Being Globally Competitive or Why California?

[richcz3]

California is going through some real tough economic times. It's a similar situation before the last real estate crash around 1990. Many companies were leaving then because of operating costs. Currently in Los Angeles the median price for a a small home is $500.000 and that's being optimistic. Smal biz operating expenses are going through the roof in the last 5 years. If your company operates in Northern California it's even worse.

There is something to be said about location especially when you consider where an entire industry is headquartered. Being local its allot easier to be in the loop, but that is more a mindset than anything else. Trying to generate business while being an out-of-towner requires allot more business savvy and perserverance to develop strategic connections. In the end it's not just price, but capabilities. Some clients may be willing to pay more if they can get what they want when and how they want it. Having a token sales office in a key client base so long as everyones on the same page.

[AmbiDextrose]

There is something to be said about location especially when you consider where an entire industry is headquartered. Being local its allot easier to be in the loop, but that is more a mindset than anything else.

That is quite true, especially when studios start to consider moving their operations to the other side of the globe.

Trying to generate business while being an out-of-towner requires allot more business savvy and perserverance to develop strategic connections.

That's the reason for having your front office where the action is. Besides, I'm more interested in what big studios think because it seems that they are the ones that are being affected the most with all the outsource talks.

[beaker]

Good luck finding enough qualified employees to relocate to your location, especially for the wage you want to pay. Thats the biggest problem. Companies like Reelfx in Texas, DNA have trouble finding enough employees and often have to freelance out a lot of work on the web, which isn't always ideal. Blue Sky is right near NYC which has a fairly decent amount of people working in post and cgi.

[leigh]

If an animator/TD/VFX person earns $120,000.00 a year in California, they would only need to earn around $80,000 in a state like North Carolina to afford the same standard of living.

And in India or another country, they only have to earn about $10,000 a year to afford to live. See?

;)

[AmbiDextrose]

Good luck finding enough qualified employees to relocate to your location, especially for the wage you want to pay. Thats the biggest problem. Companies like Reelfx in Texas, DNA have trouble finding enough employees and often have to freelance out a lot of work on the web, which isn't always ideal. Blue Sky is right near NYC which has a fairly decent amount of people working in post and cgi.

I might be true BUT can you honestly say that at the rate the industry is going, it won't implode sometime in the future? VFX is not a 'glamor' job like being an actor/actress and they are not being paid anywhere close to it BUT they are being paid a whole lot compared to other industries BECAUSE of the location. And don't tell me it's because VFX forces you to work crazy hours- I've haven't worked less than 80 hours a week in the last five years and I'm in the finnancial sector.

[AmbiDextrose]

And in India or another country, they only have to earn about $10,000 a year to afford to live. See?

;)

Well, that's outside the scope of the discussion I'm trying to get going. What I'm trying to see is if jobs can still be kept domestic by moving the grunt work to a different state. Oh, and have you tried to coordinate/collaborate/magage coleagues on the other side of the globe? I have and it's not as easy as all the hype- it's always a hassle on one or the other BECAUSE of the time difference.

And please, I'm Asian. I was born and raised in Manila. I know what it takes to live there :D.

[msp]

With the rash of negative reactions to one notable U.S. VFX company opening up shop in Asia, here's a question to all U.S.-based animators or those working in the VFX industry. If the skillset is comparable between US workers and the somewhere like Canada, Australia, or Singapore, then it's obviously a question of economics and operations cost. .

And, as other posters have pointed out, also question of availability of staff. There are VFX houses situated in places where artists/producers/technical staff already live, or are prepared to live. OK technically its cheaper to do the whole thing on an oil-rig situated somewhere in the North Sea...but there aren't that many qualified people keen to work there.

Canada, Australia & Singapore already have skilled vfx personnel around. OK you might need to recruit some from overseas but you're not starting from scratch.

Martin

[AmbiDextrose]

And, as other posters have pointed out, also question of availability of staff. There are VFX houses situated in places where artists/producers/technical staff already live, or are prepared to live. OK technically its cheaper to do the whole thing on an oil-rig situated somewhere in the North Sea...but there aren't that many qualified people keen to work there.

