Underbidding Visual Effects

Underbidding Visual Effects

One of the most problematic issues in the VFX industry, besides subsidies, is underbidding

This is where a company knowingly underbids what the company  estimates it will actually cost to do the proposed work.  It's also known as 'buying a project'.

This isn't done by just up and coming companies. Large, well established companies even in subsidized areas underbid frequently.

It doesn't take a financial wizard to see intentionally losing money on a project is not a good long term plan. In fact it's not even a good short term plan.

Why do companies underbid?

1. Subsidies
If a company in a location with no subsidies is bidding against a company located in an area with a subsidy (paid by a government) then they will likely have to underbid just to have a competitive bid to make up for the 20-60% difference. It's not like there's a 40-60% markup so that reduction has to come from the actual costs. Even companies in subsidized areas have to compete against other companies in more subsidized areas. That 20% subsidy looks good until you need to compete against a company with a 40% subsidy.

2. Competition 
Currently there are too many VFX companies for the amount of work available. If there weren't then most would be busy most of the time and would have no need to underbid. That's why the notion a lot of people have about starting a VFX company because they're not working, is flawed. And too many VFX companies in turn means that there are too many VFX professionals. Those considering a career in VFX should rethink because the odds are very much against you, despite what the for profit school ads may say.

3. Poor management
Many running VFX companies have no business training or background so will make these types of decisions based on a feeling of desperation. They'd rather be bailing water rather than considering fixing the leak. Rather than try to make decisions based on long term issues they are making rash decisions.

The thinking
Companies think they need to underbid the work to make sure they have work. They look at the dozens or hundreds of people at their company and the large cost that incurs. Larger companies can be burning through $1 million dollars a week in payroll costs alone. So the thinking is even if they lose a few million on the project it's better than losing even more by not doing so. The money offsets a large portion of the losses.

And underneath the decision to underbid is the notion that somehow they can make up for it. The crews can work a bit harder, they can be a bit more efficient and that things will go well on this one project to turn an underbid project into a break even project. That never happens. Directors do not stop changing or adding shots until someone with authority (the client) tells them they can't due to time or money. What ever budget and time allowed will be filled.

The hope is also that even though they are losing on this one they can make it up on the next one. That type of thinking can work in some industries where there are very big hits to offset some losses (films, products), but in visual effects there are no big hits. A company may be in the black on the next project but the tight margins in visual effects are hardly enough to fund that one project, impossible to make up for losses on one or more other projects. And that means any profits that might be made on the current project have already been spent on the previous project just to cover the losses.

And unlike some industries (contractors to the government) it's impossible to make up for the loss from underbidding with change orders and extras. Most vfx companies are reluctant to even submit valid change orders, the fear being if a client feels they were charged more than they expected, that company will never get work again from that client.

Impact of Underbidding

Company 
No company can continue to lose money indefinitely. While underbidding may seem like it's slowing the bankruptcy of the company, it is still going bankrupt. At some point the investors or the creditors will have enough and make radical changes or will simply close the company.

Some people think that's up to each company and if they wish to underbid where's the harm in it other than the company that goes out of business. But it certainly affects more than just the one company.

Workers
When a company goes out of business it likely will mean the workers will not only lose an employer, they will likely lose at least one pay period, possibly more. Any accrued health care, vacation or other benefits will be instantly gone.

Clients
When a company goes out of business because its been operating in the red it is likely do so at a very inopportune time such as the middle of a project or even worse on the major crunch period right before completion.

We've seen this scenario played out and affecting both workers and clients a few times just in the last year or so and it's a painful process for the workers.

Industry
When companies underbid it not only affects that company, it affects all other companies and the people who work for them. A company that underbids erodes good companies who are attempting to operate a visual effects company as a real business instead of a lemonade stand. A company that is bidding using actual numbers is now losing business not due to true competition but because a business is choosing to commit long term bankruptcy. A good company can only lose business for so long before they close.

And that's when other companies start jumping in with the same idea. Now instead of one desperate company, underbidding may be creating a half dozen companies that are getting anxious. Once they start doing the same thing, which some are, the quicker the race to the bottom happens not only for those companies but the entire industry.

Clients also get a very skewed sense of what the actual cost of doing visual effects is when companies underbid. Some clients will assume the company knows what's its doing and others will be aware but will feel compelled to take full advantage of the situation while they can. Money is a compelling substance and can cause loss of reasonable thinking on both sides.

What can be done
1. Don't underbid. Even Kansas arborists have a code of ethics that prevents them from learning other bids from clients and underbidding each other. No such ethics exists in the visual effects business. It's been said some companies have a 'we'll beat any bid' agreement with the studios. If managers can not operate a company morally then they should not be running a company.

2. Operate the company as a real business. Any idiot can run a business and lose money. When millions are at stake along with hundreds of workers, it can no longer be run by the seat of pants and wishful thinking.

3. If the company is unable to make money then the owners and investors should examine the problem and consider making improvements or they should consider closing or merging. Taking other companies down with you to bankruptcy is not a plan.

4. Lay off workers when there is no work for them. Keep a small group of key people to keep the company running between projects. The reality is film and other media work are project by project. The studios do not keep crews employed between projects. If the company is located near similar companies (real VFX hub) and the industry is healthy then the workers would likely be able to find other work as it shifts from project to project. It's when companies set up in a distant location or when the actions of a few make for an unhealthy industry that this becomes a problem. Now it may seem to be better employing the workers and get some funding but that is simply eroding the industry and its better to have workers make a short term change rather than trying to work long term in an unsustainable industry.

5. Have the visual effects companies form a trade association like other industries. Put aside petty, non-business issues and work together to stabilize the industry. Have a basic code of conduct and ethics for companies to abide by.


Individuals
The same problem of underbidding happens with individuals. Graduates and those starting out think they have to work for free simply because a company posts a job offer saying so on Craigslist. Too much competition makes them more than eager to work for nothing which in turn causes companies to consider lowering all wages. When companies start dropping experienced professionals to hire cheaper labor (another poor business plan) then what do the newer workers think will happen to them in a few years?

Some workers go out on their own with the intention of truly being independent contractors but these people almost always underbid as well. Frequently they charge less than they were making while working for a company. Some may choose the same rate but they fail to understand even the basics of business. When you're working for a company it costs the company more than simply your pay check.  Most of the time there are benefits, taxes or other costs that you may not be aware of these. These may be another 20-40% above your pay. As someone working for themselves now all taxes will need to be paid by you along with health insurance, your computer, software, etc. It starts adding up quickly. Vincent Laforet has written about the cost of doing business as an independent photographer. 

Summary
Place a value on what you do. Do not underbid. Consider the long term consequences. If both companies and individuals are only focused on being the cheapest above everything else, then the quality and the creativity will fail along with the business.

Related:

Bad Visual Effects Business Practices

Should I work for free chart

Visual Effects Professionals United

Visual Effects Professionals United

[Update: 4-12-2013 I've adjusted the page a bit.

