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As Kodak Declines, Small Tech Firms Rise in Company's Hometown

Unemployment in Rochester, N.Y. is 6.9 percent.

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Hot small business sectors in the Rochester area include medical imaging, nanotechnology and IT.

Eastman Kodak Co.
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Eastman Kodak Co.

The news of Kodak’s declining fortunes is a sad one, to be sure. The Rochester, N.Y.-based company, whose name is synonymous with film, was a leader in that industry for years.

But it’s also been many years since the company was a leader in anything. As advances in digital printing and film have changed the way people record memories, Kodak has gone through round after round of layoffs in an attempt to remain competitive.

And now, as its stock is at risk of being delisted, and the company considers a chapter 11 bankruptcy filing, people start wondering what happens when an iconic company is on the decline. Is the city far behind?

Far from it, according to those who have been watching the rise of small technology businesses rising in Kodak's wake. Just ask Mark Peterson, whose job it is to lure new businesses to Rochester. The CEO and president of Greater Rochester Enterprise, a non-profit agency that works to bring new businesses to Rochester, says that even as Kodak struggles, the Rochester area business community is thriving.

“We’re not a big company town anymore,” he says, referring to not just Kodak, but Xerox and Bausch and Lomb, two other companies that dominated the economic landscape of Rochester through the 1980s. “We’re a small to mid-sized business town, with dozens and dozens of high-tech firms spread out around the metro area.”

That’s the story he tells to small business owners every day, as he talks up the community’s low cost of living and highly educated workforce.

It is those small and mid-sized companies that have kept the unemployment rate way below the national average. The Bureau of Labor Statistics reports that for November, the unemployment rate for the Rochester metropolitan area is 6.9 percent.

While Kodak has been cutting back for the past 20 years, says Peterson, these smaller firms have been hiring, “20 people here, 100 people there. It’s not huge numbers, but when you get that happening over the long term, it adds up.” In fact, he reports, that at the height of Kodak’s dominance in the 1980s, 400,000 people were employed in the greater Rochester area. Today, he says, that number is 500,000.

And a good number of those employees are refugees from Kodak: the engineers and product development specialists who left the company but stayed in Rochester, and who have transferred their expertise to the digital and medical imaging worlds. Others are graduates from engineering and technology programs at area colleges — the University of Rochester and Rochester Institute of Technology among them — that were hired by these smaller firms to work in information technology, software, nanotechnology and many other sectors.

“It’s a pretty potent combination,” says Peterson, one that makes the area attractive to new businesses.

One of those refugees is Jeff Markin, currently the president and CEO of VirtualScopics, a medical imaging company with 100 employees. He left Kodak in 2006, after 25 years at the company, ultimately overseeing 1,500 people as the vp/general manager of its x-ray and mammography imaging group before Kodak decided to sell its medical imaging division.

“When I left Kodak, I thought I was going to leave Rochester. I was interviewing for another company for a senior position. Then VirtualScopics called; I didn’t even know it existed. But I came in, I liked the people, I liked the technology, and I decided to stay.”

Since Markin began at VirtualScopics, he said, the company, which was spun off from within the University of Rochester, has tripled its revenues and is now profitable. In the past three years, it has doubled the number of employees. About 8 percent of those, Markin estimates, are former Kodak employees.

Markin says he’s sad to see what’s happening now to a company where he spent much of his career. But Kodak has, in a way, been good for the small business community in Rochester.

“Kodak brought senior managers in from around the country and around the world,” said Markin. “It might have been hard to get them here because of the weather, but once they got here, they liked it. They didn’t want to leave. And now they’re in small companies doing really good things here.”

Greater Rochester Enterprise’s Peterson agrees.

“If you are talking to a Kodak retiree right now, they are feeling a little sick to their stomach,” he says. “But no one in this community thinks the economy is going to be derailed if Kodak declares bankruptcy,” he says. “We’ve moved on.”



email: patricia.orsini@nbcuni.com

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