Kodak Announces Plans to Eliminate 4,500 Jobs

From Associated Press

Disappointing second-quarter sales prompted Eastman Kodak Co. to announce a reorganization plan Wednesday that will trim 4,500 jobs worldwide this year.

The photo company acknowledged that the cuts were 3,500 jobs above what had been previously forecast. Kodak employs 145,000 people worldwide.

Kodak will also restructure or divest businesses with annual revenues of $1.25 billion through sale, closure or reorganization and implement "substantial reductions in operating costs."

Kodak spokesman Paul Allen said the company wouldn't reveal which units would be affected, but some have speculated that its Information Systems business segment, which includes copiers, microfilm and graphics equipment, might be targeted.

Tough Decade

For the second quarter of 1989, that segment posted a $144-million loss.

The company said the moves are being made to raise $1 billion in operating cash during 1990.

Allen could not provide specifics on where the jobs would be lost.

Colby H. Chandler, the company's chairman and chief executive, said, "We have dealt with adversity in the past, but never with such broad-based intensity. These uncharacteristic actions are being carried out with great resolve by the entire management team."

It's been a tough decade for the photography industry giant, which had turned around a sagging bottom line twice in the 1980s, only to see the same problems--increased competition, a rising U.S. dollar and higher costs--return to eat away at profits.

Thousands of workers were laid off in 1983, and in 1986, 10,000 more were laid off. In both instances, profits rose substantially the next year.

The company also said it would put "increasing emphasis on incentive compensation and benefits by placing at risk up to 40% of annual management pay."

And in Rochester, where the company's headquarters and several plants are located, Kodak said it would suspend changes in the structure of wages and salaries in 1990.

Chandler said the actions "invade sacred areas of the company but are a needed remedy for the ills that have resulted in disappointing second-quarter results."

On Aug. 1, the company announced earnings fell 85% in the second quarter, down to $60 million, or 18 cents a share, from a record $390 million, or $1.20 a share, a year earlier.

For the first half of 1989, earnings fell 60% to $260 million, or 80 cents a share, from $650 million, or $2 a share, a year earlier.

Chandler said units would attack costs by cutting back on excessive inventories and by shortening the length of time between sales and receipt of payment.

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