Kodak Park plan marks milestone

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One year into the massive $200 million remake of Kodak Park, 19 structures have been demolished, several buildings have been sold and 17 others have been revitalized.
The project is part of Eastman Kodak Co.’s worldwide footprint reduction that is expected to shrink the size of Kodak Park by one-third.
Nineteen buildings and sheds were demolished during the first year, and another 10 have been prepped for demolition, Kodak spokesman Christopher Veronda said. That would achieve the projected total demolition of 29 buildings and sheds in the 2004 phase of the Kodak Park Revitalization and Asset Reduction Plan.
Roughly 2.5 million square feet of buildings has been demolished or vacated in preparation for demolition or sale, he said. That equals more than 12 percent of the 20 million-square-foot complex. Kodak expects to clear 7 million square feet of space through demolition or sales over the course of the four-year project.
William Goodrich, president and chief operating officer of LeChase Construction Services LLC, said the additional 10 buildings slated for demolition should come down over the next six months.
Veronda said another 12 buildings-beyond those first 29 structures-have been identified for demolition in the next stage of the project. Officials have not said how many buildings will be brought down over the entire project, explaining the analysis and selection is an ongoing process.
“The scope of the project is the same: a one-third reduction to create a smaller footprint,” Veronda said. “Part is demolition, part sales and part revitalization.”
On the sales front, Kodak in October sold Building 507 in Greece to Khuri Enterprise II Building 507 LLC for $2.2 million, Monroe County records show. Building 601 was sold as part of the divestiture of its space systems division to ITT Industries Inc.
In addition, the Riverwood Campus in Henrietta was sold to Tower Investments Inc. for $3.5 million in December. Work previously done at that facility was shifted to Kodak Park.
Another move-part of the Kodak Rochester footprint reduction but outside of the Kodak Park project-was the sale of Building 101 that the company had retained at Rochester Technology Park, the former Kodak Elmgrove campus. It was sold to ITT Industries Space Systems LLC for $5.4 million in August.
Kodak currently has Building 508 south of Ridgeway Avenue listed for sale-as part of the 2004 phase plan-and is in negotiations to sell it, company officials said.
Eight other buildings-all at Kodak Park-are being positioned for sale including No. 642, No. 514/516, No. 69 and No. 23.
Kodak and LeChase officials said the overall plan, which initially called for completion over three years, will extend into 2007.
“Some of the work will be pushed out a little, as part of the overall strategy-some of the 2004 work is part of that-so it is kind of the domino effect,” Goodrich said. “We’ve made a tremendous amount of progress.
“The first year was really developing the plan and the program,” he added, “and working in collaborative effort with Eastman Kodak along with the design professionals in development of the program and the project.”
Goodrich expects opportunities for continuity, cost savings and schedule reductions now that the team has been working together for a year.
LeChase also has achieved the milestones laid out, including safety performance, schedule performance, meeting move-in and move-out dates for business units, and budget. In addition, LeChase has subcontracted more than 20 percent of the work to minority and woman-owned businesses, which has exceeded the target, Kodak and LeChase officials said.
Kodak last spring awarded LeChase the contract to serve as general contractor for the Kodak Park project.
Veronda said the contract is not for a specific total amount, but Kodak generally plans to spend some $200 million to complete the project.
“We are not breaking out spending year by year, but the program is moving on a relatively even pace year by year, with some work extending into 2007,” he said.
In all, some 50 subcontractors-most local-have worked on the project. The subcontractors have included firms dealing with asbestos, mechanical and electrical, and demolition work.
“We are starting to increase the level of participation of the interior finish contractors, painting, flooring and drywalling,” Goodrich said. “We are extremely satisfied with the performance of the subcontractors.”
LeChase and Kodak officials met three weeks ago with subcontractors to give an update on the work and the plan moving forward.
Both Kodak and LeChase officials said they have encountered no surprises during the first year.