The VES has a project in process and one of those has to do with the workforce. I've been tasked with trying to gather feedback from professionals about their wants and needs. Since I had already written and posted this I thought it was right in line.

I'm hoping to also do a survey in the next week.
Please take this survey regarding your working conditions
(I plan to wrap the survey during 1st week of May so be sure to fill it out now)

[Survey has been done and the results are here: Visual Effects Working Conditions Survey ]

[I've included some comments at the end of this post from some of the survey results already.]

PLEASE contribute your thoughts. People keep asking what's supposed to happen next and why isn't someone doing something. Now it's your turn to do something. Submit your ideas and thoughts.

Thanks.]


As individuals in the visual effects industry each one of us has very little control over our work experience. The choice is to talk to management and hope they will be willing to make changes or to quit and hopefully find another company that has similar views of work and life as you do.

Most companies are driven by profits and they’re driven even more these days by squeezing workers and vendors as much as possible. The visual effects companies are put in difficult situations by the studios, which in turn puts pressure on the workers to accept less than ideal working conditions.

Even when management may be trying to balance profits and worker experience, new management or an adjustment of business conditions may change that for the worse.

At this point there are visual effects professionals around the world doing great work, each of us connected by the work that we do and the love of what we do. We’re a global community. You can certainly extend that out to cover as much as you consider. (film, TV, commercials, animation, video games, motion graphics, etc)

Goal
What we need to do is unite in some form so we can work together to help stabilize and improve the visual effects industry.

One aspect of that is to come up with a work experience document. This would include working conditions and a code of conduct for workers and companies. This would make sure there is a minimum working base for all visual effects workers, including yourself, around the world. This would help to make sure no professionals have to deal with poor working conditions. This would mean if you have to go work half way around the world you won’t find yourself working under poor working conditions.

Many companies may already be doing most of these things and others may be doing very few of them.

Here’s my proposal
Consider what you would think is important at work that could be used as a basis of employment around the world. Post your notes in the comments or form groups with others from work or through the internet.

Let’s compile the list and have a group refine it and put it into written form that the majority agree on.

So what’s the purpose of this?

This would provide a goal or target of what we as professionals would like to achieve when all the current possible solutions are explored and implemented.

This document could be starting point and could reduce the research and exploration time required by some of the potential groups.

If / when there is a visual effects trade association then this could be used as a guideline for what we would expect from the companies and studios involved.

If / when there are visual effects unions, this could be used as a guideline for what we would expect from the union. Existing unions could review and see how it fits into their current structure. These are items of interest to visual effects professionals.

This would be a guide for any visual effects company about what they should be providing if they wish to retain the best workers.

Companies could volunteer to sign on to the guideline if they adhere to it. These companies would be posted on a list on the internet so workers would know which companies support this measure. Those who support it would likely get more higher level work applicants. And they would be monitored in case the company did not follow through on the guidelines.

This would provide a guideline for critiquing or rating a visual effects company on places like thevfxwatchers.com.  There's also glassdoor

Workers at a given company could consider going as a united group to their employer and discussing the differences and what could be done to accomplish the list.

You as an individual could discuss with management or include in your deal memo all or part of the guideline.  A deal memo is a written employment agreement that covers your job title, rate, start, end dates and other details. VFX Deal Memo


Global nature
I understand that some countries or areas may not require all of these things but I think we should come up with minimums that can and should be implemented world wide. Even though a country may not have any laws saying the exits must be clearly marked and doors unlocked, I think we should include such specifics. Otherwise if it simply boils down to whatever local labor and safety laws dictate then none of this means anything. Around the world those laws are being broken already.

Simply having a document that  only says follow local labor and safety laws does not accomplish anything.

Examples of some of the items that might be include (these are made up numbers. You’ll want to come up with the values)

Working conditions
Meet or exceed local health and safety laws. (This should not be required but of course companies don’t all comply even when required to. There are still fires and other tragedies around the world that happen due to companies skimping on safety or trying to save $1.)

Temperatures to be at nominal room temps in the work area. (72-80 degrees) (Once again the type of thing you may not consider but even here on the west coast at a large vfx company they have been working at 85 or hotter. Some areas are much worse.)

Ventilation – Reasonable ventilation along with heating and cooling to maintain a room temperature.

Sound – No loud noises. No workers playing any audio above x db.

Drinking water within a reasonable distance (100 feet)

Working restrooms

Ergo working space – specs of basic chair, monitor, etc. To avoid carpal tunnel and other physical ailments.

No smoke or fumes in the workplace.

Meet or exceed local labor laws. (This should not be required but of course companies don’t all comply even what they are required to. Many companies misclassify or avoid existing labor laws.)

Adhere to a timely payment in full on a weekly basis.

Correct classification of workers. (ie. not classifying workers in a way that causes them to lose government protections, to avoid overtime payments and taxes. Independent contractors, ‘staff’, ‘flat’,‘salaried’,’managers’,technicians, etc)

No unpaid interns doing production work.

No unpaid students doing production work.

Food break every 6 hours for ½ hr minimum.

15 minute break every 3 hours.

No paying to work, including paying for training.

Clear deal memo for all workers specifying pay, hours, start and end dates, etc.

No withholding of training fees, moving fees, etc.

Work shall be non-abusive (we are professionals)
No screaming
No bullying
No sexual harassment
No beatings

All hours worked (approved or requested) shall be paid by the company.

Overtime
Overtime will be paid at x rate above 8 hours, y rate above 12 hours.
(Yes, I understand that not all countries have such laws or rates in place. Let’s either try to get in some reasonable minimums or at least make this section variable with different grade levels. Grade A for the company if it complies. B if it only does for x. F if it provides no compensation for overtime.)

Ability to turn down overtime work without dismissal or retribution.

 x hours notice before being assign overtime.

Cap of x hours in a day, y hours in a week.

Turnaround time
Minimum of 12 hours from time of checking out before starting to work again.

Health care
If the local government does not supply health care coverage then the company will provide x minimum.


We can't put in things like permanent jobs.
Lets focus on the real issues.
For now let's not deal with wages themselves, let's focus on the working experience.


Please feel free to add in the comments or as I stated groups in different areas could start developing a defined list of what they feel is important. This could be an item to discuss at one of the vfx townhall meetings in the future. If a group wants to take this and run with it so much the better.

What are the things that are important to you and that all vfx professionals should have in their workplace?

What are the things you feel are missing from your workplace?

What are your hot button issues?
Not being paid OT?
Too much OT?
Not having demo material?
Being misclassified?
Forced to travel?
etc.



and write up specifics in the comments below (click on Comments link if you don't see a list of comments). You can do so anonymously.  I'm hoping to get survey results and feedback by May 1 or soon there after.

If you have ideas beyond just the workers that applies to the whole industry then consider posting comments on the  What's The Solution? post

Here's the original post about this concept:
Global VFX Workers

References
Reference for what might be included beyond what might be obvious would be to review local labor laws to see what they mandate. California Labor Laws example  World wide list of labor laws

The various film unions contracts provide good guidelines for what should be included. Many non-union productions and writers still adhere to union guidelines even when they themselves are not.
Animation Guild contracts  Film union contracts

The various organizations that deal with worker rights world wide provide a good reference.

