When the news broke on January 29th, 2019, that the restructuring of Tetenal had apparently failed, a shockwave rolled over the analog community. Suddenly, supply for basic photochemistry of all sorts seemed uncertain.
Tetenal does not only produce photochemicals but is also deeply invested in digital inkjet printing. For example, it manufactures most Epson inks and a lot of digital inkjet papers for the European market. Plainly put, Tetenal is an integral part of digital and analog photography industries alike. Too big, and too important, to fail.
Without Tetenal’s chemistry branch, a lot of photographers, photofinishers, labs, printing companies and even the once so mighty Kodak itself might be left out in the rain, as Tetenal reportedly produces not only chemistry for EU distribution under license from Kodak but directly produces source chemicals for Kodak’s U.S. manufacturing.
Although Kodak is believed to have two dormant chemistry production plants in Europe, the loss of Tetenal will most likely be more than a mere glitch in the supply chain. Even Hollywood might be affected: the Academy of Motion Picture Arts and Sciences requires a physical copy of all entrants to the Academy Awards: A physical copy, exposed onto film, developed in ECN-2 chemistry, mostly produced by Tetenal.
Also, to give another example, the Kodak Motion Picture Lab in London is dependent on a supply of Tetenal made chemistry to be able to process motion-picture and separation films.
Another immediate effect of Tetenal’s demise might be a supply glitch for RA-4 paper chemistry that many labs, finishers, and printing companies rely on. One might assume, that this was not exactly a big issue for the modern — digital — photo industry, but unfortunately, this is a misconception. With a gigantic number of digital photos taken every minute, every hour, every day, only a fraction of these images are printed and conserved. But nonetheless, this fraction of printed images is large and most likely surpasses the number of photographs printed during the peak of film photography in the early noughties.
Most of these images are, however, not “printed” in a sense of inkjet printing but are rather digitally exposed onto silver halide photographic paper, because compared to inkjet printing, actual photographic paper offers better quality for a significantly better price at a higher volume in significantly less production time. The thing is, this paper needs chemicals to develop it, to fix it, to bleach it. Chemicals that are at large produced by Tetenal.
That is why, among other reasons, a group of Tetenal employees has launched an effort to buy the company. This so-called management buyout might very well bear a realistic chance to save the company as the 2005 management buyout of ILFORD has shown in the past.
According to PHOTOKLASSIK International‘s editor in chief, Marwan Mozayen, who is a part of the current restructuring effort to save Tetenal’s chemistry branch, there is a very realistic hope to save Tetenal, or to be more precise, Tetenal’s chemistry branch, because as opposed to a common understanding, the photochemistry branch is actually the profitable one. The inkjet, ink-production and inkjet paper branch are what brought Tetenal into financial misfortune, according to senior Tetenal staff.
From an economic viewpoint, products for the digital photography market like inkjet papers or inks are not profitable for Tetenal and never have been. At first, this might sound quite counterintuitive, since digital is a massive market compared to a nowadays relatively small, slow-paced but stable analog market. However, one must not forget that the extremely fast pace of the digital market and industrial plagiarism play a substantial role in product profitability, especially if the product requires a substantial effort and investment in research and development. This is the case with the inkjet printing lineup Tetenal offered.
For example, the company designed and produced one of the best ink cartridges ever (at least Epson says so). They conducted significant research on printing inks in general and developed some of the most permanent inks on the market. If you claim that inkjet printing is great because of advances in permanence, vividness of color, or perception of color, then your claim is most likely based on innovations made in Norderstedt, and made by Tetenal.
So, if these Tetenal inks and cartridges are so great they sure must sell accordingly, you might say. In theory only, unfortunately. With companies in Asia being able and impudent enough to effectively copy these advancements and sell their products at a considerably lower price because no expensive R&D is involved, the margin of profit for Tetenal was too small to be sustainable. Combined with the reality that a large portion of end consumers tend to buy the cheapest product, the question of profitability is easily answered.
The company is the biggest photochemical OEM manufacturer today and most likely the largest there ever was. Even in the heyday of chemical photography, Tetenal produced chemistry for Agfa, Kodak and Ilford. Today, a hundred percent of Ilford’s and approximately 30% of Kodak’s photochemistry are produced by Tetenal, says Mozayen according to his industry contacts..
The company even reformulated and improved Kodak’s last E-6 chemistry lineup before its discontinuation. Tetenal is not only a manufacturer of chemistry, but it is also a motor of innovation and research. The 3-bath E-6 process, invented by Tetenal, for example, is a driving force behind the resurgence of color slide film in the wake of Kodak’s release of the new Ektachrome 100, because it enables small labs or photographers at home to maintain a cheap, low-volume and most importantly high-quality E-6 process.
With a rising number of small photo labs and a grassroots analog photography community growing steadily, such a simplified and yet uncompromising process is of paramount importance. That is the reason why these kinds of photochemistry are profitable and in high demand: Large labs who can run a full replenished 6-bath E6 line with continuous process control like the Kodak Q-Labs of back in the day are not financially sustainable today because of low volume.
To give a small example: a typical replenished high volume E6 line requires a few hundred liters of chemistry to keep the machine running, regardless of how many films need to be processed. A small processor like a Jobo ATL, CPP3 or comparable machines only needs a fraction of that amount of chemistry – as low as 250 milliliters per 36-exposure film. Welcome to the magic of scale.
