Saturday, July 11, 2009

#0012 CG labor issue: Part 1, Capacity

The U.S. and California economies,  coupled with last year's uncertainties about labor negotiations with various guilds, have slowed production, causing some CG visual effects studios to close or radically downsize.
David S. Cohen warns in Variety (May 15, 2009 http://www.variety.com/article/VR1118003757.html?categoryid=2520&cs=1 ) that the economic recession coupled with a production slowdown has slammed VFX suppliers, forcing some studio closures and staff reductions. He reports: 
"Some leaders of the visual effects business, both at vfx shops and at studios, are warning there could be a shortage of vfx capacity within a year -- a shortage that could drive up costs and even threaten release dates."

At the SIGGRAPH 2009 website validation of the slowdown can be seen.  SIGGRAPH, recognizing that large numbers of potential attendees are unemployed, is giving unemployed artists discount to encourage attendance. http://www.siggraph.org/s2009/attendees/registration/index.php

Likewise AUTODESK is also addressing the problem.  The company is helping unemployed artists by offering them a free 90 day student license to encourage learning new skills. Training and certification is also being offered at a discount.  http://usa.autodesk.com/

This is not a surprise, with official unemployment in the United States pushing 10%, the visual effects and computer graphics industries are bound to be effected.
Visual effects production capacity could be insufficient in USA  


The Challenge: Keep Capacity High and Costs Low
The challenge studios face in today's economy is how to keep costs low and productivity high.  Addressing this problem is related to maintaining or increasing domestic US capacity and productivity in visual effects.  While rents and wages may not have risen due to the economic slowdown, the economy and demands for labor will eventually change.  When it does, rapid expansion could be costly and increase quality control issues.

Film production companies have long solved the over-capacity problem for the vfx studios to some extent by shopping up the film to half a dozen or more companies.  A primary company will usually take on the lion's share of shots, but because they are at capacity with this and other projects, the load gets divided.  VFX studios are hampered by an ability or reluctance to enlarge facilities, a somewhat long-term move.  Physical unavailability of office space can be a factor in the high-rent districts many of these companies occupy; long term commitments can to a labor force 30% larger can be a concern as well.

Boutiques, often solve the need for expansion capacity through a virtual facility composed of freelancers working out of their homes.  The advantage to the boutique is the reduction in overhead, access to best available workers, access to a reliable pool of familiar workers, and easy labor size adjustment.
Now scale that up to the company with 100,200 or 300 workers working on team projects and divided into specialty functional units.  Now the philosophy has become to do as much work as possible at a primary facility and outsource work as needed to subsidiary facilities abroad.  Some companies will employ a few freelancers, but with large collaborative projects working with off-site freelancers is often more hassle than it's worth.  This strategy more or less works: core competencies and interaction with directors is kept local, labor intensive work is got at low foreign wages.

Outsourcing overseas has been a solution, but has it's difficulties as well.  There is another way.... One solution is to expand the circle of available workers to include those located 75-150 miles away from currrent production offices.

Perhaps you have a thought on this?  Please jump into the discussion, comment on this article or write me at CGsupv@gmail.com
Thank you for your feedback! 

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