Casualties of the Subsidy War: Rhythm & Hues?

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Twitter conversation from October 2012

The solutions in the VFX industry seemed so simple:

Open facilities in cheap labor locations and send as much work as you can there! Oh, and do co-productions too!

Well, one of the pioneers in doing just that has been Rhythm & Hues. It was one of the first VFX facilities to open in India and many other cheap labor locations. Hell, even Scott Ross once speculated that it was the likeliest survivors in the industry given how much work they do in India.

So imagine everyones’ surprise today when The Wrap broke the news:

After April, the company is expected to be sold to an Indian company, Prime Focus, two of those individuals said. If Rhythm & Hues, which employs roughly 1,400 people, cannot find a buyer and is forced to close, it would be the latest blow to a struggling visual-effects industry, hit hard by the vagaries of tax credits offered by governments around the world.

I can’t tell you how upset I am to hear about this news. The work on Life of Pi was spectacular and will probably win the VFX Oscar.

How could this have happened?

Last October Variety had an article about Rhythm looking for a partner to invest $20M after a substantial round of layoffs. I speculated on twitter that the company may be the next to go into bankruptcy after DD. I also pondered why an investor would want to put $20M in Rhythm with all the liabilities after Digital Domain was sold for $30M minus all of it’s liabilities.

Unfortunately that speculation turned out to be partially true with Variety reporting that the company was on the verge of bankruptcy and an investor “spooked” by the DD news.

Many recent rumors of Prime Focus purchasing Rhythm have turned out to be true. What’s sad about that is Rhythm generally treated it’s Indian workers well, while Prime Focus has an indentured-servitude-like program which was identified on this blog after a number of Indian VFX artists emailed me.

Live By The Subsidy, Die By The Subsidy

There’s no denying that one of the major blows in both DD and Rhythm’s situation is the studio-mandated chase for subsidies. Rhythm President Lee Berger alluded to it in an interview he did with Adrian Mcdonald:

More interesting yet, Berger said Rhythm & Hues could often match a bid from Vancouver for the same money even using his California artists.  “But what has happened in recent years with many studios,” Berger said, “it’s easier to understand the tax credits than it is to understand a discounted price.”

So like other VFX facilities, Rhythm is forced to spend capital on opening a facility in Vancouver to ensure the studios get that subsidy check. This is the problem with subsidies: No matter how efficient or talented you are, you are at the mercy of the next government willing to stupidly hand out free money to the studios.

The irony for Vancouver and the #savebcfilm supporters is that the subsidies they passionately advocate for are also part of the very mechanism killing facilities that have tried to open there.

It’s eerily similar to the recent gun debate in the US: Like gun advocates, VFX facilities are mistakingly assuming that engaging in an escalating arms race will lead to better protection for themselves. Unfortunately, all they have done is mutually assured their own self destruction.

Soldier On.

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201 Responses to Casualties of the Subsidy War: Rhythm & Hues?

    • vfxIntlTraveller says:

      No studio forced DDMG to pursue a high-risk gamble to build an animation school/studio in Florida, nor was it something that was mandated by their situation in California; “hey guys, we’re not making enough money in Venice. Let’s open a feature animation studio in Florida!” That was all just bad business, pure and simple.

      R&H have aggressively pursued cost cutting through outsourcing for a decade or more, yet they can’t make ends meet in California. Sounds like those “too good to be true” terms and benefits were just that – too good to be true. Doesn’t matter how robust the pipeline and management structure is if you’re spending more on running it than you can possibly earn from the shows.

      • Dave Rand says:

        Hell why don’t we all just shoot from hip….he’s my toss…DDMG forgot to ask permission to enter the content creation and distribution game and were promptly shut down…true…why not, in today’s game it completely makes sense….

        or….

        We can look at facts and can agree upon what’s in black in white…as a matter of fact we HAVE agreed upon it! … and signed it.

        Get educated.

        http://www.wto.org/english/docs_e/legal_e/24-scm.pdf

        …and then do something that’s not only self initiated, productive and smart, but it’s the right and honorable thing to do –honor agreements to not cheat and steal when you’re afraid to compete with what you can do or can change so you can do it.

        Take down the fences of subsidies and bidding and bring it back to Talent and Branding. Everyone, studios included, will enjoy a more profitable and creative future.

        http://www.indiegogo.com/endvfxsubsidies

        Todays news was good for one thing…..raising artists consciousness. I’ll go with that…who’s next?

        Stay tuned.

      • vfxIntlTraveller says:

        You’re seriously maintaining that DDMG was a responsibly run business and that they were just suckered in by all that easy no-questions-asked Florida tax payers’ money? That the plan for the Tradition Studio was watertight and totally sustainable and not at all a get-rich-quick scheme that exploited the motivation, good will and dreams of the crew employed there? That they were just trying to do something “self initiated, productive and smart”. Really? Seriously? Well, certainly someone was very “smart” – that’s for sure!

      • Dave Rand says:

        I was making a point that comments without intimate knowledge of what you’re actually talking about is “shooting from the hip” it’s from John Steinbeck a legend in American Culture. Your comment is also shot from the hip.

    • Thanks for the moronic and misguided statement about guns. The logic is simple, gun laws arm criminals but diarm innocent civilians. Gun control advocates have no sense of logic.

      • That word should be disarm, not to mention the obvious fact that the giant push to disarm world populations by governments in the West while they murder thousands in the middle east and Africa and take away the rights of citizens is an obvious tyrannical move toward an Orwellian world government.

        Too many people in the VFX industry are political doxies and tow the globalist line to advance their career like the weak, gutless sycophants they are.

        It’s scientifically proven that 911 was a controlled demolition and that man made global warming is a scam yet the technical VFX nerds that should know better avoid the science and push the globalist mantra at all costs.

  1. LMP says:

    It is clear that stupidity is the thang!!!

  2. Harold K says:

    R&Hs problems weren’t only tax credits. They also had an ancient pipeline, proprietary software that no-one outside of a bunch of old-timers understood, complacent management, and flat-out dumb decisions (“let’s throw money into Percy Jackson 2!”).

    Tax credits were the least of their problems.

    • titanx says:

      Are you speaking from experience, or just joining the speculation band? Coz as far as I know, R&H has one of the most robust pipelines in the industry.

    • koushik says:

      Its better not to comments on those things which you dont know…. nobody cares what u think…

  3. Andreas Jablonka says:

    So the new motto is not ” its all going to India” but ” India will buy all of us” if this happens I’m curious how many jobs in El Segundo they will relocate to the Indian offices.

  4. The Dark Knight says:

    This is a sad day for the visual effects industry. If this is not an eye opener that change is necessary, then I don’t know what will be. I wonder how the #savebcfilm advocates can honestly justify their campaign to continue this spiraling trend.

    • urizen says:

      “I wonder how the #savebcfilm advocates can honestly justify their campaign to continue this spiraling trend.”

      For your answer, kindly re-read the comment at the top of this thread.

      That’ll be 25 cents, please.

    • Randal says:

      “I wonder how the #savebcfilm advocates can honestly justify their campaign to continue this spiraling trend.”

      Because they’re loosing their jobs to Ontario by the thousands? What’s the alternative? They can:

      A) Do nothing and hope that Ontario repeals their credit
      B) Move to Ontario
      C) Petition for their own credit

      Like or not, those are the three options in front of them. You don’t have to like or support Save BC Film, but they’re doing more or less all they can in this situation.

      • Ymir says:

        D) Admit that predatory subsidies go against WTO rules and join the fight to end them.

      • Harold K says:

        Are you kidding me? Petition the WTO?

        These people are loosing their jobs TODAY. What fantasy world are you living?

      • VFX Soldier says:

        Petitioning the WTO is actually a 30-45 day process.

        Even if Ontario stops its subsidies you still have to deal with Louisiana and other international locations that will offer more.

      • Randal says:

        Chill Harold.

        The WTO isn’t going to mediate or intervene between BC and Ontario. They’re an international organization. These people don’t know what they’re talking about.

      • VFX Soldier says:

        Randal: And what is the source of that info?

      • Ymir says:

        You guys are missing the point. This isn’t just about BC and Ontario. This is about BC, Ontario, UK, NZ, Australia, US . . . anyone who keeps upping the nuclear subsidy stockpile.

      • Look at the big picture says:

        You guys are exactly right. All BC needs to do is increase their subsides just once last time and everyone else will just give up. Yay! VanCity wins!

      • Randal says:

        http://en.wikipedia.org/wiki/World_Trade_Organization

        It’s the World Trade Organization. It doesn’t deal with provincial or national disputes.

        But even on an international level, there’s no way something like this would ever be resolved in 35-45 days. The last time BC and the US got tangled in trade disputes was with software lumbar, which lasted about 20 years and resulted in a few fines, some new taxes and messed up industries on both sides of the border. In terms of effectiveness, the WTO ranks somewhere between the UN and whoever hands out Grammy Awards.

        By the time the WTO reached a ruling on it and had it implemented, even if the parties agreed to implement them (the US and Canada have both historically violated trade treaties), most of the people involved in Save BC Film would have been retired anyway.

      • Ymir says:

        Should probably scrap those Middle East peace negotiations while we’re at it. Nothing’s going to happen any time soon there, either.

      • Studio_Spotter says:

        Randal…
        WTO disputes are not always as prolonged and trivialized as you claim.

        http://www.reuters.com/article/2011/09/05/us-china-usa-tyres-idUSTRE7842EH20110905

      • deanareeno says:

        I’m pretty sure that when Randal says “software lumbar”, he actually means “softwood lumber”, and chalk it up to iPhone autocorrect.

        https://en.wikipedia.org/wiki/Canada%E2%80%93United_States_softwood_lumber_dispute

      • yet_another_anon_vfxer says:

        Just because Ontario subsidies are stealing jobs from Vancouver, doesn’t mean both of their subsidies aren’t illegal in an international market. If they were only subsidizing work from Canadian production studios, the WTO might have no claim. But both locations are importing vfx work that’s being bid in a global market, including non-subsidized locations, and winning a proportionally much larger amount of work post-subsidy than they were winning pre-subsidy. This (and not only this) violates WTO guidelines in both the cases of Vancouver and Ontario. The two cities are simply in competition with each other for work illegally won away from non-subsidized locations.

