No Really, It’s All California’s Fault!

What’s with all these recent articles about VFX in California? Why now? Yesterday the Hollywood Reporter came out with the latest fatwa proclaiming “death to California!”:

With VFX businesses under pressure to do more with less — and with impossible-to-compete-with financial incentives being offered in various states and countries — the final two months of 2010 saw the closure of three notable California-based visual effects businesses: Asylum VFX, Café FX and ImageMovers Digital.

ImageMovers didn’t close because of a lack government subsidies, it closed because of an executive shuffle at Disney. Newspapers need to do more investigation as to why the others closed.

It’s The Business Model Stupid.

I previously wrote what Californian VFX shops are going through is no different than what other VFX shops go through. VFX CEOs should do some time on Shark Tank to see if  a business model that depends on free government money would survive the first segment of the show.

It’s important to remember that it’s the studio producers that receive this money, not the VFX facility. So when $1 million worth of VFX work on Green Lantern is done at Imageworks New Mexico, the state government kicks in $250,000 to Warner Bros. The 80-90 peak capacity for that facility is a far cry from what it was supposed to be in 2007. You can’t expect talent just to pick up and move around like that, especially when many of them are underwater in their mortgages.

What’s surprising is it seems VFX CEOs all agreed a few months ago that the subsidy game is a bad idea:

Cheap labor was discussed along with tax incentives and both were dismissed as not long term solutions. Cheap labor does not stay cheap and tax incentives have been under attack in some places as not working and can change, as can value of currency between countries.

Yet no contention is made as to the legality of these subsidies in the first place. There is a very strong case to be made that such subsidies are actually international trade law violations.

Quantative Easing 2: Currency Boogaloo

I suspect that may be part of what is at work here. In November the US government announced Quantative Easing 2. Essentially the US is printing more money in a global currency war. This makes it more expensive for US studios to do work overseas by causing global currencies to rise. New Zealand and Canada currencies are hitting record highs against the US dollar.

Combine that with the fact that many outsource vendors are either turning in subpar quality work or unable to finish work altogether and you have the costly solution of fixing the work in California. Most artists would probably agree with the Hollywood Reporter that the quality of vfx work has taken a hit. I guess the studios are facing the music and stomping their feet mad about not getting some money from the state for the effort.

California Benefits Indirectly By Other Subsidies?

But is it really feasible for California to get into the subsidy game? The state seems to indirectly benefit from subsidies offered by other governments. The big 6 studios are based here and subsidies feed into their bottom line which they eventually pay taxes on to California.

Meanwhile, regardless of the commitment made by countries and their film subsidies, workers ultimately come back and spend their hard earned cash in California. For example, one of the Oscar winning supervisors at Weta recently bought a home in Los Angeles, not Wellington.

Hey Studios, Want To Save Some Money?

How about crewing VFX artists directly? When I work on a shot it goes through a series of people for approval: My lead, CG supervisor, Digital FX Supervisor, VFX Supervisor, Production side VFX Supervisor, Director, and Producer. Multiply that by 5 vendors and you increase the complexity and costs of what needs to get done. The funny thing is each link in the chain doesn’t really know what the final person wants.

If VFX artists worked directly for the studio productions they would have iterative control and would be able to give better directions to get things done. I’ve talked about this with former blogger VFX Law. What purpose do VFX facilities serve?

Soldier On.

40 Responses to No Really, It’s All California’s Fault!

  1. Lisa McNamara says:

    Well, here i am, again. I suppose what strikes me most about this (and by all means, feel free to attack my naivete), is that i find myself wishing that U.S. film productions would just “buy American.” That is, if it’s a U.S.-originated film, i feel as though the studio kind of owes it to the American economy to keep the work in America, irrespective of the tax or other incentives offered by other countries.

