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Kodak

By Patrick Van Roy On August 2nd, 2020

Kodak at one point in time was one of the largest corporations in the world. They even at one point caused a world wide panic by trying to buy up the world supply of Silver. The advent of digital photography all but destroyed the company. It still exists, because Film will never go away, but it is now a niche not the holy grail.

In upstate NY Kodak’s main labs sit almost idle in Rochester NY. It sits on 1200 acres, has it’s own power plant, water treatment facility, a rail spur, 88 chemical reactors, and all the tools and access to personal expirienced in chemical engineering.

The President has made a deal with Kodak. This plant when up to speed will supply the U.S. with 25% of the base chemicals that are needed to make all human consumed drugs.

The move does two things, it relieves a large portion of our dependency from China while providing upstate NY with 1000s of jobs manufacturing them, and 10s of thousands in ancillary jobs. A boon upstate NY needs desperately.

Congratulations Kodak, NY, and Trump.

38 Responses to “Kodak”

  1. The Trump Administration used the Defense Production Act to forward a loan to Kodak of $765 million to start this pharma venture. Quite new thinking, good for NY, and good for the country.

    https://www.marketwatch.com/press-release/networknewsbreaks—eastman-kodak-co-nasdaq-kodk-stock-heads-skyward-after-company-receives-first-of-its-kind-government-loan-2020-07-29

  2. Well Kodak’s CEO has certainly benefitted from the stock options given to him immediately before the loan was announced. Whether Kodak, which is struggling financially, will be able to execute this pivot to pharmaceuticals as they claim remains to be seen.

  3. It’s good news for NY and the country. I don’t see a reason to doubt their ability to hire the right people to do it.

    The plant sits idle for the most part, but it has everything in infrastructure that it needs.

  4. The Trump administration used the Defense Production Act to forward a one of a kind $765 million loan to Kodak for the venture. It should pay off nicely for the country as long as the chemicals are kept in the USA for domestic production of drugs. Nice win for upstate NY.

  5. This is there second pivot in the couple of years, they crashed and burned on the other one. I hope it works.

  6. fingers crossed

  7. They could always produce a chemical to uncross these fingers if they become stuck ( in hope mode ). Win win 🤔

  8. I used to do a little business with Kodak and would go up to visit them five or six times a year

    The collapse of the film business was not completely unexpected, especially by them, Kodak actually invented much of the digital photo technology, If they made an error, it was in not seeing the extreme suddennes of the transition from film to digital

    The chemical and pharmaceutical business is not strange to Kodak. They have been involved in the chemical business forever. They used to have a joint venture with the major European pharma company Sanofi

    This could be a very good move on the part of the US.

    Kodak Is highly motivated to make this venture work, international Big Pharma would not want to do something like this

  9. They even at one point caused a world wide panic by trying to buy up the world supply of Silver.

    They’re just not in the same league as Elon Musk:

    https://archive.fo/mIIRM

  10. Just after the loan was announced Kodak stock increased 1,000% making the CEO’s stock options worth 1,000% more. What a lucky guy?

    Everything the Trump administration does is suspect even if on the surface it seems a good idea. This is one of many examples. I wonder what will be discovered about the CEO’s connections to Trump. Or, maybe he is just a lucky guy!

  11. Kodak made the same mistake as IBM and many other companies, and completely underestimated a shift in technology.

  12. Yes

    A 24 year old Eastman Kodak engineer developed the first digital camera in 1975

    https://lens.blogs.nytimes.com/2015/08/12/kodaks-first-digital-moment/

    It would be amazing if Kodak could have a comeback after what they’ve been through

  13. This sounds an awful like marxist socialism

  14. All countries should diversify away from China. I’ll give reluctant kudos to the Trump Administration for this.

  15. In the long term though this is unlikely to be commercially viable. Kodak is not making pharmaceuticals, they are making the chemical ingredients needed to make pharmaceuticals. There is a reason that there is a reliance on foreign markets for these products. They aren’t very difficult to make and can made cheaply in China, in India, in Brazil etc…

    Kodak have, as far as I am aware, no innovative plans to make the chemicals better. So they are going to make the same chemicals as India and China and do so at a higher cost (because it’s in America and staff costs, overheads etc… are going to be more expensive). That raises the cost of the chmemicals to purchse for pharmaceutical companies.