        It’s also a perfect example of why nobody should win work by artificially deflating their market price.

      • yet_another_anon_vfxer says:

        The softwood lumber dispute sounds much harder to define than this situation. According to the posted wikipedia article, the disagreement was that the government bidding process did not allow the price to inflate to the value it would have had there been a competitive bid, and therefore the market value of the harvesting was deflated, and other international lumber industries felt this had the same effect as a subsidy.

        That isn’t what’s happening in Vancouver. They are sending truckloads of cash to studios in exchange for business. This is a much more clear-cut match for what a subsidy is. If you read the WTO document “AGREEMENT ON SUBSIDIES AND COUNTERVAILING MEASURES” (caps included from document) available here:

        http://www.wto.org/english/docs_e/legal_e/24-scm.pdf

        … specifically starting with Page 233, Article 5 and on, you will see very clearly stated definitions of illegal subsidies that are very clearly being broken.

        To save some reading, it seems to me that the following are being violated:

        Article 5, paragraphs (a) and (c).

        Reinforcing that article 5 paragraph (c) has been broken, article 6, section 1, paragraphs (a) and (b).

        Further reinforcing article 5 paragraph (c), article 6 section 3 paragraphs (a), (b), (c), and (d).

        Supporting 6.3 (b) and (c), 6.4 and 6.5 further reinforce that all definitions of all subjective words are meant to apply to this case.

        Supporting that the subsidies are not allowed under some exclusion, none of the exclusions in article 6 section 7 apply.

        Supporting the probable lack of other “secret” exclusions, article 6 section 8 states that in the absence of an exclusion in section 7, the parties will go before a panel to argue their case.

        Article 6 section 9 excludes agricultural subsidies, but while some people may think vfx artists are a form of vegetable, I don’t think the WTO would agree.

        Disclaimer: I have nothing to do with law other than having spent some time learning how to read it. The above should be interpreted by professionals in the appropriate environment. I am simply pointing people to publicly available materials and saving them some time finding the pertinent sections to read.

    • Sean Lewkiw says:

      “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” Upton Sinclair, I, Candidate for Governor: And How I Got Licked

  5. San says:

    That makes me very sad, R&H is my one good hope to get back on track and now to hear PF buying R&H is somewhat doesn’t sounds good .

  6. Wow says:

    When will Prime Focus buy ILM?

  7. Jeevfx says:

    Its not only Rhythm & Hues… but also Gameloft studio in india.. Its sad..:-( I don’t know what’s happening..????

    http://www.gamasutra.com/view/news/185669/250_out_of_work_as_Gameloft_suddenly_shuts_down_its_India_studio.php

  8. Octave says:

    :( :( :(

  9. Leaving D Industry says:

    I would personally advocate whatever outcome hurts the studios most, and keeps the intellectual property from going overseas. The R&H jobs may be gone in the short term – but there will be more jobs in the USA in the medium to long term. Close the doors John.

  10. jwhiteman says:

    This quote from the Variety article covering the R&H problems sums up why the VFX industry is doomed in its current form . . .

    “Fox, U and Warners stepped in and quickly agreed to find a financial mechanism to keep the doors open at R&H without making a direct — but the trio could not agree on next steps. Some studio execs wanted to press for better deals on existing vfx contracts; others objected that the last thing R&H — or the vfx industry in general — needed was further financial pressure. Two studios wanted to force R&H into bankruptcy. The third threatened to pull its work if that strategy was followed. These arguments went on for several weeks.”

    I’m reminded of the comment from the studio guy who said he aimed to put at least one VFX company out of business on every show . . .

    • Good dog says:

      Yep – put at least one studio out of business, and help ship the IP to India to help their bottom line long term.

      Like lambs to the slaughter….

    • JustCurious says:

      This was my first thought as well. What are the studios going to do when there are no major VFX companies left to do their big extravaganzas? They may have to start finding good scripts… nah, that won’t happen. I guess the easy money train is coming to the end of the line ol’ fellas.

      • Jen says:

        “What are the studios going to do when there are no major VFX companies left to do their big extravaganzas?”

        No kidding. They’re killing their Golden Goose.

  11. Vfx_Artist says:

    I don’t think this just needs to be about R&H. We should support this for the industry as a whole.

    https://petitions.whitehouse.gov/petition/bailout-rhythm-and-hues-studios-inc-manner-corporate-bailouts-2008/pNWPlZ6Z

    • Ymir says:

      And how does this differ from government subsidies?
      Don’t get me wrong, I do not want to see R&H go down. But asking for yet more government handouts is not the answer.

    • The Scarlet Pumpernickel says:

      This just makes RnH look bad. The problem isn’t RnH. It’s subsidies and the big 6 exploiting vfx houses in order to get that free money. Make a petition to help VFX Soldier fight them instead.

      • coastuc says:

        So then do it. Make a petition to help VFX Soldier fight them instead. Everyone is full of suggestions but at least this person got off their ass and did something, even if it was mainly symbolic.

      • Gromer C. says:

        The problem isn’t R&H?! R&H had two big fat problems: retarded management and out of control spending. Say what you want about subsidies, but the writing’s been on the wall for R&H for the past decade and everyone knows it.

      • Jeff says:

        Gromer, if you think that R&H has/had a money-spending problem you’re clearly ignorant of the situation. Don’t talk about things that you know nothing about.

  12. sonny says:

    More discouraging news for U.S. jobs and the VFX industry.

  13. Dave Rand says:

    Another hot wind to add to the creative dust bowl our own American Studios are forming. Nice going. Our studio executives are great at math..especially subtraction, but lack the imagination to do anything truly creative. What’s next guys Alien vs Avatar vs Predator?

    Cameron, thank God, would not allow it or your nimble minds would find a way to do it, even break trade laws to get some taxpayers to fund it by lining equally unscrupulous politicians pockets with their own constituents money.

    Taking a truly great company nominated for best visual effects on a truly great story Life of Pi and sucking the life out of them.

    Bang ….your just shot yourself in the foot.

    Variety 2007

    “One producer, according to a story making the rounds of vfx shops, is reported to have said, “If I don’t put a visual effects shop out of business (on my movie), I’m not doing my job.”

    http://www.variety.com/article/VR1117965871/?categoryid=1009&cs=1&query=blockbuster+take+toll

    Variety 2013 (yesterday)

    “Two studios wanted to force R&H into bankruptcy.”

    http://www.variety.com/article/VR1118065654/

    Sure ship it all as far away from the director as you possible can, like directing a movie from your iPhone.

    Remind me again, how is all of this beneficial for the studios? I always thought growth of culture is what truly feeds the profits of creativity.

    You can’t grow anything in dust.

    • Look at the big picture says:

      Dave,

      This problem is endemic in the modern business world. Short term profits are paramount and the long term consequences of prioritizing them above all else are rarely considered.

      The financial industry demands this of publicly traded companies.

      • Scorch the Earth says:

        Another argument for unionization I’d say.

      • Look at the big picture says:

        I agree. It obvious that the studios will stupidly drive most of the major American (if not most North American) VFX studios out of business or force them overseas sooner rather than later. I don’t think this is some nefarious long term goal of theirs, it’s simply the unintended consequence of their short term thinking. The exact same thing happened in the past to other industries like electronics manufacturing and American innovation has suffered because of it. They will eventually find out that VFX is not like building mother boards but by then it’ll be too late.

        Trade associations and unions can’t possibly stop globalization, nor should it, but it could definitely help slow the process which would be to everyone’s benefit. The studios are killing domestic vfx production and accelerating its globalization before it’s ready and it’s happening much too rapidly.

        I don’t think the studios understand why this will be bad for them in the future, nor do they care to understand about the long term consequences, so it is up to the VFX industry to save itself via a trade association and union.

        The question is do we even have the leverage or clout left to do this?

      • Dave Rand says:

        two choices shape peoples futures:
        1. bend over.
        2. stand up.

      • alex lim says:

        I think it most rather unfortunate newer generations these days are too soft to stand up for what’s right

  14. Scott Ross says:

    I find it incredible that on the eve of R&H winning the Oscar for Best Visual Effects for THE LIFE OF PI….. this happens. The industry is in real trouble. It’s time for an International Trade Association.

    • Dave Rand says:

      yeah …that should be an interesting acceptance speech–If they let them win.

      As Steve Huellet always says…”it’s all about leverage”
      …about time the real creators had some..

      I’m with you Scott.

      • Dan says:

        I’d love to see a powerhouse like Bill Westenhofer make a huge speech about the state of the VFX industry using R&H as an example and really let the world know what is happening.

    • RH_vfx says:

      I completely agree. I don’t know how MORE people aren’t for an ITA.

      These god damn production companies are making hundreds of millions, if not BILLIONS, in profit on the backs of VFX houses. It’s time for the greedy pieces of shit snakes to start giving back.

      As someone that JUST went through the bankruptcy at Digital Domain, this is just fucking stupid having to go through it all over again. It won’t stop.

      • Maria Bowen says:

        Well, London right now is experiencing what we U.S. people experienced a decade ago. Maybe united with them things will change!

  15. Ivan DeWolf says:

    it seems like they are sending ownership of the VFX facilities offshore so they can REALLY screw ‘em hard now.
    I’ve said it many times,
    the only people in Hollywood treated worse than the VFX artists, are the owners of VFX facilities.
    now that Hollywood is moving that role (ownership) overseas, I expect to see foreign investors getting bilked out of their money as shops open and then shutter monthly.

