Which Production Service Company?
by Malcolm Scerri-Ferrante
The Location Guide, 26 March 2014
Some two decades ago productions filming overseas – particularly in developing countries or difficult destinations – would commonly dispatch their production manager or producer well in advance of the prep start to establish government contacts and set up a bank account and payroll.
This was a time-consuming and tedious but necessary hands-on approach which many producers are managing to avoid today thanks to the global expansion of film commissions and hordes of production service companies (PSC). In fact, many PSCs have now become a one-stop-shop.
This positive development in today’s fast moving times saves a great amount of time and energy. But some producers can easily become lazy or simply too trusting when vetting companies to ‘partner’ with. The rule of thumb is to never compromise time allocated for researching and evaluating PSCs. Needless to say, the person behind the company is just as important as the company itself.
Deciding which company to work with is not a decision to take lightly when the finite moment comes to pressing the button. Getting pregnant with the wrong sort can quickly lead to nightmares that can negatively affect the shoot.
A company that worked well for one production may not be suitable for another. Is the company’s track record with only big-budget movies or can it also handle small budgets? It’s not only about the nature of the production but also the timing. Does the company have enough resources to handle more than one production at the same time? Some do not. Although they think they can. These are some of the several aspects producers should investigate.
In South Africa seldom will you find a company that rejects a production because it is busy. The idea of giving way to competition is unthinkable. However, sometimes - not always - producers might be better off going with a lesser known company, especially if they have a strong local independent line producer on board.
American studios are known to ‘follow the crowd’ and some have the habit of using the same company that serviced the last studio picture. Some LA producers are reluctant to stick their neck out to break this trend. As one studio executive admitted: “Sometimes it’s best to carry on with tradition then risk getting blamed for switching [to a better] service company, even if the same local problems were bound to crop up either way.”
So, using the devil everyone knows might be a safer bet, not for the production but for the producer. European producers tend to shop around more keenly, although they can also easily fall victim to unsuitable PSCs.
There are times when producers have no choice but to work with the devil everyone knows, as can be said for some parts of Sicily where working through one of the mafia families will probably create less problems then if one doesn’t.
Until recently, one Eastern European country had only two production service companies. The ‘crooked’ one had the best government contacts and was in bed with the city mayor. They were great for a film that was heavily location-based but producers had to be extra watchful with their monies. Sadly they often realised this only too late. Some crew were receiving only half of what producers paid instead of the agreed 90% of the charge. Also ‘gratuities’ to government sources were not always received by the intended beneficiaries. As one producer put it, “the corruption system was itself corrupt”.
A low-budget film with less cash to spare might be better off using an honest, less experienced company and investing into the extended hire of a foreign Location Manager who can use extra time to develop – with the help of a local fixer – relationships on the ground with the authorities. Sometimes the old adage cannot be truer: You have to spend money to save money.
Another area of caution is budgets. Producers should be suspicious of those companies readily backing into any number. Some may be too hungry for work or simply over-enthusiastic to the risky point of not giving enough consideration to the production value demanded by the script. Backed-into budgets sometimes have little or no contingencies and the smallest of creative changes arising down the line can be financially restrictive. A free budget offered by a production service company is not always the correct budget and the assumptions made need to be evaluated in great detail. At times it might be safer to commission a budget from an independent local line producer.
In principle, the right choice of production service company should save producers more money than the service fee being charged. At worst it should balance out the service fees and still save a lot of stress, allowing producers to focus properly on legitimate problems and the usual creative matters. Sometimes, but not often, avoiding a production service company can be an economical and practical option.
For example, it is not a well-known fact that producers filming in Malta do not need a local production service company in order to tap into the island’s cash rebate and neither to hire local crew. Foreign companies can apply directly for both financial incentives and the VAT refund. Local crews can issue invoices as contract workers and it is only a section of construction crews that needs be put on the payroll but this can be setup easily by a local accountant without the need of a local service company or any local company. For very long-term hires which might infringe on local employment laws, where producers might be better off putting crew on a payroll, a local company is still not needed. The “trick” for Malta is to engage the best available local line producer or production manager and worry less about the PSC itself.
