I just returned from my trips to NY and SF. I’ll have a post up about the meetings but first I wanted to give a few thoughts of some recent trouble brewing in the VFX industry.
Imageworks
Variety’s David S. Cohen reports that Imageworks will be moving more LA workers to Vancouver. As I’ve said before, all BC is doing is inflating a massively distorted bubble that will eventually burst. When the government is paying 60% of resident salaries there, you can’t expect that to last especially when bigger locations like Ontario and Quebec are offering more.
Cinesite
Speaking of Montreal, I’ve routinely pointed out that VFX pros in subsidized locations are not immune to the subsidy race. Last year UK facilities like MPC and Framestore were opening in Montreal because of much larger subsidies. Now Cinesite is the next UK facility to open in Montreal and it’s been given some huge subsidies to pay for opening the facility. The UK recently increased the amount of subsidies it offers but when you have to compete with 25% of all expenses, 60% of labor costs, and further captial investments and interest free loans offered by Quebec, you’ve got a long way to go.
Digital Domain
The Digital Domain story just continues to get weirder and weirder. As you know after the company went through bankruptcy, it was bought by China’s Galloping Horse and India’s Reliance Mediaworks. Last summer, Galloping Horse abruptly sold it’s stake to a mysterious holding company called Sun Innovations. Shortly after, Digital Domain’s co-production Enders Game was released with very disappointing box office numbers.
This January, Li Ming, the CEO of Galloping Horse died of a heart attack at age 48. The Chinese government is censoring stories about Li Ming and some Chinese websites are speculating some sort of foul play. Furthermore, Sun Innovations is issuing warnings on a substantial loss due to Enders Game and Reliance Mediaworks is seeking to delist as a public company in India.
I can’t verify any of the following but there have been rumors of paycuts at DD and I have been notified that some workers at Reliance Mediaworks were being cut live checks.
So many questions that need answers but then I think to myself:
Soldier On.
VFX Soldier 
“When the government is paying 60% of resident salaries there . . . ”
Is this for real? The BC government is paying 60% of the salaries of vfx artists who move to Vancouver and become residents? If so, do the everyday non-vfx citizens of Vancouver know about this? That’s outrageous!
Minotan……..Canadian’s take taxes out up here…..Im paying 40% of my income to Canada. So techically only 10-20% is paid by the Canadian government by Dan’s calculation. (Do we have solid data on the actual %?)
Also in a recent post Scott Squires explained how the VFX companies are not really making money off the subsidies. As he explained it “VFX Soldier Radio Interview” forum….the studios are basically strong arming VFX studios to relocate to subsidized areas to get contracts……..(correct me if i am wrong thats how i read it)….Scott made it sound like the VFX shops weren’t pocketing any of the money and all of the subsidy went straight to the film studios.
to quote Scott:
“Even in the rare case the money does officially go to a company the studios require all of that money to be handed over to them.”
So if I am being paid by a Vancouver VFX shop and all the subsidy money is going to the studio…..how is the government paying my salary? Scott made it sound like the VFX shops are getting normal contracts but getting the gravey subsidy money…is all movie studio….
By that logic…..If anyone’s salaries are being paid for by Canadian tax payers is the CEO’s of the studios. (not film workers)
“So if I am being paid by a Vancouver VFX shop and all the subsidy money is going to the studio…..how is the government paying my salary? ”
“By that logic…..If anyone’s salaries are being paid for by Canadian tax payers is the CEO’s of the studios. (not film workers)”
As noted elsewhere the studios get a large amount of money. If you can make a movie and have BC pay 10′s of million in subsidy $ then that large chunk of money is helping to fund the film in any form. Whether people want to think of it as paying part of the salaries of the workers or being paid to the CEO or others is just a matter of perspectives since it amounts to the same thing. That $20 million or 50 million is just added to the money to make the movie.
But in theory film subsidies are supposed (or at least claimed) to help ‘create local jobs’, it easiest to think it’s financing the workers payroll. In BC film subsidies it’s also based on the number of workers so there’s a direct connection to the workers.
In Michigan the number of jobs the film biz provided was promised to be 6000. They ended up with a little over a hundred as I recall. So if you took the millions they spent on film subsidies and the number of jobs it created they were paying far more per position of ‘local jobs’ than if the state government had just hired the workers directly. If the state ends up paying $150,000 for each $50,000 job, something is very wrong.
If the government pays someone who doesn’t work for the government then it’s normally considered welfare. But not with subsidies. Then it’s ‘creating jobs’ and those working in the areas with their pay at least partially funded by tax payers say that subsidies are great. They seem to have no qualms taking the tax payers money while their government closes schools and shuts down hospitals simply to be able to pay them to make movies for profitable US corporations. So much for the idea politicians represent the majority of people i their area.
Scott…
Im just trying to figure out who to be mad at here…
When people make statements…like 60% of Canadian film workers salaries…are paid by subsidies….(which i can dig up on other postings it was mentioned at 50%)….it makes it sound like Canadian film workers are to blame…and they are taking all this government money…and really the money is going directly to the Studios….
Also the way i understand it…..the subsidy money isn’t really put into the productions…..or funneled back to the VFX company. The VFX companies are expected to make the film at cost no?
Also by the same math isn’t like 80% of UK film workers salaries paid for by EU subsidies….
IMO i think we should be more angry at the CEO’s and heads of the studios rather than making bumper sticker phrases…..that focus on Canadian VFX workers salaries…
Seems to me if you follow the money…. its trickling upwards to the fat offices of the fat studio heads……not downwards welfare to “lazy canadian” vfx artists….
Be mad at the studios. Be mad at your local politicians that are taking your taxes and giving them to profitable foreign companies.
We’re not blaming workers in any of these areas. We’re just trying to counter the notion that they are creating full time jobs for locals. And the fact is the way Canadian film subsidies work is dependent on the number of ‘local’ employees so film productions are encouraged to hire more people.
The money is going to the productions and not the vfx companies as you point out. The UK is not paying 80% in film subsidies.
And yes, Canada does have some guidelines for what ‘qualifies’ for ‘local labor’ but the reality is much of that seems to be very flimsy (based on month of the year) or non-enforced or monitored. I have been informed by multiple individuals that there are people working in other countries that are being listed as ‘locals’ by the productions. Their payroll goes through Canada to places such as India. Same issue with UK.
I was contacted by a vfx company in Montreal and was informed I could bring in as many people as I wanted from California for a project. The subsidies would still be covered.
if you’re importing a lot of workers from other countries, even if they don’t qualify immediately, you are not employing locals. And soon those imported people will be ‘locals’ and will be covered by subsidies. Now you have more workers in the area trained in vfx, potentially a smaller % are in fact local, and you now have more workers than can be employed.
And because film subsidies require an area to increase or match subsidies elsewhere and because these are not Canadian productions, there is no true building of an industry. Canada and other locations are simply paying rent to the studios to get projects in, which employ a number of temp immigrants who are only there due to the subsidies. If the subsidies go away or some place else offers better, it collapses down to what it can truly support.
Some people don’t want to blame the studios and say that as long as the governments offer free money then the studios should be taking advantage of it. But the thing they forget is film studios lobby the politicians to provide subsidies. The politicians didn’t randomly come up with this idea on their own. The studios and film commissions provide very distorted sale brochures with the implications that these are ‘studies’. The politicians fall for these along with acceptance of campaign funds and photo ops.
And the tax payers typically remain in ignorance that money is being given away that could have been used for other activities that would benefit all in that area. Those who do benefit from this free government money- film workers, film commission, film rental houses – see nothing wrong with taking this money. Now the fact the money goes directly to the studios does’t mean it’s not the reason why people are employed and some companies in the area are making money.
Regardless of the worker tax rates in any area the film subsidies do not pay for themselves. I have yet to see an independent study by an economist who claims they are beneficial for the tax payers in those areas. The only reports that claim that are down by those who benefit directly by them.
“I was contacted by a vfx company in Montreal and was informed I could bring in as many people as I wanted from California for a project. The subsidies would still be covered.” I know plenty of Canadians in Montreal and Toronto who are looking for a job. You should name this company.
Scott,
I always appreciate your writings. I always learn something new when you make a post.
You are the first one to offer insight on the studio side of how this is happening. Im embarrassed that I defended the MPAA in past posts. You are so correct that politicans didn’t dream this up by themselves. The MPAA pitbull sell out is Christopher Dodd? You remember this guy?…he ran for president and co-authored a toothless bill that was supposed to reinstate the Glass Steigal act (which was to put regulation back into the banks),,,,
Funny the same corrupt schmuck after leaving congress becomes the pimp of the MPAA. Where Chris Dodd goes….so does the government spending. Also those wonderful $30,000 a plate dinners Katzenberg throws….for campaign fundraisers…The big six studios keep the Washington campaign funds stocked…..
2 years ago i didn’t know what a subsidy was….
and your right the more i find out about how our goverment spends money….the more we have to be pointing fingers at our broken government……this i defnintely am mad as hell about…
1. The US government does nothing to protect US jobs…including not instituting tariffs…
2. The US government spends $80 billion a year on subsidies.. (to banks, oil, gas, and other wonderful big corps)
3. The MPAA and US politicans play the subsidy game as much as foreign countries. And none of that money finds its way to the people who need it….
4. THe Canadians budget seem be spent on the people….including all types of socialzed programs…..including universal health care…
The bottom line with Canada is……..”It is one third the people of the US and 3 times the size”.
There just isn’t enough people up here. What do I have to say is the Canadians embrace foreign workers and have a very porus borders up here. They jack taxes up here no matter what….and they don’t care if its a foreigner or a local. In fact the Canadian government is like bring your wife…and we will give her a work visa too! More people paying into the system the better. (The US could take a lessen from this)
What the US does…is the dreaded H-1 Visa…..I have seen so many Chinese and Korean workers forced to work for the same company for 3 to 7 years…..in fear of loosing their work visa….often working for far less than US locals. Does the US care about taxes and offer their spouses a work visa?
No..what the US government cares about is that US businesses have a large pool of cheap but over qualified foreign labor………In every US VFX shop their is that Asian guy quietly sitting in the corner pounding out shots……probably getting %25 less…because he needs a Visa. And he is forced to work for that company for as long as 7 years…(thats a form of indentured servitude )
Now that I am a mobile VFX worker im just starting to wake up to work visa policies from country to country. It seems the new world order had created a global economy with global workers where their are no laws and very little regulation…..all of this is redundtant to European workers who have been dealing with it for years…..Americans are just waking up to this…..
The bottom line is the Studios have their interests…the VFX shops have their interests….and no one is looking out for labor interests…..
I have to somewhat disagree with your “porous boarders” sentiment vfxmafia.
With the subsidies being directly linked to a workers nationality and residency status it makes it biased against many. Most job postings now say not to even bother applying if you aren’t already a citizen or resident.
So this flood of work in canada you’re referring too is out of my reach because my resume isn’t even being considered.