  16. sunny_in_sandiego says:

    Sorry for going long but here goes, as much as people want to pin this on tax breaks I think the R+H management bears most of the weight for this fiasco. If there is one thing this industry is, it is most assuredly cyclical. In 07/08 R+H was in the poor house, laying off people, cutting even staff employees—the bottom of the cycle. Come 2010 they were back on top with tons of work booked and some participation in Yogi. Then came a decision, with their lease up on the old warehouse they decided to buy a building. Not just any building, a gleaming corporate office park tower. This seems to be the moment R+H went from frugal to opulence. I don’t know who made the decision, but the choice had been made. LA commercial real estate was in the tank—and it still is—yet here they are buying the new place. Don’t worry management said, the building had a tenant that paid over half the mortgage for the next three years (which I believe ended this year). I couldn’t help but thinking at the time that they could have easily found another place as cheap as the warehouse. Some of the older buildings near LAX were renting space out for $3/sq ft yet they opted to go for the tower. Then, on my first visit to the new building I got my first sense that things were changing, and not for the better. The entire first floor was blocked out for management. A space that the old R+H could have put 50 artists into was now the offices of about 3 or 4 people. I saw the suite and thought about John Hughes’s old office in the warehouse—no bigger than any of the managers offices and simply a 10×10 room if that. At the same time the rather flat management structure of the company became quite Byzantine. What used to be a John/Lee/Ken/David/Keith (and sometime Richard) core group now expanded to almost a dozen assistants. I don’t know what these people do. But I do know that things seemed to work before when they had just a couple of assistants—and those mostly charged with personal organization. The new ones seemed to be client schmoozers or miscellaneous random executive managers.

    I don’t know when exactly the switched got flipped—from the frugal R+H of old to the corporate office park version—but more importantly I don’t know why it got flipped. Did they think they needed to compete with Sony or ILM and show more of a polished look ? Did they have some sort of inferiority complex from the last building that they thought they needed to shed ? I don’t know the answer to that mystery. But after reading yesterday’s Variety article I’m willing to wager that any jackass of a studio exec that saw that new building had one thought—they were paying R+H way too much money if they could afford some place like that.

    Now I won’t dismiss the incentives entirely. I think the logistics behind setting up satellite facilities in Vancouver or wherever does put a burden on the US based companies to some degree. So maybe the Vancouver office drained a bit more of their cash over the last year. But I think the fault here lies with management.

    And to give my two cents on the subsidy issues, I say let Ontario do what they want—-same with Louisiana or Michigan or Dubai or the moon. Since I do not think there is a way to end them, I say let them race to the bottom trying to outdo each other. I’m convinced that this is the only way to crash the system. But I also wonder if London, BC, Australia have come to the realization that their subsidies have to be permanent. There is no way of incubating an industry, letting it mature and then pulling the tax breaks—which was the dream of these subsidies in the first place. If there is one thing we are learning right now, it is that the work is going to follow the money—not talent, not infrastructure, not common sense—money.

    • Smell's bad says:

      You gotta be a studio guy.

    • Opulence! Yes! We all drive brand new porsches over here at R&H. In fact, they were our XMas bonus. Should of seen what we got for Chanukah! And the end of the year bonus! Oh, and the Life of Pi nominee bonus was amazing. I didn’t know my 911 could fit so many iPads. I ended up having to give them all away to homeless dudes (aka my friends at DD, Cafe, Orphanage and the Sony people who refuse to move to Vancouver). Woo! Yeah, Opulence! Rolling in it up in here!

      • “I didn’t know my 911 could fit so many iPads”

        haha I’m dyin’ over here! :D

      • Dave Rand says:

        Get educated.:

        http://www.wto.org/english/docs_e/legal_e/24-scm.pdf

        Just one of my favorite parts under
        Article 5
        Adverse Effects (by the way …this is not a “Visual Effect”)

        (a) the effect of the subsidy is to displace or impede the imports of a like product of another
        Member into the market of the subsidizing Member;

        Once Educated

        Get even more educated on how you can
        help make a change.

        http://www.indiegogo.com/endvfxsubsidies

      • sunny_in_sandiego says:

        You think I meant to say the money got blown on artists, hardly…in fact I’ll bet if given the chance most people would prefer the warehouse to the new building.

        Do you think having a staff of 30 people doing the jobs about 8 people used to do is costing more or less ? Do you think the new building is costing more or less than the old one ?

        Now if both of these things are costing more—which I am pretty sure is the case—and margins are shrinking where is the money to pay for this coming from ? That’s why OT dinners are a thing of the past and that’s why you’re shoulder to shoulder in an office.

        Overhead costs have sank more facilities than subsidies. Yet R+H seemed to have thrown caution to the wind and increased their monthly outlay on office space and management. And at the same time either turned a blind eye to their cashflow OR banked on the investor hail mary to save them. Both appeared to have failed…

        And to address Dave’s WTO mention, yes, I am sure there are remedies through the WTO. But let’s be realistic, there are still chip dumping cases against Samsung from the early 2000s still before the WTO. With legal manoeuvring able to delay cases nearly a decade, what do you give better odds to; letting the subsidies run their course OR a WTO complaint…

  17. Dingo says:

    Are subsidies the big issue here? RnH got hosed when the studios put huge chunks of their shows on hold for months. The studios want changes without overages and they expect RnH to just eat it.

  18. Ivan DeWolf says:

    I don’t think subsidies are the killer here either. R&H has been languishing at deaths door, same as every other VFX shop, by the constantly atrophication of budgets and schedules with swelling shotcounts. The only way to be successful is to grow your market share (i.e. the newer shops rising to their place in the market), after which you are on the downward trainride and will be slowly bled dry. Certainly, subsidies affect this industry, but without subsidies R&H would STILL be teetering on the brink, and a simple schedule delay might still kill it off.

    • Dave Rand says:

      Let me guess Canadian right?..without subsidies your job would not exist, because sadly after all the work you’ve done you have not one vfx film to call your own. All’s subsidies have done is to keep Canada on the nipple, now a 15 yr old baby.

      It’s as if you’re all wearing Canuck’s Jerseys but with Bruins T shirts underneath, all warm and cuddly, while you talk about how inept the team is down there.

      Sorry you prob a great guy….just pisses me off today..the nerve of you guys and your rationalizations.

      Grow your own

      • Dave Rand says:

        Yeah I apologize, bring in the hockey and all…low blow…you know, especially cause they can’t subsidize victory on the ice…oops there I go again….sorry just a bit sore from the blow to a company I love. I’ll check in later when I’m calm

      • Ivan DeWolf says:

        actually, I’m american, from Colorado. I just really dislike LA and I’m glad to be out of that town. I ran my own VFX shop for over a decade in LA. I helped pioneer techniques your shop probably uses. I’m not a VFS student.

        I don’t think that subsidies are the sole ill facing this industry. I certainly don’t defend them, but they aren’t the real problem. R&H would still be at deaths door if there were no subsidies. Don’t like the subsidies? great, fight ‘em! but please, don’t forget that they are not the only problem this industry faces; far from it.

        R&H is busy. they weren’t squeezed out of business by work leaving them. They were left crippled by decades of barely sustainable work contracts, trying to keep pace with the industry, shaving margins thinner and thinner.

        if we eliminated subsidies, it wouldn’t suddenly be rainbows and cherubs; this is only one single piece of a very big puzzle.

      • Ivan DeWolf says:

        on an interesting side note- apparently I worked with you at R&H. IMDB can be helpful. I understand you are angry, but, don’t make too many assumptions about the people you see here.

        Fight subsidies if you like, but PLEASE, also fight for the bigger picture too.

      • Sean Lewkiw says:

        Dave, are you REALLY dumbfounded by “us guys and our rationalizations”? C’mon, if the shoe was on the other foot and all the work was getting sucked into LA at the expense of some other place, would you be running up and down the streets with a pitchfork in your hand demanding to end the gravy train and have your job go somewhere else? Of course not.

        So although I agree with the sentiments expressed by VFX Soldier and this blog, it’s really really really hard for me to campaign to see my job go away.

        Yes, I know in the long run, it might, just might, make my job more tenable, but in all likelihood, it just means I’d be out of a job.

        I’m sure you’ve heard of the “tragedy of the commons”: http://en.wikipedia.org/wiki/Tragedy_of_the_commons

        “In economics, the tragedy of the commons is the depletion of a shared resource by individuals, acting independently and rationally according to each one’s self-interest, despite their understanding that depleting the common resource is contrary to the group’s long-term best interests. “

      • Look at the big picture says:

        Sean,

        I’m not sure how the “tragedy of the commons” concept works in this situation. If there is an application it is that generous subsidies are being offered in unsustainable labor markets in order to artificially boost employment in that region to the detriment of competing markets that have experienced proven sustainability thereby cheapening the value of the industry as a whole. Even that application is a stretch given that the sustainability of the industry even in its birthplace is in doubt and many players in the industry itself have been willing, or at least passive, accomplices in cheapening their own value. In either case, the visual effects industry isn’t comparable to a truly finite resource like a single grazing pasture as depicted in the “tragedy of the commons” metaphor.

        I think a more applicable field of economic study regarding the effects of subsides would pertain to market distortions caused by subsidies and protectionism and the economic inefficiencies created as a result, especially in an industry as intrinsically mobile as the film industry who is uniquely able to take advantage of this situation.

        As more work leaves Vancouver for Toronto, Montreal and Louisiana today, and then shifts to who knows where tomorrow – as facilities are hastily propped up overnight in new locations without the local infrastructure and local talent pool necessary to properly maintain them – as quality and value of the product continues to plummet as subsidized houses drive down bids (and salaries) to unsustainable and company killing levels – maybe then you will understand that participating in a “race to the bottom” wasn’t actually saving you your job but was akin to attempting to put out the burning pasture by dumping gasoline all over it.

        And that’s the real tragedy.

      • Sean Lewkiw says:

        LATBP,

        I think you misunderstood the point of my post. I am NOT justifying the subsidy war, in fact I clearly state, “I agree with the sentiments expressed by VFX Soldier.” I am not describing the effects of subsidies on free markets. My post is on the psychology of the subsidy beneficiary, for example, the happy resident of, let’s say, Wellington, NZ.

