The Eastman Kodak Company’s filing for bankruptcy in New York on January 19 leaves employees at the Kodak facility in Zapopan wondering how much longer they will have jobs.
Kodak built their brand new plant in the open fields on the outskirts of a budding city in 1969. The massive facility sits on over a hundred acres of land off Mariano Otero near Plaza del Sol. At its peak, the facility employed around 3,000.
Now the busy suburbs have closed in around the chain-link walls of the plant and its fewer than 1,000 remaining employees as they look to the company headquarters in Rochester, New York for news of the future.
Kodak is currently seeking Chapter 11 protection for debts incurred over the last several years as the company has struggled to keep up with the digital revolution begun in the late nineties. Its digital cameras never caught on, and look ever less likely to do so as smartphones take over the digital camera market.Kodak’s stock (EKDKQ) fell precipitously as a result of these forces from the end of 2007 to 2009 and has been floundering at under 10 dollars a share since.
The company has characterized the bankruptcy move as necessary for restructuring. Kodak has already secured permission to borrow 950 million dollars from Citigroup Inc. to continue operations during bankruptcy. The company plans to sell off over 1,000 digital capture patents as part of the restructuring process.
Kodak is the latest in a string of high profile American companies seeking Chapter 11 protection. American Airlines last year initiated the process to bring their employee system into line with those of newer airlines.
In a typical Chapter 11 scenario, bankruptcy judges (in this case Allan Gropper) have a lot of discretion as to which outstanding debts are to be paid and how. Usually employees and pensioners fall to the bottom of the list as unsecured creditors. Companies (such as American Airlines) can take advantage of this to renegotiate contracts and shed expensive retirement plans.
This has to put employees on alert. Currently, the Guadalajara complex makes photographic film and disposable cameras. They have already seen dismissals over the years following low sales and have recently had their shifts cut to three or four days per week.
Yet their future is still up in the air. For now, there are no plans to close the plant, but area experts told Spanish-language daily Milenio that if such an event does come to pass, the local animation and design software field may be able to absorb specialists left without work.
Kodak has been leaning heavily on its at-home photo printing, software and packaging businesses, which it hopes will constitute a new future for the troubled giant—up to 25 percent of its business by 2013.