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The story
Founded by Henry A. Clark, George Eastman and Henry A. Strong in 1882, in Rochester.1
Name
The letter k was a favorite of George Eastman's; he is quoted as saying, "it seems a strong, incisive sort of letter." He and his mother, Maria, devised the name Kodak using an Anagrams set. Eastman said that there were three principal concepts he used in creating the name: it should be short, easy to pronounce, and not resemble any other name or be associated with anything else. According to a 1920 ad, the name "was simply invented – made up from letters of the alphabet to meet our trademark requirements. It was short and euphonious and likely to stick in the public mind." The Kodak name was trademarked by Eastman in 1888.
Founding
Eastman entered a partnership with Henry Strong in 1880, and the Eastman Dry Plate Company was founded on January 1, 1881, with Strong as president and Eastman as treasurer. Initially, the company sold dry plates for cameras, but Eastman's interest turned to replacing glass plates altogether with a new roll film process. On October 1, 1884, the company was re-incorporated as the Eastman Dry Plate and Film Company. In 1885, Eastman patented the first practical film roll holder with William Walker, which would allow dry plate cameras to store multiple exposures in a camera simultaneously. That same year, Eastman patented a form of paper film he called "American film". Eastman would continue experimenting with cameras and hired chemist Henry Reichenbach to improve the film. These experiments would culminate in an 1889 patent for nitrocellulose film. As the company continued to grow, it was reincorporated several more times. In November 1889, it was renamed the Eastman Company, and 10,000 shares of stock were issued for $100. On May 23, 1892, another round of capitalization occurred and it was renamed Eastman Kodak. An Eastman Kodak of New Jersey was established in 1901 and existed simultaneously with the Eastman Kodak of New York until 1936, when the New York corporation was dissolved and its assets were transferred to the New Jersey corporation. Kodak remains incorporated in New Jersey today, although its headquarters is in Rochester.
The Kodak camera
In 1888, the Kodak camera was patented by Eastman. It was a box camera with a fixed-focus lens on the front and no viewfinder; two V shape silhouettes at the top aided in aiming in the direction of the subject. At the top, it had a rotating key to advance the film, a pull-string to set the shutter, and a button on the side to release it, exposing the celluloid film. Inside, it had a rotating bar to operate the shutter. When the user pressed the button to take a photograph, an inner rope was tightened and the exposure began. Once the photograph had been taken, the user had to rotate the upper key to change the selected frame within the celluloid tape.
The $25 camera came pre-loaded with a film roll of 100 exposures, and could be mailed to Eastman's headquarters in Rochester with $10 for processing. The camera would be returned with prints, negatives, and a new roll of film. Additional rolls were also sold for $2 to professional photographers who wished to develop their own photographs. By unburdening the photographer from the complicated and expensive process of film development, photography became more accessible than ever before. The camera was an immediate success with the public and launched a fad of amateur photography. Eastman's advertising slogan, "You Press the Button, We Do the Rest", soon entered the public lexicon, and was referenced by Chauncey Depew in a speech and Gilbert and Sullivan in their opera Utopia, Limited.