VFXMafia – it’s way worse than that. Canada’s population is roughly 1/10 the population US not 1/3. Regarding the rest of you post, I’m right there with you. I mentioned something similar regarding H1b visas here probably a year ago. There are a bunch of studios employing workers on these visas while guys who are residents here in NYC I know are looking for jobs. It’s one thing if you are exceptionally gifted and there certainly are a number of foreign workers here who qualify as such, but there’s definitely a sizable percentage that fit “the guy in the corner” analogy perfectly. I’m no xenophobe but it’s a little ridiculous that this happens at all when there are long time resident tax payers who can’t take advantage of their own local labor market. That goes for Canada and anywhere else there’s a subsidy being thrown around. I know freelancers who went to London to work and were given a hard time by the locals because they are viewed as taking a job from one of their own. I mention that because it seems to have become fashionable on this blog for people to act like somehow it’s just Americans or LA in particular that see things that way. It’s not. When you start to feel the pinch of losing work, and in my case there are more and more people from LA sniffing around NYC for jobs, you realize this isn’t just affecting one city anymore. I know several guys who have also relocated to Vancouver from NYC to get work too.
To disgruntled…
It depends on the company…but canda is very accomodating….
I saw those job ostings…too….”you have to have worked in vancouver in the past to be considered”. Its mostly from small vancouver companies….if you work for the big shops they can flip a switch and the government lets you in.
That is absolute nonsense! The BC government pays nobody’s salary. I’m getting tired of this site lying about this bullshit: 60% pay for VFX workers covererd by tax dollars.
This is how it works: 57% of the labor costs of VFX workers aren’t taxable.
That’s it.
But this site has been perpetuating this insane falsehood that everyone gets more than half thier pay from the government. If that was the case everyone in BC would be rioting.
@james,
It seems you also don’t like the truth. Or this fact: you are 100% incorrect about how the program works. If I pay a BC VFX worker $1,000, the Province cuts me a check for $580 and covers almost 60% the salary on that worker for me. Thank you BC taxpayers.
Don’t believe me either? Then see for yourself and use the incentive calculator on the BCFM website (they administer the program): http://www.bcfm.ca/programs/tax-credits/pstc
Hey Adrian,
Reminds me of the good ol days when SaveBCFilm kept getting the math wrong and you personally called the BC film office to verify the math: they agreed with our math.
Sent from my iPhone
>
You can see how the math is done here:
>
We are repeating it because it’s the truth. You are ignorant if you STILL don’t understand between a non refundable tax rebate and a refundable rebate aka subsidie!
If Canada would really only do non refundable it be ok. The wages would be 57% less taxed. But NO. They write you a check for the amount EVEN if you have no tax liability! That’s called a subsidie!
So the wording of soldier was abut soft, the tax payers are not directly(!) paying the salaries no. But indirectly they give money to a us company a studio to lure work to Canada which is executed by a Vfx shop that had to eat the overhead of opening this facility and does NOT see any tax rebates it’s the us studios who get the cash.
So the taxpayers are financing a worker in Canada having a job without the full taxes of said position flowing back into the pool. You are loosing money for every job you lure. 7:1 I think was the number in the debate debate linked on here somewhere.
“If that was the case everyone in BC would be rioting”
James, calls the BC film commission tomorrow with my math. Let me know when you’re ready to riot.
>
You are partly wrong James; wrong in your math but right in your accusation this site sometimes misstates facts.
In order to get 58% the vfx artist has to be employed DIRECTLY by the BC production company making the film. If he or she is hired by a VFX company or other third party, the percentage is ground down by the CRC when factoring in other financial info about a third party company. Some VFX companies will guarantee a percentage back to the production company, because the estimated rebate amount in the original budget may not be real depending on whether the company can hire BC QUALIFIED LABOR. Big companies eat the difference to make sure they get the gig. If a small company does that it can wipe them out…
If the labor is NOT QUALIFIED, there is no incentive on the hire. The worker may become qualified after a period of time.
If the worker is qualified, the VFX company usually gets the production company about a 50% incentive from the provence. But that person who the incentive is payed against is THEMSELVES paying 35-46% in income taxes to the provence. VFX Soldier gives you the impression the BC Government is subsidizing 58% of BC VFX workers salaries and this simply is not true. Then the vfx worker who lives there pays PST of 7% and GST of 5% on virtually everything, further eroding the difference between the provincial outlay and what they recoup in taxes.
Also, the Provincial government does not count revenue made off of indirect spends by individuals and companies when calculating the net cost of their outlay, nor do they count taxes collected on payroll taken from loan out companies.
BC is not increasing its spend so the idea their bubble is getting bigger and is bursting is just rubbish. Toronto’s all spend model is the one the is not sustainable; to give 25% back on everything is just crazy, it does nothing to promote a long term industry.
And the Canadian Dollar is now.91 vs the American, which is another 9% off the top, that wipes out the PST producers pay in BC.
FYI… SONY Imageworks and SPA are doing almost 100% of the animation for the Angry Birds Feature in Vancouver, which SONY is distributing but not producing. They won the job via a bid. This is a first I hear.
And this banter below about that not getting Ken Ralston to move to Vancouver is going to kill SPI is just crazy, xenophobic, nonsensical bullshit. Jeez.
long time,
You can’t deny the facts. When you count the BC and federal subsidies, 60% of the BC VFX residents salary is paid by the taxpayer!
Why are you trying so hard to cover that up?
Because you know that is a ridiculous amount of money that even James admits that if what I said is true (which it is and has been verified by BC’s own film commission) BC taxpayers would be rioting.
Unbelievable you try to deny the truth.
>
If I a qualified worker/vfx artist taxed at up to 46% (plus whatever other taxes are piled on top of that) which all goes into the big government vat o’ money to be doled out, and my employer is getting a 58% labor tax break (whether the vfx company gets to keep the money or has to give it to the studio as a kickback), then I’m just paying for my own job. In what world does this seem viable?
To Soldier…
I am a really confused right now…..especially reading Scott Squires explanation of how VFX shops don’t make money off of subsiidies. Do VFX companies themselves make money off of subsidies or are they forced to give the money to the studios?
The subsidy money goes directly to the us studio producer, not the facility.
VFX shops are told to open in BC to bid on the contract.
>
To soldier
If the money goes to the studio almost like a bonus…..and not the vfx house and the vfx house pays the vfx artist…
how can you then say the subsidy is paying for a % of the film workers salary….when the subsidy itself is used a bullying technique and goes directly to the studio….?
I don’t know if it is the best bumper sticker slogan for the campaign….(just my opinion) ..
On a more positive note ….whats going on with the CVD case…any updates?
The facility you work for submits a bid for a project by the studio. That bid includes money to pay your salary. For every BC resident salary, the studio gets a 60% rebate which effectively is the government paying a 60% portion of their salary.
That’s why the studios are so eager to get you to move to BC: you’ll eventually become a resident and the government will pay 60% of your salary to the studios on the projects you work on.
We are working on the next funding stage for the CVD case and hope to have it out in time for the March.
Sent from my iPhone
>
To VFX soldier…
Thanks for taking the time to respond. I look forward to the update in the CVD ruling,…
Sorry to nag you about this 60% thing and this will be my last posting on it….I also have to say i hated math. But now a days you have to watch how people are calculating…complex calculation methods and fuzzy logic can sway numbers very easily……..especially with “Projected numbers”.
Whether it comes to “jobless numbers”, GDP numbers, or “consumer confidence numbers”…..political statistics can be fudged one way or the other……especially when it concerns jobs and taxes. It all depends on how you calculate it…..usually a couple big words are thrown in to justify adding this number or that…….
all im saying…..is I am Xpatriot US VFX worker working in Canada. 40% of my paycheck goes to the Canadian government. I pay another 20% of rent into the local economy. I pay tons of taxes not on my paycheck…..like wine (booze here is twice as expensive because the government taxes….TVs, Cell, Gas, Booze, Tobacco).
I look at the cost of living and the taxes removed my check….and Canada is getting more than %40…..I would venture to say %45 is going directly to Canada. Another %25 is going into the local economy…..(food, cable, rent, clothes)……and if i am lucky i hope save %25 of my paycheck.
I just don’t see how the Canadian government is paying %60 of my salary when i give about %45 back…by the calculation method in my pocket…… it doesn’t add up….
Again we might be arguing over calculation methods thought up by a producer or worse a producer’s accountant…….or even worse yet a governmental accountant……(all of these people won’t give you a straight answer especially about a budget and taxes)…..
Maybe i should go watch that “Nailed it Video” again….but usually with Tax law the more complicated the tax law is the more it smells like bullshit……
I just want to reiterate…the 60% bumper sticker slogan for the campaign may not be the best one…..whether who’s right or whose wrong…..it all depends on your calculation method…
Mafia,
“I just don’t see how the Canadian government is paying %60 of my salary when i give about %45 back…by the calculation method in my pocket…… it doesn’t add up….”
That is why I say the artist is paying for their own job. 40% of what you make goes to BC/Canada as taxes. 60% (or whatever amount) of what you make goes to the VFX facility as a labor tax break. Your 40%, plus throw in another 20% of Canadian tax money goes through the Canadian government as a middle man to the VFX facility, which may end up also getting forked over to the studios in order to land the bid. Now imagine if your 40% income tax, along with the supplemental 20% from elsewhere (non-VFX tax payers) actually stayed in Canada to pay for schools, roads, police, homeless care and drug addiction programs.
Here’s the problem: BC is paying 60% directly for you. Explicitly because you are a vfx worker. The don’t don’t do that for the workers at the department store. They don’t do that for the workers in the cleaners or for the food staff at the restaurant. In it’s subsidy calculations both BC and the studios use that 60% as their number to use in their calculations. The government is focused on propping up only a small segment of the local economy. All forms of stimulus are better when spread amount a number of industries by BC has anointed vfx workers as the chosen ones.
Do all your taxes go directly to BC? No, you have federal and other taxes. So BC is not getting back 40% In the US the majority of my taxes go to the federal government so the real question is how much do you actually pay into the BC taxes directly? It’s not 40%
The BC government taxes most people in the area. It’s not as if vfx workers are paying more taxes or are paying taxes at a higher rate relative to others who earn the same amount. So what makes the vfx worker special?
Does that also mean all the people who actually work directly for the government and pay their taxes are free or low cost to the government? When budgets are approved they don’t say policeman are $x but they pay $y tax so they’re we can simply budget them as $x-y dollars. And the BC government and the studios can’t say that the 60% is in reality y% because the people pay taxes.
Even with the numbers you present (i.e. if you had paid 40% BC taxes (which you don’t) the BC government is essentially paying more than they are getting back from you. (i.e .they are losing money)
All your other expense do not go back to the BC government.
As you mention you save some. In some cases a production may be picking up per diem or housing costs, especially if you’re a high level person. In that case those people are actually paying little into the local economy.
And keep in mind what you are spending is now going to a few select places and that sales tax is not the same rate. This is trickle down economics. The person once removed from your spending is getting very little if anything because the stimulus is very narrow.
The studies show it would be much better to give a broader reduction in taxes to all small businesses or other methods to create a stimulus if that is indeed the reasoning.
You’re also making the assumption everyone being paid via subsidies are staying in Canada and paying full taxes. A number of them move on to other regions or countries and will not be paying full taxes in the area. From all indications there have been companies and people who pay little BC taxes. All comes down to the exact details and how accurately it is monitored. As with most government payouts there tend to be loopholes and some shady practices.
How would you feel if the BC government stopped all vfx related incentives and said we’re now giving the same amount of money a year for expensive cars. We’ll cover 60% of expensive car sales people selling cars that will be purchased by foreign customers. We’ll be taking the tax payer money that we received from you and other hardworking people and we’ll be focusing a large chunk on funding expensive car sales. After all they pay taxes too. These sales people spend money. They eat and sleep so that must be good.
