If you dare to unionize, the work will go away.
It’s the cynical argument I always hear.
Yet if you think about it, if it was that easy to send work away to a cheaper place, why does it continue to go to some very expensive places like New Zealand, Vancouver, and the UK?
Every now and then I often run into a Californian VFX artist packing up to do a year or 2 in the UK or NZ. I curiously ask how the pay is to which they jokingly respond:
“It’s basically name your own rate. They are desperate for workers.”
I often write that the real reason many of these areas are attaining so much work is because their bids are artificially cheaper through subsidies. National governments offer to directly rebate US studios for film work done in those locations for about 20-35%. That’s pretty substantial.
Even with those discounts, a significant amount of VFX work still gets done in California even without subsidies. Why is that?
Much of this has to do with scalability, the ability to handle a large amount of work at any given time.
Since VFX is always being designated as a commodity, why not compare it to other commodities like gasoline for example.
If the gas station across the street is offering a 20-35% rebate for you to buy gas there I’m sure you, I and every person around would make that gas station the first choice to fill up.
Pretty soon there would be a line around the block with long waits for gasoline at that particular station. The station across the street offering no discount will probably be empty… unless there are people with very little time on their hands.
That wrinkle is an important distinction with the VFX industry. Studios don’t have an infinite amount of time to wait for a discount. As in many cases like Green Lantern, the work eventually was done mostly at Imageworks in Los Angeles.
Now what if that gas station that offers the discount started running out of gas? Well drivers in line would probably try to gage the capacity and if things weren’t looking good, they would jump to buy the more expensive gas. Many facilites in the UK, Vancouver, and NZ turn studio work away because they are solidly booked up. It’s not like you can just walk in and have them make more vfx for you.
Let’s add one more wrinkle. When you finally get your gas with that discount, you are asked to pay in another currency: Australian Dollars. You quickly realize that your discount is evaporated by a higher currency.
I’m compelled to speak about these scalability issues because there have been a few articles about the growth issues in 2 heavily subsidized locations: The UK and Australia.
For the UK, they are realizing that they are heavily reliant on foreign labor that isn’t cheap:
A report, commissioned by the government and published earlier this year, delivered a worrying prognosis.
It warned that, while special effects was enjoying a rapid growth, the sector was also “having to source talent from overseas because of skills shortages at home”.
Well duh. Why not go to India or China? (I’m joking.)
For Austrailia, even though they are heavily subsidized, they suffer from a very high currency which makes it expensive for US studios to do work there. Even with deep discounts, workers are looking for stable jobs. In a project-to-project industry like vfx, you need to situate yourself where you can jump on to a few projects at different facilities:
“Projects like Legend of the Guardians and the Harry Potter series have allowed Australian companies to showcase world-class capability, but there’s not enough consistency of work to maintain staffing levels, so we’re all stuck in a boom-bust cycle,” he said. “This volatility makes it harder to maintain staffing, undertake artist development and remain competitive in the marketplace. The constant relocation and training involved in bringing new staff on a project-by-project basis creates an overhead which makes us less competitive against overseas providers. It’s normal for people to move, but those kinds of volumes are dangerous for our industry.”
His counterpart at Animal Logic, Zareh Nalbandian, agrees: “We need to offer people a sense of permanency, that they can make a long-term commitment, raise their family, buy a house and all those things that go with life.”
The irony in all of this is that subsidies, the very mechanism used to lure US studio vfx work, is the cause of much of that volatility. When you combine that with the fact that you are unable to quickly scale your workforce up for a large amount of work and have to pay sky-high rates to lure foreign talent compounds the issue.
So next time you hear someone say “It’s all going to…” stop em dead in their tracks and tell them “it’s all going to where the artists reside”.