    I know i come off as a big socialist, but really…if our own studios won’t at least try to keep the work “local,” how will our industry ever continue to survive here at home? Maybe the studio profits will be smaller, but with movies being one of the few exports we have nowadays, isn’t it important to try to not to increase the trade deficit in this industry, and to invest in our jobs infrastructure?

    The U.S. has some incredibly skilled talent and lots of these folks need the work. It just seems to me that the studios are becoming the movie version of WalMart.

    To me, therein lies the first step of saving and rejuvenating a very tenuous American VFX industry.

    I now leave my belly exposed for attack.

    • VFX Soldier says:

      Oh boy Lisa, better head for the hills!

      I think its important to realize that the US VFX industry was built by many immigrants from around the world.

      When we define American I see images of go through my head of Fox News telling me America is superior because of it’s free market thinking and small government!

      The irony here is that in a free market global economy where we have to compete with companies indirectly subsidized by very large governments, we are going to lose.

      Hell if every American could choose between having American health insurance or British or Canadian health insurance I know I would choose the latter. There is no loyalty there, so why would we expect the studios to be loyal to the US?

      There’s the rub and it’s something I’ve learned in the film industry: There is no loyalty, its all business. In fact I would argue there isn’t even any laws. Ive written about unpaid OT, 1099, and even the fact these subsidies are illegal.

      As Steve Hulett would say: “what leverage do you have?”

      • Lisa McNamara says:

        Right. No leverage. And yes, the “American” VFX industry is indeed a group largely composed of immigrants. That said, many choose to live in the U.S., and if we want to keep the industry as a whole robust here on American soil, it would be, in my admittedly small view, in the collective best interest to support what has been built here and is in danger of collapsing.

        What can i say? I just hate to see good people losing jobs because of corporate/studio greed. It happens in all industries, i know, but this is the only one about which i can vent my feelings with any sort of credibility.

    • VFX Soldier says:

      Just to give an example of a similar problem:

      The US government accepted bids for a plane to be built by US company Boeing and Euro company Airbus.

      Airbus won the bid because of significant government backed subsidies.

      Boeing contended that such a decision was a violation of WTO trade policy. They won.

      Now Airbus has shot back contending Boeing is subsidized and whatnot.

      The key here is that the VFX industry is California is not subsidized. Instead of asking for subsidies from the government, they should be petitioning the US govt. The papermill industry has done it.

      There are even cases where the US has been petitioned against and lost: US farm subsidies, Brazil.

      Theres leverage up in them there hills!

      On Fri, Feb 4, 2011 at 1:28 PM, VFX Soldier wrote:

      > Oh boy Lisa, better head for the hills! > > I think its important to realize that the US VFX industry was built by many > immigrants from around the world. > > When we define American I see images of go through my head of Fox News > telling me America is superior because of it’s free market thinking and > small government! > > The irony here is that in a free market global economy where we have to > compete with companies indirectly subsidized by very large governments, we > are going to lose. > > Hell if every American could choose between having American health > insurance or British or Canadian health insurance I know I would choose the > latter. There is no loyalty there, so why would we expect the studios to be > loyal to the US? > > There’s the rub and it’s something I’ve learned in the film industry: There > is no loyalty, its all business. In fact I would argue there isn’t even any > laws. Ive written about unpaid OT, 1099, and even the fact these subsidies > are illegal. > > As Steve Hulett would say: “what leverage do you have?” > >

  2. X says:

    As I mentioned something similar in my last post, Lisa I fully agree!

    I think all U.S. production from ‘pre’ to ‘post’ should stay in the U.S. If a U.S. company wants to open a production Studio in India, go for it, but they should be making India’s films and their production work should be confined to that country.

    The Studio’s could actually gain money, we would have work, they would have work and so on. It’s a win win.

  3. vfxguy says:

    Lisa, since roughly two thirds of revenue on a tentpole production comes from overseas markets, and that those of us not from the Good Ole US of A have to suffer the crap that Hollywood puts out just the same as those of you living in La La Land, why shouldn’t we have the opportunity to make a living off it too?