        If you accept that premise that subsidies are killing the industry, the tragedy of the commons is very apt. I am not saying it’s logical or it’s sane, it’s just a fact that people will look out for #1. Look at overfishers, (catching these five fish will benefit my family greatly while doing almost nothing to exacerbate the loss of 1 billion fish over the past 50 years), gun owners, (giving up my gun will make my family less safe while doing nothing to reduce the 100,000,000 guns sloshing around the US), polluters, (pouring this paint down the drain will do almost nothing to ocean pollution while saving me a very inconvenient trip to the recycling depot), VFX artists in Wellington, (trade subsidies in NZ help me and my family immensely, removing them will help someone else’s family and hurt mine).

        Yes, yes, yes, I know, in the long term, one is only hurting one’s self. Just like the overfisher, the gun owner, the polluter, the cow grazer dude, (Shepard?), the subsidy whore, who “despite their understanding that depleting the common resource is contrary to the group’s long-term best interests [continues to do so].”

      • urizen says:

        @Sean Lewkiw

        I understand what your getting at, but with respect, unless I misread, the Wikipedia link itself that you provide undercuts the force of the soundbite.

        In so far as anyone may want to frame our common troubles as an industry in a L.A. vs. The World drama, (which, looking at the facts, I personally reject), I’d sooner put my money on a ‘Canary in a Coal Mine’ analogy.

        Understanding full well the history of labor and communities in regard to the commons of the coal mines.

        I think the current events in VFX are bearing this out.

        And what’s with all this incessant ringing day and night?

        Who’s that bell tolling for now- ?

  19. meinvan says:

    As you guys can see now, subsidies are not the issue here.

    A company like r&h which used every play they had. (vancouver subsidies, low wages in LA, lots of intern/junior positions, content creation, multiple locations in india, singapore?(not sure right now, but they have another studio somewhere)………but even then it ends like this.

    So please tell me how subsidies played a role in this?

    The big problem is that vfx shops do anything to stay in business and get the next big project, even if they take a loss on it, which is generally not bad, as we want and need jobs.

    Surely they are being pushed by the production companies….and I say this again….I believe they(hollywood) should not get a penny from the tax payer. But aslong as the vfx shops dont come together with the VES to figure out how to put the pressure back on the production companies, any war on subsidies will only make it worse not better for the artists.

    The only other way I see is if the vfx workers unite and go on strike….but for that we dont have reason enough, as we still are getting paid.

    • The Dark Knight says:

      “As you guys can see now, subsidies are not the issue here.”

      “So please tell me how subsidies played a role in this?”

      In my opinion, the question that should be asked is would R&H be in this position if there was actually a level playing field in vfx without subsidies?

      I could argue that “low wages in LA, lots of intern/junior positions, multiple locations in india, singapore…” are all a direct result of studios distorting the value of vfx work through overseas subsidies. What other choice does R&H have but to also lower their own bids and go through all these measures just to survive?

      • VFX Soldier says:

        Bingo dark knight.

      • meinvan says:

        yes i believe it would be the case. as i believe that r+h getting canadian subsidies is not the reason that they went down, not now and not why they had problems in 08.

        the only subsidized location they are in is vancouver, the other locations are just cheaper for them as labour costs and currency strength comes into play.

        it is their choice to bid low or not, its their choice to oppen up multiple facilities to try to save them money. (ie. india)
        it certainly is their choice to hire 2 cheap artists over 1 great artist.

        So yeah I say this again, I agree that subsidies are warping the true value of what we do, no doubt about that, but this is only a small part of the problem, and certainly not one that if abolished will change how hollywood corps will function.

        Its up too the fx shops and the artist to get leverage, and what needs to happen is for the studios to fall flat on their face. But how many of you are really prepared to go on strike to let an fx shop crash and burn? and how many fx dhops will be prepared to layoff all their people while they wait for the other shops to underbid each other.?

        There needs to be a dialogue between the vfx shops, an fx union for studios and their employees.

        but that sadly is not the american way to do business, and as long as a single shop is publicly owned they have to think of their bottom line and nothing else….and they will end up underbidding the bunch.

      • PolarisSoup says:

        Its plain and simple corporate greed, just like we see with the banks. Studios could double the amount they pay to VFX facilities and still turn an epic profit on 85% of the movies they finance.

    • Jen says:

      VFX artists may still be getting paid, but we get paid less compensation every year. Most of the Los Angeles VFX artists I know have given up their health insurance, paid overtime, paid vacation days, paid sick days, severance pay and any kind of retirement benefit. Now their rates are getting cut on top of all that.

      At this rate, VFX artists will still be getting paid ten years from now, but it will be about the same as what anime artists get paid.

  20. JD says:

    About those canadian subsidies, Mr. Berger complains that the studio didn’t understand how a discount price matched the Vancouver bid. Really though, Mr. Berger didn’t express the fact that the tax credit check you can get *before production starts* is now part of the financing scheme of the projects up there. No discount is going to make up for the cash flow benefit of getting part of your production cost paid for by your vendor!!

    Now if Mr. Berger had been able to say, here is our 10 million dollar bid, and we will give you no strings attached 4 million if you send us the work, that would have been an equivalent position.

  21. GetPerspective says:

    VFX was an amazing industry to get into. It has offered me the chance to do some of the most rewarding work I’ve ever accomplished in my lifetime.
    Who wouldn’t want to help make stories come to life? Who wouldn’t want to watch their work on the big screen knowing that millions of people are getting an emotional response out of it?

    Let’s face it, this job is truly a dream job.

    The passion I once had for it is now gone. We are forced to work obscene hours to finish on tighter and tighter schedules so studios can get to the next big moneymaker and help line the pockets of investors.

    I come to work, doing 60 hours a week or more, and listen to my colleagues brag about how 60 hours a week is nothing. They’ve worked longer days and carry attitudes about how tough they are and that they are such amazing artists because of it.

    Really? Are you truly that amazing? Stop deluding yourself. We are all replaceable by very talented people willing to work for a LOT less than you will.

    Work coming from India and China has vastly improved over the last few years, why? Because all these same people that brag about how good they are take an offer from the companies they work for to go overseas and train the new staff in a country that pays next to nothing for the same work we are now doing. Many of these people that take this bait, do so with one mindset…”I’m securing my future at this company.” I’ve seen those very same people get released from those companies a few months after they return home.

    Perhaps I’m not as tough as you, but 60 hours a week is demanding. It takes a toll on my family and my health. I only keep doing all the overtime because the gaps in employment are getting longer and longer, and all that OT needs to go directly to a bank account for the inevitable time off with no health insurance or retirement.

    Now, the people that are replacing us in our jobs….they don’t get OT. They work 6 days a week. They work for a month on what I make in a day. These people deserve the same rights and respect that I claim, but they are being taken advantage of by tyrants who drive 350 thousand dollar sports cars, live in a mansion, and create pay to work type policies in countries where they know they can get away with it.

    Perhaps the RIGHT thing to do would be to protect the rights of EVERYONE who works in this industy. All I ever hear is how unfair it is that you might be losing your job even though you live in a country that takes care of you long enough for you to find another job should you get released from your current one.

    My advice? Plan an exit strategy to blissfully leave this all behind, get a job that offers benefits, retirement plans, and only a 40 hour work-week so you can enjoy your LIFE!

    Or you can carry on and refuse to take that pay cut because of your pride and continue to whine about a dying industry. An industry that is dying because nobody cares about the art anymore. They only care about how much money it will make them.

    Support VFX soldier, support rights for workers in your own country. Lobby your governments to create healthy work environments. Lobby your governments to eliminate unfair trade practices. As it looks from my perspective, VFX soldier seems to be the only one attempting to do anything about any of it. VFX soldier is doing everything possible to create a difference in his country. What are you doing for your rights? idly standing by and taking a beating? Why should anyone stand idly by and allow tyrants to use the cracks in the system to get extremely rich at the expense of helpless individuals?

    • jaded_exDD_artist says:

      Well said! I would love some good faith discussions about what other fields our skill sets could give us an advantage in. I certainly know that most everyone i’ve worked with always has the proverbial “escape plan” from this industry but few seem to reach escape velocity. The VFX racket is played out.

      As a 10 year vet with a specialized skill set and no kids / family I’m finding it harder to line up work that ensures a proper standard of living even for a single person like myself. 5 years ago my VFX job at gave me a higher rate than I now command with basic OT and healthcare benefits. These days as a VFX gypsy wandering through the wayward studios of Los Angeles I am offered no healthcare benefits and often times no OT pay at low “day-rates” if I want to work. The deadlines get shorter…the hours get longer…and I’ve just about had it. This industry is bad for my life, bad for my health and bad for my spirit. At this point I’d rather just let it burn and take my chances on a new direction.

      • Jen says:

        “I would love some good faith discussions about what other fields our skill sets could give us an advantage in.”

        – Local 839 projects at Disney/Dreamworks — three pensions + health insurance.

        – Casino graphics — I am not joking. I know ex-VFX artists now working in Las Vegas. They enjoy eight-hour days plus health and retirement benefits.

        – visualizations – ex: Jet Propulsion Laboratory, Inhance Digital, museums, parks, corporations, military

        – game industry — currently not protected under California law for overtime pay, and 38 Studios burned a lot of people, but I sincerely believe good game companies exist (Valve?).

        – apps – I know one VFX artist who tried to launch his own video games for years. As soon as one “hit,” he left Los Angeles to pursue game creation full-time.

        – software – I know another VFX artist who made a mint selling a software utility. He also left Los Angeles to lower costs and pursue software development full-time.

        – teaching – at least one VFX artist I know has left the industry to teach VFX at a university.

        I hope this list helps.