Expansion
In the 1890s and early 1900s, Kodak grew rapidly and outmaneuvered competitors through a combination of innovation, acquisitions, and exclusive contracts. Eastman recognized that film would return more profit than the cameras that used them, and focused on control of the film market, targeting young, white, middle-class women by launching Kodak Girl advertising. This razor and blades model of sales would change little for several decades. Larger facilities were soon needed in Rochester, and the construction of Kodak Park began in 1890. Kodak purchased and opened several shops and factories in Europe, particularly in the United Kingdom. The British holdings were initially organized under the Eastman Photographic Materials Company. Beginning in 1898, they were placed under the holding company Kodak Limited. An Australian subsidiary, Australia Kodak Limited, was established in 1908. In 1931, Kodak-Pathé was established in France and Kodak AG was formed in Germany following the acquisition of Nagel. The Brownie camera, marketed to children, was first released in 1900, and further expanded the amateur photography market. One of the largest markets for film became the emerging motion picture industry. When Thomas Edison and other film producers formed the Motion Picture Patents Company in 1908, Eastman negotiated for Kodak to be the sole supplier of film to the industry. In 1914, Kodak built its current headquarters on State Street. By 1922, the company was the second-largest purchaser of silver in the United States, behind the U.S. Treasury. Beginning on July 18, 1930, Kodak was included in the Dow Jones Industrial Average.During World War I, Kodak established a photographic school in Rochester to train pilots for aerial reconnaissance. The war strained supply chains, and Eastman sought out new chemical sources that the company could have direct control over. At the war's end in 1920, Kodak purchased a hardwood distillation plant in Tennessee from the federal government and established Eastman Tennessee, which later became the Eastman Chemical Company.
Henry Strong died in 1919, after which Eastman became the company president. Eastman began to wind down his involvement in the daily management of the company in the mid-1920s, and formally retired in 1925, although he remained on the board of directors. William Stuber succeeded him as president and managed the company along with Frank Lovejoy.
In 1912, Kodak established the Kodak Research Laboratories at Building 3 in Kodak Park, with Kenneth Mees as director. Research primarily focused on film emulsions for color photography and radiography. In 1915, Kodak began selling Kodachrome,, a two-color film developed by John Capstaff at the research lab. Another two-color film duplitized film was marketed for photography of X-rays as it had a short exposure time and could reduce the dosage of radiation needed to take a photo.
Labor relations
Kodak became closely tied to Rochester, where most of its employees resided, and was at the vanguard of welfare capitalism during the 1910s and 1920s. Eastman implemented several worker benefit programs, including a welfare fund to provide workmen's compensation in 1910 and a profit-sharing program for all employees in 1912. In 1919, he sold a large portion of his stock to company employees below market value. The expansion of benefits continued after Eastman; in 1928, the company began offering life insurance, disability benefits, and retirement annuity plans for employees, at the behest of company statistician Marion Folsom. Many other employers in the Rochester area took cues from Kodak and increased their own wages and benefits to remain competitive in the labor market.
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Eastman believed that offering these benefits served the interests of the company. He feared labor unions and believed that offering better compensation than that received by union workers would deter union organizing and avoid the potential costs of a company strike. Selling his stock to employees would simultaneously make it more appealing to investors, who were wary of purchasing shares because of his large stake, and lower the price of the stock, which would keep anti-trust lawyers from investigating the company. Because Kodak was a capital-intensive industry with a low labor-cost ratio, employee benefits contributed less to the company's expenses than they would in other industries.
Employment opportunities were not extended to all Rochesterians. The company almost exclusively hired workers of an Anglo-Saxon background under Eastman, and excluded Catholic immigrants, African-Americans, and Jews. Approximately one-third of employees were female. A system of family hiring, where children of employees would be hired to follow their parents, reinforced the concept of an industrial community that Eastman sought to create. These practices were not seriously challenged until after World War II. As a consequence of this shared background and the robust company benefits, Kodak employees formed a close community that viewed unions as outsiders, and no attempt to organize workers at Kodak succeeded during the 20th century.
Great Depression
Kodak was hard-hit by the Great Depression, although Rochester was spared from its worst effects as banks were able to remain solvent. Seventeen percent of the company's employees were laid off between 1929 and 1933. Company founder George Eastman committed suicide at his home on March 14, 1932, due to his declining health. From 1931 to 1936, Kodak participated in the Rochester Plan, a privately funded unemployment insurance program to assist the jobless and boost consumer spending. The program was created by Marion Folsom, who gained national recognition for his work and would later serve as a company director and cabinet secretary for Dwight D. Eisenhower. Payments were made between 1933 and 1936, when layoffs ended at Kodak. The program led to many statistical improvements at Kodak, but overall had an insignificant effect on the Rochester community, as few companies were willing to join the program.
