An enduring legacy

In today’s footloose world of work, talent retention and attraction has attained greater significance. A 1996 Washington Post article by now-famous Malcolm Gladwell, then a lowly staff writer, explored the impact of General Dynamics’ abrupt departure from Rochester in 1971. Gladwell noted that the company relocated only a “few dozen carefully selected specialists and executives,” then told the stories of the smart, motivated people left behind.

The leader of the General Dynamics’ underwater navigation department founded ENI, now part of MKS Instruments. While offered the opportunity to move, Edward McDonald, head of the anti-submarine warfare division, founded EDMAC instead, now part of Ultra Electronics’ Flightline Systems. Other General Dynamics orphans joined R.F. Communications (now part of L3 Harris), Xerox, Bausch & Lomb and other local firms. Charles Plosser, then dean of the Simon Business School at the University of Rochester, told Gladwell: “I think what happened here is a healthy phenomenon. It wasn’t without its pain . . .  But it has helped us build a more diversified business base, which has helped in turn to insulate us from shocks in the economy.”

Published rankings of the nation’s least-diversified metro economies in the 1980s singled out Rochester, and for good reason. Employment at Eastman Kodak, Xerox and Bausch & Lomb totaled 74,000 in 1980, 17 percent of total employment. As wages at all three firms, particularly Kodak, were much higher than the metro average, the three-firm share of total personal income was even higher than its share of employment. Added to this, the generous Kodak bonus was equal to 2 percent of the total metro area payroll in the early ’80s. A rough estimate of supply relationships and spillover impacts suggests that the contribution of these three firms approached half of the local economy.

Kodak founder George Eastman also influenced the economy in less-direct ways. I moved to Rochester in 1991 to join the Center for Governmental Research, one of many nonprofits established through Eastman’s generosity, and supported for decades by Kodak. His philanthropy and Kodak-connected fortunes live on at the Eastman Museum, the Strong Museum of Play, the University of Rochester (particularly the Eastman School of Music, and the dental and medical schools), Rochester Institute of Technology, the Rochester Philharmonic and many other institutions.

Kodak Hall at Eastman Theatre

Eastman’s emphasis on building up Rochester’s cultural and community life has helped make our community “magnetic,” contributing to the retention of former General Dynamics employees and the tens of thousands who have left Kodak’s employ in recent decades. Just as the people left behind by General Dynamics helped diversify and strengthen the Rochester economy, the same can be said for ex-Kodakers. 

Making the Kodak connection

Kodak’s fall from grace has been well documented. Employment has plunged from its 1982 peak of 60,400 to about 1,300. Yet that employment number vastly understates Kodak’s contribution to the local economy today. In a series of posts, I will examine that impact. Although I will touch on Kodak’s future, the emphasis will be on Rochester employers whose present has some direct connection to the firm’s past.

My decision rule is admittedly flexible and somewhat arbitrary. I include companies that were once part of Kodak and then spun out as independent firms; divisions that were sold to other companies; firms founded around technology that was created at Kodak but didn’t have a natural home within the firm; and firms founded by individuals whose training and experience at Kodak made their new ventures possible. And I have surely missed many. I invite readers to email additions to me. Assuming that a number are received, the Beacon will post a revised list.

Even a partial list of current Kodak-connected Rochester employment totals about 8,500 (including Kodak’s current 1,350 jobs). 

Division sales

The largest share of Kodak-linked employment is at firms that were founded through the sale of intact divisions. The largest are L3 Harris Space & Intelligence, Carestream Health, and Ortho Clinical Diagnostics. Collectively, these businesses founded through division sales employ 4,600 here. 

Founded by ex-Kodakers

Many firms were founded by staffers who left Kodak voluntarily or involuntarily, retaining their Rochester connection with a new venture. Employment at firms like OLEDWorks, Lenel (now part of United Technologies) and Optimax Systems totals slightly more than 700 currently.

Kodak spin-outs

Kodak also spun out a number of firms over the years, including through its reorganization in bankruptcy. Kodak Alaris, Ultralife, Arnprior Rapid Manufacturing Solutions and other firms in this category employ nearly 1,000.

This series

In coming weeks, the Beacon will post additional stories about Kodak’s legacy, including profiles of the Kodak connection to specific firms including L3 Harris, OLEDWorks, Snomax, and Lumetrics. A subsequent post will explore Kodak’s present and future through a look at the impact of Kodak’s bankruptcy on the large group of Kodak retirees; an interview with Terry Taber, the company’s longtime chief technology officer; and an overview of the prospects for employment at Eastman Business Park.

Kodak was a major force for good to Rochester for many decades. A stable, profitable and generous employer, Kodak’s presence smoothed the business cycle, created a culture of generous philanthropy and freely shared its deep reservoir of leadership. Nostalgia for those days seems to fuel the many economic development initiatives of recent decades. In the final post of this series, I’ll consider the factors that gave rise to Kodak and explore the various economic development strategies and programs that have attempted to jump start the “next Kodak.” 

Kent Gardner is Rochester Beacon opinion editor.