Canada, Australia & Singapore already have skilled vfx personnel around. OK you might need to recruit some from overseas but you're not starting from scratch.

Martin

I don't think you have to hire from scratch. If you offer a good re-lo package, I'd bet a lot of people would bite. Most of the people in the Cisco, IBM, Nortel, Sun, EMC, NetApp, Hitachi, etc., campuses in RTP are transplants from California and the majority of them (yes, I've spoken to a lot of these people by virture of working for a Level-1 client of these guys) say that they're quite happy with the move. The biggest draw for them was a better quality of life. The problem is that people always equate absolute amounts of money to a better quality of life. The reality is that it depends on where you are. As Leigh said, $10,000.00/year might not seem like a joke to anyone in the US but it's considered a king's ransom in other parts of the world.

This is my primary reason for bringing this up- if the technology sector can do this, what's stopping the VFX industry?

[ntmonkey]

The cost of living issue has always been used as a pin to deflate the California hype. The fact of the matter is, there are just more opportunities out here. You can chuck a rock in Santa Monica and hit dozens of post houses. If you throw a bit harder, you get some larger studios. The concentration of work provides lots of opportunities for employment. Whereas, if you're on the East Coast, the number/concentration of studios become significantly less.

The influence of all the producers, director, movie executives is still out here whether you want to accept that or not. People like to be close to their money, their Ferraris, and their million dollar masions in Malibu. Plus, the weather is nice out here and fried chicken is not a staple.

peace,

Lu

[AmbiDextrose]

The fact of the matter is, there are just more opportunities out here.

That sounds like everyone is just playing it safe. What it, 5 or 10 years down the line, an alternative presents itself that obivates those opportunities?

The influence of all the producers, director, movie executives is still out here whether you want to accept that or not.

So let the producer and movie executive-types stay in California (essentially, the front office). The point of the thread is to see if it is possible to move the production part of the company to another location.

P.S. I've only been in the U.S. for less than 10 years so I don't get the fried chicken comment. Care to explain?

[beaker]

VFX is not a 'glamor' job like being an actor/actress and they are not being paid anywhere close to it BUT they are being paid a whole lot compared to other industries BECAUSE of the location.The way most of the vfx biz works is based on project hires since the work is so up and down from week to week. Places will have 60 people for 9 weeks strait and then back down to their core of 10-20 for the rest of the time and back to 40-60 on a 6 month project, and etc.... People can't aford to live where there aren't many vfx companies with this kind of schedule. Many of the larger vfx companies outside LA/SF end up still paying Cali wages in order to woo people away from here.

On big jobs, companies in places like Toronto, Vancouver, London, New Zealand, Australia, Texas, etc... end up having to import people from Cali and pay their wages plus towards the end of the project they end up having to pay for housing and transportation too. So in the end, do you really end up saving any money? Not much really unless your exploiting your countries tax benefits for film (ie Vanguard for Valiant).

Look at the Veggietales movie as a really good example of this.

[leigh]

Well, that's outside the scope of the discussion I'm trying to get going. What I'm trying to see is if jobs can still be kept domestic by moving the grunt work to a different state. Oh, and have you tried to coordinate/collaborate/magage coleagues on the other side of the globe? I have and it's not as easy as all the hype- it's always a hassle on one or the other BECAUSE of the time difference.

And please, I'm Asian. I was born and raised in Manila. I know what it takes to live there :D.

Well my reply was relevent in the sense that if studios are indeed going to farm work elsewhere, they'll do it where it's cheapest. That's why work ends up in other countries as opposed to other states.

And yes, I have worked with studios across the globe - I worked on two major feature films for an American studio when I was living in South Africa so I certainly know what a pain in the ass it is :) I had to switch over to being nocturnal for a while!