FLA - Fair Labor Association

FLA Code of Conduct

FLA Complete code and benchmarks

Frame of reference:

FLA is in use by HP and Apple in China and other locations.

Here's their HOURS OF WORK section:
"Employers shall not require workers to work more than the regular and overtime hours allowed by the law of the country where the workers are employed. The regular work week shall not exceed 48 hours. Employers shall allow workers at least 24 consecutive hours of rest in every seven-day period. All overtime work shall be consensual. Employers shall not request overtime on a regular basis and shall compensate all overtime work at a premium rate. Other than in exceptional circumstances, the sum of regular and overtime hours in a week shall not exceed 60 hours."

"Calculation Basis for Overtime Payments

5. Employers shall compensate workers for all hours worked. 

1. C.7.1  The factory shall comply with all applicable laws, regulations and procedures governing the payment of premium rates for work on holidays, rest days, and 
   overtime. 
2. C.7.2  Employees shall be compensated for overtime hours at such premium rate as is 
   legally required in the producing country. 

C.7.2.1 In those countries where there is no legally established overtime
premium, employees shall be compensated for overtime hours at the prevailing industry premium rate or at the internationally recognized overtime rate, whichever is higher.
C.7.3 Employers shall not set production targets, piecework, or any other incentive or production system at such a level that the payment for overtime work performed is less than the premium pay required by law or the FLA Workplace Code.

8. C.8  Overtime Wage Awareness 
   Workers shall be informed, orally and in writing, in language(s) spoken by workers about overtime wage rates prior to undertaking overtime."

"Forced Overtime
The imposition of overtime where workers are unable to leave the work premises constitutes forced labor. "

[ Think of it- 60 hrs maximum in most of the world as defined by some of the largest companies.]

EICC - Electronic Industry Citizenship Coalition

EICC Code of Conduct

"Working Hours

1. Studies of business practices clearly link worker strain to reduced productivity, increased turnover and increased injury and illness. Workweeks are not to exceed the maximum set by local law. Further, a workweek should not be more than 60 hours per week, including overtime, except in emergency or unusual situations. Workers shall be allowed at least one day off per seven-day week. 
2. 4)  Wages and Benefits 
   Compensation paid to workers shall comply with all applicable wage laws, including those relating to minimum wages, overtime hours and legally mandated benefits. In compliance with local laws, workers shall be compensated for overtime at pay rates greater than regular hourly rates. Deductions from wages as a disciplinary measure shall not be permitted. The basis on which workers are being paid is to be provided in a timely manner via pay stub or similar documentation. "

Visual Effects Society Bill of Rights
VES Bill of Rights


Ergonomics and safety (see computer)

Apple Code of Conduct  (imagine if companies and studios had to follow some of these)

Overtime around the world

Kronos report on Overtime violations


"Paul DeCamp, national chair, wage and hour practice, Jackson Lewis LLP, and former Administrator of the U.S. Department of Labor's Wage and Hour Division
"Seeing that significant numbers of employees around the world believe their employers have violated overtime laws should serve as a wake-up call to employers everywhere. If your employees perceive that you are out of compliance, you are at risk for a wage-and-hour lawsuit which can be incredibly costly even if you are ultimately found to be in compliance. Investment in wage and hour compliance should be seen as part of risk management for any smart business."


For Trade Association reference
Kansas Code of Ethics for Certified Arborists

"14. I will not compete with another arborist on the basis of charges for work by underbidding through reduction of his quoted fee after being informed of the fee quoted by a competitor."

Google the topic of interest and you'll find plenty of information.



Related Posts
Global VFX Workers
Overtime

VFX World Wide Pi Talk

Last night was a great visual effects event.  Visual Effects World Wide Town Hall - Pi Day. A great many people worked incredibly hard to pull this off in the time available. (Big thank you to all of them)
We had abut 250 in Los Angeles where the event was held (Gnomon) and interconnected to New Zealand, the San Francisco Bay Area, Vancouver and Austin.

I touched on this yesterday and here's the website with more info of the things going on. See vfxsoldier and links on upper right for additional info.

Below is the script notes I started with for my talk. I wasn't able to cover everything in the time provided and since I was free speaking most of it, I probably lost a few things along the way.  

I've posted a link to the YouTube of the talks and discussions at the end.  (And thanks for all the great responses and feedback. Let's keep the discussions going and lets implement some solutions ).

Suggested music for reading
Eye of the Tiger    by Survivor
Waiting on the world to change     by Jon Mayer
Changes    by David Bowie
A change is going to come    by Sam Cooke

------
I’m Scott Squires, started on Close Encounters, started up and ran Dream Quest for a few years, was at ILM for 20 years and I run the Effects Corner blog.

I am a VES Board member but today I’m speaking as an individual,

This event is aimed at all VFX professional worldwide. Film, TV, Commercials, and similar art forms

Each year we as the vfx community pushes the boundaries of what we can do. We develop the art, skills and technology to do more and more. This last year we have seen incredible work. Our efforts have allowed filmmakers to tell any story. We have made the impossible, possible. We are involved in not only most Hollywood films but also almost every form of moving image content. All films that were up for best picture this year used visual effects. The studios are reaping large benefits from our talents. We should be celebrating instead we find ourselves scrambling for coins in the gutter.

We have allowed visual effects to NOT be considered for creativity, collaborative and quality. We have allowed the discussion to simply become a decision of costs.

Films do not hire the key creative’s based on how inexpensive they are.

With the bankruptcies of R&H and DD and closing of other companies I the last 6 months, it’s clear that our industry is out of balance.

Major Problems

Subsidies
These are basically government funded corporate subsidies for select industries in select areas. Politicians are controlling who wins and who loses. The evolution of companies is no longer based on creativity, collaboration, quality and efficiencies. No matter how great a company is they can’t compete with a 50% or more discount funded by the deep pockets of governments. Subsidies do not create jobs, they simply move them. VFX companies are forced to setup expensive branches in locations with subsidies. The vfx professional is now forced to move from place to place like a migrant worker. We still work in offices and the moves are only based on these politics.

The taxpayers in those areas are paying a high price. Louisiana recently discovered that they make less than 16 cents for every dollar spent, even factoring the intangibles and the multiplier effect. No unbiased report I’ve seen has shown any benefits to the taxpayers in those areas.

Building an industry based on subsidies means building it on a house of cards, ready to collapse when the subsides go away. And they will go away. The subsidies are one of the next bubbles to pop. They are temporarily. Film subsidies require constant feeding.

Another location will provide better subsidies or your subsidies will go away. The BC film industry is seeing that with work now going to Ontario and Quebec. UK companies are now setting up branches in Montreal.

If tomorrow Antarctica announced a 70% subsidy, the studios would be on the phone to all vfx companies and the vfx companies would be scrambling to setup in Antarctica and requiring many employees to pickup and move if they expect to keep working. 6 Months later a small island in the pacific will offer more and the cycle will repeat itself. This is ridiculous and as insane as it sounds. Yet this is what is happening. You can see a time lapse version playing out in the US. Michigan was top dog a short while ago. They are no longer top dog and now have shutters studios and businesses simply because they falsely believed they were building an industry.