      • Cara Paul says:

        I second the reply here. When Sony pulled up stakes from ABQ, my fiancé and I had already decided that we would no longer chase a job that was increasingly becoming un-fun. I had been a web developer for many years before going into VFX but, after 8 years a lot had changed! I spent about 6 months doing self study in some web techniques as well as mobile app development. I also started to get involved with local meet up groups in web and WordPress. I did get one interview out of a connection I met. As part of my unemployment requirement, I was sending out at least 2 resumes per week and imagine my surprise when I got called info for an interview with a defense contractor. I was hired to do web work and hopefully soon, we’ll be doing more mobile work and eventually serious games as well. When i got there, they were finishing up a 3D project and were starting to get some Unity licenses in. I’m learning a ton on the job (good thing I’ve always learned fast!) and I work an 8 hour day with no weekends. It can be done but you should start working on a plan B now. Those 6 months were pretty stressful. Happy to answer any questions about my extraction ;)

      • VFX Soldier says:

        Always great to hear people who make the jump out of the industry. Given that you are working 8 hours a day now, what percentage of your hourly rate has changed?

      • Cara Paul says:

        My hourly rate went down about 24% but since I had a 4 month hiatus last year due to lack of work, I will end up making about the same as what I made last year just at a slower pace. Yes, I miss the OT paychecks but, in the long run, I’d rather have a solid steady check coming in that I can count on . I’m planning to do my own mobile app projects that may or may not bring in extra money. But at least I know the opportunity for extra money from something I made is there (as opposed to using every last ounce of energy I have on someone else’s creative vision).

        All of this said, I am still very sad to hear all of this bad news coming out of the VFX and animation industries. I am working on getting out because it’s the right move for me but I totally respect and understand those who don’t want to leave. I hope that something can be done to shore it up and make it a more stable and happy endeavor!

    • andrei gheorghiu says:

      Plan an exit strategy to blissfully leave this all behind, get a job that offers benefits, retirement plans, and only a 40 hour work-week so you can enjoy your LIFE!

      NOT SO EASY!

  22. OccupyVFX says:

    Let’s for a moment recap the DD scenario, step by step.

    1. It is made clear to employees that the company is in real financial trouble.
    2. Florida studio shut down.
    3. Bankruptcy declared.
    4. DD loses bid on Robocop.
    5. Reliance Media Works and Beijing Galloping Horse swoop in on (sic) a galloping horse to save the day.
    6. Management applauds the financial contribution of the new ownership, and assures the employees that everything is going to stay the same, and with all the investment capital the new owners have, they are going to grow the business in a more responsible and sustainable fashion.
    7. DD has a mass layoff of all “non-essential overhead personnel”.
    8. DD neglects to pay janitorial services company, whose employees walk off the job. Toilets remain dirty and trash piles up in the bins.
    9. DD forces all employees to take a permanent pay cut. Many highly talented core staff simply quit.
    10. Major studios cease to award new work to DD.
    11. Yet-to-be-determined, future event.

    Now, let’s apply the same scenario to R+H. Seem familiar to anyone? It sure does to us.

    There’s a big difference here, however. DD went from steps 1 through 5 in the matter of a few weeks, as far as the employees were concerned. Rhythm, on the other hand, has not declared bankruptcy, and it is also public knowledge WHEN the potential sale to Prime Focus will take place.

    Rhythm employees, it would appear that you’ve got about two months to stand together, organize, and fight for the facility and your jobs.

    For those of you who have not done so, sign a union representation card. Download the PDF of the rep card, print it, sign it, and fax it to (818) 843-0300.

    http://animationguild.org/wp-content/uploads/2010/12/RepresentationCard.pdf

    Maybe, just maybe, you can get enough sign rep cards to hold a vote. If everything goes together like clockwork, having a collective bargaining agreement in place BEFORE the studio is sold to Prime Focus would do wonders to protect the studio, its employees, and their jobs.

    • Ashes says:

      You got a few wrong:

      7. Less than 40 out of the 500+ employees were laid off.

      8. The janitorial services weren’t stopped for nonpayment, but not resumed until new contracts were made with the new company DD.3.

      9. Hardly any core staff quit. In fact, some deptments saw no one walking out. Can’t go into anymore about this, but that article in Variety about what the studios were trying to do to R&H was just the tip of the iceberg of what they did to DD.

      10. Can’t comment on this one, money was coming in from various new delv work and commericals.

      11. Things in works, but who knows what and when they will land.

      I do agree with your 1-6.

    • jstyles says:

      I was at R&H for half a year. Place was a joke. Producer didn’t know his face from his ass. Coordinators were clueless as to what they were supposed to be doing. I knew a chick who was a matte painter or texture artist and she said she hadn’t done any work in a year and had no idea why they had even hired her.

      If you’re an R&H employee, don’t even bother standing together and organizing. Just find a better place to work.

  23. Milka says:

    I think blaming subsidies is a joke. R and h are the kings of undercutting and buying shows even those not done in la . They have made some crazy business decisions . I know of 2 shows that were effectively bought when every other facility even those in Canada that walked away with the crazy studio demands on price . The fact is this blog has devided the industry in la against the world and in a time when we need to stand together the likes of Dave rand and vfxsoldier seem hell bent on one agenda and that is not the benefit of the whole industry. Fact is with subsidies gone r and h would be in exactly the same situation FACT.

    I fear this blog has no hope of ever uniting the industry that many of us had once hope would happen so we could stand against the studios who are the real culprits in al this .

  24. Milka says:

    Oh and they have not proven to lose money in many countries . I think nz is seeing a far greater return than that spent.

  25. Scott Ross says:

    Stop pointing fingers at each other. The issue is simple.VFX facilities are not paid for the value they bring. VFX facilities do not stand up for themselves. VFX facilities need a common voice. The industry needs a Trade Association.

    • Caleb says:

      I agree with you, sort of. It would seem given the state of the biz a trade association is getting further and further away from a reality. Common voice? YES!! The biz needs heavy organization with leaders unafraid to step from the shadows and set an example.
      I’m not sure what it’s going to take for the work force to wake up. I’m not optimistic.I thought with all the DD fall out people would finally grow spines, but not a chance, they just bent over again, and took it. At this point all this horrible shit, we deserve. Every time I’m on set the conversation comes up. “What, vfx doesn’t have a union?” “That’s fucked.”
      Now more than ever, “fucked” is a good word.

      • Scott Ross says:

        I believe a Union is a poison pill. The issue is simple. VFX facilities are not appropriately compensated. If they were, or the bids were cost plus, the industry would be better off. No subsidies, no tax breaks. Give VFX facilities meaningful back end participation.

        Unions will drive up the costs. Unions do not reach across international borders. Unions will not solve this industry’s issues. A Trade Association will.

      • Ashes says:

        @Scott Ross, yes, exactly. While I think a union could have been a great thing around 1990, I’m not sure how it could work right now because of the costs it would infer on vfx houses. The Studios not paying what they should for the work is the biggest problem and a union won’t help with that.

      • Dave Rand says:

        You may have noticed that there’s no longer post on these pages from IA reps or the IBEW. I miss Kaplan and Oedy’s input.

      • Jen says:

        “Unions will drive up the costs.”

        Decent wages and benefits tend to do that.

        As the schools continue to crank out fodder for the VFX shops, the VFX shops will have no incentive to pay good wages or benefits to attract talent. Ten years from now they’ll pay VFX veterans $30,000/year the way the anime industry does for its top talent.

        A trade association may protect the VFX studios from its clients, but not the VFX artists from their studios. We need a union.

      • OccupyVFX says:

        Jen,

        Well put. @Scott, it would appear that as an industry, we need both. We need a trade organization to essentially engage in collective bargaining with the studios to ensure fair pay, and to end the subsidy race to the bottom. In addition, we need a collective bargaining agreement between the employees and the visual effects houses themselves. Certainly, the cost of employing a union artist is higher than that of a freelancer, and would affect the bottom line of the facilities. But if the facilities were to pass those costs on to the studios, it wouldn’t affect anybody’s profit margins. A comprehensive solution to the problems the industry is facing would most definitely include properly compensating both facilities and employees for doing the best quality work, without a doubt.

        What is incomprehensible here is that the executives of the 8 largest VFX houses are unwilling to band together and fight for the future of our industry. Are they afraid that the movie studios will take the work elsewhere? Where, exactly, are they going to take the work? Are they simply going to stop making VFX-driven summer blockbusters, or be OK with a sudden drop in quality?

      • skaplan839 says:

        Hello Dave. I’ve been watching, but the union voice wasn’t called upon until today. Thanks for noticing though.

      • Ashes says:

        @Jen, the vfx houses are more concerned with getting films to book so we have jobs. To get those jobs, they have to be able to get a bid close to what the tax incentive places bid. Anything that can tact on an extra cost will kill their bid. Most big vfx houses, read Sony, R&H, DD, etc, give decent wages, staff get health benefits as well as some project hires, and they get OT. That’s why you don’t see any of these places going union.

        Yes, it would be best for all if the health insurance was portable and we had a pension plan, but when you are hoping that your house doesn’t close, the last thing on the artists minds there is going union. If the industry even stabilizes, then you’ll see a movement in support of a union.

        Until then, it’s not going to fly at this moment, especially since the union will do absolutely nothing to create or keep jobs. It’s just not the number one problem right now.

      • skaplan839 says:

        Now more than ever shows that the divided are conquered by the organized. Is plain to see that the production entities/conglomerates have worked together to maximize their profits by taking advantage of the VFX industry. This is not arguable, this is fact.

        What is also fact is that the industry has the option to stand and do the same: band together and focus the inherent leverage of their skills to bargain better conditions and workplace practices. However, this is not something the industry can call upon others to do for them. There are plenty of resources available to assist, but you .. all of you .. need to stand up and demand it.

        Poison pill? Hardly. Will a unionized VFX artist pool be more costly? Yes, for multiple reasons. Most of which would be simple adherence to labor law. However, isn’t that the point? Don’t we want the production studios paying VFX shops and artists more?

        The union and/or Trade Association can not prevent bad management. Both can provide a vehicle for change, one that is desperately needed.

