ROCHESTER – Eastman Kodak signed a letter of interest on Tuesday afternoon to receive a federal loan of $765 million to modernizing and transform parts of the Eastman Kodak campus to manufacture chemical ingredients to help reduce the country’s reliance on the use of ingredients from other countries.
The loan will help support startup costs needed to repurpose and expand Kodak facilities in Rochester and St. Paul, Minn.
Adam Boehler, CEO of the U.S. International Development Finance Corp., said the agreement will create 360 jobs in Rochester and 1,200 jobs in the construction and revamping of facilities.
The LOI was signed during an event at Kodak Center in Rochester attended by Kodak management and senior government officials. The signing indicated Kodak’s successful completion of DFC’s initial screening and will be followed by standard due diligence conducted by the agency before financing is formally committed.
“By leveraging our vast infrastructure, deep expertise in chemicals manufacturing, and heritage of innovation and quality, Kodak will play a critical role in the return of a reliable American pharmaceutical supply chain,” Kodak Executive Chairman Jim Continenza said in a statement.
Boehler told CNBC that Kodak was interested in creating a start-up that could supply ingredients for pharmaceuticals.
“Addressing the unprecedented challenges we face today – and preparing for future crises – requires innovative ideas and partnerships,” Boehler said in a statement. “Today, we are bringing together the significant resources and expertise of the private sector and U.S. government. We are pleased to support Kodak in this bold new venture. Our collaboration with this iconic American company will promote health and safety at home and around the world.”
Boehler, in an interview with CNBC, said the leading manufacturer of ingredients for generic drugs is China, followed by India.
“If we’re going to reshore and bring things back, and we’re going to have safety and security going forward, we need to change that,” Boehler said.
Peter Navarro, assistant to the president and director of the office of trade and manufacturing policy at the White House, said in a statement the deal was “a hug step forward towards American pharmaceutical independence.”
“If we have learned anything from the global pandemic, it is that Americans are dangerously dependent on foreign supply chains for their essential medicines,” Navarro said.
Kodak Pharmaceuticals will make critical pharmaceutical ingredients that have been identified as essential, but have been identified by the Food and Drug Administration as being in a chronic national shortage.
Federal officials noted that Americans consume about 40 percent of the world’s supply of bulk generic drug ingredients, but only 10 percent of those materials are made in the United States.
The new Kodak unit will have the capacity to produce up to 25 percent of active pharmaceutical ingredients used in non-biologic, non-antibacterial, generic pharmaceuticals.
Bob Duffy, president and CEO of the Greater Rochester Chamber of Commerce, said the announcement “reinforces that Kodak continues to add to our economic vitality.”
“Eastman Kodak Company has long been an important part of the Rochester/Finger Lakes economy, with unique capabilities and intellectual capital that will be put to critical use during this challenging time,” Duffy said
Gov. Andrew Cuomo said the project can help revitalize the entire 1,200-acre Eastman Business Park and create spinoff enterprises and more jobs.
“We have learned many lessons through this painful COVID pandemic crisis,” Cuomo said in remarks delivered via video at the signing ceremony. “One of the most pressing lessons is how much America needs to be better prepared for future public health emergencies. In this COVID crisis we didn’t have the basic medical essentials we needed: the masks, the gowns, the gloves, the testing re-agents, equipment and the medicine.
“Basic supply chain issues exploded and all too often we heard that these materials were made in China or made in India,” Cuomo said. American could not provide for our own needs. That just can’t happen again. It’s not just a public health issue – it is a basic national security issue. We needed the leadership and resources of the federal government to make sure we can manufacture these essential supplies right here at home in the United States of America.”
“Today’s can-do spirit is what got our country through World War II, when Kodak manufactured aircraft equipment and ammunition,” Cuomo said. “It’s the spirit that got us through these last difficult 150 days and that is the spirit that is going to keep us moving forward.”
The loan is awarded under the Defense Production Act and was described as the first use of an executive order signed in May by President Donald Trump that allows the DFC and the Department of Defense to collaborate and support the production of “strategic resources” in support of the domestic response to the coronavirus pandemic. The act was previously used to have Ford Motor Co. manufacture respirators and masks, and for General Motors to produce ventilators.