Kodak Health Group now Carestream Health Inc.

WINDSOR – As of May 1, about 800 workers in Windsor were no longer employed by Eastman Kodak Co. Instead, those 800 joined the work force of newly formed Carestream Health Inc.

“Our folks were very excited about making the transition and becoming a new company,´ said Chris Schmachtenberger, Windsor site manager for Carestream. “Structurally, we have more independence to make the decisions we need to. I just see it as an improvement all around.”

In January, Kodak announced it had entered into an agreement to sell its Health Group to Canadian private equity firm Onex Corp. in a deal worth up to $2.55 billion. Kodak received $2.35 billion in cash when the deal closed on May 1. Onex could pay out an additional $200 million if certain goals are met.

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The deal closed a year after Kodak began exploring options for the Health Group, and it took that long to spin the group off from the rest of the company, Schmachtenberger said.

According to newly appointed Carestream CEO Kevin Hobert, the separation will allow the health products company to thrive.

“We’re an independent company now,´ said Hobert, who served for four years as president of the Kodak Health Group. “We are now free to use all of the cash we generate to drive growth (in health products). Coming out of this, we plan to be more aggressive.”

The transition from being a piece of Kodak to operating as an independent company has meant pulling apart a lot of backroom operations, Schmachtenberger added. But the organizational separation and the physical separation will soon follow.  

In addition to employees and intellectual property, the transaction included equipment and property. Carestream now owns about 100 acres of the Windsor campus including two large buildings, and is leasing another building from Kodak. Carestream is in the process of moving its employees into its own facilities.

Schmachtenberger said that the 400,000-square-foot building that currently houses Carestream’s distribution center is undergoing a remodel to house the administrative and executive offices by the end of June. He added that there will still be some Kodak employees working in Carestream’s building.

No major restructuring planned

As far as private equity firms go, Onex appears fairly laissez faire. Carestream left all of Kodak’s Health Group executive team in place and there are no plans for a major restructuring, Hobert said. Under Kodak, research and development spending in the Health Group was strong, so he doesn’t think that is likely to change too much, either. However, Hobert feels there are opportunities to grow Carestream’s product portfolio through merger and acquisition activities.

Onex might be a familiar name to some in Northern Colorado. It is the holding company for Celestica Inc., the Toronto-based electronics manufacturer that exited Fort Collins in 2005 as part of a major restructuring, laying off about 570 people.

Onex’s diverse company portfolio includes several medical industry companies in the medical services field while Carestream is a medical equipment company. The Windsor site’s three key products are Web laser film, used to print digital output such as magnetic resonance images, general radiology film and mammography film. And the facility churns out these products in a big way.

“This is the largest manufacturing site for Carestream Health,” Schmachtenberger said.

New applications

The site also houses what Hobert dubs the fastest film-coating machine in the world.

“Nobody knows how to coat like we know how to coat,” Schmachtenberger said.

Schmachtenberger said there are a number of applications for Carestream’s process – basically anything that requires a water-based coating such as food product wrapping. In addition to its own products, Carestream is looking at coating products for other customers, including Kodak.

The exploration of other applications for its coating equipment is a sign of the digital times.

“In three years, we’re in very good shape, but we want to look at how to best leverage this equipment,” Schmachtenberger said.

Despite the changing nature of the company, Schmachtenberger is positive about the future of the Windsor site. He is even becoming more involved in the community as the local representative for Carestream, recently joining the board of directors for Upstate Colorado Economic Development. The goal, he said, is to both promote the company as part of the community and to give back to the community that has offered so much support.