This week VFX Artist Joe Harkins started a petition to the US President and Visual Effects Society to end illegal subsidies:
You agree that we need to create an organization that will lobby political action to enforce the WTO guidelines. Specifically the free trade agreements against foreign subsidies. You also agree that our elected officials need to do something about WTO violations that hurt our industry.
Since day one of my blog I have railed against subsidies and I support this petition. As you can see in the above video, the current President is interested in combating these subsidies. We need to let him hear our voice. One way to do this is by having you, your family, your relatives, your friends, and your co-workers sign Mr Harkins’ petition.
You can sign it here:
So What Is This All About?
The narrative in the trades is that VFX is going to cheap locations like India and China. That actually isn’t what’s happening. It’s going to expensive places like Vancouver, London, New Zealand, Sydney, and Singapore. Some of these places are the most expensive places to live in the world.
The reason VFX jobs are going to these regions are mostly for one reason: Subsidies.
Governments are essentially engaging in protectionism by paying US studios like Warner Bros, Paramount, Universal, Fox, and Sony from 25-50% of the costs to lure VFX work from regions like California where the VFX industry has traditionally been agglomerated.
The question addressed in this article is whether, under U.S. and WTO law, a foreign government can artificially lower the costs of production in an industry to such an extent that a number of U.S. companies choose to establish local production companies in that country and forego production in the U.S., thereby decimating the industry in the U.S.
There Are Rules To Globalization
International tariffs and subsidies are heavily regulated by the World Trade Organization. The US and many other countries entered into an agreement many years ago to liberalize trade barriers to encourage a more free market system. In order to do this, the parties agreed to get rid of policies that distort trade: tariffs and subsidies.
So How Do Subsidies Affect The VFX Industry?
There is nothing to stop a facility or producer from choosing to do work in a region because the labor is cheaper but there are rules that prevent a producer from choosing a region because a foreign government has offered money to do the work there. It artificializes the price and leads to a race to the bottom.
In the case of the VFX industry, facilities around the world competitively bid against each other to be awarded contract work by one of the big 5 studios. Even if California facilities could beat their competitors bids, studios would still be inclined to do the work in Vancouver, London, or another subsidized region because of the generous rebate offered by the local government. This is not about business taxes, this is a subsidy, a direct exchange of free money: corporate welfare.
So How Does This Affect The Facilities We Work For?
Most people make the mistake to think that the facility they work for gets this money. As some facility owners revealed in a post I wrote, they don’t. They are coerced into opening facilities in these subsidized regions just so they can get the work. They still must provide a competitive bid and they must also take upon the burden of extra overhead costs in infrastructure, management, and personal relocation to maintain 2 facilities. The studio gets the same film for the same price with an extra amount of money from the government.
So How Does This Affect The VFX Workers?
For the worker the ramifications can be very sobering. Consider one of my recent posts about how expensive it is. Read the comments and you will find people who have to chase VFX jobs around the world working project to project.
The costs of moving are tremendous. You will have to pay foreign taxes, state taxes, and federal taxes. If you own a home you will have to rent in your new region and take upon the burden of paying a mortgage at the same time. Some regions are so expensive that VFX workers are renting rooms from local families to avoid the costs. Many of them are not able to own any tangible items as they are constantly moving and living out of a suitcase. Some of them must leave their families for long periods of time and must pay huge traveling costs to visit them for short breaks in between projects. Regions like Canada, and London have weak overtime laws allowing you to miss out on overtime pay.
So How Does This Affect VFX Workers At The Studios?
If you think that you are immune to this because you work directly for the studio at places like Pixar, Disney, and Dreamworks think again. As the VFX facilities are weakened this will provide less leverage for those workers to negotiate better wages. As there are less opportunities for you to jump to another facility in the region, managers will have more opportunities to lower your wage.
In other words, VFX workers and facilities are working harder to chase the work, paying more to get the work, getting paid less to do the work, and their standard of living is going down. All of this is so rich US conglomerates can take advantage of what essentially is a bribe.
If you want to put a stop to this then you must start now. Sign the petition and unite for this cause.