Everyone in visual effects is affected by the subsidies.

Too much competition
The amount of visual effects in films and other entertainment has exploded in recent years. But there is still too much competition. The subsidies have caused a distortion in evolution. Companies are trying to get a small profit from the projects. The companies have no leverage due to this imbalance. Large companies, even in subsidize areas, are underbidding the actual cost of the projects. Anybody with common sense can see that doing projects in the red will end in the company going out of business.

Broken business model
The visual effects business model is a fixed bid. A fixed bid for a creative process that starts as simply vague writings and has a fixed deadline. We are the only industry in the world that operates this way for a process with so many unknowns and so many changes, large and small. Construction requires blueprints and selections. Any changes are billed and deadlines are extended. The fixed bid is an insane way to work and results in companies going out of business. And it should be pointed out that when these companies go out of business they leave a trail of unpaid workers. Because at the end of the day the workers bear the brunt of all of this. It’s not the studios or the companies.

Massive Overtime
Unions fought and won to help make a 40-hour week standard. Most countries have a maximum allowable number of hours a person can work. The Fair Trade Association that Apple, HP and other companies belong to that covers China and other countries has a cap of 60 hours. In visual effects many of us start at this number of hours and increase from there. As vfx professional we’ve already exceeded what both many countries and associations allow. In there UK they have a maximum hours of 48. But vfx workers are required to sign a waver when they start.  As overtime goes up, productivity goes down. There are now health studies clearly showing the impact to workers health when worked over 50 hours. Why on earth are we working the hours we’re working.

Unpaid overtime
Many putting in these hours are doing so unpaid. Many vfx companies are breaking labor laws by misclassifying people, making workers exempt from overtime and other questionable activities. In Vancouver they are classifying people as technicians to get around overtime laws. In the UK there are no requirements for overtime rates so many are simply given a standard day pay, if anything at all.

Health Care
This is the only US centric problem I will mention. Health care here is very expensive. Each new company you work for requires 3 months before coverage. If you work shorter than that then you will have to buy your own. That is one of the reasons why all other film crewmembers are union members, including writers and directors. Because they offer continuous benefits as crewmembers move between projects.

Problem Summary
There are plenty of other problems but we need to focus on these first.

The visual effects industry is like large ship that’s burning, sinking and headed towards a waterfall. It would make a great movie but we are all on it. All of us. There are some on the ship that see no problems, some that simply want to hold on and hope for the best or hope that someone else will come to the rescue, others argue about which to fix first and of course there are plenty that just complain without solutions.

Solutions
So lets talk about the possible solutions

Subsidies
Vxfsoldier has started a legal team looking at the issue of subsidies under the World Trade Organization, which technically lists these as illegal under their guidelines. But beyond this there is little we as individuals can do solve this problem due to the politics and the deep pockets of lobbyists.

Making our own content
Many have suggested that vfx companies make their own content. That this would provide an alternate revenue stream that would help cover costs. But being a content company is a different business than being a vfx service company.  Some vfx companies have attempted this with varied degrees of success. It is certainly worth exploring but bare in mind large amounts of money have to be obtained and invested. It would require companies to invest large sums themselves to create the concepts, hire writers and directors as necessary. And even once this has been done there is no guarantee of success. Even the large animation studios are not always successful at doing so. If your company was successful in create such content, would you even bother being a vfx service anymore? Especially if the vfx business was still broken.

Residuals and royalties
The other notion is that vfx company’s share back ends participation. Perhaps even the workers. If you think getting more credits is hard, try to get a valid back end. There are some vfx companies that have done so with varying success. But this usually requires the vfx company to bankroll a certain amount of their own production for which they require deep pockets. And what happens if these projects are unsuccessful or make no return on investment. How deep are the pockets of the companies, especially since they work on very low profits currently.

Keep in mind people such as writers get residuals based on their union coverage. Most film crews get residuals in the form of health and benefit fund payments. When you buy a DVD a certain % goes into that fund. So again, vfx workers are the odd man out with no participation in the profits of the projects.

Working for the studios
The studios could simply employ vfx workers directly, just like they do film crews. This is the way it used to be done. There would be a direct connection between decisions the director makes and the cost, just like there is for the rest of the movie. This isn’t as far-fetched or as impossible as it sounds. There would be some benefits to workers and could be an advantage to the studios and directors as well if it were done right. But the vfx companies today offer the studios the ability to take all risks over themselves and the vfx companies also offer doing the work below costs. Hard to convince a studio to do their own when others are more eager to fund their projects and take on the risks.

Post-production supervision
A director is given so many days to shoot live action. The producer, line producer and 1st AD all encourage and guide the director to shoot their moving in the allotted time. They have to shoot so many setups a day to meet their schedule. A director is less likely to do 100 takes or change their mind after shooting a setup or ask for a lot of reshoots because they have a limited time and they have others who keep them on track. Once into post-production there is no one working with the director to keep them on track. Because the vfx is done by an outside company that may not charge for all changes and overages, the changes continue. As these changes continue workers work more overtime and the company loses more money. If the studios had a strong post-production person and treated visual effects more like live action that would stop,

Global working conditions
Just like the Fair Trade Associations and other organizations mandate a specific code of conduct for companies; there could be a code of conduct for vfx companies to adhere to if they wished. Those who do so would be clearly listed and overtime and health benefits would be clearly defined. Should a company break any of these guidelines they would be off the list. All companies on the list would be required not to subcontract to others not on the list. And the studios could not plead ignorance.

Trade association
A trade association would be made up of vfx companies. By organizing they create a unified front, with numbers comes strength and leverage. Just like a union. Companies in the trade association couldn’t agree on pricing but they could establish standards and also define their business models. The goal of a trade association is to do what’s best for the companies involved. The film studios have their own trade association for negotiating with the unions as well as take care of issues affecting all of the studios.

The VES hosted a few meetings with some companies and Scott Ross has been trying for years to get companies on board. The larger companies and those in subsidies areas have been reluctant to even discuss the possibilities. But the vfx protest that many of you were involved in has seemed to make a bit of an impression. Scott Ross will be discussing the trade association tonight.

VFX Guild
A guild and union are one and the same. As mentioned almost all others involved in the film industry are covered under guilds. Writers, directors, production designers, cinematographers, actors, etc. Please don’t stereotype unions by what you have heard 2nd hand. And please don’t bother bringing up false notions of the auto industry. The German auto industry is doing just fine with a union work force.

The union provides protection for the worker. As an individual you have very little control at your workplace. The company could drop everyone’s pay without notice. They can do things to skirt around the labor laws. A company may not pay you for a few weeks and simply say that they will pay you soon. (Dave Rand can discuss this aspect) All of this is even more possible at a time of large unemployment. You have no say over your situation. You either keep working or you quit. Those are your two options.

