Magazine Article


German Firm Expected to Pick Up Agfa Parts and Service Operation

AGFA logo

As their supplier heads off into the sunset, the major concern for the Agfa dealers in the U.S. and Canada is the fulfillment of warranty obligations, along with parts and service for the equipment they own.

With investments ranging to over $150,000 for minilab equipment that may be only a few years old and for which lease payments have not been completed, many Agfa lab owners are reaching for Tylenol PM in an effort to get a good night's sleep, as visions of burned circuit boards dance in their heads. It hasn't been easy for them. Having finely tuned equipment sitting idle during the holiday rush is a nightmarish scene with devastating consequences for an owner's business and married life.

At this writing there are positive signals, though no signed documents, that suggest a plan is being put into place that would protect Agfa lab owners on these shores. Bing Liem, president of AgfaPhoto U.S.A., said in a statement made on December 13, "It is AgfaPhoto's intention to make the transition to a new supplier as seamless as possible for the company's valued customers."

The hope is that a new firm, a&o Imaging Solutions, GmbH, a German operation that has been in serious negotiations, will take over the parts and service responsibilities for the U.S. and Canada. Bing said the deal could be completed this month. That firm is being headed by Hans Magnon, who was previously responsible for all Agfa's tech services worldwide.

a&o Group, Potsdam, Germany, has already purchased Agfa's chemical facility in Germany, as well as whatever spare parts remained in inventory. They are a large company already engaged in providing technical services throughout Europe and would expect to have the smarts to be able to step into this market.

As yet unspoken for as the once-mighty Agfa imaging empire collapses in a heap are the manufacturing facilities for equipment and spare parts and the paper and film-coating facility. In light of the direction that the industry is taking, there may not be too many interested in buying a film and paper operation these days, especially since other vendors have already stepped in to fill the Agfa void in an effort to boost their own waning fortunes.

So far the future of Agfa minilabs is in doubt. It has been a well-respected line of equipment with pricing and features attractive enough to win a contract to supply Walgreens. It has long courted the independent minilab owner, promoting itself as the only firm dedicated to that constituency. But that market segment has been in serious decline.

Photo-Me International, which earlier bought the Agfa line of wholesale lab equipment into its Imaging Solutions division (not related to a&o Imaging Solutions), had been seriously looking into taking over the equipment line, but talks broke down months ago over the price involving the use of the Agfa brand name. I understand that these embers may be fanned again. Also, there is a possibility of a management buyout.

Even if some white knight were to come along and rescue the equipment line, the loss of credibility as a result of the Agfa bankruptcy and the protracted time it is taking to put the broken pieces back in place has seriously weakened the brand for a future investor. It would require a serious financial commitment to restore confidence in the line at a time when the entire minilab segment is wrenching under the digital maelstrom.

In his statement, Bing Liem said that all sales functions would be shut down by December 31, and at this writing the sales group and its inside support folks are gone.

With little in the way of new income being generated from sales, Bing has managed to keep intact the entire service operation, about 50 people. Though the financial wisdom would be to cut that big overhead as the company prepares to shut its doors, Bing is focused on two objectives: to continue to have service and parts available for existing customers; and to keep the unit in place as negotiations continue for someone to take over the service business.

Bing has the luxury of running a financially viable operation that allows him to carry the service and parts activity, which normally represents only about 10% of AgfaPhoto's revenue. Agfa operations, such as those in Australia and England, declared their own bankruptcies shortly after the German parent did. AgfaPhoto U.S.A. has maintained a positive financial position allowing for an orderly shutdown.

The hope is that a deal with a&o in the U.S. will be consummated, and that service and parts will continue to be made available without a hitch.

One has to wonder whether a&o would be interested in filling this role unless there were some plan afoot to continue supplying new equipment to this market. (Might they be a suitor for the minilab line?) If not, the service activity would continue to dwindle as the existing base of Agfa equipment ages and is taken out of service. If the name and line were to become extinct, it would be expected that existing units would be scrapped at a faster than normal rate, especially as its value on the trade-in and used equipment market would plummet.

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