HOLLYWOOD AIMS TO TRIM PRODUCTION COSTS AMID INFLATION SURGE, SUPPLY CHAIN PAIN

From WWW.HOLLYWOODREPORTER.COM

The entertainment industry is buckling under the weight of inflation exacerbated by persisting supply chain turmoil, physical production executives and studio operators tell The Hollywood Reporter. Amid a record year for production levels after bouncing back from the pandemic, studios are grappling over how to build sets within budget and on time.

“The accessibility of steel and lumber due to supply chain issues have driven up the cost of materials by at least 25 to 30 percent,” says Herb Gains, executive vp physical production at Legendary. On a recent film, he notes that the same set with the same plans was double the price of what it cost four years ago.

Hardly any material or part necessary to construct sets has been safe from surging prices. Inflation has hit everything from fuel to electrical equipment to gaffer tape. “All across the board, we’re facing increased costs,” says Brian Cooper, a partner at soundstage company S2CO, which is constructing a 1 million-square-foot production complex in Georgia. “Where I could build a $3 million stage five years ago, that’s $8 million now.”

Last year, most production executives and set construction shops said they were mainly facing delays and hadn’t reached the point where they were unable to procure certain set fixtures. Some now say that impossible-to-meet demand nationwide for the same materials, equipment and parts amid record demand for content is impacting set-building. “If a scene calls for a bathroom, but nothing happens there, we won’t have it to bring costs down,” says a major studio’s top production executive. In California, where the cost of gas now averages $6.34 cents a gallon, this executive notes: “For the first time, we’re asking how to reduce fuel expenditures.”

Mark Binke, executive vp production at NBCUniversal overseeing Gaslit, The Girl From Plainville and Queer as Folk, among other titles, notes that one of his most daunting challenges this year was cushioning the impact of soaring costs. “Inflation has impacted every area of production,” he says, explaining that the studio has turned to “having all scripts in advance [to] cross-board multiple episodes,” clustering filming locations and pouncing on “volume discounts with key vendors.”

Several stage operators who build sets from scratch say that the cost of raw materials, including lumber, metal and certain fabrics, is at least 30 percent higher than at the start of the year. Some materials have more than doubled in price. Whereas a sheet of plywood sold for roughly $40 a year ago, it’s now just under $80, says a source.

Manufactured parts and gear haven’t been spared from inflation either. An owner of a soundstage rental company notes that he was quoted $85,000 to install a modest lighting grid — a steep hike from the $42,000 he paid just two years ago. Another piece of electrical equipment, transformers, has jumped from $2,800 at the beginning of last year to $5,800 now.

Many stage owners say that they would be willing to pay the premium if not for the massive lead times. “We placed a lighting order recently, which would normally be fulfilled in two to four weeks,” says Luis Guizar, co-founder and foreman of stage rental company A Very Good Space. “We’re being told it’s now 16 weeks.”

One of the most difficult parts to secure has been switchgears — a vital component used to control electrical systems in high demand across every industry —  which can take as long as a year to deliver depending on the quantity. Cooper says that he was told that he could get his order fulfilled within 30 weeks if he pays an extra $100,000 on $300,000 worth of components.

Studios are tackling inflation in different ways. Some are better positioned to absorb the costs. Frank Patterson, chief executive of Trilith Studios, an Atlanta-based operation that’s home to Disney+’s Ms. Marvel and She-Hulk: Attorney at Law as well as features like Black Panther: Wakanda Forever, says it currently costs roughly 15 percent more to build stages than it did last year. On top of that, the studio is facing eight- to 10-month lead times for critical parts and supplies like electrical boxes and stage doors.

“We have another set of stages coming online that we need,” Patterson says. “We have the team there, and we have bulldozers out there, but we don’t have all the electrical boxes we need and we don’t have all the doors.”

Still, Trilith describes inflation and suppl… (Read more)