    There are three possible scenarios.

    Scenario a) most likely scenario; Kodak produces the same chemicals for substantially highers costs and pharmaceutical companies just keep buying from India and China because Kodak’s identical product is more expensive.

    Scenario b) the government, through regulation, forces American pharmaceutical companies to buy from Kodak and not from China and India. The result will be it will substantially increase the already very high cost of American pharmaceuticals. Politicians, especially the Bernie Sanders types, are already starting to pay a heavy, heavy amount of attention to price of American pharmaceuticals. Government action to make them more expensive is kind of ludicrous.

    Scenario c) the government subsidises the difference, allowing Kodak to sell an overpriced product without it impacting on American drug prices. Which would be an overly expensive waste of taxpayers money to fund a weird combination of needless autarky and to keep one company alive.

    Kodak are not shifting production to meet an unmet need. They are shifting to meet a need that is already sufficiently met, and will do so at a more expensive cost. I honestly can’t see this ending in anything but tears.

  16. Kodak are not shifting production to meet an unmet need. They are shifting to meet a need that is already sufficiently met,

    We don’t trust China at all, after what has happened this year.

    I think that this move will have great bipartisan support

    If your supplier of health care components can’t be trusted, that’s a completely bad situation.

    The cost of products from such a supplier is one factor among many, and not a major factor either

  17. “We don’t trust China at all, after what has happened this year.”

    You may not trust China. I may not trust China. Congress may not trust China. And none of that matters. Does Johnson & Johnson trust China? Do Pfizer? Do Merck? etc…

    And even if they don’t trust China do they trust them so little that they will be willing to pay substantially more for Kodak to do the same thing as China is currently doing?

  18. I don’t care what corporate America thinks.

    Corporate America has shareholder profit as the first priority, not the health of the American people.

    Corporate America was happy to move production of PPE to China because they made more money that ways.

    The national interest should come first now, and the interest of corporations and their stockholders a very distant second.

    This is one thing that Trump appears to get entirely right.

  19. “I don’t care what corporate America thinks.”

    And yet they are the ones buying the product. So you may not care what corporate America thinks but they are the only one with any actual control over the situation.

    “The national interest should come first now, and the interest of corporations and their stockholders a very distant second.”

    Which would be the scenario b that I outlined above. Are you content with American drug prices to become even more expensive?

  20. The costs of the raw chemicals for drugs is miniscule, when compared to the final cost of a pharmaceutical. Laws could be passed requiring US big pharma to use these chemicals. it is in the national interest of the USA that they do so to break our dependence on dodgy Chinese drugs.

  21. National security and health security of the population come first, last and always.

    We should listen to what Merck says, but they should not have a controlling voice on anything.

    This isn’t much of a debatable issue. I think that very many lefty Democrat types approve of this sort of thing.

    Along with the right wingers who now, at last, may see that it is necessary for government to carry a big stick in the market.

    Bad news for some corporations, good news for the American people. Especially when a worse pandemic hits, which it will, someday. A cheap Chinese supplier won’t do you much good when they shut you off just when you need him. Trump and Navarro understand this, and I tip my hat to them on this one.

  22. A number of physicians, including my personal doctor, do not trust Chinese suppliers over sustained quality control issues. ( along with the supply question )

  23. “The costs of the raw chemicals for drugs is miniscule, when compared to the final cost of a pharmaceutical. Laws could be passed requiring US big pharma to use these chemicals. it is in the national interest of the USA that they do so to break our dependence on dodgy Chinese drugs.”

    Surely the dodgy Chinese drugs would be the finished product rather than API?

    Obviously there would be distinction between generics and brand name pharmaceuticals, with the big, big differences in prices being for the branded drugs.

    But I was reading that APIs make up 50% of the cost of generics. And generics make up 90% of the prescriptions filled in the United States. A manufacturer for Kodak makes $25 dollars an hour. The average worker in the pharmaceutical industry in China makes $10 an hour (which is quite high for China). Likely that includes the top end stuff (the production of a lot of generics) while the production of API is probably lower than that. But even assuming that the jump is from $10 an hour to $25 dollars an hour then making the cost of API 2.5 times more expensive would increase the cost of a generic drug by 75%.

