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Agfa Makes Cuts, Continues To Operate During Reorganization



The provisional administrator of the AgfaPhoto insolvency indicated that Agfa will continue to operate during the company's insolvency period, a reorganization process which is expected to begin August 1. A formal announcement to this effect was expected to be made on that date but was not available at the time of this writing.

At a press conference in late July reported by PMA European Newsline, the administrator, Dr. Andreas Ringsmeister, stated that on August 1, the AgfaPhoto workforce in Europe would be reduced by about 25%, from 1,715 employees to 1,287. Every division is affected though the lab equipment operation seems to be taking the biggest hit by reducing from 466 to 250 employees. Also, two key management people, Eddy Rottie, CEO, and Ingbert Schmitz, director of Sales and Marketing, have been removed from the Board of Management but will continue their operational responsibilities.

Agfa has a variety of facilities in Germany that produce film and paper at one location, chemicals in another, and wholesale photo-finishing equipment and minilabs at others. Every facility is suffering personnel cutbacks. Newsline also reported that a significant portion of the Agfa minilab series is manufactured in China.

Bing Liem, president of AgfaPhoto, U.S.A. attended a July meeting in Germany along with a number of others from about 32 Agfa distributors worldwide to be brought up to date on the insolvency issue. The group was told that all production would be continued during the insolvency period and that investors were being sought to purchase all or pieces of the organization.

Who might be interested? Obviously, no one can talk with authority, but I have heard three names: Hewlett Packard, Kis Photo and San Marco Imaging. For HP it would mean moving into imaging more heavily after its acquisition of Snapfish and its recent announcement of technical advances in inkjet photo printing. Also, it would put HP right in Kodak's face.

Kis is already a large minilab supplier with production facilities in Europe and some modest penetration success though it has had some difficulty establishing its Photo Me brand in the United States. Having a bundle of its own paper and chemistry and adding the Agfa product could be an asset.

Amilcare Berti, CEO of San Marco Imaging, was the principal investor of a group that purchased the Gretag minilab operation and just recently introduced its line of MarKo minlabs. Are you interested in Agfa? "I just sold a soccer team in Italy and I have other business interests. I have enough problems right now."

He acknowledged that he has been contacted but has had no conversations concerning Agfa. He said that taking over a company is a lot more complicated in Europe than in the U.S. since the governments and unions have to be dealt with.

He felt that the Agfa trademark could be of interest to an investor.

Considering the state of the market, it might be very difficult to get anyone interested in the film, chemistry and paper parts of the Agfa business with all of these products on the wane. Having said that, however, Agfa's private label film business, with blockbuster customers like Wal-Mart (Polaroid brand) and Walgreens (Studio 35), continues to be fairly strong, I'm told. I also understand that Wal-Mart has market tested Agfa-brand film in its stores with positive results.

As one of only two major suppliers of wholesale lab equipment in the world there could be some interest in that product line. Even though the number of wholesale labs is diminishing worldwide, those remaining will eventually have to upgrade to digital equipment. The other player, incidentally, is Imaging Solutions, the firm that ended up with the Gretag wholesale equipment line.

The Agfa minilab product could be the most attractive piece of the pie. Large investments in R&D have resulted in a very competitive equipment lineup that has taken some of Walgreens' business from Fuji and is being seriously considered by other major users.

In the U.S., all parties with a stake in Agfa's future are standing on one foot waiting for the situation to firm up. This includes the staff, at AgfaPhoto U.S.A., who are wondering whether their operationóand their jobsówill survive, along with the large base of minilab owners who have long looked to Agfa as being the standard bearer for the independent dealer.

Despite this, all of the local Agfa personnel are unified in presenting a positive spin. With the exception of a few production hiccups at the very beginning of the financial trouble, Agfa has been able to keep pace with all customer orders and, according to an Agfa source, incoming shipments are being received on schedule.

How are Agfa customers reacting to the problem? I was told by a staffer, "Customers are giving us the benefit of the doubt."

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