Big firms give birth to smaller, innovative companies

Hidden within many of the old Fortune 100 companies that drove industry for more than a century was a wealth of engineering talent, product innovation, and creativity. As those companies have downsized and right-sized over the past decade, the result has been the birth of smaller, leaner companies that are proving to be successful stand-alone businesses.

The story of Ford divesting itself of its Visteon supply group and General Motors spinning off Delphi into a smaller, stand-alone company is well known. Not so well known is what happened to the various divisions of venerable companies such as Eastman Kodak Co. In Rochester, NY, Kodak has transformed itself into a digitally oriented company with strong growth potential, while also focusing on its remaining film manufacturing business at the Eastman Business Park in Rochester.

Although the traditional operations now have a much-reduced footprint, they still involve large, complex facilities that require extensive supporting infrastructure. Kodak now operates under a new lean manufacturing paradigm, with strong reliance on nimble suppliers as partners to provide this support.

To achieve this new model, Eastman Kodak began spinning off divisions that were important, valuable components of its former business structure, but ones the company’s new model could no longer sustain. One of those is Arnprior Rapid Manufacturing Solutions, formally opened on June 4, 2008 as a new company, but with Kodak’s many years of experience and history behind it. As a division of Eastman Kodak, Arnprior developed products, performed research, and manufactured production components for the photographic products business over the past century.

Everyone wins

Christopher Howell, VP of Arnprior, was with this division of Eastman Kodak for four years. “As Kodak looked to understand their core competencies and as they got smaller, they were faced with a choice they didn’t want to make,” explains Howell. “That choice was, ‘If I can only afford half of this but I need it all, how do I get it?’”

Kodak couldn’t afford to keep all the capabilities and capacity it had in-house, and Howell was well aware of this. “We knew that unless we took the initiative, this department would have to wither away,” he says. “But that option was not good for Kodak, or the employees, or the community. We formulated a plan to make this division a stand-alone company, made a presentation to Kodak management, and they agreed to entertain it.”

Next, Howell’s team began searching for potential buyers. “We approached 20-25 different companies, and went through a selection process to find the best fit for what we wanted to do,” Howell says. American Industrial Acquisition Corp. (AIAC) was the winner. It’s a collection of companies, currently consisting of 12 manufacturers that have specific synergies among the group. AIAC is all about manufacturing in the USA—“home,” Howell explains.

It has been an ideal solution for both Kodak and Arnprior. “It provides Kodak with affordable access to the capabilities of this technology, and allows us to use the spare capacity to do work for other companies,” says Howell. “The moment we became a stand-alone company, we could take our capabilities to any company. We win because we kept the division and 160 employees, and Kodak wins because they have access to all the same capabilities they’ve always had. We can compete in the open market, and are finding the ‘wow’ factor. People didn’t know this much talent and technology capabilities were in Rochester because it was buried inside Kodak.”

Prototype development and plastics manager Andrew Mastowski explains these capabilities. “We provide services ranging from digital prototyping, sheet metal fabrication, CNC machining, and rapid prototyping to thermoforming, RTV urethane molding and casting, and injection molds from aluminum to hardened steel, with a team focused on providing plastic part solutions,” he says. “Additionally, Arnprior provides injection molding capabilities for mold qualification to short-run production, with an impressive quality record of no returned parts.”

Arnprior provides these services to a variety of companies looking for ways to develop their products more quickly and trim costs by reducing their supplier base while getting their products to market in a timely manner. With 160 employees, almost all from the Kodak division, in a 170,000-ft² building in the Eastman Business Park in Rochester, Arnprior Rapid Manufacturing Solutions understands what “rapid” means in the manufacturing world, and offers a wide range of capabilities and services under one roof as a manufacturing solutions provider.

Overcoming obstacles

There are a few challenges as Arnprior creates itself as an autonomous company. “One of those is overcoming the perception that because we come from a big company, we don’t know how to be light on our feet,” says Howell. “But we see that as a definite advantage. We understand the big picture of manufacturing because we’ve been part of a company with the resources to train people in that way of thinking, yet we don’t have the bureaucracy of a large company. We are light on our feet because as a smaller company, we can get a decision made on a significant investment in a short time frame. We can react fast to get things done for our clients because we don’t have to get all these approvals from layers of management.”

Another challenge for Arnprior was building the infrastructure that a stand-alone company requires. As a division of Kodak, it didn’t need its own accounting department, marketing and sales group, and other departments critical to the success of a company—that was all done within Kodak. However, it did have to build the infrastructure of a “real company,” Howell explains, and has made tremendous headway over the past year. The company is ISO 9001 compliant and is currently obtaining its AS9100 certification.

Arnprior isn’t the only firm that has become a stand-alone company since Kodak’s re-engineering, Howell says. Others include ITT Industries, which focuses on aerospace and defense; Carestream Health, once a health imaging group; and Orthos-Clinical Diagnostics (J&J), previously a medical apparatus group. “We’re still supplying what Kodak needs, yet selling these services outside,” says Howell. “We participated in nearly every program Kodak had over the years, and we’re continuing to do work for them as we’ve got certain technology that Kodak will need in the future.”

Howell adds that what Eastman Kodak did has provided tremendous opportunities for the employees and the community. “The change that’s occurring is not all doom and gloom. Kodak is giving these companies—once former divisions—a chance to become vital, growing businesses rather than just shutting them down. Kodak is trying to work with the community of Rochester to grow these new businesses, and in many ways, Kodak has done the community a lot of service. They could have just shut it all down, but instead tried to follow a strategy over a period of time that shows a magnanimous way to downsize, reinvent itself, and yet preserve the supplier base it created over all those years, and allow us to serve other companies as well.”