    • Lisa McNamara says:

      Actually, you don’t “have” to…you choose to. But what i’m saying is no different from us wanting to see people buy American-made cars and support local food production. And i don’t live in La La Land…but i do want to see my country not suffer from joblessness. You wanna shoot me for caring about my American co-workers who are obviously feeling the pinch of the bad economy, go for it.

      BTW, you are a pretty angry VFX guy, i’ve observed. That can’t make for happy living.

    • VFX Soldier says:

      While it would be great if companies based the production on films where people watch them, that isnt the reason behind why us studios and us vfx companies are doing work in Singapore and Canada.

      It’s the government subsidy at work here.

    • Anon says:

      Americans own the distribution networks and they want Hollywood studio crap and propaganda pumped through it because that’s all celebrity obsessed, brainwashed E channel and Oprah fans want to see. It’s ‘Team America: World Police’ all the way.
      What are the ethics of corporate sovereignty? (China vs Google?) Now that the global economy is heading for rebalancing why should America decide what we all see? Personally I can’t wait for Hollywood to go bankrupt. I’m so tired of spoiled American celbrities shoving American imperial propaganda down our throats.
      Ricky Gervais hosting the 2010 Golden Globes

  4. Mike says:

    finally, some sanity… but the bottom line is every part of a movie is union, but vfx. We need representation to have any influence, whether through a vfx facility or directly through the studio. We should have the same representation as big name actors, who studios use to get green lit deals. And the vfx sup bought a house in L.A. because he is working at an L.A. facility.

  5. Shootsy says:

    Wealth and greed know no borders, no one owes anybody anything. This is all vertical, vfx or cars or bananas, then again bananas just don’t grow everywhere…yet!

    Funny thing is that since I started reading this blog it just totally grew global economics on me and not just vfx industry. Allow me to digress here…do you know for instance that many european products you buy here in the US are actually sold to a [third party] country and then resold to the US in order to lower/avoid import taxes?

    If governments don’t protect their workers/businesses then it’s pandora’s box…hey why not tax overseas telecommuting!?

  6. Mike says:

    another quick comment… the motivation for doing vfx isn’t money, it’s the quality and creativity. Most of these articles emphasize bottom line, instead of creative innovation, which is given half-sentence emphasis. They’re Business Week sound bites, with no consideration for how vfx is created.

    • Shootsy says:

      The motivation for working (pro) is because you’re getting money out of it, period. Quality and creativity exist no matter what you do. Putting these 2 factors ahead of money in the vfx industry is exactly why people are being ripped off in the first place…something along the lines of “hype” and “cool” is lethal. So hype and cool that the general population believe you make tons of cash when the truth is rather ugly compare to so many jobs.

  7. X says:

    Tell me something, can a union help with the subsidies issues and help bring more vfx jobs back to the states? Is that enough representation?

    • VFX Soldier says:

      The unions almost did that back in 2003. They lobbied for the US Trade Rep to petition the WTO on subsidies. However the Bush administration rejected it. The MPAA was against the measure since they benefited from it

  8. anonymous... says:

    RE: Subsidies. If you want to go the WTO route to try and claw back work from Weta or London or Canada, what about all the US states that offer subsidies that take film location and VFX out of California? Just because California can’t afford to (because the state is near bankrupt) or the (non film industry) California voting public won’t stand for what appears (if you live in LA) to be tax payer funded “handouts” to a hugely “cash rich” industry, doesn’t make subsidies “illegal”. The US softwood lumber industry tried to go the WTO route with Canada a decade ago..and LOST (and have lost all the subsequent appeals). Subsidies are a fact of business world wide. It’s no socialism, it’s nations competing for business.