[Cronholio]

There are tons and I mean tons of skilled artists and technicians out ther who do not want to live in California. I'm one of them. I've been working for 10 years and have yet to work in California. I'd rather not live in California, though it may be inevitable. As far as employees go, yeah it's not as easy to explosively grow your staff if you are outside of California (which is often required), but it's not impossible to get good people in the door either.


Some of these sutdios should really think about setting up shop elsewhere in the US. There are cities and towns who will literally bend over backwards to get a big prestigious company to move into the area. For example Chicago; not the cheapest place to live, but it is more affordable than California. When Boeing decided to move their headquarters (it was only like 300 jobs) the city of Chicago actually gave Boeing so many concessions incentives and tax breaks that they were effectively paying Boeing to move to Chicago and stay there. There are places like this all over the country willing to do whatever it takes to get decent sized comapnies to move in; Boston, Madison, Ann Arbor, Philly, Raleigh, Austin, Dallas, Cleveland, Indianapolis... These are all good places to live and work, preferable to LA or the Bay area to a lot of people.

[AmbiDextrose]

I had to switch over to being nocturnal for a while!

OT: I have it down to a science and can switch back-and forth on a dime although it still feels like I have a hangover on a sinking ship caught in the middle of a typhoon.

[AmbiDextrose]

Well my reply was relevent in the sense that if studios are indeed going to farm work elsewhere, they'll do it where it's cheapest. That's why work ends up in other countries as opposed to other states.

Not so. Cheapest doesn't always mean cost-effective. It may be "cheaper" up-front but when you consider other factors (i.e. quality of work, economic/political stability, telecommunications infrastructure, tax laws, et. al.) so while you same money up-front, it might end up costing more in the long-run.

[beaker]

I think what she means is that companies that are looking for cheap are going for really cheap and are going to look at places like over in India. The price difference between Cali and NC in the end are not that huge.

[AmbiDextrose]

The price difference between Cali and NC in the end are not that huge.

Dude, it IS. Especially if we're considering the larger studios. And another reason why I picked North Carolina (and RTP in particular) is because the local government gives tax breaks to companies setting up shop there. It might not be as big a tax break as, say, opening up shop in India BUT the company remains intact. In most countries, foreign corporations aren't allowed 100% ownership and some even have to provide the government a seat in their board of directors.

[leigh]

I think what she means is that companies that are looking for cheap are going for really cheap and are going to look at places like over in India.

Yes, exactly.

[beaker]

Dude, it IS. Especially if we're considering the larger studios.In an ideal world where you can find experienced talent that will work at rates you are stating. Yes, of course you could do it for cheap. But this is where theory and reality conflict.

In reality as I said earlier, on a large project you end up having to hire a buch of Cali talent at Cali rates and pay housing and transportation. Veggietales movie got hit by this exact thing and I can think of many other examples where a big project went greatly over budget because they never predicted that they couldn't find enough local talent and would end up having to pay much higher wages then they budgeted for.

[AmbiDextrose]

In an ideal world where you can find experienced talent that will work at rates you are stating.

It's been proven that people WILL do that. Just ask Cisco, IBM, NetApp, etc.

Yes, of course you could do it for cheap. But this is where theory and reality conflict.

In reality as I said earlier, on a large project you end up having to hire a buch of Cali talent at Cali rates and pay housing and transportation. Veggietales movie got hit by this exact thing and I can think of many other examples where a big project went greatly over budget because they never predicted that they couldn't find enough local talent and would end up having to pay much higher wages then they budgeted for.

Why focus Cali talent for temporary staff? I'd argue there are equally talented people east of the Mississippi. And if the purpose is building up talent in the region so you DO have a pool of local talent, this is probably the way to go.

EDIT:

I've also heard that a lot of transplanted East Coasters are lookng for ways to come back so you already have a captive pool of people.

[leigh]

I'd argue there are equally talented people east of the Mississippi.

Talented perhaps, but experienced? Experience and talent are two seperate things in this industry, in my opinion. Running a production with a bunch of people with no experience is a dangerous undertaking, no matter how talented they are. That's why Cali people have to be pulled into so many other studios - because they've already had so much experience out here.