      • Ashes says:

        @skaplan839, how do you propose unionizing would force the studios to pay more the the vfx houses? Seriously, how would that work? As of now, vfx houses make a bid and the studios turn around and say, “We get $4mil in cash from the tax incentives. Knock that off your bid and then we might go with you.” When exactly does the union come in and help? If a house refuses to match the lower bid, they lose the film. How does the union force the studio to pay more? From all the statements I’ve seem from the union, they won’t do anything about the tax incentives and they will cause the cost to the vfx house to go up. Right now, it seems like the union wants to bridge a gap between the artist and the vfx houses when the problem is actually the studios and the vfx houses.

        Honestly, I’d love to support the union, but I do not a see a feasible way for the vfx industry to unionize without it driving up the bid cost for the vfx houses.

      • skaplan839 says:

        I’ve always said that the cost argument carries some dangerous fallacies: Health and Pension or as some call it H&W (health and welfare) the IA would propose a health and pension contribution from an employer to benefit the members. That has a cost. Currently, MPI costs are around $8/hr per employee. However, MPI is not the only option. There are lower cost options. Enforcement of Laws Yep, that’s another one. That pesky overtime. It would be enforced .. stringently. Or, would it? We at 839 constantly hear of artists working uncompensated OT .. because they *choose* to. We have to chase them down and try to get them to fill out their time cards properly.

        However, isn’t the ultimate goal of all this “change” that we propose to get more money flowing to visual effects? Scott Ross says that the Trade Organization would do that by setting standards and attempting to implement profitable bidding models. The union would bring wage minimums that have a cost-of-living increase built in to multi-year contracts.

        So .. to circle back to your question, how would a union work in the current model with tax incentives? It could raise the cost of a DD or SPI or R&H, or maybe it wouldn’t. However, it would certainly give the vfx shop a reason to bid higher. “Here’s our normal rate .. and heres 20% extra because we’re union”. Would the industry say “Thanks, but no” to one of the houses you mentioned? Hardly likely. R&H, DD, SPI are a handful of the shops that can do the A-List work. The tent-pole feature work. Take them out, and the rest of those who do that work will become overburdened. It will all crumble.

        The producers would have to pay. Just like they have in the past, when they have to.

      • vfxIntl says:

        @skaplan839 ” … it would certainly give the vfx shop a reason to bid higher. “Here’s our normal rate .. and heres 20% extra because we’re union”. Would the industry say “Thanks, but no” to one of the houses you mentioned? Hardly likely. R&H, DD, SPI are a handful [of shops that can do that work]”

        That would be wonderful if it were true, and perhaps ten years ago ILM could charge 20% over the rest of the market just because they were ILM (because of the implied quality/guarantee of on-time delivery that went with the name). But right now, today this is the reality: the studios are making significantly fewer tent pole VFX shows than they did last year resulting in over-capacity across the entire VFX industry in *every* country. Some shops are busy, but none of them are flat-out booked up in the way many were up until a couple of years ago. The VFX industry is shedding capacity – we’ve all read about the layoffs and closures – but whilst the big facilities remain under-utilised it’s a buyers’ market. How bad is the situation? It’s really bad, bad enough that if any of the big shops closed today, the others would pick up the slack within a couple of weeks. Don’t believe me? Even as I type, the CEOs of the likes of ILM, MPC, Weta, Framestore, DD, Dneg, SPI, Pixomondo, Scanline, BUF, Cinesite etc are almost certainly calling up the studio VPs in charge of vfx and offering their services should R&H not make it through to the
        PF sale.

      • Jen says:

        @Ashes – Yes, it would be best for all if the health insurance was portable and we had a pension plan, but when you are hoping that your house doesn’t close, the last thing on the artists minds there is going union.

        So VFX artists should just keep working more and more for less and less compensation? Looks like Vancouver isn’t the only one subsidizing VFX productions.

      • Ashes says:

        @skaplan839, you said:

        “Would the industry say “Thanks, but no” to one of the houses you mentioned? Hardly likely. R&H, DD, SPI are a handful of the shops that can do the A-List work. The tent-pole feature work. Take them out, and the rest of those who do that work will become overburdened. It will all crumble. ”

        YES THEY WOULD. I cannot stress this enough. I have literally sat in a room dealing with bids at one of the houses you mentioned and listened to studios flat out say this. It’s this stance that is directly responsible for why you do not have the majority support of the artists working in the top houses, and the pro-union stance is lowest among the staff artists. I’m sorry, I’m not trying to be harsh, but you clearly do not seem to understand what’s happening at the large US vfx houses. If any of the 3 mention do not match or come in under the bids from Framestore, MPC, WETA, etc. they will not get the work. Adding an extra $8 an hour per artist, I’m sorry, but there is no way for a US vfx house to tack this onto their bid.

        At the 3 places you mentioned:

        1. The artists all get OT.

        2. The vast majority get health insurance, all the staff definitely get health insurance.

        3. Staff artist have 401ks.

        4. Artists get a decent salary.

        So, the union is not really offering them anything, but driving the costs up for the US houses, making the bidding less competitive, and making the artist worry that their house will close. I wish this wasn’t the case, but it is. That is the sole reason the houses have gone union. There is no way to raise the cost and still make a competitive bid. Until the union is able to do something about that it will not get the support needed.

        The vfx houses aren’t the problem to the artist, it’s the studios. Once you can show the vfx artists how you are going to get the studios to pay more you will get support, until then. It’s not going to happen until the vfx houses get some sort of leverage. If the tax incentives go away, then there’s a decent chance unionization could happen.

      • Ashes says:

        @Jen, no what I’m saying is that the union will do nothing but speed up the closure of US houses…..at this point. You want to unionize? Fine, but I’m not sure how the union is going to help you when there aren’t any jobs. The vfx houses are not the problem, the studios are. Until the union can actually do something about that, I don’t see how they will help.

        Look, I’m pro-union. I want a union, but I’m also a realist. Right now I do not see how a union will help. Our number one threat to the long-term health of our industry, and I’m considering it as a global problem not just for the US, are subsidies and tax incentives. The union has clearly stated that they will not address this problem in anyway, shape, or form. They have openly admitted that it will COST the vfx houses more to unionize and that they expect the vfx houses to pass this increase off on to the studios. The studios, currently, will NOT be willing to absorb this cost in the form of a higher bid from a US house because they will simply go to a vfx house that can lower their bid because of 33-60% tax incentives available to them.

        We missed our best chance to form a union back in the early 1990s.

      • skaplan839 says:

        Ashes:

        I’ve always prefaced my comments by saying that what I’m proposing is a possibility. We’ve all agreed that the vfx shops need to get paid better. The Trade Organization can best make that change by getting member studios to agree to work on a bidding model that makes them money. Ultimately, that is what needs to happen. My proposal was only giving unionized vfx shops the “reason” they could be searching for.

        The union can not solve the industry problems, because its not designed to. The union is designed to protect the worker .. the vfx artist. Ask any DD artist who was forced to take a paycut what the union could do. Similarly, ask and DreamWorks artist what the union is going to do for them, compared to their PDI counterpart.

        Bill Taylor said it best “There is nothing the union can do that will offset boneheaded management decisions.”

        I’ve constantly argued that unionizing is a key step in creating the stability and positive changes we all seek. The Trade Association is another. As Scott Ross points out here and regularly, the vfx studios aren’t willing to form that organization. I know a great and quick way .. unionize. What Scott wants to call the Trade Organization, we’d call a “Multi-Employer Bargaining Unit”. Change would be forced.

      • Ashes says:

        @skaplan839, funny you should mention DD, I’ve worked on and off there for over a decade. You don’t have their support, even after the pay cuts. There’s a reason there wasn’t a massive walkout after the pay cuts or a sudden push to unionize.

        I get that you are proposing possible solutions and that the union can’t be expected to solve all the industry woes. However, the union still has not mentioned once what it will do to actually help with any of the current major problems vfx artists have. Once again, it’s the studios that are hurting the vfx artist NOT the vfx houses. The union does not offer any solutions to fix this. Until it does, it won’t get the backing of the staff artist at the major vfx houses.

        Whether or not the US vfx houses are willing to join forces is irrelevant unless the vfx houses that get the tax incentives are will to join as well. They are not. They know they are able to out bid the US vfx houses and they aren’t willing to give that up. Hell, you have an entire movement up in VC right now fighting to keep that advantage even though their own government is losing millions of taxpayer money.

        As I stated before, I’m one of the more pro-union people around and I can’t make the math work. Until it does things aren’t going to get off the ground for the union. That being said, I do respect you and I think you guys do some great things. I just wish the time for vfx unionize was right. Maybe once the dust settles and the industry stabilizes the timing will be right.

      • skaplan839 says:

        Ashes: I get that you’re a supporter. I’m glad that you are and that you’re doing some critical thinking. More of that is needed.

        Once again, it’s the studios that are hurting the vfx artist NOT the vfx houses.

        I get that too. A unionized artistic workforce will help get the studios to accept a different bidding model. Its all about leverage. However, a unionized VFX artist workforce alone can not affect the change. A unionized VFX workforce can, as is shown in other established unionized fields, live a happier life.

        Again, the union is to protect the worker. Adding its leverage to the fight to change the industry is paramount. The fact that artists at DD or anywhere aren’t jumping to support unionization isn’t just based on the cost fear, but a general distaste for unions that prevails across the nation. If unionizing was the “latest and greatest” in popular opinion, we would be having a much different conversation.

      • skaplan839 says:

        As a secondary note, I’d hazard a guess that any contract signed by a union with a visual effects studio these days, would be pretty advantageous to the vfx studio. The cost argument you continually levy really does not have a strong foundation.

      • Ashes says:

        @skaplan839, I would strongly disagree that the only reason vfx artist aren’t jumping on the union bandwagon is because it’s not the flavor of the day.

        At this point we’ll just have to agree to disagree. I’m going to stick with my 20 years of experience in vfx and not join something that I know will directly harm my industry. Hopefully, that’s change in the next few years.

      • Jen says:

        @Ashes – I’m going to stick with my 20 years of experience in vfx and not join something that I know will directly harm my industry.

        I’m sure our industry appreciates it, but it will not return the favor.

