“Kodak USA crisis doesn’t hurt us in Asia,” says Lois Lebegue

Managing director for Asia Pacific region at Kodak, Lois Lebegue speaks to Noel D’cunha on a con-call from Shanghai; and discusses the Chapter 11 bankruptcy protection and his company’s progress in Asia

17 Feb 2012 | By PrintWeek India

PrintWeek India (PWI): Welcome Lois. Let me start with a Chinese proverb, since you are based out of China. A bird does not sing because it has an answer. It sings because it has a song. What’s the Kodak song for Asia/India?
Lois Lebegue (LL): I think what we need to think about is a couple of key messages today. Kodak in Asia including India, particularly in the commercial space, is very powerful. Kodak in the consumer space continues to refocus its business on the very vibrant, growing and profitable printing segment of the consumers. And Kodak in Asia has made enormous progress in the last four-five years and is using this very strong footprint that is extremely successful. I will give you a bit of numbers and examples of how big we are, how we are growing and in which segment, as we go along.

PWI: The implications of Chapter 11 in Asia! I was in Ahmedabad recently and one of your customers over there was worried. There would be similar sentiments with your other customers as well. Do you have a Kodak-user group in India, as you do in the US?
LL: We have different user-groups across the globe, but we do not have a really organised Kodak-user group in India. However, we are working in close association with many print companies. But coming back to your first point, I take this opportunity to make our message clear with regard to the uncertainty. First of all, I think it’s true in Asia, as it is in many countries around the globe, that Chapter 11 is not well understood by most of the people. Sometimes we associate Chapter 11 with bankruptcy and we associate bankruptcy with liquidation and exiting the business. This is absolutely not the case with us. It’s only Chapter 11 in the US and its US subsidiaries there.  It doesn’t hurt us here in Asia. Chapter 11 refers to the US court that allows the company an opportunity to restructure under the protection and the supervision of the court, but we continue to do day-to-day business operations.

What does this mean? 
LL: It means we are given time and protection to do four key things. One is: continue to bolster or maximise our liquidity. Second: to keep our money tight. No strategic asset, so we continue to reorganise the company more and more, from a very heavy consumer world from the past, to a more, and more digital commercial type of perimeter. We also have under Chapter 11, protection to resolve all our legacy cost. When I am saying this, you need to remember that Kodak was a very big company in terms of employees in the US when we were a very big business in terms of photographic film, and that all these employees now comprise a very heavy financial legacy for us. We need to resolve these issues that are very much part of our history. And the fourth key thing is: giving us time and protection to re-look at our most valuable business plans and have the capacity to expand them, which is the future.

PWI: So, in short, you are saying it’s cleaning the past and reorganising the company for the future, right?
LL: Yes. If you look at examples of American companies that went through the same Chapter 11 protection for the same reasons, you have big names there. General Motors, if you remember, was one of the worst-hit companies and today it is the number one company in the world. The company went through Chapter 11; were able to reorganise themselves and emerge a much stronger company. That was also the case with Chrysler, United Airlines. Closer to us, Japan Airlines also went under protection from the courts and has re-organised itself. All these companies are now thriving and have emerged much stronger.To close on the Chapter 11, we are doing this to make sure that we are making the right moves in the business that is continuing in the normal course, and ensuring long-term viability of it. Very clearly we are doing business as usual and we are not going out.

PWI: What are the pillars that you see as the key to Kodak’s plan for recovery?
LL: I’ll talk about Asia overall but it will be very similar for India too. First, we have a very strong footprint here in Asia. That’s a very strong pillar to support our future. Let me give you a few examples. We have six manufacturing plants here in Asia that are now manufacturing graphic arts and document management products. We have three R&D centres in Asia with more than 800 people working on workflows and software developments; working on new inkjet technology, for example. We have more than 4,000 employees in Asia with all the different operations. We have 13-14 countries in which we have offices and legal entities. We are doing business with 35 countries in Asia. 

PWI: This includes the project in Goa?
LL: Yes. The project in Goa is a multi-division manufacturing facility, where we do entertainment imaging finishing of print film. In addition we also do finishing of CTP plates in Goa. This will continue, and will continue to be strengthened depending on the market mood. 

PWI: What are some of the trends that you are seeing in the marketplace in Asia? How encouraging is it for Kodak in Asia?
LL: There are some big trends that are Asian, but are probably worldwide as well. In Asia, we see a very strong trend of challenging the way printing is done; a departure from how printing was done in the past.  