Well, that's my 2c input on the matter.

[AmbiDextrose]

Talented perhaps, but experienced? Experience and talent are two seperate things in this industry, in my opinion. Running a production with a bunch of people with no experience is a dangerous undertaking, no matter how talented they are. That's why Cali people have to be pulled into so many other studios - because they've already had so much experience out here.

Well, that's my 2c input on the matter.

So, how does that compare to setting up a studio in another part of the globe with under-developed talent? The cost? Is that the only reason? If that's the case, then isn't the industry dying a slow death because, eventually, these places will catch up to experience and quality. And maybe someday, a senior VFX supervisor earning $150,000.00 in CA will be forced to take a job in SE Asia for $32,000.00. . . .

[rendermaniac]

Blue Sky probably can get away with being in New York as they are an animation facility and not a vfx company. This makes a big difference. CG Animation are usually longer projects and can afford to hire more full time staff. Plus they usually have in house clients - like Pixar does.

Vfx is a service industry - it helps a lot being where the director is so they can come in for dailies, but it is unlikely that they will be based on site (more likely at the editors). Plus as has been mentioned most of the staff are freelancers - which needs decent compensation for short term contracts. Being around when people are looking for freelancers also helps which tends to cluster people. I doubt IBM etc have the same sort of business model as vfx (or at least I hope not!).

Simon

[rendermaniac]

So, how does that compare to setting up a studio in another part of the globe with under-developed talent? The cost? Is that the only reason? If that's the case, then isn't the industry dying a slow death because, eventually, these places will catch up to experience and quality. And maybe someday, a senior VFX supervisor earning $150,000.00 in CA will be forced to take a job in SE Asia for $32,000.00. . . .

Quite possibly. California does have a technological advantage over lots of areas of the world. The companies are a lot bigger and have been going longer and so have the experience and organisation to carry out proper R&D. eg. ILM, Sony, DD. Weta is probably the exception here, but apparently they do pay very well! And they had the advantage of a long project to tool up with.

Amongst the smaller places - who generally are all using the same technology - it goes on a combination of price and reputation.

Simon

[AmbiDextrose]

Blue Sky probably can get away with being in New York as they are an animation facility and not a vfx company. This makes a big difference. CG Animation are usually longer projects and can afford to hire more full time staff. Plus they usually have in house clients - like Pixar does.

Vfx is a service industry - it helps a lot being where the director is so they can come in for dailies, but it is unlikely that they will be based on site (more likely at the editors). Plus as has been mentioned most of the staff are freelancers - which needs decent compensation for short term contracts. Being around when people are looking for freelancers also helps which tends to cluster people. I doubt IBM etc have the same sort of business model as vfx (or at least I hope not!).

Simon

Those are very good points. I do agree than a service-oriented company (having worked for two in my career) tend to staff up during peak seasons and staff down during off seasons. However, a paradigm shift doesn't happen overnight. The way I think it would be possible is if one of the big animation houses (i.e., Pixar, Dreamworks Animation, Disney Feature Animation, et.al.) gradually moved their operations. Not only will that provide a seeding of talents in the area, it would also pave the way for other large shops to follow. This will then encourage the smaller and service-oriented shops to follow because of the availability of local talents.

[hiphopcr]

Just admit it, California's the best, haha! :)

Oh, anyway, I second what richcv3 said, it's easier to start business when you're in the loop (just the fact that VFX sups) only need to drive 10 minutes to visit our studio and make comments on the shots is a nice incentive.

And then of course the talent pool here is phenomenal.

Of course Framestore and MPC seem to doing fine, and I assume they're getting work because the quality is good and it's cheaper. So I guess there is something to be said for places where the cost of business is cheaper.

[EngineeredVision]

beaker had mentioned that one of the reasons that its hard to relocate talent to areas outside LA and Northern Cali is that projects and jobs aren't consistent enough to allow people to live by hopping from studio to studio as many VFX professionals can do in Cali. I think this may be true for many VFX professionals committed to large scale full-feature film production, but is not necessarily the case for television or game production.

