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News and Notes

Before the bankruptcy declaration, the master plan was to have the management at San Marco buy that operation from Gretag and continue to manufacture and supply Gretag minilabs worldwide. This would include the Masterflex Digital series, the new e-Motion lab and the NetPrinter, a stand-alone digital-input system with an integrated paper processor. Switzerland would continue to supply the printer sections for the minilabs.

Likewise, the management of the U.S. business, was putting together a buyout plan for its operation. Presumably, Telepix was to do the same. With these operations pared out, Gretag Switzerland would concentrate on central lab equipment only, viewed by some as a distinctly diminishing market.

The bankruptcy filing puts all of this planning on hold until such time as the Swiss court determines what actions are to be taken.

Gretag has an installed base of about 12,000 minilabs in the U.S., making it among the leaders here. However, they accomplished this through one customer—not always a sound business model—Kodak's Qualex operation. The unique configuration of the Gretag Masterlab and Masterflex models with their compact footprint, some with one-step, film-in/print-out operation, made it especially attractive to the drug, supermarket and mass merchant segments where space is always at a premium. Other equipment manufacturers were slow to accept the need for a small footprint unit ceding that market to Gretag. That has since changed.

Qualex built it's entire On Site Picture (OSP) empire on the Gretag unit. When PTN visited the Qualex facility about two years ago, Qualex's commitment to the Gretag line was clear. They had a repair/rebuilding facility that stripped an old unit down to its frame and rebuilt it to look brand new. Complex electronic motherboards were analyzed and repaired on site. All racks from every unit in the field were brought back to cleaning facilities and recycled.

The operation was put in place to rebuild units returned by OSP customers who would be upgrading to larger or newer systems. The rebuilds would be installed in other locations by Qualex. The latest events could seriously impact the value of Gretag's minilabs.

The matter of future parts supply for these machines, should Gretag totally fold, could be hairy for Qualex and its customers. Kodak was sensitive to the subject and not so long ago made a direct investment in Gretag which represented a 5% ownership in the company obviously covering its rear. Kodak is one of the largest creditors in the bankruptcy. Qualex most likely has been aware of the frailty of Gretag and has been stocking up on parts or seeking other sources of supply.

Qualex has been weaning its operation away from Gretag for some time due to the dissatisfaction of some of its best OSP customers, which include the likes of CVS, Walgreens, etc. The bloom started falling off the rose when Gretag was unable to make timely deliveries of APS retrofit kits and OSP customers were unable to process that film at a time when APS was big news. And then, there were problems with the kits once they were installed.

About four years ago, Gretag introduced a prototype Masterflex Digital minilab to answer the need by OSP customers for a digital system. However, deliveries didn't start until this year, long after the rest of the industry had turned to digitals almost exclusively. In general, there was a loss of confidence in Gretag's ability to perform and fulfill its commitments.

As a result, Qualex has been turning more and more to other sources, namely, Noritsu and, to a lesser degree, the Kis-Photo Me machine. And, according to sources, other systems are being considered.

On another matter, the Gretag announcement that they would be quitting the kiosk business raised a few eyebrows, considering that Gretag had been working with others to develop a kiosk line. In one program they had an agreement to develop a kiosk or minilab employing the Applied Science Fiction dry film processor. It was considered a break-though for ASF who had been seeking minilab partners. Action on that program has already been halted.

In another program, Gretag was running with Polaroid to develop a kiosk utilizing the Polaroid Opal system and had planned to show a unit at PMA. Deirdre Evans, Polaroid's divisional VP, told PTN, "We've decided not to go to market with Gretag." Other partners are being considered but she would not identify who they may be.

Olympus has been working with Gretag in the development of its True Print kiosk. Joseph Leo, director of new business development for Olympus, said, "We are watching closely to the events at Gretag. There is still no understanding of the new setup." He said, "Olympus is committed to the kiosk business and will have one with or without Gretag" and acknowledged, "We are trying to open up new avenues."

Gretag has been a player in the industry though its future is now in the hands of the Swiss bankruptcy court system. ptn