I don't see ANY good (or new) news in these links. Ilford's survival depends on one, and only one thing: their ability to find a buyer for their non-digital business. Aint likely.
I don't see ANY good (or new) news in these links. Ilford's survival depends on one, and only one thing: their ability to find a buyer for their non-digital business. Aint likely.
David:
Please explain with your industry insight as to exactly why Ilford is "not likely" to survive because I would like to gain some knowledge in this arena. After all, there are numerous examples of corporations that have spun off divisions that were "doomed" and have done marvelously well.
I see a solid cash flow that can generate a rate of return (with a new balance sheet), 125 years of history that created product recognition, fine paper and film products, existing manufacturing facilities and a smaller work force (and hopefully management) and plenty of venture capital just sitting on the sidelines.
Change is difficult but it does not have to be fatal.
Wishing you best regards and a better outlook in life.
It seems to be a pretty typical response. I worked at a company that told all salespeople to stop traveling as a cost-cutting measure. How were we to keep sales up? Of course, sales did not "keep up."
Does anyone know if Ilford has any independent sales reps? Some companies have a combination of in-house and independent sales people. If Ilford had this sort of setup, then they may not be cutting off all of their sales people. The company would, however, be competing with all of the other firms represented by the rep companies for the reps' time.
Michael,
Most of my insights into Ilford do not come from the world photography. I work on Wall Street for one of the world's largest investment banks and in the course of my normal daily banter with a couple of colleagues in England I mentioned Ilford's plight. The response - stock up on Delta 100! and this from an investment banker would normally handle a deal like this. Ilford's non digital segments do NOT have a solid cash flow. In fact their revenues are plunging and the long term revenue outlook is awful. Their cost are dubious and efficiencies won’t be gained from workforce reduction because, as previously noted, the problem is one of overcapacity –even if the workers in the coating facilities work for free, it wouldn’t be enough to produce a positive return on FIXED capital given the foreseeable level of demand and prices. About their only viable asset is Good Will, and even that is fading. The fair market value of an enterprise with a very shaky cost structure and permanently shrinking income is less than zilch. This is the calculus that potential buyers have to go though. And just who might a buyer be? A non-film related publicly traded business? Not likely, as an executive of the acquiring company would have to explain to his/her board of directors why they are getting into the film/paper business. How about a competitor? Even less likely given the fact that they know they can eliminate a competitor just by doing nothing. Also, this is certainly not a situation ripe for a venture capitalist. Venture capital flows to opportunities with great downside potential and great upside potential. Ilford only has half the pie - the bad half. The best hopes are (1) a sentimental billionaire who really loves HP4+ or (2) the British government, hoping to preserve a part of their identity as a "world power".
On a personal note, I am a “traditional” photographer who has used a heck of a lot of Ilford products and am distressed to see what’s happening to Ilford. I don’t do digital and I’m not interested in doing digital (unless I can get a really good digital back for my 8x10). That being said, I don’t need my training as an economist to know that the traditional film industry is in very very deep trouble. All I have to do is make my twice a week visit to B&H’s darkroom section and look around – the place is eerily quite and has gotten much more so in the past 6 months (the scary thing is that it has been absolutely dead during these first two weeks in September when there are usually scores of photography students scampering around with lists in hand picking up supplies for the new semester). My heart says I hope a resolution can be found for Ilford. My brain says it’s hopeless.
Thanks David for clarifying your position. I figured you had another gear in your transmission.
I have read that there is approximately $250-$300 MM per year in annual revenues generated by conventional photographic materials. I would be very interested in looking at the actual breakdown of these revenues among the current players and if the numbers I quoted above are in fact accurate. Is there any investment banker or institutional investing corporation that has research about the infrastructure of this industry? Surely, it would be much better to put some real perspective on this situation rather than speculate blindly. I similarly get the feeling that poor management contributed significantly to the current woes of Ilford but once again, this is a hard nut to crack. Lastly, like you said, will the British government take an active role in the process of finding a new suitor and maintaining this employment base? We shall see....... Cheers!
David..................................I am not a businessman, but I would like to understand this, how can an outfit taking in several hundred million dollars go belly up? Is this because of less folks buying film or is it a combination of things? Was Ilford a well run business by modern thinking? Or inept?
I was checking out I believe it's 'Lucky' films, the film made by the Chinese, so I still believe film will be made by somebody somewhere, but it seems to me that for some businesses, 300Million is a boon. What was wrong with Ilford that they could've done right, could something have been done by an intelligent management that could've forestalled this?
The folks who make Efke films are lauded by producing an 'old school' product, yet I've read on these forums that no outfit will last once it lets go of its R&D folks, why can't Ilford survive producing a product that people love?
Sure things look bad, but regardless of how this ends, what you do if you had the money to buy/run Ilford and make it work, how would you make it work, I would just like to understand this.
All this theorising about what moves investors is all very well, but it is all very dependent on individual circumstances. I note that Agfa floated off its Consumer Imaging (film, paper, chemicals etc) business to a management buyout team to the tune of 175.5 million Euro and, from memory, Agfa experienced the same kind of sales drop as Ilford has: 10-15% per year with a bigger drop this year. Two U.S. investment funds provided the capital...
Keep buying Ilford products: the fat lady has yet to put on her horned helmet and mount the stage, let alone open her mouth and take a deep breath...
Cheers,
It seems that many companies don't know how to downsize their businesses in order to maintain a viable entity, that even tho won't maintain the sales of former days, could still be quite profitable. I'd rather have a business that only made $1M a year and employed 10 people than one that made nothing. The problem is, overhead and the fast moving pace of the turn to digital leaving companies with too much debt often incurred thru mis-management and not enough far sightedness in planning.
David L. -
The relevant capital cost is how much it would cost a buyer to acquire the existing facilities out of administration, is it not? Logically it would seem (caveat: I'm entirely ignorant of the subtleties of British bankruptcy law) that the only important constraint on what offers the administrators could entertain would be that the bids be for a sum greater than could be realized by liquidating the business and auctioning off the equipment and other assets. This sum will likely be a small fraction of the original (now sunk) cost of these assets.
Perhaps an offer wouldn't even have to be for the whole kit - for example, if there are three coating machines, maybe two get sold for scrap and the third, along with rights to the name and patents, is bought for a pittance by someone who thinks he can cover the operating costs at a smaller scale. (Of course, if even the variable costs of running a coating machine in the UK in this day and age can't be covered by the volume of sales, then all bets are off.)
The financial hurdle for having some sort of business survive may in fact be fairly low. That's no guarantee that it will happen, of course. In any case, we should know soon enough, if only because time is money for the administrators...
I guess one of the problems with downsizing is the sheer size of the plant (aeriel map) - that alone must be costing a fortune just to heat and maintain. The only moderately good news for the laid off workers is that if you zoom out on the map, you will see that Manchester, with its large job market, is a few miles to the north - conversely, that means the UK Govt. is even less likely to lift a finger to help. I would not hold by breath waiting for the UK Govt. to step in - that kind of intervention went out of favour a long time ago...
Clearly, important (and painful) management decisions were not taken early enough with regard to the traditional materials side - perhaps too much emphasis placed on the new inkjet products? I did read that Ilford admitted that the fall in B&W film sales was much steeper than they had anticipated - presumably they thought they had more time.
Cheers,
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