Bottom line is the BC government is giving the studios 60% of your cost. And while they may recover some of it the return on investment is very low. As states have found out even with state tax returns and sale tax they get 13-16% return on every $1 spent.
So for the amount the BC government spends on this there’s nothing more constructive for the majority of tax payers of BC to put their money into? No long term industries? No method that is better than a tickle down approach which doesn’t work?
Is anybody surprised by this?
When one of the CEO’s says Sony is cutting back on their movie calender year (basically making one less movie a year) ……because they are counting in the S100 million in subsidy money into their business model and budget annually (rather than taking a chance on making movie)…
The bigger question is why can’t Sony upper management find IP that can make them more money than what governments are paying them? Talk about a top heavy company……if you ask me the people that should be laid off is the fat cats whose job it is to bring better IP than a truly lame movie like Cloudy 2. Maybe they should fire some management and steal some from Pixar or the Dispicable me franchise….maybe if upper management was forced to move to Vancouver that would motivate them to get some decent movies into production.
Isn’t the job of a movie studio to make movies? Ah screw it….lets just take $100 million and say we made one……
I agree SPI/SPA is too too heavy. You are right Mafia. But how do you tell Ken Ralstom that his job is in Vancouber now? You cannot.
It will kill spi over the long run. That’s why their “were firm on culver city as location” is bullshit. It’s a huge empty building with HR people and execs suites now.
“Everyone in Hollywood is replaceable….”
quote from Alan Smithee………
Actually, I am surprised by this. We received an internal memo from Imageworks about the time SPIUnion started that outlined the opening of their Vancouver facility. In that memo, they stated that most of the workforce was going to move there, In practice, they first split the pipeline and sent over half the artists to Van.
So, this news that “IMAGEWORKS IS ALL GOING TO VANCOUVER” isn’t news at all. Its the same news as “DD SENDS ALL FEATURE WORK TO VANCOUVER” while some artists are now in Playa working on features.
Most or all, its still in Van. Yes. But we knew this was happening, is the point. So I don’t get the newsflash about it.
Common Steve,
Sony is the same company that asked people to move to New Mexico….got them to make promotional videos…on its not so bad to sell your house in the middle of one of the worst housing bubbles…and move to New mexico…common be a company man?!
then coldly slice the legs out from under them after they relocated to New Mexico..and lay everyone off?
Or lets not forget about the layoffs 2-3 years back when they cut their entire Houdini crew….(because they were making too much money)……and then ask them back at 1/3rd the rate….
You ask me…this company has gotten pretty ghetto on how they are running this company…..in the last 3-4 years….
Totally right!
The big question is why does Sony Pictures not feed Sony Imageworks with work aside from MIB and Spiderman. Yes they do all the SPA projects but friends at Imageworks say they have no VFX work at all. Not one project and yet Sony Pictures sends out all VFX shows to other companies. Look at the last year, Total Recall, After Earth, Captain Phillips, American Hustle all not using its sister company.
Something is rotten in denmark for sure….
Because they are cheaper than SPI.
Sony does great quality but they always refused to take in small shows or chucks of shows. If they cannot be the main vendor they don’t care.
Maybe don’t corp will sell or kill
Image works soon. It’s not profitable. They had their big layoff phase a couple years ago where corp demanded 20% fat cut across the board and many long timers got canned.
That or Sony is a clusterfuck of a company.
They did give away the IPOD….after they had the walkmen.
I still don’t understand why they can’t funnel Sony movies into Sony imageworks VFX……talk about waste
If Sony wants to cut $200 million maybe they could save money with their VFX but keeping it in house at Imageworks….they have the talent and infrastructure….why aren’t they feeding image works?
Imagine when Disney gets tired of ILM?
It’s Sony. For Christ’s sake they are famous for fucking up one good thing after another. They lost the betamax/vhs war. They lost the audio file format ATRAC/MP3 war. By all rights they should have inherited the MP3 player market with a branded Walkman device. Even their stubborn use of those ridiculously expensive memory sticks and mini discs for years after it was painfully obvious that other formats were far cheaper and being used by everyone else. I’m actually surprised they didn’t go under years ago and by some shocking turn of events, somehow they managed to win with bluray and not make the PlayStation a disaster too. Getting back to VFX, one thing that is certain (and this is about the whole industry). If you decimate a pool of workers who were secure and demanding top dollar for their talent, things get mighty cheap if you can divide and conquer. So basically those people are heartless scumbags who are in this to line their pockets nothing more. Number are numbers. The fact that they make movies isn’t that important to them. How many vfx workers would say the same? Not many as far as I can tell.
This is what happens when corporations get to big…..Disney will fuck up ILM just like it did Pixar and the Secret Lab….things will come to an end…The CEO of Sony looks at the VFX crew of Imageworks as a number…..and Sony’s numbers aren’t good
We need hearings in Sacramento and that’s what Bring Hollywood Home has been trying to make happen for four years.
Thx for the updates.
Sharon Jimenez
Sent from my iPad
>
Over the past four years there have been many hearings each year. Hours of them. It has happened. It keeps happening. I don’t recall seeing Bring Hollywood Home testify at a single one.
I am completely confused. In Quebec, the prime minister, is against on everything which is not “pure french”, and made a huge campaign which served a s a politic platform for her to win the elections.
Now how come she is inviting British companies and offer them tons of money, money who does not exist, according to the fact that she is cutting funds from everywhere.
Can someone explain me what’s this, if not some kind of corruption?
I don’t know how in Vancouver is, but Quebec is the POOREST!!! province of Canada, and if in Vancouver started to shake, why we, the taxpayers, have to sustain or agree with this thing?
No matter which holding pen you are in, in the end, we are all just cattle. Prioritized and owned by the corporate state.
I prefer to think of myself as a turkey….before thanks giving….but the cattle analogy works too….
I’m confused. Let’s say the Treasury refunds 60% percentage of the labour cost to the studio in this case. Okay.
However the worker who got paid still has to pay their full taxes as normal, don’t they? And this goes back to the Treasury.
So even if the govt were to rebate @ 60%, you still have to count the % that the govt will later receive back via the employee’s taxes, don’t you?
Which would mean the actual govt outlay in this case would not be 60% really?
The gov’t outlay would be 60%, partially funded by the 46%+ paid by the artist in taxes. Paying for their own job. This generates no economic benefit to the BC economy or population. They are still making up the difference. I fail to see how this model is a benefit to anyone. Is the appx. 60% labor rebate to the vfx facility capped at any amount?
So why this practice continues? Why people in Canada are saying tax incentives are great to produce local work? Why they are hiring cheap overseas workers, and the Canadians are on EI? Who is taking a big advantage of this situation?
The point is that the 60% figure being shouted about here is misleading and incorrect, and the people pointing who are questioning are right.
It is only one part of the equation. You also have to count the tax that the employee eventually returns to the Treasury.
And no, they are not ‘paying for their own job’, the client/studios are paying for it.
The employee pays taxes to the Treasury, the Treasury either cuts the vfx facility a labor tax break, or pays the studio a subsidy to send work to Vancouver to employ the employee to give money to the Treasury . . .
The employee is paying for his job.
Keep saying 60% and you have no credibility. it’s just not true.
Here’s some facts:
The large artist base also does non subsidy work so that is one way the Provence benefits by keeping artists employed.
These artists contribute to the country culturally, and Canada likes to spend money on art and culture to create an identity that its not America’s backyard. Canada has had an identity crisis and supporting arts and culture is one way they want to change it. In fact, ANY professional in culture or sports with a track record can immigrate to Canada. MUCH easier than USA. Check out the Canadian Immigration Website. You don’t even need a job offer, just proof you have/can earn a living from global income sources
The argument that the out of work vfx employee would just do something else is weak cause there is someone doing that something else already contributing to the tax base. If the artist job leaves the employees will go with it, they won’t suddenly go drive a cab or work as a nurse. Crazy talk.
The VFX companies buy large amounts of equipment, pay rent and pay duties and taxes and contribute to the GDP. Landlords pay property taxes.
When a studio rents a hotel room for a visiting producer the taxes on that hotel room, the work created for the employees at the hotel, taxes on his booze at the Sutton Place Hotel Bar are not factored into revenue generated against the cost of the subsidy.
If a VFX company in BC actually makes a profit, they pay taxes on the profit. If the jobs didn’t exist because of no subsidies, that 13% corp income tax goes away too. So you need to count corp income taxes that offset the subsidies.
All these VFX companies hire local accountants, attorney’s etc. Income taxes from these workers is not counted as revenue against the subsidies.
I could go on and on because I know the true story.
The average income tax rate for both Provincial and Federal taxes in BC is less than 23% for a salary of $75k. The 43% income tax rate (which, again, is Provincial & Federal taxes combined) only applies to dollars earned above $135K. http://www.ey.com/Publication/vwLUAssets/Tax_Rate_Card_-_2013_British_Columbia/$FILE/Tax-Rates-BritishColumbia-2013.pdf
The DAVE credit and the BC PSTC credit that subsidize wages are funded and paid for solely by the BC taxpayers.
So BC only gets a small share of the income taxes paid (which are not at the rates being bandied about here) and shoulders the entire cost of the subsidy (sans the minor federal incentive).
The taxpayers subsidize a huge chunk if the wages. And the tax revenue from that worker does not come remotely close to offsetting the cost for BC. It’s just that simple.
The point is it’s NOT a 60%, never ever has been or will be. The figure that vfxsoldier has been shouting about is bullshit because it doesn’t take into account the taxation that returns to the govt FROM the employee.
In this very thread he declares “When you count the BC and federal subsidies, 60% of the BC VFX residents salary is paid by the taxpayer! Why are you trying so hard to cover that up?” He also boasted on Twitter about how he ‘proved’ he was correct about the 60%.
This is literally using fake numbers to provoke outrage. Has it really come to this now?
exactly meanbow!
meanbow,
To be fair (and accurate) it’s actually 58%.
As for the figure not taking into account the amount of taxes paid into the Province by the worker? No, it does not account for that. Frankly, it cant. Every worker gets paid different rates depending on their level of pay. Then there is the parsing of which income taxes they pay go in to the Provincial coffers (that fund the primary credit programs) vs. the Federal coffers.
What we do know is that if the VFX worker is a BC resident, the government is subsidizing 58% of their wages when employed on a production. Will the Province recoup some of that back? Of course it will. No one is denying that, and I think I even speak for Soldier. But since the amount returned will vary person to person, it’s simply impossible to quantify a single percentage. So, sorry we are not mentioning the unknown figure that is impossible to determine. Shame on us.
However, even if the maximum marginal rate of 43% on income taxes applied to a workers ENTIRE salary (which it doesn’t, since the tax is progressive), the coffers would still not get close to breaking even. Even if you add in any consumption taxes when the worker spends money on crap like coffee or gas, the amount of revenue recouped would only tick up slightly.
To their credit, the BC policymakers don’t seem phased by this. Like Louisiana (which also admits cost exceeds revenue returned), BC justifies the spending as an investment. Whether this investment will ever pay off with a self-sustaining industry is a question that remains to be seen. But the Province has been at the subsidy game for over 15 years now. They have not been able to taper the program down or end it. Rather, they have needed to increase it time and time again. The cost of the programs just last year was more than they cost for several of the first program years combined.