    And whining that movies are American and should all be made in America is just stupid jingoism and doesn’t take into account the realities of being part of a world economy in the era of multinational corporations. Sony is not an American company. Newscorp (Fox) is not an American company. Apple is but makes all of their products in Taiwan. If you’re so Pro America/anti foreign in your stand, you should always turn down work on a Fox or Sony movie no matter where it shoots or posts and all the Americans at Sony Imageworks should quit in protest. Just because historically it’s been American doesn’t mean it MUST continue to be if there are cheaper business models overseas. That’s free market.

    Once upon a time buggy whip makers were EVERYWHERE….now, not so much. Adapt or die, as some US VFX houses have done by opening “satellite offices” in other parts of the world. As stated before, VFX is a mobile industry. If you’re a good enough artist, you can follow the work to London or New Zealand. An out of work Auto worker in Detroit doesn’t have that luxury. The “I live in LA and want to continue to work there” mantra should be prefaced by “I’m spoiled and”. Seriously.

    • VFX Soldier says:

      To answer your question, stateside subsidies are legal. International subsidies are not.

      The key here is that the studios are based in the us, and owned by us corporations. If they go stateside for a subsidy that is okay. Internationally is illegal.

      If a Canadian company produces a film in Canada to get a subsidy that is okay. If they go to new zealand to get a subsidy that is illegal.

      The reason why this is illegal is because most countries signed into an agreement with the WTO to encourage free trade: Canadian imports in the us cannot have tariffs and vice versa. The same can be said on subsidies. They are analogus to a tariff placed on cali Vfx bids.

      I’m not a trade law expert but most of these arguments are made by us trade law professor Claire wright in the following paper:

      http://www.iatse728.org/home/wright1.pdf

    • VFX Soldier says:

      By the way I was curious about the softwood dispute.

      The us lost the WTO petitions specifically because the subsidies for Canadian lumber were not industry specific.

      The Canadian, new Zealand, uk, and Singapore subsidies are all film industry specific.

    • X says:

      Wow.

      Anonymous you are completely missing the point on a lot of the ideas being presented.

      Nobody is saying movies are only “American”, film is an art form presenting a world wide opportunity for story telling, but the fact is, America has always been the front runner for film.

      If the film industry is supposedly such a “world venture” like you say, then why am I not working on any films from studios in London or China? They have film studios and production companies, so why aren’t they out-sourcing they’re VFX work to the U.S.?

      Being said, American film has been a tremendous part of our cultural heritage, in which case, we deserve, and economically speaking, need, the front running of work opportunities in the states. This is not necessarily just about California, or being ‘Spoiled Angelenos’. Being the front-runners, we shouldn’t have to leave our country to work in film. VFX shouldn’t be a ‘mobile’ industry, there are millions of stories to tell and foreign countries should be producing their own films also, that would be a true expansion and adaptation of the industry, not the migration of jobs from one country to the next.

    • Shootsy says:

      It’s true, I mean c’mon ILM Digital Domain Pixar really have to open offices outside the US to survive…!! And Apple oh please Apple…start your donations today!

      It’s true, since everyone has been outsourcing for cheap labor, you the customer in the end only pays $3 for a movie ticket, $25 for an iPod and $2000 for a brand new car…so true!

      Remind us again the personal wealth of each of these saviors!

    • Shootsy says:

      And I love the “adapt or die” motto…probably from someone coming from a wealthy family who never had health issues or any other problems in his life except picking a color for the car. Typical black and white bullshit.

  9. realitycheck.... says:

    “Remind us again the personal wealth of each of these saviors!”

    So what? Do they owe you an economic equivalent living (to their lifestyle)? They took the risk, they have the free market spirit, you are(just) an employee(highly skilled yes, but on a company balance sheet, you’re still a worker bee). Why shouldn’t they benefit when they did all the work/took the risk of creating the company you only WORK for? That’s been the American Dream since day one. Learn the business, one day own/manage your own company, benefit economically from it, get rich.

    They (company owners) have the right to maximize profit and if that means going overseas, that’s the same capitalistic spirit that built America. For decades America was happy to take advantage of poorer nations for it’s benefit and NO ONE here complained. Now that America is being taken advantage of (your opinion) by other nations, suddenly you cry foul and start whining. That a bit hypocritical.