  24. “We should listen to what Merck says, but they should not have a controlling voice on anything.”

    Well they are the ones buying it.

    “Bad news for some corporations, good news for the American people.”

    Until they get sick and have to buy more expensive drugs they can’t afford. Or when their insurance premiums go up because their insurance companies now have to pay for more expnsive drugs.

  25. We have a worse problem when China cuts us off in the hour of need.

    Which to some extent happened this year with PPE, in the aftermath of a virus that they lied about.

    We hopefully are learning from this, as are the Europeans

    A low price on today’s invoice is very nice, but public health security is more important.

    I shed no tears for Merck or J&J or Pfizer.

    We could have short term savings in the defense budget if we bought our guns ammo missiles and ships from China too. But I don’t think that we will be doing that.

    Bravo, Trump, today at least

  26. “I shed no tears for Merck or J&J or Pfizer.”

    And for the poor bastard who goes bankrupt trying to afford the new, more expansive prices. Do you shed tears for them?

  27. You miss the entire point.

    If we do it your way, there will be no drugs for anyone when China decides to turn off the supply.

    Which they actually have done with PPE.

    You propose that we never learn any lessons from history. Many here will not agree with that.

  28. “You miss the entire point.”

    No I disagree with you.

    “You propose that we never learn any lessons from history. Many here will not agree with that.”

    No I’m suggesting we learn the lessons from history. Such as not making stupid mistakes by following an economic model disproved decades ago. Autarky doesn’t work. You will not increase security. All you will do is make a lot of people poorer in the long run.

  29. If divesting from China is the goal then make that the goal. This isn’t what Trump is doing. He is trying autarky, not divestment from China. Those industries aren’t going to be competitive in the United States. They are actually already becoming less competitive in China (as China economically develops). So if you want to buy less from China the key isn’t buying American (all you do is make yourself poorer). It is buying from India, Vietnam, Brazil etc…

  30. A low price on today’s invoice is very nice, but public health security is more important

    And those ill who can’t afford the more expensive medication? What happens to their health?

  31. No one is proposing autarky.

    What many on both sides of the aisle propose is a shift away from unstable suppliers located in enemy countries.

    I support continued pharma trade with Canada, the UK, Japan and the EU, under fair rules that all of these adhere to.

    This will happen, and it should happen.

    We live in the real world, and hard lessons have been learned over the last 8-9 months.

  32. “No one is proposing autarky.”

    Trump is, and you are supporting him on it. He isn’t divesting from China. He is trying to create a company in New York to replicate what China does, rather than putting in place policy to encourage companies not to buy from China but to buy from other cheap places.

  33. Trump does not propose autarky. He never has proposed anything like it.

    He even buys his wives overseas. He’s a big trader.

  34. “Trump does not propose autarky. He never has proposed anything like it.”

    So why is he given three quarters of a billion dollars for an American company to produce low cost goods at high cost, when companies could simply buy those products from overseas (from countries other than China). This is yet another Trump doesn’t understand trade moment.

  35. The only country that I think is a more or less autarcky now is North Korea

    The US isn’t that and it won’t be that.

  36. “The US isn’t that and it won’t be that.”

    So why even, in a limited sense, try to mimic it?

  37. For the same reason that we don’t buy aircraft carriers from Russia or China, even though they would be cheaper than building them here

    The price on the invoice is not the only thing.

  38. “For the same reason that we don’t buy aircraft carriers from Russia or China, even though they would be cheaper than building them here”

    Except the two are not comparable. Firstly I’m pretty certain that not everything on a US Aircraft Carrier is built in the US. Undoubtadely parts of it, materials etc… are produced elsewhere.

    Secondly, aircraft carriers are not cheap manufacturing. It is precision manufacturing which can only be done in a few countries, and so is unlikely to be substantially more expensive in the US compared to elsewhere.

    Thirdly, plenty of countries do source naval vessels, military equipment from overseas, even the United States. The Beretta is Italian, and is being replaced with a Sig Sauer which is German, the Glock is Austrian, the main US mortar is Israeli, standard howitzer is British, the Stryker Infantry Vehicle is Canadian.