Thursday, November 18, 2010

Adios Asylum

Around and about the wide blogorama (and visual effects community), this has gotten some reaction.

After 11 years it appears that Asylum Visual Effects in Santa Monica is closing. ... Phones across Los Angeles were buzzing today with reports of a company meeting where everyone was let go, and in this socially connected world Twitter and Facebook exploded with the gossip including mentions of filing Chapter 11 ...

The above is a shocker only if you know nothing about today's visual effects business and the old visual effects business -- the cartoon industry.

When TAG was founded in 1952, there were a myriad of large and small cartoon studios in Los Angeles. There was Disney, there was Warners, there was MGM and UPA and a wide range of small commercial houses cranking out animation. Seven years later, the television animation business exploded and we got Hanna-Barbera, Snowball, Filmation, DePatie-Freleng and lots of others.

And fifty years later? Every one of those studios -- with the exception of Walt's place -- is gone, off to the great animation research library in the sky.

With visual effects houses, the turnover is brisker than it once was for cartoon studios. As an effects supe on "Dinosaur" told me a decade and a half ago:

"Effects studios are like mushrooms. They sprout up, bid for jobs, get big, and all of a sudden disappear. And the people who work at them go out and start their own places, and the cycle repeats. Then those studios disappear. ..."

Effects studios are not high-margin businesses. Competition is fierce, and the attrition rate is high. And one of the dirty little secrets attached to that attrition is: if you're a happy employee of Big Fish Visual Effects, Inc. who enjoys a 401(k) and health plan, when Big Fish rolls belly up, your 401(k) is safe (by Federal law) but your health coverage ends ... and there is no COBRA option to see you through those cold, jobless nights, even if the health insurance is Aetna, Blue Cross, or some other large health insurer.

Because COBRA only works if the company that is paying for it is ongoing. If the company liquidates, there is no COBRA. You are on your own.

(This sad fact smacked employees of a non-union feature animation studio in their collective faces back in the go-go 1990s. TAG made a vigorous attempt to organize the facility, came up short in the employee support department, and walked away. Eight months later, the company collapsed -- owing staffers a month's worth of salary and vacation.

Sadly, there was no money or assets to pay any employees what they were owed. There was also no money or government protection with health coverage either; the staff was left high and dry.

For a month afterward I fielded angry phone calls from unemployed artists, lamenting the fact that they hadn't signed rep cards and organized the place. As one of them said to me: "The bastards sill would have gone under, but at least we would have had Motion Picture Industry Health Insurance ...")


Anonymous said...

Unfortunate, but what is missing from your post is that it takes a great deal of courage to start any business. Some people are good at it and become good CEO's, some are bad at it and become those 'bastards.' Both groups cannot be condemned for trying, because it is an extraordinary thing to try to do. Even more extraordinary to do it with a collective bargaining agreement. Any business that employs people locally closing it's doors is unfortunate, especially today.

Floyd Norman said...

My partners and I launched a start up when we were young and stupid. You're right. It does take courage.

However, do it when you're young and still have time to recover.

Anonymous said...

Even where there is COBRA available, it's generally unaffordable when you are unemployed.

Anonymous said...

Another good reason for the Health Care Reform. Too bad they didn't go for Single Payer. Sadly, it looks like the gNOp wants to re-institute the "death panels" instead.

Anonymous said...

No, the GOP want health care to be affordable - which means NOT sticking future generations with mountains of debt. What I'm hearing from the Elephant Party is the desire to give people the ability to own their policies - to take their policies from job to job, and keep them between jobs, instead of relying on their employer for the coverage. I think that's an excellent idea, one that allows the free market to compete for the customers of such policies. Let's wait to see what the GOP and Tea Partiers come up with as an alternative to Obamacare before passing judgment on them. Health care needs to be reformed, not taken over by the government.

Steve Hulett said...

what is missing from your post is that it takes a great deal of courage to start any business. Some people are good at it and become good CEO's, ...

True enough. But even bad CEOs should send employees home when the company is unable to pay them. In this instance, the company kept people working for NOTHING, stringing along with "Your check will be showing up next week, don't worry ..."

Anonymous said...

The GOP doesn't want reform. They killed it when it was Hillary care in 1993, and they want it to die now. They are in the pocket of big Pharma and the Ins companies.

Anonymous said...

I don't know how this got turned into a debate about healthcare, but since it's started...

The healthcare bill that Obama proposed, public option and all, was essentially the Republican healthcare proposal from 1994.

When Hillary proposed HillaryCare in 1994, the Republicans responded with their own plan. Fast forward to 2008--Obama looked at that old proposal, decided he liked it, and figured he could get everyone to agree on it, since after all, it was a Republican healthcare plan.

But nooooooo. As soon as Obama said he wanted it, the Republicans immediately said they hated it. Buncha' partisan morons.

Anonymous said...

It must really hurt to be a loyal party Dem right now, I'm mean you just got you collective @sses handed to you a few weeks back and unless the savior in the White House can spin the dial from rhetoric to doing something he'll be the great one term savior.

Let the firestorm begin!

Anonymous said...

Look at you idiots. You want to turn the story about how businesses that go belly up leave their employees high and dry without an insurance option into a discussion about partisan politics.

You GOP/Tea Party kids: are you actually going to do ANYTHING to help the AVERAGE American? Because contrary to the TV punditry, tax cuts aren't going to create jobs. Stop lying to yourself.

You DEM/Donkeys - stop whining about partisan politics - your party plays the same game, from the other side.

Get this: the government IS NOT going to help you as an individual. The government is so corrupted that the only people getting "help" don't need it - banks, insurance companies, and other top 5% income lives. Fix it yourself, from the grassroots. And no, unionizing isn't the only answer - but it is one possibility.

Anonymous said...

I think whats missing is companies that can't change fast enough with the times die.
I've worked for 2 of the current companies and left before they died, and both companies I've had the same reaction upon starting. WTF is going on here?!?! These guys don't have a pipeline, or good shot/asset tracking... I could go on but the point being, these companies were grossly inefficient. People talk about margins but they keep looking outside not at themselves.
I can't imagine, when I was at either company, how they could be making money this way. I think industry used to cover up inefficiency with higher costs, now that's going away companies have to re-evaluate quickly and make changes.

Anonymous said...

The last poster is unfortunately too correct. Having worked at about a dozen different animation and VFX studios, it's amazing that most of them last more than a couple of years. Business incompetency tends to get papered over by pushing the talent to work longer hours for less pay. It IS a tough business, but it's made all the tougher by terrible business practices. The courage to start a business is nothing to applaud unless there is some real planning and insight behind it, and the willingness to look further ahead than just the next two weeks.

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