Kodak is seeking to eliminate health benefits for 56,000 retired workers. Last month, the company, which is operating under bankruptcy protection, asked the bankruptcy court approval to offload retiree health benefits in an effort to shed the $1.2 billion worker benefit. The company had hearing a last week to consider the proposal and a decision could be made at any time.
This action will affect 56,000 retirees, dependents and survivors. All those who are not eligible for Medicare will lose their health benefits and everyone will lose vision, life insurance and other benefits. This was not an unexpected move. Many companies utilize bankruptcy as a means to abolish pension benefits for retired workers.
The company has discontinued manufacturing its line of printers and also announced the related layoff of 200 workers at the end of September. This brings the number of layoffs to 755 in the past three months and 2,700 since the beginning of the year. The company will cut another 1,000 workers by the end of the year.
If the steep downward trend continues, sales this year will be more than 50 percent lower than last year. Kodak lost $312 million during the third quarter. Total losses for the 132-year-old company, once a pioneer in technology, have totaled $3 billion since 2008.
The upstate New York economy has been losing industries with good paying jobs for decades. Rochester was once known as the imaging capital of the world. The city’s high technology companies—Kodak, Xerox, Bausch & Lomb, Delphi—for years gave this part of western New York a sense of invulnerability to the fate endured by other nearby cities like Buffalo, Cleveland, Detroit and Chicago, which lost steel mills and auto plants to the outsourcing of jobs. The US Census Bureau released Rochester’s 2011 poverty rate, which at nearly 34 percent ranked the eighth worst in the nation.
With the announcement of roughly 4,000 layoffs expected this year worldwide, Kodak’s workforce will be reduced to 14,800.
Kodak’s decline reflects the general decline of industry within the United States and increased competition from low-wage production in the global economy. In particular, Kodak suffered greatly from the move away from film to digital photography. On top of this, the fortunes of the company generally suffered from shortsighted management decisions.