However, generally PSCs, as opposed to mere fixers, serve a very important role in many countries. The reputable ones have good relationships with government authorities and can help cut through heavy red tape when requesting permits for sensitive locations, some of which may need to be bonded, and also when benefiting from financial incentives and tax rebates which surface several months after the shoot. Moreover PSCs usually command better rates from local suppliers and hotels.
Some bad apples do exist. For example, it is not unheard of for a PSC to receive a VAT refund and not pass it back onto the producer. Although such dishonest companies don’t usually survive for long, they do manage to sweep up a few victims whilst they do.
All in all, in today’s day and age many producers prefer PSCs to handle everything from A to Z because they “get everything on one simple invoice”, as one producer put it. American studios prefer using PSCs also because the entire structure shields them from any necessary local bribes, especially in developing nations, that may infringe on the Foreign Corrupt Practises Act.
Some may have the mistaken concept that using a local company to employ local crew will indemnify producers against serious claims for accidents on set. Adequate insurance still needs to be in place and producers must not forget to double-check any policies sought by the service company and ensure that the cost of local hospitalisation for serious accidents is commensurate with the policy cover.
Another factor to consider is the company’s relationship with local crews. For example a company that serviced the biggest or hottest productions may not have the best reputation with crew and/or supplier payments. So, for example, in busy times when there is an abundance of work the ‘A’ crew might not be readily available simply because they prefer to work with the company they trust better, which pays their salaries on time and which does not play tricks with their overtime sheets, even if their salary is less. Crews are known to be quite unforgiving, unless of course if they are desperate for work.
Another old adage prevails: There is no such thing as a free lunch. When making your first visit to a country it may be wiser for producers to be making the first contact with the hotel and main equipment suppliers, rather than being introduced by the service company or immediately accepting a free night at a hotel.
Unfortunately many companies are on the take for ‘introductions’ and this can have costly consequences on the outcome of negotiations with service providers. It is naïve to think that by vetting all invoices you can ensure there are no kickbacks. Inflated invoices can easily be rectified secretly with credit notes that don’t find their way into the production file!
The fact of the matter is there are multiple reasons why producers should or shouldn’t use a particular service company. It is safer to assume that the majority of production service companies are not very honest and suitable, until you find one that is. Due diligence involving some real time on the ground and including conversations with the last three producers/clients should help you make an informed decision and minimise the risk. A little hard work in pre-prep will go a long way in terms of monies saved and stress avoided.
This was a time-consuming and tedious but necessary hands-on approach which many producers are managing to avoid today thanks to the global expansion of film commissions and hordes of production service companies (PSC). In fact, many PSCs have now become a one-stop-shop.
This positive development in today’s fast moving times saves a great amount of time and energy. But some producers can easily become lazy or simply too trusting when vetting companies to ‘partner’ with. The rule of thumb is to never compromise time allocated for researching and evaluating PSCs. Needless to say, the person behind the company is just as important as the company itself.
Deciding which company to work with is not a decision to take lightly when the finite moment comes to pressing the button. Getting pregnant with the wrong sort can quickly lead to nightmares that can negatively affect the shoot.
A company that worked well for one production may not be suitable for another. Is the company’s track record with only big-budget movies or can it also handle small budgets? It’s not only about the nature of the production but also the timing. Does the company have enough resources to handle more than one production at the same time? Some do not. Although they think they can. These are some of the several aspects producers should investigate.
In South Africa seldom will you find a company that rejects a production because it is busy. The idea of giving way to competition is unthinkable. However, sometimes - not always - producers might be better off going with a lesser known company, especially if they have a strong local independent line producer on board.
American studios are known to ‘follow the crowd’ and some have the habit of using the same company that serviced the last studio picture. Some LA producers are reluctant to stick their neck out to break this trend. As one studio executive admitted: “Sometimes it’s best to carry on with tradition then risk getting blamed for switching [to a better] service company, even if the same local problems were bound to crop up either way.”
So, using the devil everyone knows might be a safer bet, not for the production but for the producer. European producers tend to shop around more keenly, although they can also easily fall victim to unsuitable PSCs.
There are times when producers have no choice but to work with the devil everyone knows, as can be said for some parts of Sicily where working through one of the mafia families will probably create less problems then if one doesn’t.