    And X, when you say nobody says it(film biz/VFX biz) should be an American industry. Read some of the previous posts here (specifically from Lisa). She’s a total unreasonable protectionist. And when you speak of California (or America) “deserving” and the “need” for the front line work, you again smack of “protectionism” with no rational basis if you use economic logic. WETA is locally owned and operated and arguably THE BEST VFX (quality of work wise) house operating today. They hire both locals (about 40 % of their workforce) and people from around the world who are excellent at their job (not just Americans, it’s like the UN down there if you look at nationalities of the crew at Weta; Japan, Russian, China, India, Canada, the UK and EU as well as the USA). Yes they entice work with government subsidies but EVERY nation does so (legally), even America (though not in California apparently, but that’s California’s fault). As California’s own politicos have stated, the system there that allows direct voting on every bit of minutia that might raise taxes/cut services to combat the HUGE debt, allows the majority to shoot down any initiatives that would cost them tax money but they still demand more and more services(or at least maintaining current economically unsustainable levels) from the state government. With that much debt load, California can’t afford to get into the “subsidy game” like a lot of nations (and other US states), at least not to the level other nation/states do.

    You’ve never worked in London? I have. I’ve also worked in mainland Europe and Weta. Don’t say these jobs aren’t available to Americans. Americans are among the EASIEST people to get permits etc to work overseas at VFX houses. You just have to be willing to move.

    As to your claim of “cultural heritage”, the US has been steamrolling other nations for decades whose claims of “cultural heritage” has gone unheeded by the American machine as “evil almost socialistic economic protectionism”. In the process, this ‘American cultural imperialism” has wiped out (or severely curtailed) cultural/artistic industries in dozens of countries. Don’t see you crying for those workers who had to leave a cultural/artistic industry they loved and trained to work in. Now that things are “on the other foot” and America is losing “cultural” jobs, you expect the world (or even your own “free market” government) to have sympathy? The term “chickens have come home to roost” sounds appropriate.

    When Disney or Warners makes a film in Central Europe and does all the VFX work in London doesnt matter. It’s still an ‘American film’, preaching ‘American ideals’/The American Dream”, just like a Ford or GM car is considered an ‘American car’ even though it’s constructed in Mexico or Ontario Canada or the EU. EVERY industry has had to adapt to the “world economy” and a consequence is, America doesn’t “make” anything in the US anymore to the scale it used to in decades past. Yes the film biz collectively a large economic engine, but VFX within that industry is relatively small. It sure isn’t what US steel or the Auto industry or the manufacturing industry were when they were the lifeblood of the US economy. They all picked up and moved offshore, adapting to economic conditions and the US heartland isn’t a third world nation. It’s certainly not post war boom times of the 50’s and 60’s but it’s hardly Uganda either. Unions might get the workers who are still working a better deal, paid OT or medical et al but that won’t solve the problem(and might hasten the movement of VFX offshore). Protectionism won’t solve the problem either. The US is in so much debt (mostly to China), suddenly going “protectionist” will start a trade war that will hurt more than help the US economy. And for what the film biz (and VFX) sends offshore just isn’t a big enough industry to risk a trade war over.

    The problem is, California film industry workers have a “sense of entitlement” chip on their shoulder (films are historically California’s, how DARE they ship it out of state/country), how DARE studio owners make large profits while taking work away from ME (because I refuse to move). The reality is, the film/VFX industry IS adapting to continue to survive in the new model of the world economy. It’s the workers who refuse to see the writing on the wall and angrily complain that the “status quo” from a half century ago shouldn’t change because THEY don’t want it to. And forget nationalistic protectionism for a minute. What about Louianna, New Mexico, New York etc. Those are states within the nation that have taken a huge chunk of film work (and VFX work in the case of New Mexico) out of California due to tax subsidies. Are you doing to declare economic war on other STATES too because you shortsightedly think it should be a “California industry only”?? When you look at it under cold hard light, your arguments are knee jerk emotionalism rather than clearly thought out economic logic.

