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In Kodak's town, life after layoffs Rochester: With the lost of 26,000 jobs since '82, Kodak has taught hometown residents a lesson in survival.

THE BALTIMORE SUN

ROCHESTER, N.Y. -- Back when Kodak produced profits as steadily as it churned out film, a local author dubbed this prosperous town "Smugtown, U.S.A."

Fifteen years of Kodak layoffs -- including last week's announcement of 10,000 more -- may have humbled Rochester, home of the company's world headquarters and more than a third of its 95,000 jobs.

But beneath the anxiety, many in Rochester exude uncommon confidence as the city proves an important lesson for the 1990s: There can be life after layoffs.

"Virtually everyone I know that left," says Lawrence Matteson, a former top Kodak executive, "ended up doing something they felt very good about."

Matteson, who took early retirement in a 1991 downsizing, is now a professor at the University of Rochester's business school. Others have become consultants, photographers, entrepreneurs.

At its peak in 1982, Kodak paid a quarter of metropolitan Rochester's salaries and possibly accounted for half its total economic activity. Kodak now pays only 12 percent of salaries.

Chemist Bruce Klanderman took an early retirement package in 1992 and used his allotted $5,000 in retraining money to hone his skills as an organist and buy more music. He plays part-time at weddings, funerals and at his church.

Rochester is so full of these stories that some current workers -- weary from a half-dozen rounds of downsizing -- envy the ones who got out early, back when the company's legendary paternalism ensured sweet buyouts.

"They love it. They got a great deal. We're getting squat," says George Gorman, a tool and die maker with 16 years at Kodak.

In Rochester, with a metropolitan population of 1 million residents, Kodak employment peaked at 60,000 in 1982. Today, its payroll is 34,000 and falling. By comparison, the Baltimore area's largest private employer, the Johns Hopkins University, employs about 15,000.

Kodak isn't saying how many of the 10,000 new cuts will occur in Rochester. But most people figure local employment will fall to about 30,000. That would mean that the Rochester area would have roughly as many former Kodakers -- as everyone here calls the company's employees -- as current ones.

Yet the Rochester area has unemployment of 4 percent, the lowest in New York State and lower than Maryland's rate of 4.7 percent. Rochester's average weekly wages have kept pace with inflation throughout the downsizing -- and are higher than wages in the Baltimore area, according to Rochester's Center for Governmental Research.

And Kodak still dominates Rochester.

Founder George Eastman is a local patron saint whose philanthropy created the Eastman School of Music, the Eastman Theatre and the Eastman Dental Center. Kodak money has bankrolled countless other local organizations -- hospitals, research centers, the United Way.

Generations of workers found lifetime employment at Kodak's downtown headquarters or Kodak Park, a 2,200-acre manufacturing facility that stretches 3 1/2 miles in the northern part of town.

The company provided cradle-to-grave care for many: good pay, health care, a credit union, a bowling alley for leisure time. Annual bonuses worth thousands of dollars bolstered car dealers and appliance shops.

In his 1957 book, "Smugtown, U.S.A.," local author Curt Gerling poked fun at the Rochester's local aristocracy of Kodakers.

"The pattern for success in Rochester," Gerling wrote, "is singularly lacking in complexity the formula [is] as unburdensome as getting a job at Kodak and learning to pat the proper posteriors."

That worked as long as Kodak dominated the world market for film. But Japan's Fuji Photo Film Co. and private store labels have undersold Kodak and cut deeply into its sales. The company also made a series of blunders.

Its disk camera flopped. A Polaroid-style instant camera proved to be patent infringement. Diversification into batteries and pharmaceuticals sapped Kodak of cash and focus.

Suddenly, prospering in Rochester required more than patting posteriors at Kodak.

"It's part of what the American work force needs to learn in the '90s," says author Alecia Swasy, whose book "Changing Focus" details Kodak's lavish past and uncertain future. "We're not going to work for one big company for 40 years."

Weaning Rochester off the fortunes of Kodak has brought anxiety to a community unaccustomed to hard times.

Engineers, chemists, executives and production line workers have all faced the prospect of unemployment. Many were forced move their families out of Rochester to find jobs that paid as well. Some blue-collar workers with limited job skills have slipped into low-wage service jobs.

Bitterness toward Kodak, once regarded as "the Yellow Father," has grown, especially against George Fisher, the chief executive officer. An outsider who many believed would save the company when he took over in 1993, Fisher has become the target of employee anger in recent months as profits dipped.

Kodak paid Fisher $2 million in base pay plus more than $5 million in other compensation in 1996. This May, he also exercised stock options worth $4 million.

"If Fisher took a 10 percent cut in pay, you could keep my department," says one 16-year Kodaker who wouldn't give her name.

Last week's announcement of 10,000 new job reductions seemed to cap a long process of disenchantment for workers.

"Our trust is in the Lord," worker Maggie MacQuarrie told the Rochester Democrat and Chronicle, "not in Kodak."

Some worry that cutbacks at Kodak could threaten a revival brewing in Rochester's nearly dormant downtown.

A section called High Falls -- named after the Genesee River's dramatic plunge nearby -- is often compared to Baltimore's Inner Harbor. In the last year, it has gained a brew pub, nightclub and Frontier Field, home of the Rochester Red Wings, the Orioles top minor-league team. But the economic anchor remains Kodak.

Even so, many in Rochester -- including many employees -- say Kodak is right to lay workers off if that's the cost of staying competitive in the 1990s. Tales of Kodak flab and bureaucracy are part of the local lore. Many would rather see a strong but smaller Kodak than no Kodak at all.

"We've tried to make the changes the last few years, but it's been too little, too late," says Steve Robida, a computer technician who might get laid off after 15 years. "Maybe this will make the difference. We can only hope."

Mayor William A. Johnson Jr. is among those hoping that Rochester's economy can "absorb" another few thousand workers without causing a recession.

"How much can we take?" Johnson says. "What is the straw that breaks the camel's back? I certainly hope this is not it."

Kent Gardner, an economist whose Center for Governmental Research is among the many local organizations to see its corporate support from Kodak dwindle, is more optimistic.

Gardner argues that Rochester has benefited from Kodak's cutbacks. The city is now less dependent on a single company. Many talented workers who might have made little difference within the sprawling Kodak bureaucracy have started their own businesses.

And he thinks Rochester is still enough of a company town that workers and others are willing to suffer so long as Kodak can regain its competitive edge.

"You don't find many people who are very angry with Kodak," Gardner says. "People understand that the long-run interest of Rochester is the long-term self-interest of the company."

Pub Date: 11/21/97

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