      • Attract the best and charge for it. says:

        I have 20 years of experience too – but in VFX and feature animation. That’s the basis on which I would suggest that you might be wrong. Neither Disney or Dreamworks are doing too badly – and they are both union shops. The fact of the matter is the best people want to work at the facilities with the best working conditions. Places with consistent 45 hour work weeks. Places with good health benefits. Places with pension plans. The best people always gravitate towards this kind of place over a non unionized operation. Because they have the best people, they will always do superior work. They can charge for that.

      • coastuc says:

        I pretty much agree with most of what you say, but how are the unions hoping the dreamwork staffers who are getting laid off?

      • coastuc says:

        err, helping

      • skaplan839 says:

        Ashes:

        not join something that I know will directly harm my industry

        That’s rich. Sorry to be crass, but the industry hurts the industry. By your logic, you should be out of it by now and not a 20 year veteran.

        Again, you don’t have the foggiest notion as to the organic nature of negotiations. Everything is on the table and nothing is written in stone. The early vfx contracts will likely be highly favorable to the vfx shops for the very reason we’re having this debate: they’re up a creek without a paddle. It serves no purpose for the union to sign a contract with a vfx shop just to have said shop crumble under the weight of that contract.

        You must think we go in with thumb screws and bamboo and get people to sign in blood. You’d be blown away with the reality of the process.

      • skaplan839 says:

        but how are the unions hoping the dreamwork staffers who are getting laid off

        Thanks for asking Coastuc ..

        * Unionized Dreamworks employees must be given a weeks notice of layoff per the terms of the contract, or be paid a week in lieu of that time. By all accounts, the studio is giving much more time on the notification.

        * Unionized Dreamworks employees who have spent around a year at the studio will likely remain in the Union health plan for another year .. while not employed under a union contract.

        * Unionized Dreamworks employees have access to our Email List which is constantly updated with the latest union jobs. I’ve made those postings more public recently by adding tweets to those emails.

        * Unionized Dreamworks employees will be receiving dismissal pay that is calculated based on the amount of time they’ve spent in the studio.

        * Unionized Dreamworks employees, once laid off from the studio, can put their union status on “Honorable Withdrawal” which will halt dues payments while keeping them in good standing with the union.

        * Unionized Dreamworks employees have pension accounts that will continue to earn interest and dividend income until such time they return to a union studio, and have employer contributions added back.

        That’s just off the top of my head.

      • skaplan839 says:

        Ashes,

        Reading your comment again, I’ve come back to this:

        However, the union still has not mentioned once what it will do to actually help with any of the current major problems vfx artists have. Once again, it’s the studios that are hurting the vfx artist NOT the vfx houses. The union does not offer any solutions to fix this. Until it does, it won’t get the backing of the staff artist at the major vfx houses.

        So, you understand that the union can not fix “bad management”, and that the role of the union would be to place and enforce standards and conditions that benefit the vfx artist. Further, you understand that a Trade Association would be instrumental in making the changes you seek (better bidding model, cohesion of the vfx shops, etc).

        Knowing that the vfx shops, of all sizes and caliber, refuse to participate in a Trade Association, and that the formation of a “Multi-Employer Bargaining Unit” that would result from union contracts being signed at vfx shops would be the seeds of such a Trade Organization ..

        How can you say that the union doesn’t offer the solution you seek?

      • Ashes says:

        @skaplan839, wow, nice personal attack. Yes, I know how the union contracts work, I’ve actual negotiated IASTE, SAG, contracts before. I had the fun of dealing with the Teamsters and even government offices like BLM.

        I’m going to make this very simple for you to understand, anything that will add any extra expense to a bid, even 50cent more an hour for an artist, is too much for the US vfx house to handle….right now. The union is not going to do anything to help with the tax incentive and underbidding. Until it does, it will not get popular support from staff artists.

      • skaplan839 says:

        Ashes:

        Sorry to make it personal, but if what you say is true, then I don’t see how you’re trying to fix things. Its one thing to point out that “no cost is a good cost”. But you’re ignoring the fact that unionizing can make the difference you seek.

        We should meet and go over this. I’d love to sit and talk about this with you. Let’s do it over lunch, my treat.

        skaplan@animationguild.org.

      • Jen says:

        @Ashes – I’m going to make this very simple for you to understand, anything that will add any extra expense to a bid, even 50cent more an hour for an artist, is too much for the US vfx house to handle….right now.

        So you’re cool with lowering your current wages and losing your current employee benefits in order to meet these bids in the future, right?

      • Couldnt happen here says:

        Exactly. I wonder how clever the staff at Imageworks feel now? Just because things seem good now doesn’t mean that your time for regret wont come. Don’t wait until it’s too late people. Stand up and organize now.

      • Nix says:

        @Attract the best and charge for it “I have 20 years of experience too – but in VFX and feature animation. That’s the basis on which I would suggest that you might be wrong. Neither Disney or Dreamworks are doing too badly – and they are both union shops.”

        I am sorry but you can’t compare Disney or Dreamworks to most of the other major FX houses. Disney and Dreamworks create their own content and basically are their own bosses. FX houses are at the mercy of the major studios. I am not arguing Unions are bad or good, just that you shouldn’t use Disney and Dreamworks as examples when comparing to FX houses.

    • vfxguy says:

      What would a trade association actually do?

    • Caleb says:

      So, you are back for against Unions? Didn’t you say that you were pro Union after you felt the studios were no keen on the idea of a trade association? Seems I recall you standing up and saying you supported a Union?

      Why the shift back?

      • Scott Ross says:

        The reason I came out in support of a Union for VFX workers was because there was no movement towards a Trade Association. My thought was … if fear seems to motivate or inform the owners of VFX facilities, then lets fill them up w lots of fear…. A Union should do that… be the force that forces the facilities to form a trade association.

      • skaplan839 says:

        The formation of a union for artist would sign shops to a contract. The shops that sign would negotiate together in order to maximize their leverage.

        Collective action from VFX shops = beginning of a trade association.

  26. andrei gheorghiu says:

    Hi Scott
    What do we need in order to have a Trade Association?

    • Scott Ross says:

      The political and financial support of at least 5 of these companies: ILM, DD, R&H, SPI, WETA, Framestore, DNeg, Technicolor, PFW, Cinesite.

      • VFX Soldier says:

        Scott around siggraph you tweeted that you had the support of many but one facility. Textor even pitched in 100k and announced his support. Any news there? How did minds change?

      • Scott Ross says:

        The facilities that showed interest were second and third tier companies. None of the Big 5 ( except DD) showed interest. DD 2.5 ( The Textor Decline) offered to fund for $100k. Unfortunately, at the time promised, DD probably didn’t have that kind of cash. So…. no $$$, no big 5 support, no Trade Association.

      • vfxscrub says:

        Is there anything illegal from having the heads of these houses have a sit down? To just “talk” about stuff. They sound scared of their own shadow let alone mention of a trade association or union.

        I’m not suggesting anything like Taiwan LCD price fixing scandal from 02-06.

        But just a friendly get-together, they might talk about how the industry doesn’t pay much etc,

        I hear stories of the heads of the big 6 doing this every 3-4 years to make sure they still retain power over media (not just film).

        Together they could simply demand more almost like how the hollywood 6 dictate how much you or i should get.

        Theses vfx houses always seem like they are looking for a master to serve instead of gods who graciously extend a hand to mere mortals.

        I know its such a naive pipe dream.

      • Ivan DeWolf says:

        how much financial commitment would this require? like, low 6 figures, or high 8 figures? I think they must all be nervous enough to sit at a table and seriously discuss this, but none will have much financial capacity (as you well know, Scott).

        R&H winning top VES honors the day after being forced to announce the sale of the company has GOT to be a prime motivating factor to get these parties interested in serious discussions, no?

        isn’t today the very day to be getting them into the same room?

      • Scott Ross says:

        There is nothing illegal about getting together, and there is no intention of acting in any way that would even be considered illegal. I would enjoy getting all together to discuss the possibility of forming this much needed Trade Association. That being said… I can’t seem to get these folks together.

      • Ivan DeWolf says:

        I wish there was some way I could help. Something I could do.

      • skaplan839 says:

        There is .. help your employer join a “Multi-Employer Bargaining Unit”

        http://vfx.iatse-intl.org/50-2/

  27. sdgfdsg says:

    VES is not nearly up to the task.
    They barley manage some screenings…

    http://www.hollywoodreporter.com/news/layoffs-coming-dreamworks-animation-418670

  28. Scott Ross says:

    Again….. VES is an honorary society…. it does not and cannot address business issues.

  29. sdgfdsg says:

    Then it better stop pretending to try..

    • procrustes says:

      TED- already, with offices in NYC and Vancouver- moves from Long Beach to Vancouver and Whistler. This somehow displays a lack of Canadian capabilities?

      • Look at the big picture says:

        I think the capabilities that Dave is referring to is that instead of creating their own original content Canada is simply attracting foreign productions to their country.

        I’m not sure how the BC film subsidies apply to a production like TED or if it was even a factor.

      • Craig says:

        A few years old but interesting article on Canada’s filmmaking problems: http://canadiandimension.com/articles/1728/ The author cites some statistics and suggests that the service money could have been used to fund Canadian films instead. I dont agree with his solution though–he dismisses the traditional narrative popular genre film entirely and thinks the answer is to embrace the typical quirky and weird self-expression Canadian films which no one wants to watch. Jack Valenti used to answer criticism about the Hollywood domination of Canadian cinemas by saying that all Canada had to do was make watchable movies. Maybe he was lying but we never got around to testing if it was true.

    • Sean Lewkiw says:

      http://www.vancouversun.com/travel/Vancouver+lands+Holy+Grail/7918753/story.html

      Lured to Vancouver by a new stage and 10% off at the Motel 6!

    • Dave Rand says:

      If you listen to the discussion on the radio I had with the former BC film Commissioner you’ll here a segment about rationalization of the film industry. Basically the BC film market has surrendered to the Americans. I think the same has happened with the Canucks…sad really. If only they could subsidize victory on the ice….but they can not, it’s a just a level sheet of ice.