The guilds goal is to do what is best for workers. Workers are involved in the management of the guild and are involved in determining what is critical. The guild sets up basic working conditions and they set minimums. Everyone is still allowed to do their own negotiating higher as they choose.

And guilds are not only here in the U.S. There are in a lot of countries including Canada, UK, New Zealand and even India. China is one of the few places where unions are not allowed by law.

Solutions summary
So those are many of the potential solutions. None of these will fix all of the problems. We have different members on the panel that can discuss different aspects of some of these possible solutions. And if other have better solutions please submit them.

Workers POV
Since this is a town hall event primarily for the workers let’s take a look at the solutions they can be involved with.

From my perspective a VFX trade association would be a very good thing and help build a more sustainable business model. I would suggest to all workers to ask management if they have an interest in a trade association and would be willing to meet about one. If not, why not?

We as workers don’t control the politicians, we don’t control the studios and we don’t control the companies so lets look at the options that are left.

1. Do nothing. Hold on and simply hope you don’t end up unemployed and/or half way around the working next year.

2. Quit the business. Some have already done so and more are more making plans.

3. Unionize. We now have a large group of motivated workers around the world.  We’ve changed our Facebook images but how do we put that into real results? For real change to take affect we will have to truly be organized in a contractual form.

I know some people say they want working conditions, they want to be paid the hours they work, they want collective bargaining to get continuous benefits but they don’t want a union. The problem is you’ve just described a union. Here in the US there are specific laws and regulations. To do those things you have to be a union otherwise you’re an organization that submits petitions in the hopes someone may read it.

Ideally a union would be global but given the range of laws in each country that’s not possible. The best option is a per country union that can be loosely connected.

Some say they wish to start a union from scratch. How much time will that take to get through all governmental approvals, to get acknowledgement from companies, studios and other unions? And in the end what do you have gained?

Now there will be those that say a union will be too expensive, that the companies can’t handle it. That all work tomorrow will go to China or the cheapest place this week.  It does the union no good to create a large added cost to the companies, which cause the companies to fail. The unions would negotiate with the companies to develop a reasonable solution for both sides.

And remember, I’m not just talking here in the US. If you wish some protection as a worker you should consider joining a union. Canada, UK, etc all have the option to unionize as well. I think that once one area unionizes the others would be more interested in following.

Nothing signals we’re tired of this and we’re not going to simply wait around for others who may not fix the problem than people joining a union. It sends a strong signal to the vfx companies that a trade association is a good idea. We as union members would be connected to all other film crewmembers.  With numbers comes the strength to do great things.


There are those who want to continue to talk about all of this for the next 2 years. I don’t know about you but I’m tired of talking. In 2 years time our ship will have burnt, sunk and gone over the waterfall.

We need to understand at the end of the day the entertainment companies need what we do. They are dependent on us.

What we need now is unity and courage by everyone. That is the only thing that is preventing us from making positive changes.



FXGuide hasVFX PI coverage.

Related Posts
Pass me a nail
Oh, what a mess we're in!
VFX Business Models

Global VFX Workers

VFX Tax Incentives / Subsidies
Risk and Subsidies

VFX Union, Take 2
VFX Trade Association
Using the nail

Other web related postings
John Parenteau's Thoughts on the VFX Industry
More than 400 VFX artists protest at the Oscars, to highlight the growing problems in the VFX industry after Oscar winning studio, Rhythm & Hues (Life of Pi) recently had to file for bankruptcy

Pi Day

In case you haven't heard the VFX Town Hall on Pi Day is being held 3.14 (Tomorrow as I write this)

It's in Los Angles but there will groups in San Francisco area, Vancouver, New Zealand and elsewhere. There will also be a live stream over youtube.

I will be speaking along with Scott Ross (Trade Association), Steve Kaplan (Unions) , Mike Chambers (VES) and Mariana Acuna (http://davfxchick.blogspot.com). (inadvertently left off Mike Chambers originally)

The state of the industry will be discussed along with possible solutions. There will be an hour of questions and answers. The various town centers on the list will be able to send in questions and discuss amongst themselves. There will be an email or twitter hashmark I believe for others to ask questions. You can also submit or post questions ahead of time. We won't have all the answers but it's time we started to make some things happen. There are interesting meetings and discussions already in progress.

We are hoping to help reach out the global world of all visual effects professionals and hope to implement some concrete steps to solutions in the upcoming weeks and months. 

For details vfxsolidarity website, vxfsolidarity - Facebook (I've spent more time in the last day on Facebook than I have in the last 5 years) 

There are other links and twitter accounts in the upper right that would be useful to follow if you haven't already.

Update 3-15-2013 My talk from Pi Day event. Includes my script and the video

Risk and subsidies

Risk and subsidies

This post is in response to a comment on the previous post Oh, the mess we’re in! . Blogger is unable to allow long comments so I've made a new post for the response.

Here's the comment:

" Mark said...

Thanks for replying to my comment. You're saying that the risk used to be that the studios would be held to ransom in some way, but now that's changed -- to a risk that the studio will find itself in financial difficulties.

I think it's unlikely that's a new consideration. The risk that the VFX house will be unable to complete the contract for some reason will already feature. Work gets pulled from even high-profile VFX houses which I see as the studio managing this risk in a hands-on way, and I expect they will continue to do so.

I think the reason I'm commenting on your blog is that it (and many others) are reducing the discussion to a simple one of "subsidies have introduced risk to the VFX business." Not acknowledging any existing risk is (to me) an indication that risk management is not high enough on the agenda within a sizable part of the VFX industry."

'I think it's unlikely that's a new consideration.'

Actually  it is. Obviously studios wouldn't award projects in the past to companies that were just starting up or which there were indications they would fail from the get go.

Now there may have been a company or two that closed during a production in the pre-digital days but I can't think of any. But as you can see with R&H, DD, Meteor Studios, etc. that's a real risk now where it wasn't before. And this is as risky of the big companies as the small companies. The risk that a company may not be able to handle shots as desired or they may not be able to handle hundreds of new shots was always there but a company going out of business while working on a project? - That's a new one. Do the studios going to Weta or ILM think that tomorrow they may get a call saying they closed their doors while working on a project? No. And that was the case with almost all vfx companies pre-digital as well. Yet many projects are not done 100% at Weta or ILM. The work is split up among a few companies, not to reduce their risk of going out of business but in an attempt not to have all of their eggs in one basket. And by that I mean the studios don't want to hear about delays or problems or change orders. And they think it's cheaper.

A studio can check the quality of the work the company has done for other films, they can check their budgets, meet with the crew, they can talk to other studios, producers and directors - all of this to assess the risk and quality factor before they sign a contract. But the thing they can't do is check the books of the company and do a true assessment of their financial stability. In the past, they never had to.

Now a studio may pull work from a company and that's aways happened if the company wasn't delivering what was requested in the required time. There have been certainly 911 calls (emergency) when work needed to be shifted or shots were added. But that's a risk that is evaluated before the contract is signed and is monitored by the studio. This is not something they're blindsided with. A company calling them up and saying we're filing for bankruptcy tomorrow (or next week) is a much different thing and a much higher level of risk.

