I am sitting in my hotel room in Bangkok on a Sunday afternoon; taking a break from prepping a film that will star Djimon Hounsou and be directed by the Steven Spielberg of Thailand, Prachya Pinkaew. Prachya is famous for Om Bak, Chocolat and Tom Yung Goon, three of the highest grossing films in the history of the country. You may be wondering why I am in Thailand and not somewhere in the United States. Why am I in a country 9,000 miles away from home when I could be shooting this movie anywhere in America including Los Angeles.
In the case of this film, the answer is more complicated than in others. The location of this film is South East Asia and, it is directed by a Thai national. That is not always the case. And, more often than not, the location of the film and its director is not even an issue. Many films that could be shot in America are not. In fact, many films with American locations are shot outside of America.
Why? The answer is simple: cost. Because of the ridiculously high labor costs and other production costs in America, it is just simply not feasible to make a movie in America anymore; especially a lower budget independent film. And, unfortunately, this is a symptom of the entire economic problems facing America today. I would love to work in the United States and be home with my family, friends and my little kitty Sidney. I cannot.
The clothing industry does not manufacture in America. The steel industry is all but gone. The automobile industry is all but gone. There are countless others. It is just too expensive to create almost any type of product in America. Unfortunately, this is leading to the elimination of our middle class. The working man can no longer work in America. If my father were still alive, I do not know how he would make a living.
The remainder of this article will be about the film industry as that is my area of expertise. But, keep in mind while you are reading that these problems are prevalent in all of the industries mentioned above, as well as others, not just the film industry.
Independent films and many studio films are now shot mostly in Eastern Europe, Canada, South East Asia and/or South Africa. The only real production in America these days is in heavy tax incentive states such as Louisiana, Michigan and the Carolinas. New York and Los Angeles, the homes of film production and the industry since its inception, only have production that either involves a star with the leverage to force production in those cities or if they are location specific to either state (and not always in that case either). In fact, we have shot films that take place in New York in Bulgaria on occasion.
The major culprit in the destruction of this industry and in most others is, as always, the unions. The unions refuse to work with the producer to make shooting in America cost effective. The average independent producer has a fixed amount of money to make his movie. The pocket is not deep. Even studio films are looking for ways to save money now. When you are a producer with fixed funds, you shoot the movie where your available money will bring the most bang for the buck and insure the existence of your ever decreasing profit margins.
For example, you could make a low budget action movie in 1995 for about 2.5 million dollars and be pretty sure you would get 3.5 million dollars back within 18 months. Now, that same movie can only be made for about 1.5 million dollars and the producer is struggling to get 2.0 million dollars back. Keep in mind that the same movie you made in 1995 for 2.5 million dollars would now cost 3.7 million dollars. (Calculated using an average of economic indicators, not just CPI) So, by making that movie for 1.5 million dollars you are making a far lower quality product.
If you tried to make that film for 3.7 million dollars, you would make the equivalent of the same film but you would almost guarantee the producer a loss as the sales on such films have gone way down in the past 15 years. You would probably only get the same 2.0 million in sales that you would have gotten if you made the film for 1.5 million dollars.
The average cost of shooting outside of the United States is often about 30-40% of the cost in the United States. For example, you can shoot an action film in Eastern Europe for about $700,000 per week. That is about one-third of the cost in Los Angeles and about 70% of the cost of shooting in a major tax incentive state.
I am shooting this movie in Thailand for even less. In fact; substantially less. We are shooting this film for 48 days of principal photography and our overall production cost is about ½ of the cost of Eastern Europe. No wonder I am forced to spend four months in a hotel room in Thailand. Do you blame the investors?
If I were to go to the unions in Los Angeles and say, “I want to make this movie in Los Angeles.” They look at you and say to pay the union rates, the standard pension, health and welfare and residuals. You are told if you do not have the money to pay them, then do not make the movie. You are never given the opportunity to negotiate a deal that works for the particular film in question. You are given a mandate and told to live by it. And if you do not like it, then tough.
Further, when you do shoot a film in the States, you are forced to obligate yourself to the payment of residuals forever. I ask you, in what other business is the investor/owner forced to pay the employee for work done years ago, every time he makes a dime?
The union people are now going to say that I am typical management and do not care about the working man. They will say that residuals are cheap. If the movie is made with all entertainment unions, the total cost of residuals is less than 10% of the total income. But, if you are only making a 25% return on your money, the residuals eat up approximately 10% of that return, leaving you with only a 15% profit. A motion picture production company cannot survive on that.
I would think that the working man in the United States of which I am one would rather work at a lesser rate inclusive of the medical protection than have the work go overseas. But, the general consensus is not.
Of course, if you shoot outside of the United States, you do not pay residuals at all except for some money to the Screen Actors Guild* who must be used no matter where you shoot. You get to keep your measly profit and hopefully put it another movie that will keep residents outside of the United States employed.
I can go on with this column for another 10 pages or more and never repeat myself and maybe I will in the future, but for now, I am going to spend the
rest of my afternoon relaxing. I have a big week coming up.
* See my prior article on the Screen Actor’s Guild and Global Rule One printed earlier in this column.
© 2010 by Frank T. DeMartini. Permission to be copied will be freely granted.