The Salem News website (http://www.salemnews.com) 
Published: January 15, 2008 12:23 am  
Matthew K. Roy

PEABODY-- It's a digital world, and Eastman Gelatine Corp. is trying to find its place in it.

The company's success has historically been linked to the use of photographic film. But the overwhelming popularity of digital photography has diminished the demand for Eastman Gelatine's specialty -- gelatin that holds traditional film together.

So the company with a 77-year history in Peabody is taking steps to survive in a changed marketplace. It's determined to increase its customer base beyond Eastman Kodak, its parent company, by competing for business in the previously untapped food and pharmaceutical industries.

"It's kind of exciting for the plant," said Jonathan Schwartz, Eastman Gelatine's operations manager. "We know that we're still a strong player for Kodak. ... But we also are excited about trying to get new business and bringing on new customers."

With more than 400 acres, Eastman Gelatine is the second largest landowner in the city, behind Salem Country Club. It's Peabody's seventh-highest taxpayer, with an annual bill that added up to $671,159.

In its plant on Washington Street, Eastman Gelatine removes the protein from cow bones to make gelatin. It's one of only two plants in the country that use bones, as opposed to animal skins, to make gelatin.

"Traditionally, for the longest time, we've just made gel and shipped it all over the world to the different Kodak plants," Schwartz said.

The company employed 200 people and produced about 19 million pounds of gel in 1999, before the emergence of digital technology. Nine years later, Eastman now has 100 employees and makes 12 million pounds of gel a year, Schwartz said.

Gelatin is still widely used in movie film and the photographic paper on which pictures are printed. It's also in demand by developing countries with hospitals that still rely on traditional film for X-rays. But the photographic gel market has declined by at least 30 to 40 percent since the turn of the century, Schwartz said.

In 2007, only 12 percent of the gelatin made in Peabody was for something other than photographic film. Gary Butler, Eastman's president, said the company is hoping to increase that percentage.

It means carving out a niche in the pharmaceutical market, where gelatin is used to make capsules that make medicine easier to swallow. There are also numerous applications for gelatin in the food industry, from gummy candies to fat replacement.

Eastman faces somewhat of an uphill battle against its competition. Making gelatin from bone is a longer, more involved process than making it from animal skins, Schwartz said.

As it attempts to diversify its customer base, Eastman is also looking inward to capitalize on the various resources at its disposal on its Peabody property. It has water supply land, a wastewater treatment facility, a power plant, laboratories and warehouses.

It recently began leasing space to Intertek Inc., an international laboratory/testing company that does quality control checks for Eastman Gelatine and other companies.

Butler hopes to rent other unused space at the plant to companies who might need a warehouse. In the meantime, Eastman has uncluttered its property by tearing down old maintenance buildings and cooling towers.

"They've always had a great working relationship with the city," Mayor Michael Bonfanti said of Eastman Gelatine.

The company donated land for the new YMCA. It gave the city water at no charge to water the city's golf course. With its aquifers, the company could one day help supplement the city's water supply, Bonfanti said.

"They got a lot of irons in the fire," Bonfanti said. "I expect they'll be in Peabody for a long time.