The studios have many risks when they make a film. They take on that risk with their crews and locations.  But vfx is a 3rd party since the studios don't want to take on running their own vfx company (too risky).  The real risk is laid at the doorstep of the vfx company. But the risk for the company is constantly changing by external forces which they have no control over. And in many cases their clients are the ones putting the companies at more risk either directly or indirectly.

'I think the reason I'm commenting on your blog is that it (and many others) are reducing the discussion to a simple one of "subsidies have introduced risk to the VFX business." Not acknowledging any existing risk is (to me) an indication that risk management is not high enough on the agenda within a sizable part of the VFX industry.'

No offense but this sounds like a certain management software company or a studio talking and not someone working in visual effects or visual effects management. Would there be some risk without subsidies?  Yes but they'd likely to be much less.

As pointed out the studios and regions (countries, states) have created a situation where quality and efficiency are lower priority. If it were a true free market then those companies who were doing good work efficiently would be rewarded by more work. They'd be able to make a profit and be on much firmer ground financially.  The companies that did poor work or that were inefficient would see their profits go down and possibly have to close. Studios would be clearly able to see the different levels and know ahead of time what their general risks were. This is natural evolution. Just like in nature the weak ones would be dying off and the strong would survive.

But now you've added in subsidies into the mix. It's no longer evolution based on quality and efficiency. It's evolution based in large part on politics. And those politics change frequently. Companies that would be strong and survive in a free trade market now find that there is no way they can cut costs 50% or more. They find they have to invest $1 million dollar into a satellite branch they don't want and didn't plan for. And companies that wouldn't even exist without subsidies now exist only due to the subsidies. Companies that were small found themselves very big in a short time not because the companies were the best at what they did but because of subsidies.

 Imagine you've got 5 runners in the Olympics and you give some of them motorcycles. Is that fair? Is that a way to truly assess which runner is the best? Are people surprised when the actual runners don't win? Which one would you bet on?

Imagine a restaurant in a town and it's doing well. In fact it's very good and people are coming from other towns. And in another town right next to the first town the city government decides to pay for 50% of all orders at a similar restaurant.  Don't you think that would have an impact on the first restaurant? Almost all of the people from both towns would flock to the one that they could get food for 1/2 price.

 Is there a way for the first restaurant to compete with that? No. There are certain food, labor and building costs that they can't trim. They're not making over 100% markup so it's impossible to cut their prices 50% and still make any money.  What are their choices?
1. Close their doors
2. Try to offer food at the same price. And this will bring back some of the customers but since they're now losing money every month it's simply a matter of when they will close their doors.
3. They can open another restaurant in the town with the discounts. Now they have the extra burden of a duplicate restaurant. They have doubled their building and overhead costs. They've had to hire a manger, hostess and the entire group of chefs and wait staff just for this new place. Do they have enough money to do that? Will that added unexpected cost now make them more at risk of going out of business? Yes is the answer.

Now imagine that another town right next to these two starts offering a 70% discount. Now where does that put the owners of the restaurant? Do they now build a 3rd restaurant in this new town? Do they try to lower their price to match?  And with the more lucrative restaurant business in this new town, there will be more restaurants built by those who haven't done this before. The townspeople have paid their taxes and the town council has decided that offering food coupons is much more important than putting the money into their schools or their decaying bridges. There's no winners here except for the customer.

Are subsidies the only reason for troubles of the visual effects industry? No but it is a major reason. Natural evolution would tend to solve problems of poor management and other flaws by having them go out of business. Is there a risk? As in all of filmmaking, yes. Is the risk of a company running out of money on a project much greater now? Yes. See the restaurant example of options for a company.  None are good. And it's not a question on how good management is at that point, you can't do the work for 1/2 price. And that's whats created the largest risk - closing doors even while working on projects.

And lets not forget when studios do stop or pull projects that creates a huge loss for the companies that was unexpected. As I say, the companies take on a fair bit of risk outside their control. Now they're on even shakier ground. The studio that pulls 1/2 their work can't plead ignorance that they increased the financial burden of the company and increased the risk the company could go out of business. Between these types of actions and the subsidies it's no wonder some companies go out of business.

Related post:
Visual Effects Tax Incentives (aka subsidies)


Here's some more information on subsidies of other industries and the impact they have:

Choosing winners and losers: How government subsidies destroy the free market
Subsidy Insanity
WWF: subsidies destroying industry [PlanetArk]
Coalition of Gulf Shrimp Industries Files Petitions for Relief From Subsidized Shrimp Imports
New Study Reinforces USW Position that Improper Chinese Subsidies Destroy Jobs in American Paper Industry
USA Shrimp Industry Seeks Relief from Subsidized Imports
China subsidizing auto parts exporters: US industry
Solar energy firms 'bankrupted' after subsidies cut
Over Half of All U.S. Tax Subsidies Go to Four Industries. Guess Which Ones?
Germany Subsidizes China To Destroy The German Solar Industry
China Solar Subsidies Pose Dilemma For U.S. Trade
California Backfire: Energy Subsidies Destroy Economy
Put An End To Massive Logging Industry Subsidies in California

Visual Effects Trade Association

At SIGGRAPH John Textor announced he was giving Scott Ross $100,000 to help start a visual effects trade association.

This is probably a good thing.

What is a trade association?
It's a group of companies in a specific industry that organize together to achieve common  goals. The MPAA  is a trade association of motion picture studios that negotiates as a group with the guilds and unions of hollywood. They standardize and provide film ratings. They are also involved in anti-piracy protection.

There's trade associations in quite a few industries. International Dairy Foods Association  covers the nation and Dairy Institute of California is made up of dairy farmers in California.  Because they cover a specific area they then lobby the state or federal government for or  against specific bills that would affect them. Some trade organizations do group advertising as well or set standards for their industry.

TechAmerica is made up of  high tech companies.
Wiki coverage of trade associations 

As you can see these groups are able to leverage their strength in numbers to their advantage. In many ways a trade associate is like a union or guild for companies. The companies pay dues and they are working as an organized group.

Scott Ross originally estimated the association would require $3 million a year to operate. He's since cut that figure in half so the $100,000 he is receiving is seed money. And the company dues will be significant compared to a few hundred dollars most guilds charge their workers. Dues in the trade association could dwarf the cost of a company unionizing.

What could the trade association do?
They could agree on standards and practices such as visual effects bidding forms or even things like model interchange formats. The Association of Independent Commercial producers (AICP)  has standardized bidding forms and bidding processes among other things. Although my understanding now is that this may not have truly benefited the producers in the long run.

They could agree to working conditions for their workers. They could use their strength in numbers to make deals with software or hardware vendors. They could review basic business models and work as an organization with the studios to negotiate common issues.

If there were a visual effects union the trade association could be the ones to negotiate with the union compared to each each company having to do it individually.

What they have to be very careful of
Collusion. This is where companies get together to decide on financial or hiring practices that are illegal. ILM and Pixar colluded to not hire each others animators. That was illegal as per the justice department. They won't be able to set rates or agree to match pricing. Because it's planned as an international association it will have to abide by laws that affect all nations.