Research projects led to several new Kodak products in the 1930s. At Kodak Research Laboratories, Leopold Godowsky Jr. and Leopold Mannes invented a three-color film which would be commercially viable. In 1935, the product was launched as Kodachrome. The company also produced industrial high-speed cameras and began to diversify its chemical operations by producing vitamin concentrates and plastics. In 1934, Kodak entered a partnership with Edwin Land to supply polarized lenses, after briefly considering an offer to purchase Land's patents. Land would later launch the Polaroid Corporation and invented the first instant camera using emulsions supplied by Kodak.
Frank Lovejoy succeeded William Stuber as company president in 1934, and Thomas J. Hargrave became president in 1941.
World War II
After the American entry into World War II, Kodak ceased its production of amateur film and began supplying the American war effort at the direction of the War Production Board. The company produced film, cameras, microfilm, pontoons, synthetic fibers, RDX, variable-time fuses, and hand grenades for the government.
Kodak's European subsidiaries continued to operate during the war. Kodak AG, the German subsidiary, was transferred to two trustees in 1941 to allow the company to continue operating in the event of war between Germany and the United States. The company produced film, fuses, triggers, detonators, and other material. Slave labor was employed at Kodak AG's Stuttgart and Berlin-Köpenick plants. During the German occupation of France, Kodak-Pathé facilities in Severan and Vincennes were also used to support the German war effort. Kodak continued to import goods to the United States purchased from Nazi Germany through neutral nations such as Switzerland. This practice was criticized by many American diplomats but defended by others as more beneficial to the American war effort than detrimental. Kodak received no penalties during or after the war for collaboration.
Unlike Germany, in Japan Kodak had already been shut out prior to the war and then banned imports entirely when war broke out with America.
Manhattan Project
After a 1943 meeting between Kenneth Mees and Leslie Groves, a team of Kodak scientists joined the Manhattan Project and enriched uranium-235 at Oak Ridge.
Kodak's experiments with radiation would continue after the war. In 1945, a batch of X-ray film that the company processed mysteriously became fogged. Julian Webb, who had worked at Oak Ridge, proposed that the film had been exposed to radiation released by nuclear weapons tests. The source of the radiation was eventually traced to strawboard packaging from Vincennes, Indiana, which had been irradiated by fallout that had traveled thousands of miles northeast from the Trinity test site. After this discovery, Kodak officials became concerned that fallout would contaminate more of its film, and began monitoring atmospheric radiation levels with rainwater collection at Kodak Park. In 1951, the United States Atomic Energy Commission (AEC) began providing Kodak with a schedule of nuclear tests in exchange for its silence after the company threatened to sue the federal government for damage caused to film products. Kodak was later contracted to create emulsions for radiation tests of fallout from nuclear tests.
Post-war expansion
Kodak reached its zenith in the post-war era, as the usage of film for amateur, commercial, and government purposes all increased. In 1948, Tennessee Eastman created a working acetate film, which quickly replaced nitrate film in the movie industry because it was non-flammable. In 1958, Kodak began marketing a line of super glue, Eastman 910. Its cameras were used by NASA for space exploration. In 1963, the first Instamatic cameras were sold, which were the company's lowest-cost cameras to date. Annual sales passed $1 billion in 1962 and $2 billion in 1966. Albert K. Chapman succeeded Thomas Hargrave as president in 1952, and was succeeded by William S. Vaughn in 1960. Louis K. Eilers would serve as president and CEO between 1969 and 1972. In the 1970s, Kodak published important research in dye lasers, and patented the Bayer Filter method of RGB arrangement on photosensors. They were tasked by NASA to developed thin new films with special emulsions; four types were used for Apollo 8 mission. Kodak stereo close-up camera was used to film the lunar soil during Apollo 11 mission.
