The Disney Bombshell

The announcement of large-scale layoffs by Disney Feature Animation, in addition to 30% to 50% salary cutbacks, came as something of a shock, even given the continuing slide in Los Angeles-area employment over the past few years. The Motion Picture Screen Cartoonists, IATSE Local 839 estimates160-230 artists will be laid off in Burbank, with additional layoffs expected in Orlando. The move comes as part of an company-wide effort to increase profits by laying off some 4,000 workers, while at the same time it announced earnings beat expectations; however, the company showed a loss for the most recent quarter due to the closing down of its disastrous Go.com web portal.

Animation employment in the L.A. area, as measured by figures supplied by Local 839, had already declined 30% since they peaked in late 1998 to about 1,700; during the same period union membership also declined 30% to just under 2,000. When all the pink slips are handed out, employment will fall down to lowest levels since February 1996, when the union reported 1,359 members at work.

While the raw numbers still remain historically high, the situation in Los Angeles is weaker than it seems. For instance, during much of the 90s, studios were afraid to lay artists off even when there was no work; this is no longer the case, with most artists now hired on a project-by-project basis. In addition, as seen in Disney's attempt to lower the premium they pay animators over union minimums, wages are declining.

The Same Ol' Same Ol'
Though the box office returns of Disney's animated features remain the envy of the industry, they are not the money machines they once were. Disney, for its part, attributes this to high labor costs, which it is trying to do by layoffs and wage cuts. While doing so is sure to please Wall Street, it doesn't address some systemic problems at Disney in regards to the way they make animated movies.

One, which the union is quick to point out, is the tendency of some studios (including Disney) to waste time because of mismanagement, including halting production in mid-stream and deciding to rewrite the script, discarding millions of dollars of animation in the process. This has been a hallmark of many a Disney movie going back to Snow White and Pinocchio, and I suspect it's too much part of studio tradition to change at this time.

The real issue, though, is a certain lack of creativity and vision. For instance, in talking last fall to Frank Terry, the veteran commercial producer who is now director of the Character Animation Program at the California Institute of the Arts, he recalled that,

When I first took over the department [in 1996], I was invited to go down to the the Disney Studios, where I saw all the planned work that they had ahead for themselves. I realized that they were confronted, as advertising was, with having to come up with a different look, a different feel, a different approach, etc., etc., [but instead were still turning out] the same old product ...

Studios like Disney are well aware of this situation, but are really not sure what to do about it. Disney has shifted away from musical extravaganzas, but the design and tenor of their films still hasn't substantially changed. Some think their salvation lies in 3-D computer animation, but new technology cannot really substitute for new ideas.

The Situation in Television
Another important factor in the current employment situation is the falloff in television production precipitated by the success of Pokémon and other Japanese series, which has allowed broadcasters to drop more expensive American programming. The situation was further aggravated by the high profile failures of primetime shows such as God, The Devil and Bob and Clerks. 

The decline in TV work has also had a devastating impact on service studios in Korea and the Philippines, who were already finding it increasingly difficult to compete on price with new studios in China, let alone the even lower priced competition emerging in India.

Canadian production, like that in much of Europe, is kept afloat and is even prospering because of government subsidies and tax breaks, which are exempt from the rules and regulations of NAFTA and the World Trade Organization. While many American producers privately admit that government subsidies and tax breaks work, the current deregulation and free trade mania makes it extremely unlikely that the government will do anything serious in this area.

While there are some bright spots in the United States — e.g., New York, aided by Blue Sky Studios' first feature, is enjoying its highest ever employment — the overall situation remains uncomfortable. While employment will probably remain well above the dark days of the late 80s, it is not yet clear when the current downward spiral will bottom out.

Speaking of Labor Relations ...
For another view of the resurgent profitability of the newly merged AOL Time Warner, check out the cover story on the parent company's labor practices in the February 16th issue of Forbes ASAP, 'The Little People vs. America Online.' The story focuses on a class action lawsuit on the part of volunteers who oversaw AOL's many discussion groups against the company for back wages. The magazine, which is no liberal rag, took the case seriously enough to ask on its cover, 'Will thousands of angry volunteers topple America Online — parent of the world's most powerful media company?' 

The question I have is how will the case's outcome affect AOL Time Warner's animation divisions, especially if it negatively affects the company's profits?

—Harvey Deneroff
April 30, 2001

© 2001 by Harvey Deneroff

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