The transformation of our industry over the past few years has been nothing short of mind-numbing. The impact of the digital age upon the world of photography will someday be the subject of case history study at Harvard Business School, marketing textbooks, and theses of how technology changed the world.Refurbishing a minilab at BEF.
We've seen the bankruptcy of major manufacturing brands (Gretag), the consolidation of retailers (Wolf, et al, into Ritz), the reduction of Qualex wholesale labs from 53 to 22, the loss of thousands of independently-owned minilabs, the meteoric rise of electronic firms to the photo industry with cameras and kiosks, and the humbling of Kodak as it was removed from its preeminence among the Dow-30 industrial stocks while re-casting itself from the film environment to digital. In the transition, tens of thousands of folks have lost their jobs and their fortunes.
Digital cameras are already outselling film cameras and that black swarm we see on the horizon are not locusts, but cell phones with digital cameras, up to 2-megapixels and more. The needle on the compass is certainly shifting.
But not all fingers can be pointed to pixels as we cast about looking for insights into the shifting sands. There are, without a doubt, elements of inefficiency, mismanagement, reluctance to change, financial disability and the mercurial nature of the consumer market to consider. Plus, the myriad hazards of participating in any highly competitive industry. All, and more, are contributors to the tempest enveloping the industry.
How to cope?
No matter the venue, if there are two or more minilab folks together, the common subject is, "What do I have to do to change my business so that I can survive in the digital world?" PMA's current series of seminars for the independent minilab is entitled: "Digital Minilab Makeover" and addresses the need for the indy to restructure their business. I attended one of the seminars filled with owners looking for those answers and they are even willing to talk openly about it with their competitors sitting at the same table. Signs of desperation.
Manufacturing firms have multi-tiers of executives to thrash out new business plans. Restructurings abound. Large retailers have forums to discuss common problems and work out solutions. The most productive forum these days may well be the business pages or the internet.
Niche Market Concerns
But, just suppose you have a small firm in a niche market that deals with just a tiny segment of the industry and you find that segment in a serious downslide? No one to talk to. Few to mourn if you don't succeed.
BEF Corp, Allentown, PA, is such a firm.
Operating somewhat below the radar, BEF was founded in 1983 by Ed Brewer, the sole owner, with a Kodak background in service. It was his idea to not only act as a broker for used minilabs, as others were already doing, but to take in these used labs and recondition them for re-sale. Today, BEF bills itself "the largest (and oldest) provider of pre-owned minilabs in the world."
Ed built up a large facility to recondition machines of all brands. This meant accumulating a huge inventory of parts as well as service manuals. In my visit to their facility for this column I saw the racks of manuals, floor to ceiling, alphabetized by brand. Quick calculations suggested maybe 2,000 parts, service and operating manuals-even the Noritsu QSS-11 that I had in my old labs. As for parts, they take up almost a whole warehouse and I'm told the value is about $7 million.
Equipment that BEF sold in the U.S. was offered with installation and service. For this the firm started to build a field service operation to take care of these needs.
A few years ago, BEF suffered a blow with the untimely death of Tom Bono, a key guy in the firm's desire to move into new technical areas. There were other personnel changes, as well, and Ed went into the market and brought in three top guys who now run the Allentown headquarters operation. Ed spends most of his time in Florida and, for this interview, I spent an hour in a video hookup with his image on a wide screen TV hanging on the wall of the conference room. [A first for me.] Ed apparently stays close to the Allentown activities from the conference room wall.
The current team is made up of John Frederick, VP operations, a 33-year Kodak veteran of Kodak's service activities, William Carroll, director of sales, an auto industry executive, and Keith Lyden, general manager and controller, formerly with a construction-engineering firm. All have been with BEF for less than four years and direct a staff of 160 employees. Their charge was to deal with the challenge of change within the industry and find new ways for BEF to profit.
In the early days, BEF was especially successful in the export market shipping systems throughout the world. They seemed to connect especially well in South America, the largest markets for them being Brazil, Colombia, Argentina and Venezuela. At that time the overseas market accounted for about 60% of its sales. Today it's about 70% as the local market has shrunk.
But the used minilab market has changed radically within a few short years. At one time the market was supported by a large base of independent minilabs that would upgrade their equipment when their five-year leases ran out to take advantage of the latest in technological improvements. As in the used car business, some of these labs were traded back to the manufacturer while other dealers either sold their used equipment to another dealer or a firm like BEF.