PWI: For example?
LL: Asia has moved very fast from analogue plate to thermal plate and now we are seeing lots of opportunities of using digital print for existing printing segments on new applications; that is very valid in the publishing segment, where the book printing segment is being challenged with questions for today and the future. Our technology and the knowledge of the market and the fact that we have a very extended portfolio from analogue to digital thermal plates across offset to digital segments and being able to embrace the hybridisation of offset and digital with seamless workflows in hybrid models, are very strong advantages that our customers and partners are using more and more. That’s a  key distinguisher of our portfolio. It’s certainly encouraging from Kodak’s point of view.There are also a lot of new challenges and opportunities in segments that are growing fast in Asia, like packaging. We have enjoyed success in this segment with Kodak doubling its flexo business in Asia. Our Flexcel range of products is providing a very attractive value proposition compared to the traditional way of printing and manufacturing packaging. Also, in terms of geography, the specific applications reinforce security printing on packaging like adding security feature that would prevent tampering the packaging or prevent copying and having fake products. We see that happening in the pharmaceutical and the cosmetics segments among others, and we expect that to expand.

PWI: Using the digital technology, that is?
LL: We are using both technologies, but we see digital as a good way to provide some safety features that were not possible with the traditional gravure.

PWI: Kodak is working with big enterprise companies. Any updates?
LL: Yes. We are seeing a big demand emerging in Asia from enterprise companies, not entirely from the printing segments, but from enterprises like banks, government, utility companies – who are more and more interested in linking their inputs of information with their outbound printing. And this is a place where Kodak is positioning itself very well with its partners in countries, where we are providing capacities of back-ups and outsourcing to big enterprises.

PWI: How’s the new Flexcel technology performing?
LL: In Asia, we have doubled our Flexcel NX installations and we have robust packaging segments now. We started small a couple of years ago, because this is something we had created. But it’s growing very fast, though we still believe it is modest compared to our offset plates. This is a segment and value proposition from Kodak that gives a lot of advantages to our customers. I was in the Philippines recently where we signed a couple of deals with our customers who are looking at this technology as a breakthrough in terms of quality, flexibility and environment-friendly.

PWI: Can you share some installation figures in Asia/India?
LL: It is difficult to share numbers in terms of installations, because that’s a company policy, which I guess is the case with most companies. However, we can share growth numbers and overall trends. The segments that will be of interest to you would be: packaging on the Flexcel has grown 100% plus; the newspaper segment as you know very well, is a segment that has declined in Western Europe and US, but we still remain very strong and active in the market in Asia. We grew by double digits in the market last year compared to 2010. We are now creating a very strong force in the publishing and book printing segment, which also grew by double digits for us in the region, and India was also a part of it. Actually, it grew faster in India. Our digital printing solutions: the electrophotography of NexPress, Digimaster and the inkjet with our Versamark system grew by 40% year-on-year. 

PWI: Kodak is talking about organisational restructure. Will India be part of it? How much of the move will affect customer support?
LL: If you look at the big picture of the company, Kodak was heavily invested in the consumer world: capturing and printing photographic images. In the last six to eight years, we have moved a very big part of our revenue and teams into the commercial space, the B2B element. We will continue to drive into this direction, which will as a result be a reinforcement of our capacities in the commercial and the print. So there will be no impact whatsoever on the commercial side. Actually, we will put more and more people in a country like India and continue to grow our business, which I think is growing very nicely today.

PWI: The last time Heidelberg entered the digital market, it partnered with Kodak. Now it has aligned with another digital specialist, while you have entered into an agreement to sell Konica Minolta’s C8000. Why this cross-selling of kit?
LL: I don’t know the reasons for others to do it; for us it’s pretty simple. We have a range of products and technologies in the digital printing environment, which is a high-end solution in terms of quality and productivity and long-term capacity. Here in Asia, we see a trend where offset printers are interested in digital print as well. These printers do not have big volumes and hence look for a smaller product that will provide the right level of quantity, quality and service. Aligning with a company that provides us with a range of products that is complementary to ours and provides the quality and service, makes sense. 

PWI: Digital printing has come a long way since the days of the 40ppm, 600dpi printers. Experts say that the future of toner depends upon the changes it makes. Do you agree?
LL: What I think is the number of dpi and dpm depends on the technology you are using. You can have 10,000 dpi solutions looking much worse than the 200dpi. Pure resolution is not something that has any interest if it’s not taken alongside with which technology you are using.

PWI: When do we see the first Prosper installation in India?
LL: By the first half of 2012. To be honest, we are waiting for the site to be ready. If you look at our Prosper installations last year, it’s been very successful. It’s a brand new technology and we do not expect it to go to every country at the same time. We want to make sure that the people who are seeking our technology have the right support from us. We are seeing customers, first of all, producing millions of pages everyday in black and white and in colour. Whether it’s on the presses themselves or with the heads as components that we intergrate on offset presses, or transports for different types of applications, they are very successful and are growing very fast for us.We are seeing customers buying additional units from us and we are gaining more opportunities of business that we didn’t have in the past.So this year is going to be a trend of opening up new countries including India.

PWI: You would want to assure your customers in India. What would you want to tell them?
LL: That we are doing business, there’s nothing changing for customers who are working with us. We are totally committed to continue to serve them better with new technology every year, with the great service that they are getting today.