Say a job costs 100.000$
The government shells out 40.000$ in subsidies (assuming 40% for now).
The tax the artist pays on the 100.000 is just 28% or so. 28000$. So the government lost 12000 right there.
not if you factor in the indirect spend benefits and loan out labor tax revenue.
unsure what loan out labour tax is. the indirect spending does not count as EVERY job has these and its not making new jobs anyway.
http://chinadigitaltimes.net/2014/01/tv-execs-death-linked-zhou-yongkang-probe/
And once again blogs like this just show why vfxsoldier and the like are NOT interested in discussing facts, but raising fear in order to foster this myopic Pro-LA activism. This is why people outside LA don’t take you, or David Cohen’s articles seriously. Let me lay some FACTS on you:
1) Anyone relocated from LA to Vancouver does NOT get Sony immediate tax benefits. They need to ESTABLISH residency in Canada, which can vary depending on when they arrive and what kind of roots they put down. This idea that you just show up here and the company gets tax rebates for you is WRONG. Stop promoting it.
2) Sony Vancouver has already let go HUNDREDS of artists in the last 2-3 months. Almost all of the lighters and animators from Cloudy 2 have either been wrapped and let go or are finishing Spiderman in the next couple weeks. So if you think the layoffs somehow only affect Los Angeles you are sorely mistaken. This is a SONY issue, not an LA/Vancouver issue. And for what it’s worth, Sony is relocating the staff from LA. The aritsts in Vancouver were simply let go when their contracts ended. Which would you rather be, a staff artist who keeps their job AND salary and is offered the opportunity to move to Vancouver, or one of the hundreds of project hires in Vancouver looking for work right now.
3) STOP with the 60% rebate number. It’s WRONG. That may be some theoretical maximum if you qualified for every single rebate the local and Federal government offered, and your employees were 100% eligible for the entire Calendar year. The ACTUAL number that most studios up here end up getting in rebate $ is closer to 20-28%. I know. I’ve worked in production on the shows that submit the actual revenue rebates. This isn’t theoretical or some BS number to stoke fear mongering. You can point to as many trumped up web sites or surveys that you want. The REAL number of $ that VFX Studios up here get is nowhere near 60%. EVER.
4) Tax rates in Canada are MUCH higher overall than those that artists would pay in the States. On average, a day to day VFX worker in Vancouver gets 40% of their income taken out in taxes. They don’t get that back with tax loopholes, mortgage deductions, or any of the other millions of tax avoidance strategies that exist in the US. Therefore, this whole “the BC taxpayers are paying to have this work done” is ludicrous. The government here gets 40% OFF THE TOP of everyone’s salary. Can you see the math? Let’s go with a top # of 30% rebates given back to the Studios at the end of production, which is at the high end of the scale in my experience. With a real 40% tax rate, the government is making 10% in tax income for every $ in rebate they give back to film studios. Get it? That’s WHY they do it? Do you think Canada is some mecca for government handouts or that the people in Canada are dying to give $ to Hollywood. NO. It’s to build a tax base, create jobs, and prop up yearly tax revenue. If they were losing $ long term they wouldn’t do it.
Anyway, those are real numbers, from someone working in Vancouver, and who has been here many years in VFX. If you want to keep spreading fear and misinformation carry on.
1. They will get the tax benefits soon enough. And its only the higher level people getting moved anyway. Most I’m sure are getting layed off.
2. Thats just normal production hiring and firing…they’re not losing work because of a foreign governments subsidies.
3. So the govn’t is only bribing studios with ~25% of a workers income?… well that makes it all better then.
4. Workers file tax returns and get some of those taxes back so its not a simple 40%. I leave it to the more knowledgeable Squires and Lay to address your other figures because I have no base with which to address those.
1. What does “soon enough” mean? It can take up to a year or more before a worker qualifies as a resident for tax credit purposes. That doesn’t work in today’s hire and fire climate where there are no long-term staff positions. Ask the hundreds of Sony Vancouver artists that were promised long term jobs last year who came from Europe and have since had to leave the country when their contract wasn’t extended. Tax credit eligible?? Not in most cases.
2. Oh, so if hundreds of artists in Vancouver who were promised long term job prospects by Sony are not renewed that’s “normal”, but if 3 dozen staff artists in LA are asked to move to Vancouver and given their full salary plus relocation benefits that’s a tragedy worth of a Variety article. Uh, ok. Biased much?
3. The government is “bribing” anyone. The average rebate is 30%, and workers pay 40% in taxes. Looks to me like the Canadian government are the ones making money here. Do math much?
4. Have you lived in Canada? There is almost NOTHING you can get back in taxes. You can’t deduct your mortgage, work exepenses, etc. The average that you get back in tax refunds in Canada is a pittance. Compared to the US where the average US taxpayer making 90K pays about 15%, and corporations pay on average 12.6%.
http://www.nytimes.com/interactive/2012/01/18/us/effective-income-tax-rates.html?_r=1&
Do you know what that’s called?? Ready for it?? That’s a REBATE. You get a credit back from the US government that is about 30% more than you would get back on that income if you were working or operating a business in Canada. But no one wants to talk about how the effective US tax rate IS a rebate, no different than the rebates Canada gives companies to work here. Oh wait, except in Canada they take the 40% off the top to pay for schools, healthcare, and public programs.
Quoting Adrian above:
The average income tax rate for both Provincial and Federal taxes in BC is less than 23% for a salary of $75k. The 43% income tax rate (which, again, is Provincial & Federal taxes combined) only applies to dollars earned above $135K. http://www.ey.com/Publication/vwLUAssets/Tax_Rate_Card_-_2013_British_Columbia/$FILE/Tax-Rates-BritishColumbia-2013.pdf
The DAVE credit and the BC PSTC credit that subsidize wages are funded and paid for solely by the BC taxpayers.
So BC only gets a small share of the income taxes paid (which are not at the rates being bandied about here) and shoulders the entire cost of the subsidy (sans the minor federal incentive).
The taxpayers subsidize a huge chunk if the wages. And the tax revenue from that worker does not come remotely close to offsetting the cost for BC. It’s just that simple.
After 6 months you are considered a BC “resident”, I hear. Even without canadian residency. They just want you to live there for 6 months and show proof of that through utility bills and such. Then when you’re being let go the studios ask you to sign a neat little form stating you lived there X amount of time and are thus eligible for the subsidy, as well as lend them copies of your bills for proof. (Or so a good handful of friends who went to SPI and other studios there and were let go told me)
Is this not true? Any artists/techs in Vancouver that have had to do this?
El Pepe Loco,
I know that Ontario did a few years ago. One of my co-workers worked in Toronto for a few months, he hit the residency requirement right when his contract wrapped up and his old employer tried for 2 years via email and mail to try to send in the tax credit forms which he threw in the garbage. It’s not like was planning to go work for that company ever again if it still exists.
vfxpro says: “It can take up to a year or more before a worker qualifies as a resident for tax credit purposes.”
Oh please, for the vast majority it’s six months, despite your slippery wording.
“The government is “bribing” anyone. The average rebate is 30%, and workers pay 40% in taxes. Looks to me like the Canadian government are the ones making money here. Do math much?”
You keep saying this, however you and most subsidy defenders always forget the convenient fact that most people working in subsidized positions would have other jobs and would thus be paying income tax anyway. These people cost the gov’t the entire subsidy price. What you’re saying (even though your numbers are very, very debatable) would only apply to those who wouldn’t be in the country in the first place.
“Compared to the US where the average US taxpayer making 90K pays about 15%,”
Ok, now you’re just showing full-blown ignorance. I’m assuming that you have never worked in the US. In California, where most VFX jobs are, there is approximately 10% state income tax, and that is *not* reflected in the NYT chart. And all non-self-employed people in the US pay 6% Social Security tax on the first $110k or so of income. That’s 15% more tax than what’s in the NYT chart. Also, the effective tax table numbers are heavily due to the fact that US income tax tables are graduated (please look that up if you don’t know what that is), and not because of elaborate deduction schemes. The richest of the rich might have all sorts of crazy deductions, but the average vfx certainly worker doesn’t.
I’ll address one issue to at least keep it to a basic argument for both sides. The issues of hire and fire, it’s very common and standard practice in the industry. But, at least with an actual, non subsidized, false economy, such as California, (I know Cali provides some small budget films funds, but not for VFX so please stay on topic), when the hire and fire way of life is makes a little bit of sense when you have a VFX hub to keep folks employed on a fairly regular basis. Worst case, you had to drive across town for a gig.
Now, with the hire and fire practice more prevalent than ever, and you add the insatiability of the vfx market caused by subsidies (Please stop calling them rebates), an artist, no matter how talented, is even less likely to eek out a living, let alone gets to stay put for very long. The scary part is, folks aren’t mad enough yet to want this to stop. Economically this is wrecking most artists on a GLOBAL level. But if you think everything is ok, it’s because you haven’t been personally affected yet. You will, and your feelings will change.
If another hub such as London or Vancouver gets wiped out by competing subsidies, and it will, an additional thousand artists voices might be heard condemning the subsidies they once held so dear. I think there is plenty of room for vfx hubs like London, Vancouver and NZ, with NO subsidies needed. But, when the chase of free money dictates your job and lively hood, we all lose.
Think about that next time you have to relocate for……a job? Remember, it’s now just a job, and no longer a career. That’s probably the worst part of it all now.
Finally, a voice of reason. Thank you VFX PRO.
This whole clusterfuck just gets worse every moment. Because of the corruption of “ALL” goverments by corporate and criminal interests there is no cure short of the public torture and execution of every goddamn corporate executive in this industry (Public to terrorize anyone that would seek to rebuild their empire, as well as to boost the morale of the proletariat.). I really wish that I could see that, but we have clearly devolved into lemming like pathetic creatures. So, to be strictly pragmatic here, has anyone here found any useful, stable or remunerative application for our VFX skills, because I am out of here?!
And my head is spinning. Yes, the subsidies are a big issue. I get it. I have no idea why the CA State gov isn’t being just a wee bit more proactive on finding some solutions. By the time they stand up for the entertainment industry, it will be too late imo.
But with all the talk of government this and that, how about a spotlight on the internal rot within the VFX industry too? It’s not just subsidies that has caused this. It’s workers agreeing time and time again to work for less…that it’s just ‘super cool’ to get that first screen credit and that outweighs being paid for the work on the screen. Let’s spend some time talking about the producers that continue to press the artists for more work in less time, and the vfx supervisors that demand more quality within those constraints. And then the artists that think that putting a few more hours on their shot after hours is simply so they can ‘punch up their reels’. Think doing that is a victimless crime? Incorrect! Throws off all the bids, and makes everyone around think that they need to work for free. Why? Because your supervisor that is desperate to look good is all too happy to welcome high quality work in dailies, regardless of how he got it. The artist then gets a nicer shot because of the quality work they put in. And round and round we go. And don’t ever get me started on the deluge of online schools popping up, launched by industry vets. I get it…the wages are lower and you need to subsidize your salary…but then the workforce has been flooded with eager beavers ready to get that screen credit! It’s a vicious cycle.
