"The economics of the situation are a major factor in our decision to withdraw," Chandler said in his statement. "Our South African business has been affected negatively by the weakness in the South African economy, and we have no doubt that the system of apartheid has played a major role in the economy's under-performance."
Timothy Smith, executive director of the Interfaith Center on Corporate Responsibility in New York, applauded Kodak's decision. He pointed out that other companies that have decided to dismantle company operations in South Africa still intend to sell products there.
"Kodak is the largest company to totally cut its links with South Africa," he said. "Its action becomes a model for other companies to follow."
The Interfaith Center is a group that coordinates the efforts of various churches in the United States to pressure corporations to divest themselves of their South African holdings.
Smith said Kodak faced pressure from a growing number of state and local government pension funds that had placed Kodak securities on the "sell list" because of its South African holdings. He said also that the New York State Retirement Fund, a sizable Kodak shareholder, was sponsoring a shareholder resolution for Kodak's annual meeting next April that would have required Kodak to divest itself of its South African operations. Similar shareholder resolutions have failed in the past.
Severance Pay
Kodak said its South African employees will receive "a generous separation package," which will provide a year's severance pay for the average worker plus four months' medical and life insurance. The company will try to place as many of the workers as possible, Kodak spokesmen said, and will provide "re-employment counseling" for all.
Of Kodak's 466 employees, 60% are blacks, Asians or mixed-race Coloreds, and the balance are whites. Most of the employees are highly skilled and should find jobs quickly, according to Kodak officials, but some will find competition for employment tough, particularly in areas where about 15% of white workers and perhaps 60% of blacks are unemployed. Kodak has only one American employee here, and he will probably be reassigned to the United States.
"By far the most difficult part of this decision," Chandler said, "is that our loyal and dedicated South African employees will no longer be part of our company."
Aid Projects to End
Another casualty of the pullout, Kodak officials acknowledged, will be the company's multimillion-dollar effort to finance the improvement of black education and the upgrading of the ghetto townships where its nonwhite employees live. Some education programs have funds to run through next year or 1988, but most of its "social responsibility" projects, regarded as among the best efforts by American companies here, will end with Kodak's withdrawal.
Kodak's income from marketing, distribution and processing operations amounted to less than 1% of its $10.6 billion revenues worldwide last year, Guthrie said, and their closure should have no significant impact on profits. He declined to say whether the company has been losing money in South Africa.
Kodak said it would sell its South African assets, which consist mostly of buildings, office equipment and inventory. Guthrie refused to say how much the property is worth.
Times staff writer Denise Gellene in Los Angeles contributed to this story.