    • Shootsy says:

      Huh wait a minute, I’m not complaining that they outsource to maximize profits, instead I cringe every time I hear people giving them the survival excuse. Did they need New Zealand subsidies to make Avatar? Does ILM really need to outsource to compete? Does DD need to open offices in Florida to survive? What an insane joke!

      Capitalistic spirit?! Yeah right…go ask hyper protectionist, communist and capitalistic China…I don’t see millions of people fighting to become China/India citizens, now check the lines of people wanting to become US citizens.

      After that it’s indeed up to me, will I move to shit holes like India or China to save my line of work? hell no!

      “Why shouldn’t they benefit when they did all the work/took the risk of creating the company you only WORK for?”

      This one leaves me speechless…

  10. realitycheck.... says:

    As to the state vs state tax subsidies being legal and international ones being illegal…then why are they not being challenged? Where are the dozens of WTO petitions trying to put Weta and MPC/Framestore etc out of business and get all the “American VFX work” back (excluding Sony and Fox pictures of course, since they’re not really American)? Why isn’t the huge and well funded IATSE union (who want to represent the downtrodden VFX worker) leading the charge? Oh yeah, IATSE is also leading the simultaneous push to unionize VFX workers in other countries(England, Canada, New Zealand)…would be kind of shooting itself in the foot (IATSE local vs IATSE local) if they took a nationalistic side and put London out of work or had Weta dismantled. Like corporations, IATSE too is multinational and dues are dues in their collective bank account, no matter what the currency.

    • VFX Soldier says:

      First off, could you stop trying to pretend you are 2 different people? I support anonymity but don’t support deception.

      Secondly the reason why VFX companies aren’t petitioning the US trade rep is because alot of them don’t even know that the subsidies are illegal.

      Thirdly, you cheer on the free market system yet at the same time much of your salary is subsidized by the public. You wrongly assume that the elimination of subsidies would put Weta and Framestore out of business. Doesn’t this imply you admit that these companies solely exist because of a subsidy?

      The irony here is I believe the elimination of the subsidies would bring the vfx market back to the free market fundamentals you espouse.

      Framestore and Double Negative have publicly said they don’t need the subsidy.

  11. X says:

    With attitudes like that, its no wonder why things are so difficult to change. Obviously, as Realitycheck’s winded retort sums up: The choice to live and work in the U.S. VFX industry is going away and there is nothing we can do to get it back, so don’t analyze, argue or act, just except the inevitable: Either move overseas or find a new career.

    I guess I’ll start looking for a new career.

    • VFX Soldier says:

      Don’t let negativity get to you. The fact that the person behind those posts is acting as 2 different people sounds like someone is desperate.

      Thanks for reading for my blog.

  12. realitycheck says:

    I was posting under “realitycheck”…today’s “anonymous” name posting was unintended.

    Your OPINION (or the lawyers you consulted) is they are illegal subsidies, which is fine. I’ve spoken and dealt with very smart legal council on both the studio side and the VFX facility side who say they are completely legal, so that’s my opinion based on my research. The only way to settle the issue is to petition for a binding ruling, which leaves the ball on your sides court.

    Until such time there’s a binding ruling, subsidies are a fact of business life in any international industry. Framestore and D-neg may have publicly said they don’t need the subsidy, but I’ve worked on shows that specifically awarded to London because of said subsidy and the insistence of the studio. The London houses may not NEED the subsidies to survive, but they’ll gladly take any work they can get because of the subsidies.