So yes – subsidies are a huge pain. But for once let’s look in the mirror shall we? For the better part of 15 years, on every production, I’ve worked with at least a few that said ‘hey…we’ll work whatever hours, for whatever pay, because gosh darnit..we love this job!’ Producers LOVE those guys and the message those artist sent, and continue to send, was simple. It doesn’t matter what the studios do, or how they treat people…they’ll have all the workers they need just knocking down the doors, so why bother treating any of them with respect?
Soldier – I love what you are doing, but I’d love a bit more attention to be lavished upon the corrupt producers and sups that throw gasoline on this giant fire.
…race to the bottom.
Would you like a side of fries with that?
>
Haha..Yes. Just pointing out that there are a variety of issues here feeding the same machine.
I guess the question is do the lawyers at Sony think the CVD is a dead end hence the move? I see two answers.
1. They think nothing will change and the rebates will remain. And these are some very experienced lawyers.
2. Even if the rebates end they see the cost of running a facility to be far more cost effective (cheaper) in Canada and will allow them to be more competitive even with a level playing field . My guess is lack of 401k, more expensive extended medical in the states does not help make the states cost effective.
Oh and no one here has mentioned the huge grants the Canadian Government gives to companies in the areas of Research and Development that these Dev type people will be eligible for. I know weta gets huge kickback in New Zealand for similar types of R and D . I read ann article recently how imaging techniques developed at Weta is now used in something to do with Cancer scans. I think this is more about those grants rather than subsidies.
Where are the peer reviewed articles on subsidies? The only things I read are from people with skin in the game, and unsurprisingly, their findings tend to go along with what benefits them.
I find it hard to believe that subsidies are saving local economies.
I also find it hard to believe that politicians are throwing millions away on an incredibly one-sided deals just because movie studios are asking them to, no accountant has noticed it yet, but a bunch of meddling bloggers have outsmarted them all.
Take a look at this blog post for links to articles and indie studies. i know Adrian and vfxsoldier have links to even more. http://effectscorner.blogspot.com/2012/08/visual-effects-tax-incentives.html
There have been many more articles just in the last year that aren’t listed.
The politicians ware well aware of what film subsidies actually mean. See the Louisiana and Saskatchewan videos on the page.
That’s why they are discussed but the only people putting forward ‘reports’ to the politician are by and large the studios. Check any economic report in any subsidized area used by politicians and it will be funded or sponsored by the MPAA or other group or an accounting firm o their behalf. If the only documents a politician or tax payer reads is the ones supplied to them by the beneficiaries it becomes non-balanced information.
Most subsidies don’t save local economies alone; that is correct. But some have tentacles that reach further and better than others.
Many politicians don’t understand how the entertainment industry really works and where the dollars wind up. So places like Louisiana create really stupid all spend programs that are ripe for abuse and unsustainable, and then on a flip side you have local labor only incentive based programs like BC that are very hard to abuse, but where some local politician or tax minister comes out and opposes the program, maybe for political gain, or maybe its because when you analyze how poorly they add up the benefits of those tentacles against the cost you realize they really haven’t included all the benefits.
But you can’t deny many politicians with big ambitions might use the taxpayer money wrongly just to get a photo op. It’s just picking out the ones that are.
Also, many VFX workers in California would simply be happy if California competed in the subsidy game and that getting them back some work is all they really want, but that is against the interest of many bloggers who post on this site cause if that happens they won’t get the numbers they need to make ADAPT an organization the WTO and US Customs Dept will acknowledge represents at least 25% of VFX workers in America, which is a number they need to be able to prove they represent in order to get these organizations to act on their behalf. VFX is much harder to organize than the US Honey Producers, who are often cited here as being a trade group that has used CVD’s to their advantage. If the California VFX workers are appeased by subsidies, the righteous cause of these bloggers will crumble in front of their eyes.
Subsidies are very effective economically speaking…..
in the short term they are excessive loss that create short term jobs….but with one common effect. They are assassinating the Los Angeles VFX industry with extreme predjudice……..
One thing that Canada and the UK needed is to demolish the LA VFX industry as a stable hub…….
and how many were there of us…..maybe 3,000 VFX workers?
Subsidies aren’t effective economically speaking. Short term or long term for anyone except those who receive them.
And this isn’t an LA vs the World. The Montreal subsidies are not helping the UK industry or workers. We’re letting the politicians demolish everyone. When the focus is on getting money and not on actually building a long term industry, everyone loses.
So, the UK announces a new tranche of film subsidies while at nearly the same moment Cinesite announces a new satellite office in Montreal. The snake is eating its own tail.
In related news, “Vancouver’s housing 2nd least affordable in world”:
http://www.cbc.ca/news/canada/british-columbia/vancouver-s-housing-2nd-least-affordable-in-world-1.2505524
Quote from article: “If you’ve got the most attractive city in the world, it should have the highest price-to-income ratio,”
Hahahahaha. Depending on your profession.
Bubble?
double bubble!
Welp, I bet the Sony shareholders are a little more at ease with the so called “stream-lining” of their entertainment division. Cause that’s what really matters here, guys….
In 1989 Universal started making release prints in Toronto. The lab in Toronto was called Film House and they did excellent work and were cheaper cause of exchange rates only.
Within a few years Deluxe moved in and bought that local company, and set up shop. Then Technicolor built a facility in Montreal. All growth in film processing went to Canada as the number of film screens expanded in North America. Deluxe and Tech La were kept busy but the bulk of the release print work left the USA.
And no outrage by US Lab unions reps. No CVD’s.
Now Sony is doing similar proof of concept with VFX by setting up shop in Vancouver and India. Others will follow. They always do.
Hollywood Reporter it’s been said over and over again but people like yourself keep wanting to make this a game of xenophobia.
It’s the subsidies stupid.
If you can make the whole industry move to Canada on it’s own mertis, fine. Using this scheme where a government pays to make it happen is where most of us get our nose out of joint.
We coukd try an experiment. We put it to into the average citizen’s head that someone is moving to their country and their city and their elected officials are paying 60% of their salaries. After you sit back and watch their head explode. I’ll let you then explain to them “No no! it’s ok because it’s actually only 25% because blah blah blah” I promise I’ll stop them when they try to strangle you in a fit of rage.
…excerpt from the World Trade Agreemet as it pertains to OUR situation. The farmers can start their own organization as it is up to members to complain. The Adverse effects and amounts considered to be “serious prejudice” are very clear here.
We are not fighting over currency fluctuations, but direct government handouts that have selectively not ony harmed, but move a huge portions of our industry artificially….one of the very reasons member nations signed this agreement.
PART III: ACTIONABLE SUBSIDIES
Article 5
Adverse Effects
No Member should cause, through the use of any subsidy
adverse effects to the interests of other Members, i.e.:
(a) injury to the domestic industry of another Member;
(b) nullification or impairment of benefits accruing directly or indirectly to other Members
(c) serious prejudice to the interests of another Member.
Article 6
Serious Prejudice
6.1 Serious prejudice in the sense of paragraph (c) of Article 5 shall be deemed to exist in the case of:
(a) the total ad valorem subsidization of a product exceeding 5 per cent;
;
To Easy…
I actually had the conversation you mentioned….recently with a Canadian citizen…..when he asked me why there are so many foreign VFX workers here……I told him that it is subsidy money….
He looked stunned at first and was reminded me that i pay 40% into the system just like him……
In Canada…with its limited population…because it is big and fucking cold up here…has a hard time keeping people up here. There are a lot of foreign countries they let in up here……%40 of the population is asian NOT french Canadian. They don’t care about visa or citizen status…as long as your work permit pays %40 to the government.
I am a permanent non resident in Canada….but i pay my taxes….and that is what matters most to the Canadian economy.
As before, you’re not paying 40% to BC taxes. Even if you were paid that amount that still leaves 20% unaccounted for. (i.e. 20% loss)
If this was a business you can’t say we’ll give you $60,000 and you give us back $40,000 and think that you’re running a successful business. You certainly can’t do that and expect to do it long term nor can you say that it’s better nothing. Because you can’t make it up in volume there’s no point in increasing it. Pay more people that amount or increase the amount being paid is not going to result in a larger return on investment.
Better would be for BC to invest in their natural resources and local industries so they don’t have to keep paying foreign corporations more a year. So they encourage long term employment and possible long term immigration covering a wide range of industries rather than ever increasing bribes to people to stick around in one industry.
It’s simple….
1. If the subsidies/tax credits/rebates for VAN went away, would any one work there?
2. what is the percentage of VFX workers in VAN that are VAN natives, Canadians?
3. If another state, territory or country offered a 50% tax incentive rebate subsidy, would the work stay in VAN?
The answers are simple.
1. no
2. a small percentage
3. no
It’s simple. Governments need to fund schools, police, roads, infrastructure, fire departments, health and public works… not multi billion dollar US corporations.
It’s simple.
I know Scott.
Canadians are on EI and companies are looking abroad for cheap labour. You might ask yourself, Why they look for cheap workers when there is such a huge return in taxes?
I asked people around if they agree with this situation. And the answer is: Good for economy, creates lots of workplaces.
Well I tell you what: this trick is nothing else then a corruption scheme. Nothing else. Whoever says something about art and artists is wrong.
Just corruption at high level. Pure corruption.
There are people on this forum saying you are wrong, and in fact everything is fine. Everybody is happy and things are bright.
In fact, everything is shaking and looks like: let’s do as much money as we can using cheap labor and big returns.
This is not only LA drama, but unfortunately is everywhere.
actually the percentage of canadians, BC residents and PR people is alot higher than you think. Thanks for playing.
well, lets see some numbers. In eastern Canada as well. Toronto – Montreal.
Let’s see how much is brought from outside, when Canadians are not working or being told to wait.
really? I worked in 2 different companies here in Vancouver ( 18 months ) and the majority of the artist are British, American, French and of course a minority from different European countries. I do know some Canadian, just few.
Scott,
your quote:
“It’s simple. Governments need to fund schools, police, roads, infrastructure, fire departments, health and public works… not multi billion dollar US corporations.”
I don’t know if that is the best arguement when discussing how the US taxe dollars are spent.
When i was in LA paying taxes…..I saw the California gov cut schools……teachers….and public funding. I saw a California mayor cut himself a $800,000 pay check from tax money. And I saw the LAUSD kick people out of their homes (using eminant domaine) in the Valley to grab depressed real estate for future schools that was never built.
Talk about China town…Los Angeles is pretty corrupt place with all the tax incentives for Disney and Fox out in Burbank…and the huge pool of illegal immigrants used as cheap human labor….who institutionalized by the local government and police force….
Then I saw Federal Tax dollars spent on Wars on drugs, Afghanistan, Iraq, even money to Egypt who didn’t have a stable government at the time……plus the tax rebates for Exxon, GE, and BofA….and goldmansachs….
Now that i live and pay taxes in Canada……i at least get single payer health care……..
if you want to argue how tax dollars are spent……..i would not use the US government as an example.
A government has so much in public funds. And the politicians choose to spend that as they want to some degree. Do politicians always choose wisely? Do they make decisions based on the majority of people they represent? No they don’t. And yes there can be corruption.
In the case of BC they decided to put that into film subsidies at the same time they closed schools and cut homeless benefits due to lack of funds.
You’re using the excuse since there are already subsidies then another one isn’t an issue. For some reason the BC government funding film is the one and only above the board type of funding.