Until recently, one Eastern European country had only two production service companies. The ‘crooked’ one had the best government contacts and was in bed with the city mayor. They were great for a film that was heavily location-based but producers had to be extra watchful with their monies. Sadly they often realised this only too late. Some crew were receiving only half of what producers paid instead of the agreed 90% of the charge. Also ‘gratuities’ to government sources were not always received by the intended beneficiaries. As one producer put it, “the corruption system was itself corrupt”.
A low-budget film with less cash to spare might be better off using an honest, less experienced company and investing into the extended hire of a foreign Location Manager who can use extra time to develop – with the help of a local fixer – relationships on the ground with the authorities. Sometimes the old adage cannot be truer: You have to spend money to save money.
Another area of caution is budgets. Producers should be suspicious of those companies readily backing into any number. Some may be too hungry for work or simply over-enthusiastic to the risky point of not giving enough consideration to the production value demanded by the script. Backed-into budgets sometimes have little or no contingencies and the smallest of creative changes arising down the line can be financially restrictive. A free budget offered by a production service company is not always the correct budget and the assumptions made need to be evaluated in great detail. At times it might be safer to commission a budget from an independent local line producer.
In principle, the right choice of production service company should save producers more money than the service fee being charged. At worst it should balance out the service fees and still save a lot of stress, allowing producers to focus properly on legitimate problems and the usual creative matters. Sometimes, but not often, avoiding a production service company can be an economical and practical option.
For example, it is not a well-known fact that producers filming in Malta do not need a local production service company in order to tap into the island’s cash rebate and neither to hire local crew. Foreign companies can apply directly for both financial incentives and the VAT refund. Local crews can issue invoices as contract workers and it is only a section of construction crews that needs be put on the payroll but this can be setup easily by a local accountant without the need of a local service company or any local company. For very long-term hires which might infringe on local employment laws, where producers might be better off putting crew on a payroll, a local company is still not needed. The “trick” for Malta is to engage the best available local line producer or production manager and worry less about the PSC itself.
However, generally PSCs, as opposed to mere fixers, serve a very important role in many countries. The reputable ones have good relationships with government authorities and can help cut through heavy red tape when requesting permits for sensitive locations, some of which may need to be bonded, and also when benefiting from financial incentives and tax rebates which surface several months after the shoot. Moreover PSCs usually command better rates from local suppliers and hotels.
Some bad apples do exist. For example, it is not unheard of for a PSC to receive a VAT refund and not pass it back onto the producer. Although such dishonest companies don’t usually survive for long, they do manage to sweep up a few victims whilst they do.
All in all, in today’s day and age many producers prefer PSCs to handle everything from A to Z because they “get everything on one simple invoice”, as one producer put it. American studios prefer using PSCs also because the entire structure shields them from any necessary local bribes, especially in developing nations, that may infringe on the Foreign Corrupt Practises Act.
Some may have the mistaken concept that using a local company to employ local crew will indemnify producers against serious claims for accidents on set. Adequate insurance still needs to be in place and producers must not forget to double-check any policies sought by the service company and ensure that the cost of local hospitalisation for serious accidents is commensurate with the policy cover.
Another factor to consider is the company’s relationship with local crews. For example a company that serviced the biggest or hottest productions may not have the best reputation with crew and/or supplier payments. So, for example, in busy times when there is an abundance of work the ‘A’ crew might not be readily available simply because they prefer to work with the company they trust better, which pays their salaries on time and which does not play tricks with their overtime sheets, even if their salary is less. Crews are known to be quite unforgiving, unless of course if they are desperate for work.
Another old adage prevails: There is no such thing as a free lunch. When making your first visit to a country it may be wiser for producers to be making the first contact with the hotel and main equipment suppliers, rather than being introduced by the service company or immediately accepting a free night at a hotel.
Unfortunately many companies are on the take for ‘introductions’ and this can have costly consequences on the outcome of negotiations with service providers. It is naïve to think that by vetting all invoices you can ensure there are no kickbacks. Inflated invoices can easily be rectified secretly with credit notes that don’t find their way into the production file!
The fact of the matter is there are multiple reasons why producers should or shouldn’t use a particular service company. It is safer to assume that the majority of production service companies are not very honest and suitable, until you find one that is. Due diligence involving some real time on the ground and including conversations with the last three producers/clients should help you make an informed decision and minimise the risk. A little hard work in pre-prep will go a long way in terms of monies saved and stress avoided.