[pure-silver] Re: Freestyle EDU Film To Be Discontinued
- From: Dave Hornford <Dave.Hornford@xxxxxxxxxxxxxxxxxxxxxx>
- To: pure-silver@xxxxxxxxxxxxx
- Date: Sat, 05 Feb 2005 10:00:01 -0700
Jim Brick wrote:
>At 01:02 PM 2/4/2005, Tony Wingo wrote:
>
>
>
>>(apparently they've been selling at or below cost).
>>
>>
>I guess they were making it up with volume... ;-)
>
>
Forte & Ilford got caught by the effects of doing something foolish in a
declining market.
Both had a brand product they wanted to protect yet both got into the
habit of selling equivalent knock-offs of their primary brand at a
discounted price. Works ok as long as the market is growing and can
accept more product.
Once the B&W market stated declining (& declining precipitously) they
were in a spiral - to much product doing into the market. In an
oversupply what does the seller do to clear the inventory - discount.
This drives the knick-off down and hurts the branded product.
Apparently Forte was selling the knock-offs to keep volume up (they seem
to have minimum buys of inputs or minimum production runs). Alas,
selling at or about cost of production doesn't leave money on the table
to pay the corporations other bills.
Ilford was in a similar problem, although I suspect their newer, more
'efficient' British facility had another trap of larger minimum
production runs. A hidden killer in a declining market.
In both cases they have stopped/dramatically reduced production over the
past few months and we only have spot shortages in the market. My local
retailer, 'The Camera Store' carries both and is only short of the Forte
Polygrade V FB, but he was short-shipped that with his last shipment (a
while ago). Only having spot shortages months after both stopped/cut
production tells us that there was a massive product oversupply.
Kodak seems to have had both the financial reserves to meet this as well
as a better understanding of sales into & out-of the channel (as a
manufactuer you need to know both what your distribution channel is
buying & selling lest you get caught with a quarter or two of inventory
in the channel. Kodak's financial reports talked about paper & chemicals
being de-stocked in the channel (firms that would order 20 cases and
keep 20 in inventory were ordering 10 with an eye to keeping 5-15 in
inventory) They also seem not to have gotten into the game of knock-offs.
Agfa seems to have followed Kodak, as well as having to make a
transition as part of a larger firm to a managmenet buy-out of the
photographic didvision.
Based on previous analysis of Kodak & Agfa's financial statements &
public statements by Ilford we seem to have a world-wide B&W market of
~$200 million going to ~$100 million. Big enough to ensure suppliers,
not big enough to attract the attention of the multinationals.
Dave
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