And funding by the government of film in BC is great but if any other place (such as Burbank) reduces % of tax required (i.e. an true reduction in taxes, not a government payment above and beyond the taxes owed) then that’s a sign of corruption.
It could easily be argued any government funds spent with the intention of aiding non-local for profit corporations would be consider corruption.
And hey, as long as the local government is willing to pay out we might as well all get in line because other places do the same or worse. No sense in trying to improve the government let’s focus on getting the most out of the situation.
Scott,
I understand why Canada does it. They are like 1/10 the population of the US and 3 times the size. Its alot of trees up here……
Canada needs a bigger population……quite frankly…and new industries……If i wanted to bitch about how a country does or doesn’t spend tax dollars…….i would bitch about the american government.
Canada does take care of its natural resources…and subsidies the oil and nat gas companies up here……(look at the tar sands)….
Im not arguing that VFX subsidies are a waste of BC tax dollars…..but there is a method behind the madness….Canada needs high profile industries up here….but everyone points out…no one wants to move up here…..so they subsidize the film industry and force workers up here….and decimate the VFX industry in Los Angeles……
I am one of the 3,000 LA VFX artists that has been injured by the subsidies…..maybe we should keep to that point…
making arguements like how Canada spends its tax dollars….vs how the US spends its tax dollars is waste of time.
The point i was making about the US government…is that for years it has been aiding big corporations and the 1%. They don’t pay taxes and they don’t go to jail…..like regular people do….Im just saying we have alot of opinions and clever arguements being thrown around and maybe we should just stick to…
1. Subsidies create market distortions and unstability
2. Subsidies injure workers and businesses who are targeted by subsidies
3. Create permanent and stable VFX hubs…..(so we all can stop moving)
A number of people here seem to be desperate to avoid facing the facts because they truly want to believe the subsidy money supporting them is a good thing for all. Or their job depend on them.
Here are some numbers from Disney at the VES Production Summit a year ago:
“Using the example of a $1 million dollar project – in BC a production could get back $379,000. In Ontario credits can be combined to return $437,000 and in Quebec the return rises over 50% to $572,000.” (from fxguide article and my notes) http://www.fxguide.com/featured/ves-summit-2012/
That’s over 50% in subsidies as detailed by a major studio that receives the money. You can try to slice and dice the numbers as exacting as you like but at the end of the day these governments are paying out a lot of money that has nothing to do with tax rebates. And the money from the government is paid out of pocket by the local tax payers. These do not make money. There is no significant or mysterious multiplier effects that makes this a big winner for these areas. Please post a link to a study showing a big economic gain for the average person in these area that was not sponsored by the studios, film commissions and others who benefit directly. At one time the tobacco companies had studies that smoking was good for you.
Independent studies have blown holes in the sales brochures.
If you hire 1000 extras for 1 day then the film commission will increase the number of jobs by 1000 in their report. Is a 1 day job really the same as a full time long term job? If a $100 million film shoots pickup shots for a couple of weeks then $100 million will be added to the amount the studios have spent according to their report.
And all of this is masked by using the term tax rebates or incentives instead of what they really are – subsidies. Many of the Canadian politicians are now calling them subsidies.
And someone mentioned Canadian art support. Really? Is the next sequel to a Super Hero movie really a ‘Canadian’ art project? This is the same excuse the UK government uses – somehow films like Captain America are magically deemed British, so that it can qualify for subsidies. This also tries to make them feel good about the fact that little of these subsidies is actually used to sponsor local talent and arts. Instead it is begin paid to foreign companies. if they truly wanted to support the local artists they would put on caps and restrictions to keep all the money from being sucked up by outside big budget projects. Take a look at the California film subsidies as a starting point. This caps the amount and puts restrictions on such that the big tent poles are not the winners.
Even some of the industry funded studies show negative ROI. The Michigan Ernst & Young report comes to mind. As does the Cleveland State study for Ohio. And the HR&A report for New York. Of course the talking points from those studies were spoon fed to reporters and did not mention the loss for the coffers. Instead they mention the “return” in the form of spending in the private economy. To the layperson that hears this, it sounds like the programs make more money for state coffers than they cost. Case in point, comment threads like this.
And so here we are. Sigh.
Sigh.
You can skew these numbers however you want to have them perceived. Studies and numbers you pull out of the air mean nothing. The reality is that no vfx studios are getting 50-60% “rebates” for work done in Vancouver or any other province. That number is a bogus, straw man number to support your thesis. Maybe if you worked with real numbers or were able to discuss these issues with facts instead of fear mongering the debate could go somewhere. But as long as you keep throwing out artificially inflated, bogus scare numbers like “60% rebates” we’re just going in circles.
And no one on here has made a single refute of how corporate and individual tax “refunds” in the States are exactly the same as rebates given by Canadian governments to develop and encourage business and investment. Canada and other countries have subsidy programs for industries they want to grow and encourage. The US gives almost everything back in tax loopholes and refunds to corporations at the end of the year. Either way the money goes back to the corporations. You argument that somehow because the money is given as subsidies instead of tax refunds and that makes it any different is so specious and full of holes it’s laughable. The US corporate subsidy and tax scheme is one of the most corrupt in the ENTIRE world. It single handedly almost destroyed the GLOBAL banking system a few years ago. For people in the States to point fingers at other countries like New Zealand or Canada is a joke. Look at your own house first…
What’s laughable is your understanding of the financial crisis and feeble attempt to associate this situation with it.
It had absolutely nothing to do with subsidies, taxes, or refunds. Not even a little.
In fact, no where in all of the material I have read on why it happened, discussions with finance professionals I am acquainted with or any televised journalistic dissection of it ever once mentioned taxes, subsidies, or refunds in any way shape or form.
A lot of these posts don’t even sound like something a real person would say. It is actually more believable that they are made by MPAA cohorts doing a psychological operation. The people who are putting their real names out aren’t the ones trolling here and making things up. They are the ones with direct links to government reports and websites.
I think soldier should set up a tab for his blog using a wiki or something similar to begin to organize all of this information and perhaps get some vfx volunteers to help create visualizations of the data.
The argument has gone from ‘I don’t believe it’ to ‘Even if it’s true it’s only 20%’ to straw man arguments about totally unrelated events. People can look at the data and come to different intelligently credible conclusions from it but at least argue your opinion from the facts.
tax refunds stop at 0$ tax liability. subsidies are blank checks given to the us studios even if there is 0$ tax liability.
Scott has named numerous studies. yet you have no source. so stop with these wild accusations of fear mongering when you cannot accept the canadian government is renting an industry it would not have otherwise. its quiet pathetic how desperately you guys try to defend a scheme that is never showing a profit anywhere, US states included!
“the canadian government is renting an industry it would not have otherwise.” I am not sure Canadian gov. is renting anything.
There is some money going in and out, this is for sure, but renting, well maybe, until the bubble will burst, then back home.
So far, the tax payers are sleeping.
Oldie,
I suppose the Quebec film commission is also using bogus scare numbers when they dangle the 53.8% cash back lure to filmmakers in their promotional video? Start at 40 seconds in: http://youtu.be/F3abF-z0e-k
Or what about the BC Film Commission presentation for filmmakers posted on their website? Are the numbers in their presentation bogus? Because I added up the refund amounts for the example on the last two pages and the rebate is actually just over 58% of the BC VFX labor cost. See for yourself: http://www.bcfilmcommission.com/database/rte/files/BCFilmPPTaxApr2010.pdf
The numbers and rates are now coming DIRECTLY from the provincial agencies who administer and promote these programs. Are they making shit up as well?
Until an actual producer comes on this blog – or anywhere else – and says “yes, it’s true – we got 60% out of BC on this actual named project” it’s all bullshit. You can cite all the supposed phone calls to unnamed BC gov reps you like, but until there’s an actual producer who made a show and got that magical number it isn’t true. Same goes for the supposed 40% UK rebate, which is in fact 18% at best.
Let me get this straight, the argument has now turned into a “he said/she said” about how much the subsidies are in different regions? How does this help again?
The subsidies DO exist and are distorting the vfx market so heavily EVERYONE’S job is at risk! EVERYONE. This is a FACT.
Can we at least agree on that?
And then, maybe refocus on how to make things better for the industry as a whole?
When you steal 100 or 1000 is there any difference? You are a thief anyway, am I right?
But no one with any power to change the situation will ever listen to you if you continue to exaggerate. If filmmakers were really reclaiming 40%, 50%, 60% there would be *nothing* left in Cali at all.
You do yourself a disservice by coming up with nonsensical figures that no producer has ever managed to achieve.
LASkyline.
Tomorrow I challenge you to contact the BC film office and verify our math showing that 60% of BC VFX resident salaries are paid by the government to the taxpayer.
Here is a screenshot of our math from their own calculator which we called to verify almost a year ago:
It’s that simple. Put up or shut up. 🙂
>
Nobody is denying what the provincial offices are saying, just that what they are saying and what is really rebated after a claim are two different things. It’s their job to sell the province, it’s the CRA’s job to maximise tax revenue and there is a natural conflict. LAskyline is right, the lack of evidence of real claims and your insistence that what the film offices are saying is gospel is undermining your credibility. We should try and get some real evidence of actual rebate data, not just the data for the sales pitch.
@soldier my buddy’s VW grocery getter has a speedo that goes to 150mph – it might make that if he drove it straight off a cliff. It doesn’t matter *what* the BC gov calculator says no production has ever gotten remotely near a 60% rebate on the total cost of VFX production in Vancouver. You have failed to point to a single example of someone achieving this. The burden of proof is on you.
I challenged you to contact BCFM to verify what I’ve said. We’ve called them last year for another commenter who doubted us: they agreed we were right and savebcfilm was wrong.
BCFM is the govt agency that administers the subsidy. That is as reliable a source as possible.
Here’s what I don’t understand: you and I both agree that larger and larger subsidies are needed in BC or else VFX will collapse there. While I’m against subsidies, you are for it.
So why the outrage over the fact it’s 60%? Yeah that’s high but it has to be to beat everyone else or else the work goes away.
You tacitly acknowledge this game is going over the cliff.
Sent from my iPhone
>
Btw skyline, I notice you changed the parameters of the argument:
“no production has ever gotten remotely near a 60% rebate on the total cost of VFX production in Vancouver.”
In my post I clearly point out that 60% of BC resident VFX salaries are paid by the government. Please don’t try to change the parameters.
Again I challenge you to call BCFM.
Put up or shut up.
Sent from my iPhone
>
I’ll repeat this since it seem to be ignored.
Here are some numbers from Disney at the VES Production Summit a year ago:
“Using the example of a $1 million dollar project – in BC a production could get back $379,000. In Ontario credits can be combined to return $437,000 and in Quebec the return rises over 50% to $572,000.” (from fxguide article and my notes) http://www.fxguide.com/featured/ves-summit-2012/
Keep in mind this is a studio taking an average project and determining where they will take the work. They look at the bottom line and see what their accounting team has determined they can make from any given subsidy for any given project. In this real example Quebec will provide them with a 57% subsidy.
All of you people arguing whether it’s 60% or 55% or whatever are completely missing the point. A large amount of money is going from the governments to the studios.,The studios are in fact using that to help determine where they will take their project. If the accountants/producer told the studio they would get x% and instead they only got 1/4 of x%, then those people will no longer be employed by the studio.