Personally, I'm more interested in getting into game development than feature film production anyway so I already have a bias toward smaller studios. I think that games and television production do provide opportunities for VFX artists who want consistent work and a better standard of living outside of California. As a life-long West Coast resident I have visited and driven through California on many occasions, especially when I lived in Phoenix, and I can honestly say that I have no desire to ever live in LA for any period of time. Are local LA residents blind to the smog that unrelentlessly permeates the valley? Traffic I can deal with, but smog and an almost entirely concrete environment just don't appeal to me. Even on a good day, it seems that LA has a maximum visibility of 2 miles. As someone who aspires to be an environment artist I feel that I would find very little inspiration in LA, aside from ideas for urban settings. The Bay Area on the other hand is more tolerable, but still very expensive and a little too crowded for my taste. I could see myself living in the Bay Area for a couple years if I had to, or if I found a project I was excited about.

I think that many studios would find that their employees would be very content with living elsewhere if the standard of living was comparable or better and the work was consistent. I think you will still find that the front end of the business would have to remain in the heavy media centers such as LA/San Fransisco, Seattle, Austin/Dallas, and New York City, but production could be relocated to a more cost-effective environment. I'm somewhat partial to the Pacific Northwest, but I know that there are many locations across the country that have favorable living conditions that could support VFX industry talent. I just don't think the steps and transformation process that would make this possible will be that easy or immediately practical.

[lmartore]

Blue Sky is in White Plains, NY. One of the most expensive places on earth. #45 to be exact and #3 in the US. Check this survey out from CNN -> http://money.cnn.com/2005/06/21/pf/costliest_cities/index.htm
Having lived there for almost three years I still cannot believe the prices there compared to the rest of the country. The Bay area is surprisingly cheap compared the the NY area, except, of course, for housing. Housing seems to be about the same.
I don't know how many conversations I've had with people about having studios in cheaper areas. It hits home especially hard if you have a family. Many people have left BS because it is just impossible to own a home in the area on the salaries offered to most. Fortunately it's a good time in the industry and many studios in Cali are offering good salaries.
Open a studio in a more affordable area and I'm sure you'll get a ton of extremely talented people knocking on the door.

[ntmonkey]

P.S. I've only been in the U.S. for less than 10 years so I don't get the fried chicken comment. Care to explain?

OT:

Fried Chicken, in the Southeast, is quite the popular food. It's also very unheathly. And having cold autums and winters usually mean there's a large population of people watching football and eating fried chicken dipped in gravy or mayonaise. I'm not stereotyping. My friends and a large portion of their extended family did this and it was disgusting. I thought it was just an isolated incidence, but turns out it wasn't. Kinda like the peanuts in coke thing. That is a total mystery to me how you come up with those combinations. :shrug:


Back on topic:

Sometimes, working abroad can totally screw you. So what happens when you move to a lower cost of living area, accept the job, and then for whatever reason you have to leave? Try coming back to California or to the US from a place where you got paid less. Some of my friends, who were extremely talented and experienced, turned down jobs in Austraila because they knew they wouldn't be able to come back after the conversion rate. So if the contract was over, they'd be stuck over there with no job, and no means of coming back.

Again, the studio will have to sweeten the deal in order to get good people. All of a sudden, it's not a bargain anymore.

peace,

Lu

[AmbiDextrose]

OT:

Fried Chicken, in the Southeast, is quite the popular food. It's also very unheathly. And having cold autums and winters usually mean there's a large population of people watching football and eating fried chicken dipped in gravy or mayonaise. I'm not stereotyping. My friends and a large portion of their extended family did this and it was disgusting. I thought it was just an isolated incidence, but turns out it wasn't. Kinda like the peanuts in coke thing. That is a total mystery to me how you come up with those combinations. :shrug:

Oh, O.K. It's like us Flips: we like having our lomein (or ANY cooked food for that matter) with rice :D. Go figure.

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