Wednesday, March 2, 2011

might unions be *good* for VFX/animation companies?

Naturally enough, when we talk about organizing VFX and animation workers, we focus on the benefits that would (we hope) accrue to the workers. It seems as though most of us assume that these benefits would come directly out of the pockets of the VFX business owners, who are already struggling.

What if they didn't?

We've been hearing and reading a lot about the VFX companies' woes, which boil down to inadequate compensation for the services they provide, given their operating costs. Adding the cost of union labor to their balance sheets would have to hurt their already-narrow margins.

What if it didn't?

Let's look at live-action production.

First, compare the overall business health of union-signatory major film studios with non-signatories. Ignoring the fictions of studio bookkeeping, I think it's fair to say that the signatories are generally better-off, as businesses. Look at their physical plants, their longevity, their executive compensation, their benefits packages for non-craft employees, their production slates, their assets. I'm pretty sure that the signatories all rank higher in all of these categories.

Now make the same comparison in commercial production companies -- you find the same pattern. There are some non-signatory company *owners* who make more money than they might if their staffs were organized, but I would argue that their businesses are less-healthy -- that these are fundamentally greedy people out for a short-term dollar, uninterested in building value in the business itself.

What's going on here? Shouldn't the companies burdened with union and guild agreements be suffering more than the others?

What if organized labor and collective bargaining actually *benefit* businesses as much as employees?

Now, correlation doesn't necessarily indicate causation. Even if this is a causal relationship, maybe it runs the other way -- perhaps only healthy businesses can afford to hire union labor. But that doesn't seem likely -- I think there are very few, if any, examples of non-signatory companies becoming really rich and healthy, and subsequently deciding to become signatories. What would motivate them to do so, especially if organized labor is universally burdensome to management -- wouldn't a strong company find it easier to just ignore it?

What would the mechanism be then? How does signing a bunch of union bargaining agreements make a production company or a film studio healthier, when everything else stays the same?

I think the answer is simple and subtle: it imposes standards. Standards of fairness. Standards of costs. Standards of work rules. Standards of, indirectly but perhaps most importantly, fiscal responsibility. Collective bargaining agreements are not negotiated company by company -- they are industry-wide (at least within a given local's jurisdiction). This creates exactly what VFX shop owners continually cry out for: a level playing field.

Standards make it impossible for a signatory to shoot itself in the foot by saying "we'll do this one project for half what it should cost" -- for whatever reason (We're building our reel, it's just this once, they'll bring us the next one at full price, it'll be so cool, etc.) But what about the non-signatory (or out-of-state or overseas) competitor who *will* say that? How do we keep the job from running away? Again, the same way as the live-action production industry: reciprocal agreements with other locals, guilds, and unions.

If one of the majors let its SAG agreement lapse, and tried to hire non-union actors, not only would any SAG talent refuse to work and picket the studio, its DGA, WGA, IA, IBEW, and Teamster workers would honor the SAG picket line. If a signatory live-action commercial production company tried to hire non-union camera crew, the grip and electric and carpentry locals would honor Local 600's picket line.

The reciprocal honoring of picket lines means that if a studio violates one of its bargaining agreements, it effectively loses *all* of its labor. This in turn escalates the issue -- the studio could, in principle, run away completely, but that would move it out of the labor market it most wants to be in. The size and competence of the local workforce is a powerful motivation for the majors to stay in L.A. -- although we are seeing more and more runaway production as alternative pools of talent deepen, which is worrisome.

If feature VFX houses were organized, especially through an existing powerful union like the IA or DGA, reciprocity would make it possible to, um, encourage the major studios to take their work only to union shops. Those shops in turn would not be willing to bid the job irresponsibly or unethically, as their own bargaining agreements would impose standards that would make that behavior too risky. For example, if a bargaining agreement strictly compelled a shop to pay overtime, it would be strongly discouraged from deliberately bidding a job with too few staff or too short a schedule. So, in addition to ensuring workers' fair treatment, the agreements help ensure rational, more profitable behavior from shop owners and managers.

Now, what about the small shops, the upstarts, all of us trying to break into the business or make our own way? There is no doubt that restrictive and exclusive union membership and eligibility rules stifled innovation and growth in VFX and commercial production for a very long time. Some craft locals continue to work in this unenlightened manner. For VFX organization to work, this simply cannot continue. If, and it's a big if, the IA or IBEW can, in their entirety, move out of their mid-20th-century mindset and make it easy and desirable for people to join the unionized workforce, this can work.

In this scenario, a small group of artists wanting to create a new company to do VFX work might, as they often do today, seek subcontracts from larger shops. Assuming those shops and their studio clients were organized, it would be necessary to make it easy for this new entity to work as a signatory as well, and easy for its employees to join the labor organization. Easy, but not free. Realistically, there will be some costs associated with this, a barrier to entry -- which in my view is a good thing. It has become too easy for anyone to buy a few workstations and start soliciting work without any real understanding of what makes a business work well (goodness knows that's what I've done!). Those of us who want to run companies need to do our homework better than has been usual. If you make it possible for any fool to not only start a business but compete in the marketplace, and further, encourage self-destructive behavior like underbidding and working impossible hours, then, well, you get a market of fools -- and those who prey upon them.

This has gotten too long. If you read this far, thanks!


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