To think the BC and other film commissions making up ‘fake’ numbers and the studios are blindly accepting these ‘fake’ numbers is absurd. To think the governments and the studios are in cahoots and both touting ‘fake’ numbers is absurd as well. What possibly benefit could it have for either group?
The studios do indeed use the numbers their financial team have reviewed. Not only do they do that, many are putting in contracts with vfx companies that they expect a subsidy of $x from the government. And if they don’t get it for any reason (vfx studio didn’t have the number of locals employed they expected, the vfx company sent some of the work to a non-subsidized area, etc), then the vfx company is legally bound to pay the studio the difference. If you’re subsidy target amount is missed by $1 million, it’s up to the vfx to pay out of pocket directly or indirectly.
People here seem to be grasping at straws hoping that a few percentage points will make a difference of being a worthwhile tax payer investment and not begin any consideration that studios use the subsidies in their decision making process.
You have to understand that to most of the posters on this blog and VFXSoldier, the reality doesn’t matter. The numbers don’t matter. They’re here to stir things up and twist the numbers to make whatever argument they like. Therefore, they believe that if they keep throwing around bogus numbers like “60% REBATES IN VANCOUVER”, then eventually that gets spread from site to site and repeated until it becomes accepted. The reality, as you, and multiple people here have posted is that film subsidies are a very fluid and complex equation. It depends on the overall budget of the show, the amount of residents on the staff, and a myriad of other very complex equations. NONE of which this site or the posters on here seem to care about. The reality doesn’t matter to them. All that matters is that “jobs are leaving California”, and “studios in Vancouver are getting subsidies and hiring.” So we end up with this ridiculous anti-BC/anti-Canada ranting which is all this site has become.
Let’s forget about Weta, because they “do good work” and no one wants to bash that gravy train of VFX. Let’s forget about London because Harry Potter and Gravity are old news. Let’s forget about Australia because Dr. D went under, and Animal Logic is pretty slow. Let’s focus all our energy on bashing Vancouver and Canada because Sony isn’t playing nice and DD sends a couple shows a year up there.
And to fit that mindset they need to make up numbers like 60% rebates in Canada to fuel this fear and misinformation. When in reality NO SHOW in the history of vfx projects in Canada has ever come close to getting a 60% rebate. It’s HALF of that at best. But hey, “THE WEB SITE SAYS IT”, so it must be true. Instead of talking about real issues and real problems in this industry let’s make stuff up. Let’s let the bitter ex-DD/R&H/Sony employees flood this blog with their ranting and watch the VFX industry slowly go down the toilet from our apartments in LA. Good luck guys, I’m out on this blog. I can’t take it anymore.
Dude you are missing the point. Even if it was a 15% rebate its still distorting the market! Besides we do comment o the UK (upping of incentives really?), Weta (Cameron/Avatar/ NZ Bend-over much?) and other locations, even the US State Incentives (Michigan?).
But i Guess thats to inconvenient to mention in your rant post right? Would destroy your pathetic attempt at derailing the real issue here.
If I pay a BC resident VFX worker $10,000 for my film, I get 58% of his wages back in the form of a rebate check from BC. This is not misinformation. This is not fear mongering. Just like 2+2=4, it’s a FACT.
Do you have the decency to at least admit the truth of that statement??
“Movie production means business, and business is generally good for local economies. But footing the bill for movie production doesn’t pay off for states as much as their leaders would hope.” Read this:
http://www.nationaljournal.com/economy/how-leonardo-dicaprio-cost-new-york-taxpayers-30-million-20140122
Even after all this time, I am still utterly shocked at how willing some of our fellow artists are to deny the basic facts that:
A – subsidies are THE ONLY REASON that major VFX facilities have located to Vancouver, (which we have been told clearly and directly on multiple occasions by management at my facility – one mentioned in this article) or
B – that these facilities prefer to transfer LA artists to BC rather than hire directly from BC (which we have ALSO been told by management), or
C – subsidies are, in the long term, detrimental to location stability and artist quality of life, or
D – subsidies put your own lives and current or future families at certain risk of an involuntary, nomadic existence
For christ’s sake people, have a little compassion for your fellow artists! Have a little wisdom! Have a little reason! Look at the facts! Look at what this means for you beyond your immediate existence.
Whether it’s a 40% subsidy or a 59.784% subsidy, who gives a flying f**k?! It doesn’t change the fact that subsidies are currently the ONLY reason certain locations exist. Not Talent. Not proximity. Not the TRUE cost of your labor.
Artists are suffering now. If you’re not, you will in the future. When men with spreadsheets are in charge, you are worthless as an individual, you are dirt to be shoveled, no matter what they tell you.
You guys need to create your OWN SUSTAINABLE industry who’s existence isn’t sustained by draining artists of all value and sucking the nipple of the gluttonous, self-serving, corporate psychopaths in Hollywood.
“For christ’s sake people, have a little compassion for your fellow artists! ”
He is the one who can change everything, the “fellow artist” but is doing nothing.
He is the one who believes that saying nothing is going to give him some long term benefits.
Artists who are standing up and have some attitude against this issue(subsidies), are dead.
This thread has digressed into the disgruntled rantings of whats wrong in the VFX industry, instead, we need change the focus on, the VFX Artist/Tech as adding “Value” to each organization. End of Story. Lets not point fingers, it’s easy to find the culprits as the Economic advisors to the Studios big or small as the real reason we have become Journeyman.
If the subsidizes work no matter the %. it’s because WE are agreeing to it. Not the other way around. If we stood together in this industry, there would be a smaller pool of skilled Vfx artists willing to move for yet a next temporary gig. No matter how many schools churn out vfx students they are not trained by themselves.
The industry exists because of the talent that the Art & Technology was built by, and everyone needs to wake-up to that fact.
A few facts,
Immigration requires a local be hired before a visa is issued. So no matter what management say they will always look for a non visa hire before getting a visa for someone as required by Canadian LAW.
Subsidies may move work but it is allowing films to get made. We are already seeing studios making less films and making films that are cheaper. If subsidies go away we can expect the number of VFX tentpoles to drop which in turn will create less work for all. I am not saying they won’t make them but they will make fewer and rely on cheaper films like comedies, horror and mrs car movies;)
Only 3 major facilities have relocated to Vancouver most others were already here or owned by sister companies already operating in Canada.
The main problem in VFX is not subsidies but underbidding by the over saturated market place of every johnny and a computer opening up a VFX facility and actually being able to do the same work as places like Sony, DD and ILM.
AS for our own sustainable industry. It was never yours but has alway relied on international talent in all aspects of film making from producers, directors, writers, VFX, design . Perhaps you could start making films that are solely American in origin from story , IP, crew and MONEY and then just rely on American box office. It would not last long.
“If subsidies go away we can expect the number of VFX tentpoles to drop which in turn will create less work for all. ”
More FUD. Spreading made up fear and bogeyman. I’m sure Fox & Cameron said if we don’t get another $1 million of subsidies we won’t make Avatar 2. No, no, it’s not enough h for us to make a billion gross. The tent pole movies will continue regardless of subsidies. Look at what they’re paying Robert Downey Jr. The tent poles are earning the studios their major profits to break $1 billion. And that doesn’t even include the merchandise profits. Do think Diseny won’t make Star Wars if they don’t get major subsidies? They’re not about to drop them for $5 million comedy films. The loss of the subsidies will drop borderline mid-level films that is on the border of calculated profits.
“Only 3 major facilities have relocated to Vancouver most others were already here or owned by sister companies already operating in Canada.”
Let’s see off hand:
DD
R&H
Sony
ILM
Pixar
Hydraulx
Zoic
Method
MPC
I’m sure there are several more I’m missing.
‘The main problem in VFX is not subsidies but underbidding by the over saturated market place of every johnny and a computer opening up a VFX facility and actually being able to do the same work as places like Sony, DD and ILM.”
Yeah, every Johnny with a computer is now replacing ILM. Studios are rushing to give every johnny their tent pole movie cause after all they have a computer.
Keep in mind ll the companies and garage vfx companies that have gone out of business the last few years. ILM is not competing with johnny. DD is not competing with johnny. It’s the subsidies that have created more large companies because the subsidies have been a massive artificial boost causing many companies to expand well beyond where they would have by natural evolution.
And what is one of the main reasons companies underbid? How do you compete with another area that is funded by in part by a government? How do the UK companies compete with Montreal? How does ILM compete with UK?
And you like many here are making the assumption this is an LA vs the world issue. Wake up to reality. All places are fighting like dogs over the work and it will be much worse in the future given the trajectory it’s going in. The studios and politicians are yanking the dog food from place to place. People here may wish to dig into the sand but it’s happening and it won’t go away by ignoring it.
Underbidding was a huge problem long before the current subsidy roundabout.
No, underbidding wasn’t a huge problem before subsidies.
Underbidding meaning to underbid less than you actually have calculated it will cost you. (i.e. you know going in that you will lose money on a project) This isn’t competitive bidding where you can bid lower because you’re more efficient or are willing to reduce basic profit a bit to compete. This is bidding such that you’re paying to do at least a portion of the work out of the company pocket.
Keep in mind the subsidies started ramping up in earnest in the mid 1990’s
I remember a bid ILM lost to DD by $100,000 ILM could have said we’ll cut our bid by $200,000 to get the job but we didn’t.
Most vfx companies used to be self-owned by those managing the vfx company. BOSS, Apogee, Dream Quest, Illusion Arts, Matte World, etc. Even the places in the UK were by and large self-contained. ILM was about the only place backed by deep pockets.
As a result you didn’t see intentional underbidding because places couldn’t take the losses. While they may not have always been run as efficiently as they should have vfx companies knew that their survival depended on not underbidding. Some places, especially in the lower tiers, would bid aggressively but never intending to do it at a loss. You HAD to cover expenses and since each place had evolved over time most fit within the eco system in terms of size of project, type of work, quality and complexity level. Any money you lost was a result of not bidding correctly or not running efficiently. And that wasn’t obvious until you were done or close to begin done with a project. Certainly not by intent.
The advent of subsidies increased the likelihood of places being bought by corporations and increased the size and scope of many places as well as increasing the number of large companies competing. They were no longer evolving and fitting into an existing eco system. The eco system was being destroyed and manipulated such that a random location might grow very large from almost nothing and the amount of work in other areas was dwindling not due to the companies but by politics alone.
And the subsidies compel underbidding by their very nature.
If you’re in a location with no subsidies and bidding against a company in a 20% subsided area, how do you compete on price? You will have to slash 20% minimum to even be considered. Due to the cash implications that subsidies create, you would likely have to slash by 30% to get a studio to accept it. I’ve seen companies drop prices by $2 million in an attempt to match a subsidized price. And they lost the work because it just matched it.
The same rules apply if you have a 20% subsidy and and other company has a 40% subsidy from their government. Same exact thing of having to underbid if you wish to increase your odds of getting that particular project,
To think that subsidies play no role in underbidding or the increased competition is naive.
The concept of underbidding has crept back into the discussion. As others here have explained (and I hope I get this right), even the most aggressive lowball pricing doesn’t stack up against subsidies. Not even close. To discuss mere low pricing is to completely misunderstand how profoundly subsidies have changed the film financing model (on which I am not an expert).
