Trump Administration Plans to Give Kodak $765 Million Loan in Unlikely Pivot

Trump Administration Plans to Give Kodak $765 Million Loan in Unlikely Pivot

Kodak, the film giant whom has been swirling the drain for nearly a decade, may be getting an unexpected lifeline.

8 years ago, Kodak — whose head office is located in Rochester, New York — filed for bankruptcy protection and began selling off assets in a bid to stay afloat. Kodak was one of the worst affected companies by the digital camera revolution when it did not evolve with the industry and film sales plummeted. This culminated in a near terminal position for the company and its stock price was in free fall. Now, Kodak's survival might be back on the cards, but through an unexpected route; the same route which has gutted so many other companies: COVID-19.

The U.S government has put forward a loan of three quarters of a billion dollars to leverage Kodak's facilities and procedures in developing chemicals, traditionally for camera film. This will be harnessed in combating the virus by the once titanic company producing ingredients for generic drugs used to fight the coronavirus.

Since the announcement on Tuesday, Kodak's share price has increased by over 60% and the giant who has been on its knees for many years now, might just get the boost it needs to rise back up. Jim Continenza, Executive Chairman of Kodak said, "Kodak is proud to be a part of strengthening America's self-sufficiency in producing the key pharmaceutical ingredients we need to keep our citizens safe."

Trade advisor to Trump, and White House spokesman Peter Navarro put a more political spin on the move, noting that, "If we have learned anything from the global pandemic, it is that Americans are dangerously dependent on foreign supply chains for their essential medicines." Navarro also added that the loan will create jobs in Rochester, which is undoubtedly a valuable side effect. Trump called this loan "one of the most important deals in the history of U.S. pharmaceutical industries," calling it a "great American company."

This isn't the first company in the industry to pivot in an "all hands to the pump" effort to combat COVID-19, with Fujifilm working on one of the most promising vaccines.

Lead image a composite using image by The White House from Washington, DC used under Creative Commons.

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27 Comments

Twum Hene's picture

What does shaking hands with Kim Jong-un have to do with Kodak?

Deleted Account's picture

That didn't take long.

Alex Reiff's picture

I honestly wouldn't have given a second thought as to who was under the Kodak logo of you hadn't said anything, I don't think most others would have either.

Steve Pellegrino's picture

That was the first thing I noticed. It's obvious where the photo is taken, and whose hand Trump is shaking.

I'm sure they were just looking for a photo of Trump shaking hands, but putting the Kodak logo over Kim Jong-un, while in Korea, wasn't the best way to demonstrate the US helping an American company.

Peter Mueller's picture

Unfortunate (and a little lazy) choice of photo used to make the "Deal" image.

Restoring national security by reducing reliance on foreign markets is what he's always lobbied for on his platform, and this is another case of him doing what he said he was going to. I, for one, respect his sincerity in his role, a very rare behavior among politicians. He's predictable and in this matter, spot on. Bringing jobs back to the US is noble, not political.

Twum Hene's picture

He probably has business in it or one of his goons..........and so this move to "wash" some money for them.

Marek Stefech's picture

do you have some evidence of that?

Bernie Bros's picture

Of course he doesn’t. But don’t blame him, after a long night of burning small businesses and beating innocent bystanders he probably can’t think clearly.

Twum Hene's picture

hahahaha, of course I don't........;).

Pignose Dennis's picture

If CNN don't need evidence, he don't need it

Kawika Lopez's picture

The fact that Kodak has been struggling for many years just means that it’s not a profitable business model. They make great products for those that use them, but clearly their overhead, business practices, or manufacturing process is inefficient. Companies like this need to deal with the natural process of loss without government help.

Not just Kodak. Any company that isn’t profitable. Otherwise companies like this, that receive bailouts, are increasing government spending and increasing inflation, all while they are tying up resources to create products that aren’t profitable, and subsequently, not creating economic growth.

It would be a little different if Kodak was a victim of COVID-19, but they have been struggling for many years before this all happened. So have many other non-photography related companies.

Bernie Bros's picture

Critical supplies like pharmaceuticals must be made in the US, even if labor expenses make it less competitive than Chinese sources.

Kodak Advanced Materials has been making drug precursors for decades.