    Isn’t the real reason your side is so ‘anti subsidy’ is, there’s no way you can get California (because the state is broke, not for any philosophical/legal belief it’s wrong, as the very limited film industry tax subsidies enacted under the Governator proves) to agree to the come close to matching subsidies from other states and countries. If California could afford it, as an industry the California VFX companies and the local workers would gladly accept all the VFX subsidies the state could dole out. Because your state can’t afford it, you’re crying foul that other places, both in and out of the US, can.

    Any argument over subsidies is difference of opinion until a legally binding decision is rendered (meaning a petition has to be filed first). What is rather annoying is the general tone from many posting here that VFX (and film in general) is California’s God Given Right and how dare any other place that isn’t California pull work out of the Only State That Should Make Films/Create VFX. That is the knee jerk emotionalism that makes no sense. EVERY other industry in America has faced the issue of work going offshore (legally) or to another state to minimize costs and maximize profits (the ultimate goal of any company, be it a Mom and Pop operation or a multinational conglomerate). Why should film/VFX be any different? The fact is the only difference here, is, VFX workers based on their skill set, have the option to go where the work is. Most other industries (steel workers, auto workers, textile workers etc) don’t get that option.

  13. VFXLaw says:

    Great article and insights. It is clear that the media does not fully grasp the facts, or even bother digging deeper to discover some truths. Those places that went under were failing for other reasons too- blaming foreign competition is a cop out, and it’s simply not the whole truth.

    If you want the whole truth, you have to dig, like vfx soldier, and then actually use your brain. Just because it seems obvious to the media doesn’t mean it actually is.

    It’s economics, not rocket science.

    VFX Law, out.

  14. realitycheck.... says:

    My sources as I said, are legal council for a couple of LA based VFX companies and one or two studio legal people whom I’ve worked with and I’m not about to “out” them here.

    As stated, legal opinion is just that until it is put before an authority who can make a binding decision. I’m not saying your sources are wrong, but you can say with no authority the lawyers I’ve spoken to (and they were meetings so I have no page to link to) are wrong either until a decision is rendered, which means someone has to step forward and file a petition for a ruling. With all the rancor on this subject, hard to believe isn’t one company, studio or union willing to back such a petition if there is firm belief that they have the law on their side in regards to foreign subsidies and a ruling against will bring work flooding back to California. It’s easy to have a anonymous blog and one sided opinion. More difficult to mount a real legal challenge and make change.

    And what about other states in America? Is it your opinion it’s OK for them to bleed LA/California for location work and VFX work with subsidies? So DD Florida is OK but DD Vancouver is not? I don’t see the logic there for those in California who don’t want to move and want what they claim is a level playing field. Or are we back to jingoistic protectionist “America first (or in this case “only”) for the film biz?

  15. Winston Smith says:

    Some thoughts and comments re: http://www.iatse728.org/home/wright1.pdf

    Couldn’t help but notice this statement in the introduction of Claire Wright’s article:

    “What could be more American than arguing that one of America’s premier industries should remain in America? Or, more specifically, that American actors should actually portray Americans in stories that reflect and promote American culture and values?” (p.742)

    It’s not difficult to perceive a jingoistic tone here. Her article should well have omitted such statements – it detracts from the merits and substance of the argument that she presents.

    Wright suggests that:

    “Interested parties in the U.S., in particular those feature film workers who have been harmed by Canada’s PSTC film subsidies, could also file a Section 301 petition with the USTR.” (p.816)

    According to her article, ANY US film worker who feels that they have been or are damaged by Canadian film subsidies may file such a petition. Also per her article, it seems that the filer would have to prove that they represent at least 25% of the affected workers.

    So why not start an internet-based campaign to create and sign such a petition?

    Wright identifies one of the main obstacles to filing a petition with the USTR as “Lack of International Alliance of Theatrical Stage Employees (IATSE) Leadership Support” (p.821)

    Soldier, given your strong advocacy for IATSE, how would you address this obstacle?

