Eastman Kodak Co. of Rochester filed for Chapter 11 bankruptcy protection Thursday, an action that resonates in Buffalo, its sister city on the Thruway that has survived the demise of some its own iconic employers and now battles to adapt to a changing economy.
The struggles of Rochester mainstays such as Kodak call to mind the Buffalo area's loss of companies that once symbolized its manufacturing might, including Trico Products and Bethlehem Steel.
Over the years, Rochester has endured huge job reductions at Kodak, Xerox and Bausch & Lomb, and watched Xerox's corporate headquarters move to Connecticut.
Kodak is trying to reorganize its business, not shut it down, and some observers think the company can withstand the process in some form.
Both Buffalo and Rochester have faced dramatic downsizing by employers that in their heyday were sources of thousands of good-paying jobs. Competitive pressures spurred by technological innovations or by low-cost rivals down South or overseas compelled companies to make sweeping changes.
Andrew J. Rudnick, president and CEO of the Buffalo Niagara Partnership, sees an "absolute parallel" between the two cities. Namely, both have had to find ways to "re-engineer" their economies as some employers struggled.
Nallan C. Suresh, a manufacturing expert at the University at Buffalo's School of Management, also sees similarities but views Buffalo as "a little more blue-collar." He called Kodak's bankruptcy filing a "necessary phase" that will be painful for its employees for the next two to three years. But he believes Kodak will come through it.
"The struggles are very similar [to some Buffalo manufacturers], but I don't think Kodak will disappear," he said.
George M. Palumbo, an economist at Canisius College, said Buffalo's major decline in manufacturing started with the early 1980s recession, while Rochester's began about a decade later, based on measures such as earnings per worker.
"It's going to have similar impacts," Palumbo said. "Those are high-wage jobs."
The Buffalo Niagara region averaged 49,200 manufacturing jobs in 2011, compared with 92,600 in 1990, according to the state Department of Labor. The Rochester area averaged 60,000 manufacturing jobs last year, compared with 124,100 in 1990.
The loss of so many manufacturing jobs has forced Buffalo and Rochester to search for innovations and other industries to cultivate.
"We need to remember that advanced manufacturing is still a big deal here," Rudnick said, citing employers such as Moog Inc. and Greatbatch Inc., whose output is much harder for cheaper overseas competitors to match.
The region has also embraced sectors such as life sciences, logistics, back office operations and agribusiness. Financial services employers, including M&T and First Niagara, have shown strength.
Dennis M. Mullen, a former chairman and CEO of Empire State Development Corp. and now a partner in the Mullen Group LLC, said companies such as Xerox and Bausch & Lomb remain strong employers in Rochester. And even Kodak, for all its struggles, still has about 6,000 to 7,000 area employees.
But the Rochester area has also diversified, through employers such as Wegmans, Paychex and the University of Rochester and its health care system, Mullen said.
As for comparisons with Buffalo's manufacturing experience, Mullen said: "They are comparable, but the issue here is: Kodak technology was not able to keep up with the changing marketplace."
Observers say that there are notable differences between the two areas.
In Rochester, many of the employees laid off from places such as Kodak had engineering, management and research and development skills that they have applied to launching their own companies in technologies such as optics, Rudnick said.
In Buffalo, employees laid off from places such as steel plants were skilled in the precise technologies of the time but found it harder to transfer to their skills to other jobs, he said.
And the massive manufacturing cuts in Rochester and Buffalo have unfolded in different time frames, said Richard Deitz, an economist with the Federal Reserve Bank of New York. The steel industry in the Buffalo area contracted relatively quickly, and longer ago. The restructuring of the major Rochester companies, while extensive, has unfolded over a much longer time frame, and more recently.
Kodak's bankruptcy filing was not a surprise, given its troubles responding to photography's shift from film to digital. But the filing is still a significant moment in Kodak's storied history and its effort to survive.
Garry M. Graber, who leads the Hodgson Russ law firm's bankruptcy practice group, said a bankruptcy filing "certainly doesn't have the stigmatic effect that it used to have in the old days."
And the filing has actually enabled Kodak to obtain the type of financial support it needed but couldn't find before a bankruptcy, Graber said.
The filing gives Kodak the opportunity to shed unneeded assets and divisions, and unload unprofitable product lines, Graber said. And while suppliers and employees may be unfavorably affected, they are still inclined to support the process, in the interest of ensuring that a customer/employer endures in the long run.
Survival is the key question for Kodak. Graber noted that in bankruptcy, "every case is different, but I think it's very common for a company to be able to survive."