During the Cold War, Kodak participated in several clandestine government projects. Beginning in 1955, they were contracted by the CIA to design cameras and develop film for the U-2 reconnaissance aircraft under the Bridgehead Program. Kodak was also contracted by the National Reconnaissance Office to produce cameras for surveillance satellites such as the KH-7 Gambit and KH-9 Hexagon. Between 1963 and 1970, Kodak engineers worked on the cancelled Manned Orbiting Laboratory program, designing optical sensors for a crewed reconnaissance satellite. The company later performed a study for NASA on the astronomical uses of the equipment developed for MOL.
Kodak doubled its number of employees worldwide between 1936 and 1966. The majority remained employed in Rochester, where it was the employer of choice for most. The company continued offering higher wages and more benefits than labor market competitors, including the annual wage dividend, a bonus for all employees, which typically amounted to 15% of base salary. Employee loyalty was strong, and the company experienced a turnover rate of only 13% in the 1950s, compared to 50% for American manufacturers as a whole. Journalist Curt Gerling noted that Kodak employees behaved like a separate class from other workers in Rochester, and "From the cradle infants are impressed with the fact that 'daddy is a Kodak man'; inferentially this compares with 'our father is a 33rd degree mason'". A 1989 New York Times article compared Rochester to a company town.
Kodak's business model changed little from the 1930s to the 1970s, as the company's dominant position made change unnecessary, and it made no mergers or acquisitions, which might bring new perspectives. Research and development remained focused on products related to film production and development, which caused the company to fall behind rivals Polaroid and Xerox in the development of instant cameras and photocopiers. Kodak would begin selling its own versions of each in the mid-1970s, but neither became popular. Both product lines would be abandoned in the 1990s.
Rivalry with Fujifilm
Japanese competitor Fujifilm was founded in the 1930s with the specific goal provided by the state to produce photographic film in Japan instead of buying it from global leader Kodak or the number two Agfa. Fujifilm entered the U.S. market in 1958 and remained a small player until a breakthrough in the 1980s with lower-priced film and supplies. Fuji defeated Kodak in a bid to become the official film of the 1984 Los Angeles Olympics, which gave it a permanent foothold in the market. Fuji opened a film plant in the U.S., and its aggressive marketing and price cutting began taking market share from Kodak, rising from a 10% share in the early 1990s to 17% in 1997. Fuji also made headway into the professional market with specialty transparency films such as Velvia and Provia, which competed with Kodak's signature professional product, Kodachrome.
Encouraged by shareholders, the company began cutting benefits and making large layoffs to save money. Despite the competition, Kodak's revenues and profits continued to increase during the 1990s, due to the strategy changes and an overall expansion of the global market. Under CEO George M. C. Fisher, Kodak's annual revenue peaked at $16 billion in 1996 and profits peaked at $2.5 billion in 1999.
In May 1995, Kodak filed a petition with the US Commerce Department under section 301 of the Commerce Act, arguing that its poor performance in the Japanese market was a direct result of unfair practices adopted by Fuji. The complaint was lodged by the United States with the World Trade Organization. On January 30, 1998, the WTO announced a "sweeping rejection of Kodak's complaints" about the film market in Japan.
A price war between the two companies began in 1997, eating into Kodak's profits. Kodak's financial results for 1997 showed that the company's revenues dropped from $15.97 billion in 1996 to $14.36 billion in 1997, a fall of more than 10%; its net earnings went from $1.29 billion to just $5 million for the same period. Kodak's market share declined from 80.1% to 74.7% in the United States, a one-year drop of five percentage points.
Fuji and Kodak recognized the upcoming threat of digital photography, and although both sought to diversify as a mitigation strategy, Fuji was more successful at diversification. Fuji stopped production of motion picture film in 2013, leaving Kodak as the last major producer.
From Wikipedia’s article on Kodak, shared under CC BY-SA 4.0.7