“Kodak still stands for innovation and quality”

-says Jeff Clarke, the newly appointed CEO.
Kodak, having gone through tumultuous times over the past years but hoping to cash on available opportunities, is getting onto the energy filled tracks. A set of four questions posed to Jeff Clarke, incoming CEO of Kodak. Q1. How do you see Kodak today?

Jeff: I’ve spent the last 10+ years of my career in Silicon Valley, and I can tell you, Kodak in many ways is like a start-up. We are creating proprietary technologies which I believe will transform our markets. But it’s also a company that has one of the world’s most recognized brands, a highly developed supply chain, 25,000 commercial customers around the world, and a world-class research and development operation which continues to invent technologies and solutions in anticipation of the customer needs in Kodak’s fast-changing markets. That is what attracted me to Kodak.

Jeff ClarkeKodak, as you know, is focused on graphic communications, packaging, and functional printing, with a product portfolio which is unique in its breadth and in the strength of its underlying technologies in material science, deposition, software, and digital imaging. The portfolio contains some extremely exciting product families, especially Prosper, Sonora, and Flexcel NX. As one example, we expect to nearly double the installation base of Prosper this year, driving significant annuity sales, which I believe will benefit the company for years to come. These are the products that position the company with its B-to-B focus for imaging for business.

Another source of strength for Kodak is our customer roster. I’d like to give you three examples. Mercury Print Productions, Rochester is a fast-growing leader in digital book printing. Mercury is using its Prosper 5000 XLI press to boost its short-run, on-demand books in colour, meeting publisher’s needs in the education and textbook market. With faster time to market, offset printing quality, and automated inventory replenishment, Mercury plans to increase its already significant business from the largest textbook publishers, including McGraw-Hill Education, Pearson, Houghton Mifflin Harcourt, and others.

Reproservice in Munich installed the first Kodak Flexcel NX system in the country in 2009. Reproservice focuses mainly on packaging with foils, cartons, aluminium, etc., and is adding more printing on its paper for the secondary packaging market, including corrugated. In under a year, Reproservice has moved more than 20 percent of their volume to the Flexcel NX system, is now producing more than 60 percent total volume with the Flexcel NX system. When asked how often it breaks down, they responded, “It doesn’t.” The system has proven to be very stable and very fast.

While, RBS Group in Brazil is using the Kodak Sonora News process-free plates to reduce costs, time to press, and environmental impact. By switching to Sonora News Plates imaged on a Kodak Generation News place-setter, the group has been able to completely eliminate any processing equipment and chemistry, which is in line with their environmental values, as well as good for their business. They have also been able to increase the amount of plates they produce, and reduce downtime for cleaning and maintenance in pre-press.

My mandate from the Kodak board of directors is to deliver growth. We will invest $90 million in research and development, and $50 million in capital expenditures this year. With the combination of our portfolio and breakthrough products, global reach, powerful brand, and strong customer base, we are positioned to deliver future growth.

Q2. What is the biggest opportunity in front of Kodak right now and what you think the company might look like three years down the line?

Jeff: Well, as you know, we are in a mix of businesses. We have some businesses that are declining, our film business is clearly a business that’s going to decline, and as you know, in the consumer inkjet business, we’ve chosen to stop selling the printers and just sell the consumer inkjet ink now. So, those businesses are going to decline. What I’m excited about is the areas of growth, and this is where we’re putting the $90 million of R&D. When you step back and look at the fastest growing area, in terms of this year because it’s starting from zero, it’s functional printing. You know, we have two major partners where we believe we can print sensors and other devices, and by going from effectively zero into an incredibly rapid-growing market—also in an area that has not traditionally been in Kodak’s base—so that’s going to be a very fast growth area for us.

Our biggest strategic business is, of course, graphics. And in graphics we have the traditional business, which has been, frankly, pretty steady for us, and we’re pleased about that. But the growth area is there, and the one that I’m most excited about for a whole list of reasons, is our Sonora Plates. They grew 40 percent last year, it’s now up to 10 percent of our overall plates business, and it’s going to grow 40 percent this year. And so, significant acceptance by the market, provides a green solution, provides a chemistry free solution. By having a cleaner process, we’re able to charge a little bit more for the plates, and it has great customer satisfaction. And we’ve got great, as I said, 10 percent of a business that’s been around for a long time.

And then digital printing. Prosper is a very, very significant return on investment for our customers, and when we place these presses—which we expect to double the install base this year—when we place these presses, there’s huge annuity streams going forward to the company, as well as a great solution for our customers. We intend to have 40 installed systems by the end of the year, and we have the pipeline that supports that.

Q3. Kodak is very well known for material sciences and deposition science and so forth, and yet the world is really shifting, where companies need to focus more on the content than on the nature of the content, whether it’s printed or digital. Can you expand on your thinking around how Kodak will be providing software solutions for its business clients moving forward?

Jeff: Prinergy is a workflow software product, a product that publishing houses and printshops, use to manage their solutions end-to-end. It works in both the offset and the workflow productions. It works with colour management, file optimization and position, automation. It has rules based software, and so effectively this differentiates us in many ways. Prinergy software works in non-Kodak environments as well. Customers like RR Donnelley here in the US, probably one of the largest printers in the world rely on our software across their global environment. And that allows to standardize their processes, allows to split their print jobs and be consistent on the metrics and so forth.

Q4. Kodak has obviously gone through tumultuous times over the past few years. Do you feel that you have to do repair the Kodak brand and to regain the confidence of printers? And what do you plan to that?

Jeff: When I think of the Kodak brand, I immediately think of innovation. I think of creating some of the most important products in the last century. And when I was researching whether I would come to this company or not, one of the most important things for me, coming from the tech industry, was, was that innovation still here? And I’ve found it is.

It is in software with Prinergy, it is in inkjet printing with Prosper, it is in the amazing things possible that we are now doing around functional printing, around the Flex systems, with the way that we print on packaging today. These are innovative areas, and I’m not even going into the basic, you know, the IP of thousands of patents.

The second thing is quality. I think a company like Kodak having deep manufacturing processes, it has processes that make sure the products work before they go out there. And that’s really important, and that’s what I think about the Kodak brand. And I also think about both community and employees. I think everybody will step back and say that there’s been very few companies that, over its history, has done as much for their communities and for their employees.

What I would like to add to the Kodak brand is something around sustainability and the environment. Kodak has made investments in several areas, most notably the Sonora plates, that allow us to transform an industry that historically has been a bit of a dirty industry. I mean, let’s be clear, printing uses chemicals, which aren’t always completely cleaned up after the process.

The printers treat Kodak much deeper than a brand. They know our products, day-in and day-out. And yes, the brand, I think, still means innovation to them. I think it still means quality to them. So, what we have to do is now to continue delivering great products. And with your customers you’re only as good as your last shipment. And so, what I’m going to try and do is keep the trains running on time, keep this innovation going, make the investments that are important to our customers, and then the brand will speak for itself.

We expect to nearly double the installation base of Prosper this year, driving significant annuity sales, which I believe will benefit the company for years to come! What I would like to add to the Kodak brand is something around sustainability and the environment. Kodak has made investments in several areas, most notably the Sonora plates, that allow us to transform an industry that historically has been a bit of a dirty industry.