Kodak’s new MD says company will focus on right-value proposition and best practices

Ramu Ramanathan (RR): Kudos on your new designation. Purely from an Indian point of view, what does your new responsibility entail and what impact will it have on the market?
Gustavo Oviedo:The focus on emerging market is to look into the right-value proposition, look at the people for right-talent management, and look at partnerships for the right partners in a better manner than before because the more the emerging markets evolve the more they differentiate. India is a priority, has always been because Kodak has been present in the Indian market for many years. Indian has a young population, its growing with great potential for the education sector. For India, American market is an example. I hope we can also bring some of the best practices to India.

RR: What kind of best practices would you look – from manufacturing point of view or educating your customers?
Gustavo Oviedo: Yes...it can cover various spectrums in terms of sharing technologies and training, it can be partnerships. I think for India, know-how sharing would be a good strategy.

Noel D'cunha (ND): We saw a bit of restructuring in Kodak worldwide in the last 12-14 months.... what is the focus for 2012?
Gustavo Oviedo: The transformation of Kodak has been taking place for years, particularly in US, and it gives us the flexibility to look at the future of the company in a different way. At Drupa, we presented a big part of this future. Also from the consumer point of view we have added value proposition to the imaging segment. So the new Kodak has become a very dynamic digital company. This transformation is helping us. At this Drupa, the emerging markets have contributed to more than 65% of our sales, which is record for us. We exceeded the target and the star of the show was the Asia Pacific region. There was tremendous interest and curiosity from visitors from this part of the world. Like always India was present.

ND: Can you share the numbers with us?
Gustavo Oviedo: The official figure in public domain was a target $ 106mn for all segments. Packaging was one of the segments that led the pack. From the products, Sonara plate was well received by the markets. But I do believe at Drupa, Kodak has offered a balanced proposition for the customers. As you know, at Drupa Kodak showcased around 40 companies worldwide who are using our technologies.

RR: Kodak has gained a traction with inkjet heads....  Whats the update ? Are the margins healthy for Kodak healthy on these heads ?
Gustavo Oviedo: If you remember Drupa in 2008, the theme then was digital will replace offset. I think Drupa 2012 has shown the world that hybrid is the future. It gives the market a synergy to utilise the capabilities of the printer. As far margins on the heads are concerned, i cannot comment, but as far as business is concerned,I can only say that we consider the inkjet head as the business of future.

ND: Any concern on what happened on the first four days of Drupa given the buzz that Benny Landa created?
Gustavo Oviedo: I always welcome innovators. I think the product portfolio of Kodak is rich. We've a value proposition that is complete. Kodak has brought new efficiencies in pre-press , new technologies in packaging, new ideas and value proposition for the heads and the hybrid world. We are very happy with the reception our portfolio has received at Drupa. We will always continue to welcome innovators.

ND: From among your Drupa products, we were very impressed with the Sonara News (plates), Magnus 800 (platesetter), the upgrade on SX Nexpress and Prosper sale to Repro. What according to you is making waves?
Gustavo Oviedo: Worldwide I must say, in the packaging products and the streamheads has been well received. Sonara has made major strides in Europe.
Lois Lebegue:  If you look at the Asia Pacific, we came to Drupa with products for newspapers, books, packaging (without process on flexo). We have added features on the Nexpress range of products which is responsible for bringing photo book applications, specialty printing with textured documents, etc. It is a difficult question because we have plenty of good products and to pick one is difficult.

ND: How soon should we expect Sonara to be in India?
Lois Lebegue:  The deployment of Sonara will come in phases across the world. We don’t have a firm date for region-wise deployment but we see a lot of attraction for those types of technology because customers want to have faster response time, more and more environment-friendly and they want to put that into practice with plates that is mainstream. Sonara is fantastic advantage on that.

RR: What are the trends in the packaging space? What are customers seeking, what do brands want?
Gustavo Oviedo: If you look at the packaging industry worldwide, it is moving from the technology to the customer. The performance of the colour in the shelf; the opportunity to do new design; to add a new value proposition is dominating the packaging eco-system. And the printer, who is involved with packaging, has to talk to the brand managers, the brand owners and a complete eco-system that is more and more talking about performance. Here, technology becomes important, because it brings efficiencies, new ideas for new segments of the market. Today, Kodak offers such opportunity for premium packaging. If you analyse Drupa 2008, it hardly offered any opportunity for the packaging segment but Drupa 2012 saw big players in the market participate and showcase disruptive technology. For Kodak it was no different.

RR: There are two distinct trends in packaging. One is in the offset where post-Drupa we are expecting some 350-odd units coming in to India this year and the second is narrow-web flexo were we are seeing about 160-odd units. What is the sense we are getting here?
Bhalchandra Nikumbh: There is no doubt that narrow-web flexo is growing - and so is wide-web flexo. We can see the traction, not at the same pace as in US and Europe, but we are catching up. Kodak is one of the participant offering solutions in the form of NX, which is attracting customers.

RR: A question arises: if I am an investor what should my preference be? Should it be in the direction of offset or flexo in terms of choice.
Bhalchandra Nikumbh: I think it all boils down to which segment the investor wants to play in.

RR: But we see a giant leap in terms of technology in flexo... Do you see investments leaning towards flexo?
Bhalchandra Nikumbh: What we are seeing is that players in flexo are expanding and exploring newer technology in flexo.

