New York and the Rochester-based Kodak Corp. are about to enjoy one of the greatest second acts in US industrial history. The US International Development Finance Corp., or DFC, a federal agency, is entering into a partnership that should position Kodak as one of the most strategically critical powerhouses in our domestic supply chain.
This is all possible because President Trump took decisive action Âauthorizing the DFC to make loans under the Defense Production Act, the Korean War-era statute that allows the nation to mobilize manufacturing capability in times of crisis.
America is dangerously dependent on foreign supply chains for all three stages of drug production: starting materials used to manufacture active ingredients, the active ingredients themselves and the finished product in the form of tablets, pills and injectables.
China and India have an unfair competitive advantage in the production of starting material like acetic acid because of lax environmental regulations. Low-wage Asian sweatshops have an unfair advantage in labor-intensive active-ingredient production. Final-product manufacturing has moved to tax havens such as Ireland.
While Americans consume approximately 40 percent of the world’s supply of bulk ingredients for generic drugs, less than 10 percent of generic active-ingredient manufacturing takes place in the United States; over 50 percent comes from India and China. Of the 120 critical medicines identified by the Food and Drug Administration, half don’t have any domestic active-ingredient facilities.
That’s where Kodak comes in.
Kodak, the company that made your dad’s camera, is shifting gears to drug production. And it will be able to compete with the world’s sweatshops and pollution and tax havens because it will incorporate the most advanced manufacturing technologies. Kodak’s high-tech leap will enable the long-term, clean and sustainable production of starting materials and active Âingredients in ways that improve yields, reduce environmental waste and cut production costs.
Once fully operational, Kodak will have the capacity to produce up to 25 percent of active ingredients necessary for all non-biologic, non-anti-bacterial, generic US pharmaceuticals.
The ultimate goal of the Kodak project is to wean off the United States from foreign supplies of Âessential pharmaceuticals — the weakness starkly highlighted by the COVID-19 pandemic.
Why did the federal government choose Kodak for this project? The iconic company has a massive Âindustrial footprint that includes 1,200 acres; 16 million square feet of manufacturing, lab, warehouse and office space; 88 batch-manufacturing reactors; a wastewater-treatment facility that can process 30 million gallons a day; an on-site power plant and steam supply; a long and distinguished history of organic chemical manufacturing; and a proprietary chemical process database with more than 100,000 molecules.
With its industrial pivot, Kodak will join a distinguished list of companies, such as Bayer, Fuji and 3M, that have made the successful transition from fine chemicals to pharmaceuticals.
And it’s all thanks to Trump. On May 14, the president signed the executive order that delegated Defense Production Act authority to the chief executive officer of the DFC to invest in the domestic production of strategic pandemic-response resources.
Some might question why a federal international-finance agency is funding a domestic project. But remember, extraordinary times require extraordinary measures. The DFC, it soon became clear, could serve as the nation’s onshoring bank. Its power lies in its ability to use maximum leverage of funds at minimum risk to the taxpayer.
For example, with the Kodak agreement for a $765 million loan, the loan will be fully collateralized by a combination of liens on Kodak’s equipment and purchase commitments from Kodak partners.
This is not a partisan issue. It’s an American issue. The Trump administration is fully committed to restoring all parts of America’s once-vibrant manufacturing base to its former — and now future — glory. The Kodak project is a big win for the Defense Production Act, a big win for New York and the nation — and a huge step forward toward US pharmaceutical independence.
Adam Boehler is the CEO of the International Development Finance Corporation. Peter Navarro is assistant to the president for trade and manufacturing policy.