Kodak Snaps Itself Out of a Tailspin : Change in Corporate Culture Brightens the Film Giant’s Future

The walls tell it all at Eastman Kodak Co.

Historically, the company’s sprawling manufacturing center, known as Kodak Park, has been painted in dull and conservative factory colors like gray or brown.

But a summer painting project produced bright flames on fire doors, murals in hallways, slogans and bright colors on cement walls, and pop art next to the soda machines.

In one control room, workers can scribble milestones on the heating ducts and the ceiling. The notations date back no farther than 1986.

“Before then, writing on the walls wasn’t exactly considered the thing to do,” said Ralph Olney, a unit manager in the film-sensitizing division, whose graffiti-prone staff works on a machine three football fields long that rolls out more than 300 feet of color film a minute.

Relaxation of Work Rules

The new decor is the most visible symbol of the radical changes that have given the 108-year-old photographic giant a new image and a new outlook. On Friday, the company took a major step in diversifying into the pharmaceutical industry by agreeing to purchase Sterling Drug for $5.1 billion.

Gone are the days when suspicion and anxiety ruled, when employees were afraid to make suggestions and were told when to work an extra shift or when to cancel weekend plans because more work was needed.

Today, workers are urged to shut down massive production lines if they spot a problem. They’re asked to work overtime. And they’re given sophisticated statistics and information so they understand more of the big picture.

“I think what’s different is that we’re told more, so we know what’s important and what it means to make a change,” said Rick Ladue, a production worker in Kodak’s paper support division.

The changes have helped lead a turnaround for Kodak, which suffered six straight quarters of declining profits throughout 1985 and into 1986 before things started to pick up.

Through three quarters of 1987, Kodak’s profits of $936 million reached a record high, more than triple the same period in 1986, when they were $299.4 million.

“I think what we’ve done is moved from a parent-child relationship to adult-adult and now people come to work excited about what they’re able to do, excited about what they themselves can impact,” said Ron Heidke, who’s in charge of manufacturing film and paper at Kodak Park. There has never been a labor union at Kodak, partly because the company always paid top salaries and offered excellent benefits. Now the company is offering its employees something new--the chance to speak up, Heidke said.

The transition is one that America’s other large companies have either already started or must begin soon, said Colby Chandler, Kodak’s chairman and chief executive.

“Kodak was quite representative of an old culture,” Chandler said. “People seek the comfort level of groups. They tend to take the safe routes, rather than the ambitious and daring routes.”

The change in corporate culture, along with a strict cost-cutting program and thousands of layoffs, have helped send Kodak’s sales and profits soaring.

Chandler predicted that 1987 would prove to be a record year for sales and operating earnings when results are reported in February.

The success comes after two years that included the costly ($494 million) and embarrassing court-ordered withdrawal from instant photography because of violations of Polaroid Corp. patents.

Analysts are pleased with the new Kodak, but not overwhelmed.

“The company’s gotten some breaks,” said Michael Ellmann, a Wertheim Schroeder & Co. analyst

What made the past year so good, Ellmann said, is the same thing that made previous years so bad--things beyond the control of corporate management.

“I mean the dollar was so strong and just kept getting stronger, which just kept hurting Kodak,” he said. “Now the dollar is weak and Kodak is getting a big break.”

New Markets

Another break, according to Eugene Glazer, of Dean Witter Reynolds Inc.: a jump in the number of photos being taken.

“I think most everybody expected to see a 5% to 6% increase in the number of pictures taken and it’s actually running closer to 10% this year,” Glazer said.

The new aggressiveness at Kodak is unmistakable. It is acquiring new businesses, jumping into joint ventures and discontinuing or swiftly introducing new products.

On Jan. 13, the company made an impressive entrance into the color copying market with a machine that is nearly four times faster than any other color copier. The company is also selling batteries and cameras made in Japan and is active in biotechnology.

The company’s greatest challenge, Chandler said, is in keeping things from sliding backward.

“I’m not going to be satisfied until every individual in the company feels the need to be an individual contributor of ideas and judgment,” Chandler said.