What it can't do
The association is currently planned as an international group. You'll notice most trade associations are region based where they can lobby for specific things. With an international group they won't be able to lobby any specific government because that would be detrimental to other members of the association. So that means things like visual effects tax incentives will likely not be addressed or dealt with.

Companies
There will also be a question as to how many companies and what size of companies signup. So far visual effects companies have been reluctant to start a trade association on their own. Will they be willing to join one if someone else starts it? Will it provide a balance for very small companies and the largest visual effects companies? In some ways it can help provide the smaller companies with more leverage but only if that's the leverage the smaller company wants. Will companies who aren't members benefit from the improvements the association makes? Will studios seek out associate member companies or avoid them? Will the the studios take umbrage with companies looking to join the association as some companies do to workers who are looking to join a guild? That all depends on the associations agreed upon agenda. It's also very dependent on which companies and how many are in the association. If all the largest companies are members then there may not be much option for the clients.

Time
It will be interesting to see how long it takes to build a trade association and come to agreement on key issues. This is likely to be a very time consuming process (at least a year or more).

Comparison
As mentioned a trade association in some ways is like a union or guild for the companies. By organizing together they provide a strength in numbers and solidarity that independent companies don't have. Same thing applies to unions and guilds. They provide a strength in numbers and solidarity to individual workers that they don't have by themselves.

The distinction is a trade organization has  different goals than a guild. The trade organization's goal would be actions that are  beneficial to the companies. A guild's goal is actions beneficial to the workers. More profitable and balanced companies would be good for the visual effects industry as a whole but doesn't necessarily result in benefits for the workers. The trickle down effect does not work. A more profitable company will tend to pass the additional profits on to investors, executive management and possible long term investments. None of this may address hiring and layoff practices and it's unlikely to provide things like continuous health care or limited overtime.

In fact a trade association could make decisions on practices that are detrimental to visual effects artists. (Amount of overtime, overtime pay, employment agreements, etc) Only time will tell how this plays out. If that's the case then individuals who quit specific companies because of certain practices may find that most other companies are now doing the same thing. Individuals have very little power when dealing with a single company and will have much less with an organized group of companies. A trade association may be even more of a reason to look at a guild as a way to keep some balance.

Summary
A visual effects trade association could be a good thing for the visual effects industry if it actually materializes and takes the necessary steps. It won't deal with tax incentives and some of the other ills of the industry. It doesn't  and shouldn't preclude a guild for visual effects artists.

[Update: DD closed operations in Florida and the company has been sold. The $100,000 being offered to help start the Trade Association didn't happen. Scott Ross had obtained a number of yeses and at least a couple of Nos. Not sure how likely it will proceed at this point.]

Tom Cruise and VFX

For those who haven't seen it there's posting on TomCruise.com regarding vfx information.
My Effects Corner blog is listed along with a lot of various blogs, companies, schools, etc.
Worth checking out here.

Globalization and VFX

Globalization and VFX


One of the issues facing VFX companies and artists is the issue of globalization. Given the tax incentives and cost of living variance around the world most film studios are looking beyond the borders to find a better price for doing film work, including visual effects.


This blog is read around the world. This article will have a California slant but I’m trying to as always document the current state of affairs in visual effects.


In the golden age of movie making most Hollywood films were shot in Los Angeles with some being done in New York. The studios were setup as film factories to be as efficient as possible. If you finished a film on Friday, you'd start another film on Monday. The stages, sets, back lots and rear projection allowed them to shoot a wide range of film settings within the confines of the studio lot. If you want New York in the 1890's you go to one block of the back lot. If you wanted a1940's Midwest town you'd make a left into that back lot street. Many 'locations' were within easy driving distance of the studios, which also had ranches and other outdoor areas where they could construct western towns or other special settings.


With films like Easy Rider studios started to reconsider what they needed. Many back lots were sold for short-term gains and more true location shooting was done. In some cases if a film could be shot at a lower price in a different location that made sense. In other cases it made sense to go to another location if that truly was the location in film.


When films like Star Wars and Close Encounters were filmed the majority of visual effects were done in Los Angeles. When ILM moved to northern California that spread the work a bit but still the majority of the big, Hollywood vfx work was done within California. VFX companies were on a relatively level playing field. The jobs were awarded based on ability, quality and costs.


As the digital age of visual effects got underway some countries and states started offering tax incentives that included vfx. The digital age enabled the use of computers and software to be setup anywhere. VFX artists can be brought in from anywhere else and setup with little effort. VFX artists can be trained in the basics locally. The internet allows images to be sent anywhere quickly for work to be done and reviewed anywhere else. The studios, always eager to save money on things that weren’t under their umbrella, were more than happy to start sending out work. In their view, vfx are a commodity that can be done anywhere.


At this point a number of countries offer tax incentives, rebates or even pre-investments in films in exchange for a certain amount of work to be done in that country. Various states also have tax incentives as well to try to get millions of dollars of production costs to come to their state. The details vary greatly and can be a smart or bad investment depending on the details.


From the various governments viewpoint (state and country) an incentive means that they can draw film production to their location. A film production can bring in millions of dollars to a given locale fairly quickly. A factory doesn’t have to be built over time before people can be employed and there usually aren’t a lot of ecology studies required. All the products, services and rentals that can be had are paid for by production (hotels, catering, car rentals, hardware stores, etc). The crew spends a fair bit of their money locally on things like restaurants, bars and leisure time activates. If a location is portrayed well it may mean extra tourists in the future. When long-term incentives are in place then an entire film studio infrastructure can be built in that location and crewmembers of all types can be developed, including visual effects artists. Many third party companies develop to service the motion picture industry at these locations.


Companies in Vancouver, London and similar locations are doing well since they don’t have to compete on a level playing field. With a 20% or more savings via the government it’s difficult for vfx companies in the U.S. to compete directly.


From the studio perspective their main aim is to do a film as cheaply as possible and still make it work. If the film is a major VFX tent pole movie with a lot of difficult or new vfx then they will pay top dollar to make it and to ensure it will be done on time and to the quality required. But this only applies to those shots and sequences they feel need to be done at expensive vfx companies. One step down from those types of shots (certainly simpler compositing and roto shots) or lower level vfx film and price becomes one of the highest priorities.


A Hollywood studios first choice is usually Vancouver simply because it’s in the same time zone, is just a 3 hour flight away and they all speak English there. Second choice would probably be London since it’s the next closest location, they speak English and studios executives and key personal enjoy the London life. Next would be Australia. (New Zealand with Weta is primarily on the big projects and not so much a cost saving measure). India, China and other locations are further down on the list if the studio executives and key personnel think they will have to go there. If they don’t have to personally travel there, then the studio is all for sending the work anywhere in the world.


Obviously some studios now have infrastructures setup in various locations and their choice will be dictated by their established suppliers. You’ll notice most editing and sound mixing still happens in the U.S. since the filmmakers and studios spend a fair bit of time involved directly in these activities. They’re also not at the same level of expense as vfx.


