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Eastman Kodak Shuts Down Qualex Photofinishing Division



In Jerry Lansky's January 2008 On-Site column, in PTN, he noted that Qualex, Inc., a wholly owned subsidiary of Eastman Kodak...bills itself on its website as "the largest wholesale and on-site photofinishing company in the world."

That statement is soon going to change.

Eastman Kodak announced the closure if its remaining Qualex photofinishing labs this past December. The company had closed all but three Qualex wholesale labs earlier in 2008. The final pickup and delivery of film by Qualex to its retail customers will occur by the end of March 2009, giving those retailers a few months to come up with an alternative photofinishing solution.

Brad Kruchten, vice president and general manager for Retail Printing Soutions, for Eastman Kodak, said that the company contacted the retailers who would be affected by this decision at the time the press release was distributed, announcing Qualex would be shutting down its wholesale photofinishing. The press release was dated December 16, 2008.

According to Kruchten, Qualex has offered to help its customers in finding new options for their photofinishing needs. He said that the date of March 31, 2009 would give Qualex's customers plenty of time to make new arrangements for their photofinishing needs.

Six or seven years ago Qualex labs were pumping out about 300 million rolls a year. Qualex currier's would make daily pickups and deliveries to its retail customers, sometimes twice a day for the larger, busier customers. That number dropped to about 30 million earlier this year. And, those daily visits to retailers for pickup and delivery have since dropped to two-day service.

Speaking to Qualex president Mark DeSimone, for an article in the beginning of 2008, Jerry Lansky reported that at the time, Qualex served about 30,000 retail locations a day. As for the ubiquitous Kodak drop box, it, like the telephone booth, is rapidly diminishing in number.

At one time there were about 50,000 drop-boxes for Qualex photofinishing, and in that article, DeSimone explained the number is only half of what it once was.

However even though consumers are still dropping [some] film into the drop boxes, it was no guarantee that the film would make it to Qualex's labs for processing.

In Lansky's On-Site column, dated June 2004, "Brad Kruchten acknowledged that massers with equipment are more likely to drive rolls to their own machines rather than back to Qualex--compounding Qualex's problems. Since the equipment investment has been made, store management would be inclined to process on-site."

"The Qualex shutdown should come as no surprise. After all, they have been closing plants every year from the time of their peak of about 100 locations 12-15 years ago, following a major acquisition program, to about a dozen two years ago," said Lansky, in reaction to the news that Qualex would be shuttering its photofinishing doors.

"Qualex's huge film processing operation was faced with the same shift to digital as the smallest one-hour lab. But its massive infrastructure of physical facilities, pick-up/delivery services to some 35,000 drop boxes and administrative and executive personnel structure could not be sustained in light of digital, the overall economic conditions and the excessive pressure on Kodak to boost financial performance," added Lansky.

"However, as the decision falls heavily on those with the pink slips, it could open up new opportunities for local one-hour labs as the only consumer choice for film processing.

"The aggressive independent might do well to connect with his local drug store and supermarket, with whom he had been competing, and working out some program to provide outlab processing," he concluded.

Brent Bowyer, executive director for the Independent Photo Imagers added, "It wasn't surprising given Kodak's public strategic plans announcements over the past year or two. Less competition is good for local dealers as long as everything else remains the same.

"The question is how much longer can local dealers "live the dash" of this segment of image archiving? Those that have either built their "local expert" persona, vertically integrated, diversified, provided excitement and experience to customers or are providing stellar service to professionals and moms are doing very well and living the new dash. That just didn't match with Kodak's strategy," Bowyer added.

After hearing of the Qualex closure, the question on everyone's lips was whether Fujifilm's wholesale photofinishing operation was in the same precarious position that led to the Qualex closure.

"Fujifilm is committed to supporting our retail partners and will continue providing our customers with wholesale photofinishing options; including traditional film processing, digital printing and a full array of photo gift products," replied Joseph Palaggi, VP, Operations, Planning & Development, Fujifilm USA in response to our questions.

What About the Website?

Kodak's EasyShare Gallery, is the digital photofinishing website that offers printing, as well as photobooks, photo gifts and other products to consumers. What would Gallery be doing for its photofinishing needs with Qualex closing?

Kruchten explained that Kodak's EasyShare Gallery website has its own lab in Emeryville, California and although Qualex labs had been doing some fulfillment, the Emeryville location would be doing all of the photofinishing for the website. Kruchten noted that they [Gallery] has other partners that it uses for certain products, and will continue working with those companies in the future.

With Qualex closing its doors, what will happen to future paper and chemistry prices? Kruchten explained, "While Qualex was a strong consumer [of] paper for Kodak, the expectation is that the majority of the paper volume will be picked up by Kodak Gallery, current customers such as CVS who use Kodak paper, and other labs who may pick up wholesale photofinishing work."

The Future of Perfect Touch

In 2002, Kodak had introduced its Perfect Touch processing service. Perfect Touch was designed to improve the quality of photographs through digital imaging; introduced while digital printing was still in its infantcy. Perfect Touch processing involves individually scanning and digitally processing each picture for maximum quality.

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