    FYI, here is the official statement from the USTR regarding the most recent 301 petition filed on Canadian film subsidies:

    “On September 4, 2007, we received a petition under Section 301 of the Trade Act of 1974 on the issue of Canadian film subsidies. The petition argued that Canadian subsidies on the filming of U.S.-produced television shows and theatrical films within Canada were inconsistent with Canada’s obligations under the WTO Agreement on Subsidies and Countervailing Measures, and requested that the USTR immediately initiate a WTO dispute on these issues. As provided under USTR regulations, the petition was reviewed by an interagency committee of trade and economic experts. Based on a thorough review of the economic data, other facts, and legal arguments set out in the petition, the interagency committee unanimously recommended that the USTR not accept the petition because a dispute based on the information and arguments set out in the petition would not be effective in addressing the Canadian subsidies. Ambassador Schwab has accepted this recommendation, and has decided not to initiate a Section 301 investigation in response to the petition.” (http://www.ustr.gov/about-us/press-office/press-releases/archives/2007/october/statement-gretchen-hamel-deputy-assistant)

    Soldier, what has the Obama administration done to address this situation?

    “I am pretty sure that the new administration would be open to filing a new petition.” (https://vfxsoldier.wordpress.com/2010/06/05/response-to-stranahan-on-subsidies/)

    A simple, perhaps simplistic, solution to dealing with subsidies would be for California to simply levy a specific income tax on them. Require all film production companies incorporated in California to declare on their tax forms how much they received as income from foreign or domestic tax subsidies and then tax it at the rate of 100%. Let’s start the signature drive right now to get this on the ballot as a proposition and let the people in the state vote on it. All that tax money revenue coming from other countries and states would do wonders to help fill California’s budget deficit.

    • VFX Soldier says:

      Winston,

      You are a genius. I was unaware that individuals can file a petition. I’ll release an article tomorrow that shows what I found. Thanks for finding that.

      About the IATSE:
      As a former member of the Animation Guild I’ve been a strong supporter of what they offer: Portable benefits, low cost membership, and enforcement of labor law. You and I know they’ve done an excellent job bringing former VFX artist Steve Kaplan on board to help organize.

      However, I’ve written previously about my frustrations with the IATSE national campaign and I will be writing another article also.

      My support for the IATSE was because unlike the IBEW which charges higher dues, the IATSE has had a history of representing cinematographers, editors, etc. I also support the IATSE because they have the most international reach. Many VFX artists have said we need a union that is international because of the global nature of the work.

      This can be a catch-22 as the IATSE has members in the US and Canada. The Canadian members rely heavily on these subsidies so the leadership response has been none at all.

      So should we kill the baby while it’s in the cradle over this issue? I don’t know. While it’s unfortunate they aren’t taking the stand on these subsidies they win on the portable benefits and cracking down on illegal labor practices.

      You and I have both reported how the misclassification of workers as independent contractors is illegal. Has our campaign stopped facilities from engaging in such a practice? Hell, you saw how the Hydraulx owners came on my blog and not only admitting to the practice but saying it’s good for the artist. A union would stop that practice immediately.

      Look for my post tomorrow.

  16. […] You see I suspect RealityCheck engaged in an internet sockpuppet argument by  pretending to pose as a VFX artist against unionization as two different people “RealityCheck”, “Voice of Reason”, on this post and RealityCheck and anonymous on this post. […]

  17. Mike says:

    ok, enough rhetoric. We need to form a clear outline for unionization, with specific coverage for the many issues vfx people have, including vfx programmers. We need to unionize now, so we can have as much input as the rest of the industry. Organizing will not be easy, but we need to be vocal, activist and well-supported by cohesive reasoning. If people don’t want to join: fine. But, we need to move to a more pro-active role in unionization. We will have the support of all the unions in the field, which is substantial. Yeah, we’re spoiled from the software and production companies telling us how wonderful we are, and plying us with shrimp and software. But we need to take an objective view of our circumstances, get out from behind our 20 inch flat screens, and start rallying to go union. Hey, it’ll be just like the 60’s. Peace.

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