  30. Pookyjuice says:

    ok, I’m sure that VFXSoldier is writing up a new article by now about Dreamworks Animation shedding a quarter of it’s staff…..

    http://www.deadline.com/2013/02/dreamworks-animation-layoffs/

    • VFX Soldier says:

      Yep sad news post coming tonight

      • Dave Darkovski says:

        Also in London the staff at Peerless Camera company have been told not to bother coming in.

    • vfxscrub says:

      Well this month won’t be forgotten anytime soon. Is this a “crash” of sorts?

      I wonder what would happen if a tent pole movie had sub-par vfx and looses a lot of money because audiences just wont buy what the film is selling. Where the houses on the job either weren’t prepared or just not mature enough because they are still young etc.

      To me, these big films rarely have any poor work in them. Imagine if the Hulk in the avengers sucked etc.

      To me it seems Hollywood needs to get stung a couple of time. And they will, but it will come by way of other places being shutdown, not because of a trade organization or houses demanded more money.

      • Paul says:

        Again the only reason why these junk movies hold anything in value is 100% because of VFX. Barely any actors bring value to them.

  31. Concerned artist and proud citizen. says:

    Ironic when the underpaid slaves become the masters. India and specifically China are becoming more and more world powers, and not just in the vfx arena. Countries need to wake the hell up. While countries are subsidizing vfx industries willy nilly, both of those countries are investing and owning parts of the larger corporations in their states. It’s alarming.

    • rtagore says:

      lol, that’s racist, you j**k.

      • Paul says:

        No it’s not racist. Educate yourself on China or any other country for that matter, go there open a business and see if protectionism is not in full swing. You’re a useful idiot.

      • rtagore says:

        Since there’s no reply button under Paul’s comment, I’ll reply here.
        I’m chinese, although my name doesn’t sound like it, and I’ve been living in different countries, so, yeah that’s racist, and you’re idiot, not even a useful one.
        i’m done here.

  32. Textor Ass says:

    Perhaps the Prime Focus model is the only workable model.

    I once heard the owner stating it in front of a bunch of investors, “We are in the fixed cost business, once the core talent group is in place you can load them with any amount of work. They all love long hours which makes the upside virtually unlimited.”

    It’s the only company in this business churning out 50% profit year on year and that too working for cheap. At least they pay their salaries.

    Indenture-servitude is not unique to Prime Focus – that’s been inherently built in the studio – vfx company business model. Come to think of it, with such a specialized skill, who else will employ vfx artists? All this while they just made themselves believe that they were the ones making movies work when studios weren’t even interested to put their names on the credit roll.

  33. beezwax says:

    There is a global agenda by the owners and handlers. The globalist owners are international, they have no fixed location, they move the ‘imaginary’ money deposits of high finance at will. In the past 30 years or so, they decreed to take down and deindustrialise the Western advanced economies to reset the growth engine out to the East. You never let populations get to comfortable and living well or they begin to think for themselves, question who holds the money system and makes the laws, then question the owners and handlers themselves.

    So they moved out new central banks to India and China. They deindustrialised the advanced economies, using the tax money of citizens in those same countries, to tie up uncompetitive international trade agreements, biased against the home nations. Using home tax payer money to gaurantee profits, educational training and infrastructure building, particulalry in China and India. They then tied up junk-science wrapped around the ‘global warming’ movement, indoctinating kids at schools, to further hinder advanced economies competitiveness. China and India are still giving ‘third world’ status, even though they have more millionaires and billionaires than anywhere in the west. The main point, they get exempt from the global warming lies of UN climate change regulations. And avoid those costs. Even though they burin coal power stations far in excess of any power generation in the west. And recently they were given another twenty year extension on this agreement. That noone voted for. You can’t compete with that, period. The owners recycle profits from China and Indian slave wrokers back to their accounts in cayman and switzerland.

    And you sorry bunch still talk about unions, when hollywood distribution studios are blatantly turning on the likes of R+H and DD in order to crush their profits and further the globalist agenda.
    You deserve what you get.

    • titanx says:

      “Even though they burin coal power stations far in excess of any power generation in the west. ”

      http://www.dosomething.org/tipsandtools/11-facts-about-pollution

      Go to point no. 8

      Oh, and if you didn’t know, United States is world no. 2 in industrial pollution.

      And back to the problem at hand, the underlying issue is: “Profits don’t care about nationalism.” All the major movie studios are owned and run by Americans. You can fight as much as you can, but don’t forget that it is these very profits that are used for things like your presidential elections. Good luck with convincing your government to lower their election “donations”.

      And don’t get me wrong. I don’t support subsidies or unfair trade practices. But I see little happening to the way our industry is shaping, unless there is a major shake up.

  34. Twain says:

    Doesn’t it seem like as VFX artists we, and our employers, are always trying desperately to impress the studios hoping that next time and on the next project, if only they see what we can do, it will get better. But it never does. We impress, we get amazing effects done in record time, we win awards and then stand there waiting for a pat on the back when in return we get punished on the next show. “Well you did it once, you should do it over and over…” says the studio. Sounds like the very definition of a dysfunctional relationship.

    Isn’t it time as artists we stop arguing about LA vs Vancouver vs Montreal vs NZ vs India and instead stand up to the studios who consistently underpay the VFX studios for the work we do?

    • PolarisSoup says:

      That would most certainly be the way, but it will only work if you have 100% support. Its a tough one because as soon as someone breaks ranks its all over, especially in VFX where you have so many “I will work for free to get a foot in the door” or “I don’t mind doing unpaid overtime” types.

  35. PolarisSoup says:

    With subsides gone vfx facilities would still try and undercut every project they bid on, the only difference then will be that the facility with the lowest bid will be the one with the lowest staff costs and overheads. Just like clothes, cars, iPhones, TVs etc. that will almost certainly result in the jobs moving to where labour is cheap.

    20 years ago I watched a similar debate as models & miniatures and Matte painters (the ones done on glass) debated the potential loss of their skills within the industry. Now that process is complete, technology revolutionised the field and no one (bar a handful in models and miniatures) work in these disciplines any more. 60 years before that my grandma worked in a weaving shed making textiles for the UK clothing industry, she earned good money, but as costs rose and competition from emerging countries increased it soon became not cost-effective to weave in the UK and my grandma was made redundant.

    Thats where this is all going, China pulls thousands of farm workers from outlying areas into its cities each and every day, this is where the bulk of the worlds manufacturing will be done in 20 years. There is a chance that the US, UK etc can out smart this cycle by concentrating on R&D and literally driving design and innovation at home (like Apple and Dyson do) but that only offers a relatively small amount of jobs when compared to most manufacturing. The downside to this is that education and R&D in the west are already stating to lag behind China.

    • alex lim says:

      If everyone is just going for the cheapest of the cheap, why is iphone still sell? Why are there still things like LV, Prada, Gucci? Why China? Why not Africa, which is even cheaper than China.

      • vfxIntlTraveller says:

        An iPhone is very cheap – to manufacture – it’s just very expensive to buy, which is why Apple is so rich. And some of its most important components – the rare earth metals – do come from Africa, from places that would make your hair stand on end, where people are lucky to make more than $300 a year and live past 35.

      • alex lim says:

        they are cheap to make. My point is why do people still buy them.

      • PolarisSoup says:

        People by Gucci and Prada (at vastly over the odds prices) because they want to keep up with the Kardashians, its all about look at me nothing else, they are buying a name nothing else. The iPhone really is no different to a movie ticket, you manufacture it overseas, ship it to the US, and sell it for 700% profit. The studios make more profit as their production costs are lower, the movie goer just pays the same ticket price they always did, if not more.

  36. Exactly.. there are much larger economic factors at work than can be dealt with by tackling the subsidies issue alone (which would only be a short-term
    bandaid)..

    Looking at the longer-term outlook, we need to take a sober look at
    which areas of our industry are least amenable to being farmed out to China/India.. ie those that could be described as an art (which require a local cultural sensibility), versus those that are more a craft.

    It’s the industrious versus the individualistic work ethic, as I see it.

  37. I think as long as the studios refuse to look at a bid from a company that doesn’t involve a subsidy location we are going to suffer. What the FX Houses should be doing is requiring a percent of that subsidy payback (which is reported by the government and can’t be hollywood bookept into non-existance) because the FX Houses are the one with the overhead and the risk. If banishing subsidies could take us 10 years then lets make the Big 6 pay while we wait.

  38. Where's my paycheck? says:

    Anyone else out there hear R&H missed payrole?

  39. coastuc says:

    well I think you’re about to see some more information out there.

  40. Polyphemus says:

    R+H is gone tonight. Chapter 11. Something needs to change.

    • The Broke Scarlet Pumpernickel says:

      Anyone know what to do when your employer files for Chapter 11? Will the long hours of overtime evaporate as we file for unemployment? Shall we ever get our paycheck?

    • Ymir says:

      Was there an official announcement? Source?

      • Polyphemus says:

        Check out the facebook of any R+H employee.. they’re getting calls. But people were being told from all shows and positions that they are laid off.

      • Ymir says:

        That sucks. :( I’ve worked there in the past and have a lot of respect for what John, Pauline, Keith, and Charlie (while he was there) built. And for all the talent over the years that have contributed to all the fine work that has come from there.

  41. RobertC says:

    Its a sad day in our Industry.

  42. At the end of the day, a not surprising result when you take on capital risk for the wrong reasons. It’s not just VFX but Post in general that is on a predictable technology trajectory. see http://www.slideshare.net/mlbnyc/post-3-0roadshow

  43. […] in town. Runaway production and enticing tax breaks offered by other state and foreign governments. VFX Soldier noted that Rhythm & Hues, which employs more than 1400 workers, was one of the first facilities […]

  44. […] working fine and on track, that usually means it isn’t. Last time something similar was said I was correct in assuming the opposite was true. Did this deal with Taiwan cost Rhythm a substantial amount of […]

  45. Derek says:

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