Troubled Kodak bails out of digital camera manufacturing

Global photography giant Eastman Kodak has reached a deal with Flextronics International Ltd. to hand over its consumer digital camera manufacturing operations to the Singapore-based company. This will include the shift of manufacturing from its core Shanghai production plant. The move is part of a broader reorganisation and efficiency drive as the world's most famous photographic company is struggling to keep up with the global shift to digital technologies. Kodak recently reported its seventh consecutive quarterly loss and has had to cut its full-year revenue forecast.

The new deal will see Flextronics take over Kodak Electronics Products Shanghai Co Ltd and the Kodak Product Centre Japan Ltd in Chino and Yokohama, Japan as well as logistical and operations management for Kodak's consumer digital camera operations. Kodak will, however, maintain the design and development functions for cameras that will continue to carry the Kodak name.

The deal sees Flextronics take responsibility for 550 Kodak manufacturing jobs, including around 200 in Shanghai. Kodak has been keen to stress that there should be no Chinese job cuts as a result of the deal, although there are jobs being axed as a result of the more general efficiency drive in the light of low profitability. Kodak's Shanghai plant is the company's largest digital camera manufacturing unit producing around 95 per cent of Kodak's cameras worldwide. However, in the China market, rivals Canon and Sony enjoy twice the level of popularity for their products and other manufacturers such as Nikon and Samsung are catching up fast. Kodak can claim only 11 percent China market share.

CMI - 22/8/06