Kodak expertise for hire

By staff writer Ben Rand

Catherine Bonser has a job that could help manufacturing workers at Kodak Park sleep a little better at night.

The University of Minnesota graduate is heading a new business that will offer Eastman Kodak Co. know-how in electronics design and manufacturing as services to third parties in imaging and other industries.

That means factories at Kodak Park and across the world could soon be making products for and delivering related technical services to more than just Kodak.

The company intends to market itself as a electronics design and manufacturing services company, as well as an all-around contract manufacturer of coated materials, fine chemicals, precision parts and micro-particles for a variety of uses.

The possibilities are broad. Kodak says its expertise could be useful in products as common as sunglasses, cosmetics and sunscreens, and as exotic as fuel cells. Contract customers would sell and manage the products under their own brand names.

Contract manufacturing could also open up opportunity in imaging. Bonser said Kodak wouldn’t rule out making film, paper or other imaging-related products on contract for others in the industry.

The goal of the new unit, Bonser said, is to turn excess manufacturing capacity worldwide into a profitable business.

And for the 18,000 manufacturing, research, logistics and other workers at Kodak Park, that offers a dose of good news at a time of uncertainty.

The company is in the midst of an unsettling technological change brought on by digital photography. Digital cameras record images on re-usable computer disks instead of film, which is Kodak’s most profitable product.

If Bonser is successful, global electronic design and manufacturing services will help keep workers busy as film becomes an endangered species. Kodak estimates that digital cameras are currently lowering sales of consumer film by 1 percent to 2 percent, a number that analysts say could soon accelerate.

Yet Bonser says her new business isn’t a defensive play. Kodak has made products for other companies from time to time over the last 10 years. Global manufacturing services simply formalizes that activity. And the unit will work to generate profitable growth regardless of the dynamics in film, Bonser said.

She also points out that the film business at Kodak — which serves consumer and professional photographers, radiologists, movie producers and more — continues to grow.

Whether the new unit translates to more jobs in the long run remains to be seen. But for workers, taking more jobs on contract "means growth and challenge and excitement," Bonser said.

Estimates for the size of the contract manufacturing market are hard to find, but it’s clearly a big number. For instance, the top 50 providers of electronics manufacturing services generated $78 billion in sales last year, according to Manufacturing Market Insider, a trade publication.

Yet companies such as Kodak — already busy with other activities — face several hurdles, experts say. Such companies typically struggle with higher costs and have a hard time establishing a clear strategy, identifying customers, assessing the difficulty of the task and more, said Robert Freid, president of Contract Manufacturing Consultants Inc. of Bellevue, Wash.

Nonetheless, those companies can be successful, according to Freid and a professor at the Rochester Institute of Technology.

"They need to have a diverse customer base to provide a constant flow of business," said Daniel Johnson, assistant professor of manufacturing and mechanical engineering.

"They also need to understand that their product is their manufacturing capacity and that their business is providing that capacity as a service, not just making parts."

A Wall Street analyst is a little worried that Kodak could become distracted by the electronics design and manufacturing services unit.

"My initial thought was that this is a company with an incredible amount of complexity. . . . Are they better off focusing on a few big opportunities?" asked Gibboney Huske, who follows Kodak for Credit Suisse First Boston.

Bonser said that early returns are encouraging. She said she has received dozens of inquiries from people both inside and outside the company excited about Kodak’s decision.

E-mail address: brand@DemocratandChronicle.com