RR: There is another segment that’s catching up -  the book market...
Lois Lebegue:  The book market is seeing a similar trend as other printing applications ... which is more run, shorter runs and the threshold between doing books in digital or print on demand and offset is varies from country to country. The run lengths will decide the threshold for going from digital to offset. The other pressure that the book industry is facing is coming from EVD, which is changing the habits of people. That said it is also creating an opportunity for print on demand that wasn’t available in the past. These trends to some extent are favourable for technologies like Prosper, which combines speed and productivity with economy and importantly offers a higher threshold between digital and offset print. We are in the early stage of first Prosper in India expect it to be operation by the end of this year. We have a healthy number of installations in countries like Australia, China, Japan, Korea in Asia that are both mono and colour. It is a market that is seeing drastic changes that is not only impacting the printers but also the publishers.

RR: As a case study if you look at what Repro has done, in terms of scale and ability to print multiple type of jobs – doing 3-lakh copies, 50 thousand or 10 thousand down to one on one. Do you think that the Repro model is the way to go for book printers in India?
Lois Lebegue: You will always need to have different engines depending on the volume you print. Obviously offset is very attractive for the big volumes. Certainly, you need to have the capacity to big volumes as well as capacity to digital in the mid-ground but you also need to have the step-by-step capacity to do personalisation. We see that in Japan, where we have three full colour Prosper and two of the three are only printing educational books that are all customised... every book is different from the other. This is in addition to the offset capacity that the printer has. This Prosper opens new opportunities for the printers and publishers in terms of optimising storage of books, being more environment-friendly and growth.

RR: In terms of emerging economies, where does Prosper fit in the value-chain?
Gustavo Oviedo: If you take Russia, it’s a place for Prosper. There’s China, Brazil, Mexico where we have Prosper. I think if you have the ability to do variable data or go hybrid, we have the Prosper or Stream head. These are a perfect value-proposition for emerging economies. Kodak believes in hybrid’s future.

ND: Please let us the Indian readers know the latest on Chapter 11. What next?
Gustavo Oviedo: As we have told before, in the US it’s a tool to transform the company and Kodak is working on a plan that will present a lot of flexibility to transform the company. Drupa 2012 was an example, where we focussed on customers and technology and we did it successfully. The customer base and the people are the two major assets are working very well in Chapter 11 circumstances. All the events we are participating in show the confidence in the future of Kodak.

RR: What’s the status on fast-tracking of patent sale? Will it affect the digital print operation?
Gustavo Oviedo: The 1,100 patents are in the imaging segment. These intellectual properties practice has been Kodak’s forte for many years now and it will continue to be a tool to commercialise our assets.

RR: In lieu of what’s happening in Rochester and Dayton plus China, any plan to shift a portion of the investment base to India?
Lois Lebegue: We continue to have a lot of capacities and expertise in the US and especially for the inkjet, Dayton is the centre. However, what we are now doing is splitting capacities of development in terms of inkjet, workflow in different parts of the world, including Asia. The US capacities remain, but manufacturing is growing especially in China. Our capacity for developing new products is growing between Singapore and China. We are also shifting some of the resources to India.
Gustavo Oviedo: If you look from the emerging markets perspective, the idea to look at is: to have centres of specialisation. Probably India would be one, Brazil one, China and so on.

RR: From among the products, which are the key products that are produced in China - and crucial to India?
Lois Lebegue: We manufacture plates and paper, assemble scanner, some of the components of inkjet, designing part of Prinergy in China and that’s not only for India but for supply to the world.

RR: Indian and China keep getting compared. Is the print economy in China strong or is it running out of steam?
Lois Lebegue: It’s true that there is a lot of growth that’s come in the past and is still relevant to China’s economy and its print market. That said, it is observed that the GDP is not growing as fast as in the past, in the last couple of quarters or so. That’s impacting all types of industries, but print is still a very vibrant market. Sometimes, there can be a temporary lull in the economy, but this part of the world printing, is a growth engine for several people.

RR: A lesson that the Indian print industry should learn from China?
Lois Lebegue: The Indian print industry needs to continually embrace the vision of the full eco-system, not just focus on little silos of printing but think of integrated eco-system and work with partners that have the capacity to offer solutions from A-Z. The second is educating the employees; continue to invest in the human resources.
Gustavo Oviedo: I think the thing to learn from China is its two approaches. One is exports – 25% of the volumes are exported. India’s print market is oriented to the domestic market. What it needs to do is balance the domestic and exports. India can leverage its influence in Africa and Middle East. India has done that in the field of IT outsourcing. A similar vertical approach is needed in print. The other is to embrace technology. China did that seven to eight years ago and it has paid rich dividends. But during this trip I have found Indian entrepreneurs to be very curious about new technology.

Team Kodak(r-l) Gustavo Oviedo, Bhalchandra Nikumb and Lois Lebegue

(Gustavo Oviedo is managing director and chief customer officer for emerging geographies and vice president at Eastman Kodak Company; Lois Lebegue is managing director for Asia Pacific Region at Eastman Kodak Company; and Bhalchandra Nikumbh is managing director at Kodak India)

This Feature is an online special on the PrintWeek India website. The interview was published online in July, 2012