Some people think that the studios won’t go anywhere just based on price but it’s very dependent on the nature of the work. There was an article a few months ago where most of the studios were now sending out their subtitling work (as done on the DVD’s). The cost savings to the studio? $600. A $100 million dollar movie and they send out the subtitling to a different country to save $600. I’m not a studio accountant but I suspect there might be a few other budget items that would yield larger savings but since subtitling (and vfx) are done by third parties it’s an easy win for any studio person to make that decision.


Unfortunately the location that has the most to lose (and gain) from subsidies is California. They have done too little, too late. A large revenue stream for California (especially southern California) comes from movies. There are a lot of people employed in this business and they in turn spend their money locally on services and products.
Runaway product continues to suck out revenues from California and unfortunately most of the California legislation can’t get a simple grasp of the obvious. Motion pictures are one of the U.S.’s largest exports.


People (and politicians) assume since movies bring in huge revenue that everyone who works in movies are ‘gazillionairs’ to quote another internet forum. What they forget is the vast majority of people involved in movie making are making working wages. The median income for writers in the Writers Guild is $44,000 a year. Most VFX people make more than this but if it’s averaged over all vfx artists and dry spells it may not be as much as you think.


Some US companies are opening satellite companies in other countries that are able to offer a better price break. There are multiple arrangements. In some cases they simply outsource the work they feel can be outsourced such as Roto. In other cases they have a full working relationship where the foreign company does a fair bit of real work on the actual product. Some companies operate independent shops in different countries that can be leveraged, as the work requires it.


Part of the issue is what is to be gained for everyone involved. If the focus of the studios is purely on the cost factor, having a US based VFX company doesn't necessarily gain them much. They're willing to pay top dollar today for certain projects with a lot of R&D but what happens in a few years when those techniques and software are more readily available in off the shelf products? If your California vfx company has some specialty (water, fire, etc) what happens when that’s all in the next major update of a software package? Will you continue to get work? What happens when vfx production management elsewhere is brought up to the same level? Will the studios continue to be willing pay more to a U.S. company to act as an intermediate?


Will most of the work being done in the US move out of the country and the only thing remaining be the vfx company executives and accountants?


If you live in a country that is currently doing well (healthy vfx production) because of the incentives or reduced expenses what happens when that changes? At some point your government may reduce or eliminate the incentive. Another country may offer a higher incentive. The world and local economy may increase the cost of doing business such that the incentives aren’t enough or another location may end up being even a lower expense because of changing cost of living factors. The studios will quickly move to the lowest priced area that can provide them what they need. Can you and the company you work for compete on a level playing field if it had to? Is your company truly efficient? Does it have the talented artists and R&D people required?


If you live in California (or starting here) what can you do?


1. You can work at some of the larger companies such as ILM, DD, etc. These still get large projects but they still lay off massive amounts of people and still go through cycles of feast or famine work so there’s no guarantee of long-term employment even if you’re considered on staff.


2. Consider working at a small to mid-size shop that continues to maintain a reasonable balance of work. Many of these do all television work (which is usually done here or in Vancouver) or that at least do some television work to help balance the work.


3. Consider moving out of country to where the actual work is being done. This sounds like a simple fix to anyone who doesn’t consider the implications.


a. There are already people working there. Are there enough job openings to make it worth moving there?


b. How long is the project? Is this a permanent move or will you have to shuffle off again in few months to somewhere else?


c. Can you qualify to work elsewhere? Many countries require work visas and other paperwork. Some incentives require crewmembers to be living in the country for a given length of time. Just because there is technical and creative work elsewhere doesn’t mean you can just move there and start working.


d. Can you work at reduced wages if that’s the reason the work is located in that country? If you’re at a location that is getting work based mainly on the cost of living can you work there yourself at the reduced rate and feel comfortable? Does the local taxes and other issues reduced the income even further?


e. What happens if you have loved ones, family, house or other connections here? If you’re young and single it may be fun and exciting to move to another location. For those of us with families do we sell the house and uproot all family members (taking children out of school and away from their friends) to go work in another country? Do we leave the family for long periods of time? (6 months to a year or longer) Do we try to rent out the house and hope to return someday?


It’s a sad state of affairs when experienced vfx artists, with all of their creative and technical skills, are likened to migrant farm workers moving to where the work is. At least there’s a real reason farm workers move is because of locations of the crops and growing seasons. In the case of the vfx artist a cubicle is a cubicle, no matter where in the world it’s located. The only reason for moving is purely at the whim of the counties incentives and the studios.


Unfortunately I can’t offer any real solutions. The unions can’t prevent work from moving out of the country. The politicians seem to be the few who have much control over this so they’re the ones to contact. I know that there are some organizations trying to make this better. If you’re in a location doing well then enjoy it while you can. If you’re in California it’s likely you’ll have to do what you have to do. There are now some vfx supes that spend months shooting in one country and then do the post in another country and spend most of the year away from their families.


Will there be enough of a demand and balance that all the vfx companies and artists throughout the world can keep reasonably busy and can enjoy the fruits of their labor?


(Links added 7/12/10 based on VFX Soldier comment posting. See comments for my basic response at this time.  The links all make interesting reading and really get to the heart of the matter.)


VFX Soldier  VFX Subsidy War Grows Into Global Trade War

How to Make an American Job Before It's Too Late

The Vanishing American Consumer and the Coming Trade War

(If you're viewing this on a page with other posts then please click on the Comments link below to see the comments and responses)

Update 8-9-2010
Every week there seem to be new updates on state or country incentive programs.
Clint Eastwood makes UKFC plea - Entertainment News, Top News, Media - Variety


Here's a snippet:

Scottish-born producer Iain Smith, whose credits include "The A-Team," "Children of Men" and "Local Hero," expressed the need for the government to quickly form a plan or risk producers looking elsewhere to shoot films.

"While we have a fantastic infrastructure, we have to protect that as much as we can and in order to do that we have to compete against industries in other countries," said Smith. "There's no doubt we need to tighten purse strings but we need to be careful we don't asphyxiate the film industry in general."

But in an article written for Blighty's Observer newspaper on Sunday, culture secretary Jeremy Hunt hit back at critics.

"If we are going to face budget cuts I have a duty to ensure that taxpayers' money is spent where it gets the most bang for its buck," he said. "It is simply not acceptable in these times to fund an organization like the U.K. Film council where no fewer than eight of the top executives are paid more than £100,000 ($160,000)."

Hunt added: "Stopping money being spent on a film quango is not the same as stopping money being spent on film."

NY RENEWS TAX CREDIT, ADDS POST INCENTIVE Snippet:

"This new credit will give New York post production services a much needed competitive edge," explains Rich Friedlander, co-founder of Brainstorm Digital. "We increasingly saw visual effects post work going to Canada thanks to their their Digital Animation or Visual Effects tax credit (DAVE). This new program will allow work that was filmed in New York to stay through its entire production cycle. It's a major move that will attract and keep top talent here in state."