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. Last Updated: 07/27/2016

Kodak Restructuring To Cut 10,000 Jobs

ROCHESTER, New York -- Eastman Kodak Co. said Tuesday it is eliminating 10,000 jobs, or 10.5 percent of its work force, as part of a plan to cut costs by at least $1 billion and revive sluggish sales and profits.

It is the latest in a series of overhauls since 1983 at the world's biggest photography company, which has encountered increasingly fierce competition from Japan's Fuji Photo Film Co.

The cost cutbacks will be made over the next two years, at least half of them by the end of 1998. Kodak plans to set aside at least $1 billion during the fourth quarter to pay for the job cuts and other expenses of the restructuring.

The company's stock was down $1.37 1/2 at $64.87 1/2 on the New York Stock Exchange on Tuesday morning after the announcement.

The layoffs among Kodak's 95,000-strong labor force worldwide will account for only about half of the savings, company executives said.

The company will reduce research spending next year by between $100 million and $150 million compared with this year. The company's overall research spending in 1996 was about $1 billion.

Kodak also will reduce its sales force, hire other companies to do more of its manufacturing, and look for more joint ventures and partnerships. The job cuts will be made unit-by-unit and employees are expected to be notified by Dec. 1 at the latest.

The layoffs were expected to be made quickly, but Kodak did not specify how soon.

Stung by an anticipated 25 percent slide in profits this year and Fuji's inroads in the U.S. film market, Kodak in September axed 200 senior and middle management jobs.

In refocusing research costs, Kodak is attempting to curb this year's projected losses of $400 million in digital photography. Losses totaled $300 million through the first three quarters.

Chief executive George Fisher's predecessor, Kay Whitmore, was fired in 1993 for failing to cut costs deeply enough. Two weeks later -- before Fisher's arrival from Motorola -- Kodak slashed 10,000 jobs.

Shedding health care and consumer products businesses to concentrate anew on photography, Fisher spent huge sums on growth in electronic imaging, which records film on computer chips. He pared 4,000 jobs in 1995 but has until now stopped short of sweeping layoffs.

Fisher addressed meetings of investors and journalists in New York on Tuesday to announce the cost cutting.

"We have begun actions to achieve a minimum reduction of $1 billion from our total cost structure over the next two years," Fisher said, adding that the savings would be used to "provide competitive flexibility and restore the company's continuous improvement in earning performance."

At the same meeting, Kodak Chief Financial Officer Harry Kavetas said management would recommend a pre-tax restructuring charge of at least $1 billion in the fourth quarter of 1997.

"Right now it looks like about half of that charge will be employment-reduction related and the other half write-down of assets," he said.