The problem is, however, that these low volume machines that are sufficient for the current demand and thus can operate in a very profitable zone require an available 3 bath reversal process, that thus far is only offered by Tetenal. That means that a total loss of Tetenal might very well bring a quick end to Kodak’s efforts to bring back slide films like Ektachrome 100 and maintain their production.
Although there are alternative manufacturers like Bellini or Unicolor, none of these companies can fill the gap Tetenal would leave. First, Tetenal’s chemistry surpasses every other brand except perhaps Fuji in terms of storage and shelf life. Bellini’s color chemistry concentrate is only good for about 3-4 months in storage. For reference, that is about the time a working solution made from Tetenal chemistry will develop your film or paper.
Second, producing and selling photographic color chemistry inside the EU requires a so-called R.E.A.C.H. certification, which is an unbelievably expensive but necessary license to produce and sell certain chemistry inside the E.U. Reportedly, Tetenal spent about €500,000 (~$574,000) to acquire the license to produce CD3 and CD4 color developers — and apparently they split the bill with Fuji to save money. That is one of the reasons why Unicolor chemistry, for example, is not available in the E.U. No small company or startup could afford such certification and thus Tetenal is the only manufacturer of CD3 and CD4 within the European Union.
Another aspect of Tetenal’s crucial importance to the photographic/cinematographic industry is the fact, that ECN-2 chemistry, which is necessary to properly develop motion picture film, is in some form or another completely dependent on Tetenal. Kodak is dependent on Tetenal as well because at the moment no other company worldwide except Fujifilm can synthesize certain necessary chemicals that are required as pre-products for various photochemical end products, including film manufacture.
According to Mozayen, basically every single company involved in the chemical photo industry depends in some way or another on Tetenal. Kodak’s cash-cow developers XTOL and HC-110 are produced by Tetenal, as well as Rollei’s Digibase C-41 kits, the list could go on and on.
The demand for photographic chemistry is high and stable. Tetenal’s order books are full — to this day. So why in the world is the company bankrupt, then?
The reasons for Tetenal’s financial struggles are manifold. Among others, the research and development of highly sophisticated chemical products are very expensive and to even begin research, let alone production of a product is a considerable financial investment if you put necessary hurdles like R.E.A.C.H. certifications into account. Second, in an OEM / B2B business model, payment periods can get excessively long and if a customer struggles to pay their bills, cash flow might be in jeopardy quite easily. Added to the fact, that in times of almost nonexistent interest rates, banks are more and more hesitant to bridge such financial gaps, insolvency happens faster than one might expect.
Additionally, from a marketing perspective, the OEM focused company slept through the analog revival and did not focus enough on establishing itself as a brand like for example Kodak, Kosmofoto or Lomo did. Tetenal, the oldest company in the history of photography and even older than Kodak, does not even have a Wikipedia entry. Let that settle for a moment.
All the above combined with a partly unprofitable branch of business and some accumulated old liabilities add up to a perfect microeconomic storm.
But as mentioned before, not all is lost. Hope is on the horizon. Tetenal has one huge advantage over Fuji, Kodak, and Calbe, who could easily produce the necessary chemistry. As mentioned before, the magic word is scale.
According to sources from within Alaris, Kodak neither confirms nor denies that it owns two dormant chemistry bottling plants in Europe that could be reactivated if the need to do so should arise. The problem is, however, that these plants were most likely designed for the huge production runs of yesterday, equipped with gigantic and inflexible machinery. The same can be said about Calbe Chemistry, another German manufacturer of chemistry that has the necessary means and funds to produce photochemicals.
The pressing issue with these non-scalable production chains is that these lines cannot produce chemistry at relatively low quantities at a profitable level.
Tetenal does not have this issue. Their machinery is small and flexible enough to produce even small batches of chemistry and then, when push comes to shove stop production of product A to begin production of product B. To put this into numbers: The minimum quantity of chemistry Tetenal can produce is 10,000 liters, or to put it in even simpler terms, the minimum production quantity is approximately 4,000 2.5-liter E-6 3 bath kits, which is a very reasonable scale.
With the current demand for photochemistry and the fact that Tetenal at the moment probably produces chemistry at its highest pace to satisfy the huge amount of “before it is too late” orders combined with a slowly but steadily increasing market for chemical photography and cinematography, Tetenal is far from lost.
Currently, about 60 employees from production, R&D, quality assurance, and management are concentrating their efforts on buying the company’s chemistry branch. All employees from the non-profitable inkjet branch have reportedly been laid off, which reduces the cost of operations dramatically and makes the effort to buy the struggling company even more feasible.
Another thing that increases the chances of success is the missing interest on possible investors for the very ground the Tetenal factory is built upon because of the simple reason that Tetenal produced chemistry there for over 50 years. A repurposing and thus the necessary decontamination of the grounds would be excessively expensive — a price no one acting even remotely economically could justify.
All in all, Tetenal, or rather NEW Tetenal, has the potential to rise from the ashes of the past. To rise as a strong and flexible company that can easily react to a market that depends on the company’s very existence. After all, Tetenal is, was and will be a hotbed of photochemical innovation and progress. Maybe, hopefully, we will see them at Photokina 2020 presenting reintroduced C-41, E-6 and black and white developer tablets. Indefinitely storable and suitable for worldwide shipping.
If you want to stay informed about the proceedings and status of the Tetenal management buyout, make sure to visit their new website.
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About the author: Ludwig Hagelstein is a photographer and college student based in Bamberg, Germany. The opinions expressed in this article are solely those of the author. You can find more of Hagelstein’s work on his website and Instagram.