One week after they met with Ford Motor Co., resistance is growing among production companies to the car maker's demand for significant markup reductions on commercial bids. And they are gaining new allies: the labs who work with them on post-production.
Several top production firms said Ford has approached them with jobs since the meetings held in Los Angeles on Oct. 8. All either declined the work or bid as if the guidelines—which call for a reduction of total markups to about half the prevailing rate—did not exist, to see if Ford would blink first.
"They wanted us to bid a script under the guidelines a couple of weeks ago, and we refused because the mandate [to cut markups] is a very real problem," said one producer. "This week, they came back with it again, asking us to reconsider. Our rep says they've been shopping it all over town. ... We refused again."
Neither Ford nor its lead shops, WPP Group's J. Walter Thompson, Detroit, and Young & Rubicam, Irvine, Calif., would comment.
Labs are lining up behind the production firms. (One of the new stipulations is that production companies cannot work out their own deals with the labs—deals that often include markups for work such as film processing.)
Sources said at least four labs were approached several months ago by a New York third-party production-services packager seeking bids on a bulk rate. Some of the labs that accepted the terms for the work learned the client was Ford only when they were named—without their knowledge or consent—as labs producers must use under the new guidelines.
"We've made a conscious decision not to be party to this agreement," said Jim Hannafin, svp of business development at FotoKem in Burbank, Calif., one of the labs named in the guidelines. "I believe other labs are, but we made a decision to support the local production companies."
Irwin Young, chairman of the board at DuArt in New York, said he is unaware of any formal relationship to do Ford's work at a volume rate. DuArt's commercial division confirmed it has done no recent job for Ford.
A rep for Technicolor in Hollywood said the company learned of being named in the guidelines only last week. The firm finished a previously scheduled three-day job for Ford but will now back the production companies. "We have long-standing relationships that are an honored and treasured thing that we are not going to violate," said the rep.
Rushes in L.A., another lab one source said was named in the guidelines, did not return calls.
Keeping labs and production companies from doing their own deals "not only deprives a production company of needed revenue but also interferes with the basic creative process of our business," said Andy Traines, executive producer at Anonymous Content in Culver City, Calif.
"Ford is being disingenuous to say the least," said Matt Miller, president of the Association of Independent Commercial Producers, New York. "They know once you set your price, there is no saying, 'We'll do it just this once.' It becomes the new, known level. GM tried something similar in 1996. The sense of outrage was the same, but to show you how our industry has decayed since then, those guidelines might be acceptable now."
Miller warned ad agencies against standing on the sidelines: "The way agency contracts are written today, everyone is on the hook for quality issues. At the core, if the producer can't pick the director, the director can't pick the dp, the dp can't pick the lab, how do you really guarantee quality? Just tell them how much money you have: Don't tell them how to do the job."