Kawika Lopez's picture

It’s clear we can’t compete with foreign pharmaceuticals. Making them in the US might be good for safe keeping, but it only hurts our economy because the opportunity cost is so great. It wouldn’t be as much of an issue if our foreign relations were in a better condition.

Bernie Bros's picture

Right, we can’t “compete” with foreign slave labor, so we should just acquiesce to your friends in the Chinese Communist Party so they don’t threaten to “drown” us in a tidal wave of disease.

Charles Mercier's picture

Well another view is, if Americans are willing to work for $5/hour, manufacturing will come flooding back to the States.

Alex Reiff's picture

To answer to both this, and the other reply: Just because a company isn't profitable doesn't mean it doesn't contribute to economic growth. They're still paying workers, vendors, etc. who are then going out and spending that money, and creating a product that is being used. They just don't have enough money left over to keep for themselves. Also, inflation isn't really an issue, the amount that the government is spending is offset by the fact that banks aren't lending as much.

To say that all critical supplies must be made in the US is an overstatement, to my knowledge that's really only true of certain defense-related items. In fact, Trump just signed an executive order allowing Medicare to import medication. Having at least some made in the US, though, is a good idea as the PPE shortage showed is what can happen when foreign supply chains break.

Kawika Lopez's picture

Im confused as to how inflation isn’t an issue. Also, banks are still lending a ton because of artificially low interest rates. It’s been that way for years, which is also contributing to inflation. It’s an artificial economic growth, aka an economic bubble. What happens when we’re using all these resources, theres a ton more money added into circulation, but we have no value added to our GDP. No foreign country will value the US dollar because we have more of it, but no increase in value.

Alex Reiff's picture

Disclaimer, I'm not an economist. I took a couple econ classes in college, and have been consuming some articles/podcasts from economists explaining the situation.

Inflation basically occurs when the money supply increases, but the money supply isn't just cash. It's also credit. Partly because credit contributed to a person's buying power and therefore willingness to spend, but also because fractional reserve banking allows banks to essentially lend the same money to multiple people, effectively creating more cash. While banks are still lending, they're being more cautious about it in the current economic climate, and people are being more cautious about borrowing and spending on credit. This has reduced the money supply, so the Fed can basically print money to fill in that gap without it causing unusual inflation.

Felix C's picture

Actually, the Fed is more worried about deflation than inflation right now. If we get deflation, that would be catastrophic.

g coll's picture

If only I had bought shares in Kodak yesterday!

Rick Rizza's picture

Kodak is not the only company that impacted by digital camera, but surely is not smart enough to survive. That can mean putting money down the drain.

On the other hand, Agfa did a smart move in changing from film business to the hotel industry with their Motel One. They still maintain their x ray film division though.

Bernie Bros's picture

Uh, Kodak does quite well in the industries it serves, such as the production of advanced materials, including pharmaceutical chemical precursors.

But I get it, the facts aren’t as relevant as is “orange man bad”.

Andrew Mackauley's picture

My goodness. The amount of vitriol on this thread is disturbing. Are the cruel responses necessary? I think not.

Mutley Dastardly's picture

I'm absolutely no fan of Trump - but this seems to be a good investment to produce more base-products in your own continent. Kodak seems to have a past of producing chemicals for the health industry. They can restart this soon - and within 4 years they'll be capable of producing a whole gamma of chemicals needed for generic medicine production.
Now the whole world is dependent on one nation for its ground materials to produce medicine. That's a situation that has come to light thanks to covid-19. And the risks (we're not talking politically) are too high to let this continue.
China closed down certain product lines for their own needs at the outbreak - and left the others fighting for what was left. That's the free market - and the disadvantages of wanting to pay only the lowest prices.
And the image with the big leader from NORK - is good humor. Just have a laugh... I think it's well made. There's enough bitterness due to the events all over the world. The vinegar is getting really expensive - and there 's no need to drive the prices up.
Humor is still free - and it's also good for our health...

Andrew Mackauley's picture

A well-reasoned and respectful comment, with a nod to humor at the end. Excellent analysis!

Jim Tincher's picture

Ever wonder what the photography landscape would be like if Kodak had followed through on their invention of the digital camera in 1975?