Lowball? Phah. Subsidies are like tradeable financial instruments. This means they are irresistibly attractive to the studios and their masters, Big Finance. Better returns than bonds; less volatile than stocks; tax advantages; sliced, diced, bought and sold on secondary markets for additional profit; parleyed into additional financing; positive ink on the balance sheet even if the movie tanks. Can you do any of that with mere cheap rates? Pathetically inadequate. Heck, in some ways the movie itself seems almost irrelevant in this new financial model.
Talk about market distortion. Subsidies are so unbelievably attractive, on so many financial levels, they must be like free money crack raining from heaven (or out of the taxpayer’s pockets) to the studios and Big Fi. They can and must exploit this to the hilt, until there is nothing but smoking wreckage left. Win/win. For them. They’ve done this in plenty of other industries, now it’s our turn.
“As a result you didn’t see intentional underbidding because places couldn’t take the losses. While they may not have always been run as efficiently as they should have vfx companies knew that their survival depended on not underbidding. ”
At Boss we did take projects on that were bid very low. Especially if we had other projects in house. We always faced underbidding from the competition. If we had staff onboard we could multitask and push the low bid jobs through. Staff was routinely laid off and moved from company to company between projects. There were a few very lean times when we took anything, at almost any price and used a skeleton staff to do it. While we didn’t have to deal with subsidies we certainly had to deal with intentional underbidding. That said, I heard endless complaints about the cost of uncontrolled change orders. Doesn’t seem the basics have changed much. There are just many more places doing the work now so the bidding is a lot tougher.
You mean everything before subsidies wasn’t all perfect? I’m shocked.
Now that subsidies are the only thing distorting the market that means that two companys in Vancouver for e.g. would never underbid each other or take on a show at a massive loss right?
This is so funny. The benefactors of this subsidy race are suddenly so attentive. Its almost as if theyre *gasp* threatened by something.
No, they’re not, just as the lawyers at Sony, Fox and Disney aren’t threatened. Get over yourself.
It really was very civil. The fellow in question was calm and smiled but looked uncomfortable and red faced as he spoke. The guy next to him kept holding his head like he had a headache and spoke of some minutae, much like several posts here, regarding how the subsidies are calculated.
The bottom line is the amounts are irrelevant. It’s enough to force the kind of exodus we’ve witnessed. Which means that it’s a seriously gigantic pile of cash!
Well….. if they werent, there wouldnt be an explosion of argumentative posts each time soldier’s posts or the replies mention something about subsidies Theyd ignore it. Not that argumentative posts here never existed. But the speed they appear, the number of posts, and the length of the posts have all increased. You can say whatever you want, but the proof is in the action, not your denial.
There were some older people at the NYC meeting clustered on one side of the room last week who really did NOT seem to be happy. One fellow spent some time trying to goad Daniel into a confession that his stake in this was really all just for personal financial gain. Another was a producer who didn’t seem to understand the difference between a VFX subsidy and a live action subsidy in NYC. Which I thought was very odd considering the fact that outside of real VFX people, no one is willing to take a Saturday to go hear someone speak about it.
Haha yes I remember that! They really frowned when I asked how long do they expect to be on government assistance. Forever?
Sent from my iPhone
>
I couldn’t make it out to the NYC meeting but I’m interested in hearing more about what was discussed. Seems like it might have been a bit contentious?
Just wondering if there is a farm bubble too? Canada’s subsidies to farms is $6.9 billion in 2011, and we’re discussing $500k? What about oil? Financial? Telcom? We’re talking billions of dollars. VFX is not even on the radar.
So, the tax payers cough up 500k, used to pay employees, who pay 35% of that back in income taxes, on top of sales taxes, etc. They they pay their rent, their car payment, their groceries, and maybe they save 10% in a Canadian bank, everything being taxed again and again along the way.
There is very little downside for the tax payers here. Its not like the alternative is that they all get a free basket of scented candles, or a 0.01 cent tax refund. Its not enough money to have a measurable effect on an economy such as Vancouver’s, but it brings in educated and law abiding consumers.
No business really gives a shit about their employees to the point that they’ll lose clients. Such is the nature of business. If you were the one taking all the risk, paying all the salaries and all the bills, you would be the one making the same decision. You gotta go where the customers are.
Its not like employees in the VFX industry are organized enough to make some kind of stand anyway. We are literally THE worst when it comes to cooperating on anything. Many artists can’t handle simple changes to the pipeline, so I doubt anyone can organize some kind of global fucking coup.
Its not that much money. It can go on forever like all other industries. Stop asking about who moved your cheese, go find new cheese.
Where did you get this 500k number? In 2013 BC budgeted $437 million in film subsidies and that doesn’t even include the federal amount.
In 2011 it’s been estimates Canada spent $635 million for an estimated loss of $510 million. I can supply sources but I’m on my phone.
Sent from my iPhone
>
I got the 500k from a previous post. 500 million is like a fraction of 1% of Vancouver’s total income and not even on the map in a federal budget. The USA spends 1 billion dollars a year alone on employees printing the wrong thing.
The point of a subsidy is not to make a profit. It’s used to shift the supply curve either to benefit the supplier or the consumer, pretty standard practice in a socialist country. That is what makes it socialist.
There can be many bad things about subsidies. The USA has inflicted a wave of poverty throughout many parts of the world with farm subsidies that allow US farmers to sell staples like rice and corn at well below market prices in foreign lands. It has decimated entire farming communities, people whose families have worked the land for hundreds of years.
When someone benefits, someone else usually gets fucked, that is just life. Its not fair, but its the world we live in. How about we start a movement in VFX to help those people most affected by subsidies?
We enjoy a life style better than 99.99999% of all human human beings that ever lived. Everyone here is commentated to a level that puts you in the top 1% of people alive today.
If you guys want a better life, then go make one. There is only one person that can make a difference in your life, that is you. Is it easy? No, its hard, much harder than complaining on the Internet for sure.
Oh here we go again with the usual lines of bullshit: “The USA is evil and does X Y and Z in A B and C industries, so it makes you a bad person for caring about your career” and “Why don’t you help all of those poor people over there, it’s a better use of your time than messing with my gravy train”. My favorite is: “Hey you pathetic nerds, life isn’t fair, stop whining, it’s distracting me from counting my money so get back to working on my shots”
So then you won’t mind at all if this actually succeeded and you got the shit end of the stick instead?
“If you guys want a better life, then go make one.” …it was ok, before subsidies arrived.
@easy I don’t know if we know each other in real life but if we did I think we might be great friends.
“if you guys want a better life, then go make one”
haha… seriously the irony in that statement is just sad. Who do you think BUILT this industry?
“When someone benefits, someone else gets fucked”
Great defense there too… when a mugger steals from someone, that person gets fucked. When hyenas mob a lion after he/she did all the work catching prey, the lion gets fucked. Is that all you are? Parasites? Great defense. Well done.
Dude, if you had followed this issue with even the slightest bit of interest and candor over the last few years you would know that the very issue you raised has been addressed too many times to count, and the distinctions have already been clearly made as to how these things are quite different.
Please everyone, don’t waste your time explaining to Cue3 what has already been addressed countless times before. If you really give a flip about the different between farm subsidies and film subsidies, go read the comments or virtually ANY OTHER ARTICLE that has been written about this.
Hi Cue3:
you seems very confident in what you are saying here. Good for you.
@Cue – “Just wondering if there is a farm bubble too? Canada’s subsidies to farms is $6.9 billion in 2011, and we’re discussing $500k? What about oil? Financial? Telcom? We’re talking billions of dollars. VFX is not even on the radar.”
The farm is not moving from Montreal to London to Vancouver.
The oil well is in no danger of crossing the border.
The bank remains on the corner.
The telcom users stay put.
VFX, however, is mobile.
What about LOUISIANA? Many LA firms have been forced to open shops there due to studio contracts and yet I don’t hear anyone bashing Shreveport.
oh jeez did we forget to bash one?
besides do a search on the site:
Lol thanks Andreas, I posted the same article not realizing you did the same.
Back when New Mexico was hot I was very critical of that subsidy program. That was all replaced by BC. why? Because the 60% subsidy there is larger than the 20% in NM which also is now capped.
Louisiana offers 30% and government reports show a -85% loss. While some VFX work is going there, it’s minuscule compared to BC.
Sent from my iPhone
>
Sent from my iPhone
>
VFX Soldier
You’re spirit is willing but again, you’re math is wildly incorrect.
BC is a BC resident labor only rebate. In order to qualify for the 58.5% the individual must be hired DIRECTLY by the production company on a job that SHOOTS in BC. Ninety five percent of the time, the only person that will qualify for this tax credit level is the production side supervisor or producer. Jobs that post but don’t shoot are only rebated the DAVE plus the Federal which means around 30%. But again only by direct hire.
The vast majority of rebated VFX work is done by companies that then must reduce that 30% or so by labor cap of 65% of total invoice during billing. Effectively, this reduces the rebate or tax credit to 20-22% for a VFX house.
Louisiana is a full out 30% all spend transferable tax credit with an additional 5% for in-state labor. That means any money spent whatsoever is qualified (including out of state movie star salaries paid locally). Plus Shreveport offers a full rebate on sales tax.
Gee, which one looks more sustainable and seems to be designed to expand the local labor force and tax base… Yeah, that’s why the Louisiana legislators are shaking their heads right now.
I am an American, working in LA. But this thread has an odd jingoistic ring. It’s like the righteous US search for foreign terrorists who are trying to destroy us. And yet we forget that Timothy McVeigh is about as ‘merican as you can get.
And yet, at the end of the day, the industry is pulling up stakes everywhere else and racing to BC as fast as it can. It’s not racing to Louisiana, NY, Mumbai, London or other locations. Not like it is to BC.
If, as you imply, net rebates in BC aren’t so remarkable — about average really — how did the other players in this game get left so far behind? What is the secret sauce? Is it BC’s weather? The shooting locations? The coffee? The overinflated housing market?
Is none of this actually happening? Is it simply a mass xenophobic hallucination by disgruntled, entitled ‘murkin VFXers who need a convenient target for their misplaced hostility?
Sir, have you looked at any VFX job sites lately and seen where the vast majority of positions now reside? It’s sheer numbers, not nationalistic sentiment.
FWIW, not a single colleague of mine has expressed any resentment towards BC’ers. Their anger is reserved for those behind what they see as a massive rigging of the system, and needless destruction in the name of short-term profit for a few. Including destructive effects that may yet manifest in BC itself. And those concerns know now national boundaries.
Pardon: “know no national boundaries.”
Ohhh riiight, I forgot. “AMERICA BAD!”
Tim McVeigh is in your opinion, as American as you can get? Hey, if you’re going to troll, be a little less obvious.
I know, you’re losing the argument, because you can’t change the fact that some large percentage of the labor costs are being paid for by tax payers and the profits are being kept by private US corporations. So why not turn it into an “us vs them” fight instead? Right?
VFX Lurker:
We spoke to VFX producers and the BC Government.
All independently confirmed:
Government pays 60% (58.4%) of BC resident #VFX salaries.
As far as the comparisons to Timothy McVeigh and foreign terrorism… You need to lighten up. We are just writing about the facts why Montreal offers more than BC.
>
Benjamin Luke Weil
Trouble Brewing | VFX Soldier
thanks for sharing doing this shit bro