, according to Eugene Glazer, of Dean Witter Reynolds Inc., came in an unexpected jump in the amount of photos being taken in the world.

″I think most everybody expected to see a 5 to 6 percent increase in the number of pictures taken and it’s actually running closer to 10 percent this (past) year,″ Glazer said.

Good fortune aside, the new aggressiveness at Kodak is unmistakable. The company traditionally has moved cautiously in and out of product lines and has almost always used its own resources to develop and sell its wares.

But the ″new″ Kodak is acquiring new businesses, jumping into joint ventures and discontinuing or introducing new products at a swift pace.

On Jan. 13, the company made an impressive entrance into the color copying market with a machine that is nearly four times faster than any other color copier. The ColorEdge, which can create copies at 23 copies a minute, is the first American-made color copier on the market.

Kodak is selling batteries and cameras made in Japan and is active in such new fields as biotechnology. Sitting on $696 million in cash, it is looking to buy a pharmaceutical company, has acquired two photofinishing firms and is planning to start joint ventures in photofinishing and battery-making.

The company helped lead the charge into 8mm videotape with its Japanese- made camcorder, but then dropped out of the market.

The company’s greatest challenge, Chandler said, is in keeping things from sliding backwards.

″I’m not going to be satisfied until every individual in the company feels the need to be an individual contributor of ideas and judgment,″ Chandler said.

End Adv Sunday Jan 24

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