“I think the primary reason behind (there being) no surprises is all the planning done by the team, and trying to identify any and all potential hazards or obstacles,” Goodrich said.
A key aspect of the project, particularly as it moves into the final years, is the revitalization of buildings to make them competitive, Veronda said.
The program so far has relocated people and operations into more than 17 different buildings in Kodak Rochester. Significant upgrades have occurred in buildings 28 (medical and training facility), 308 (manufacturing and office space) and 605 (warehousing operations).
He pointed to the work done at Building 28, the structure that houses the Theatre on the Ridge, as an example of how Kodak can revitalize an older building into a vibrant, effective workplace.
The building has undergone extensive work, he said. Most of the medical and training and development work done at the Riverwood Campus was moved here.
“The word revitalization is appropriate in terms of taking buildings that have been in existence for a while and transforming them into workable spaces for the new occupants,” Goodrich said. “Some areas may have been production areas and now are office space, depending on the building.”
A key Kodak goal is cost reduction and the project has begun to achieve that, Veronda said. The company expects to reap benefits in areas such as tax savings from reduced assessments, lower heating and cooling costs, reduced insurance costs, and lower maintenance costs and capital spending. Another push is to gain efficiencies by moving people from one building to another.
“We are beginning to see the cost savings,” Veronda said. “Costs to heat and run utilities-we are beginning to see cash savings from that as we continue to vacate buildings.”
Another example is consolidation of warehouse operations from Building 507 into available space in Kodak’s central warehousing facility in Building 605. That allowed the company to sell Building 507.
Both Veronda and Goodrich touted the project’s strong safety record, which, Veronda said, far surpasses typical industry levels.
Goodrich explained safety is critical because the work is being done in an industrial plant and in occupied buildings; it involves protecting LeChase workers and subcontractors, Kodak employees and the community.
The Kodak Park project is believed to be the largest of its kind in Rochester history. It is part of a plan announced in January 2004 and reflects Kodak’s shift from traditional photography to digital imaging.
Kodak expects to spend more than $600 million worldwide related to the disposal of buildings and equipment over the reduction effort, filings with the Securities and Exchange Commission show.
Goodrich described the plan as a broad effort by Kodak to keep Kodak Park vital for decades.
LeChase-which employs roughly 600 staffers overall, with more than 260 in Rochester-has assigned some 40 employees to the project, including project management and supervisory staff.
That team is supplemented by subcontractors, including architects and engineers.
Some 265 tradespeople are working on the job now, but that is expected to ramp up to 500 once the project reaches peak activity.
Kodak’s 2004-2006 worldwide restructuring plan that outlines the footprint reduction also calls for the elimination of 12,000 to 15,000 positions companywide, primarily in global manufacturing, selected traditional businesses and corporate administration.
The objective is to achieve a business model appropriate for Kodak’s traditional businesses, sharpen its competitiveness in digital markets and create a more variable cost structure overall, Kodak officials said. The company expects cost savings of $800 million to $1 billion for full-year 2007.
The current reduction plan is the latest effort to upgrade and reduce the size of Kodak Park. The company in 1995 began a consolidation project involving 200 buildings at the complex. As a result, Kodak has torn down 56 older buildings and other structures.
Kodak Park is the largest and oldest of Kodak’s major manufacturing facilities in 14 countries. It is the largest photographic product manufacturing facility in the world and the largest industrial complex in the Northeast, Kodak officials said.
The complex is situated on more than 1,300 acres, stretching nearly four miles through the city and Greece. It was started in 1892 by company founder George Eastman.
LeChase’s Goodrich said the company has learned lessons from the first year that will extend for the reminder of the project.
“One of the key initiatives that has been developed is a daily sunrise huddle, which has produced a very high level of awareness of just what is going to happen that day on the job: what risks and what potential opportunities,” he said. “We are going to step that up and make sure all subcontractors are participating in coordinating meetings.”
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07/01/05 (C) Rochester Business Journal