What will the Brexit vote mean for the UK’s post and vfx businesses? We asked post company owners and managers for their views.
While many are still attempting to take in what the Brexit vote means for them personally, others are now trying to divine what this seismic event will mean for their businesses.
And the post production sector more than most. It is, after all, an increasingly internationally focused business that relies on a steady supply of foreign talent. Are there fears of a talent drain in post? Will instability stall the greenlighting of projects? Will a weak pound actually lead to an upsurge in international business?
The heads of many of the UK’s leading post production businesses share their views below. We’ll add more as they filter through.
William Sargent, CEO, Framestore
I am very saddened by Brexit.
I am an Irishman who believes in the benefits of the European Union.
Having a business embedded in the UK film and advertising I have the following observations:
1. As many of our clients are US based a weaker currency enhances our competitiveness.
2. The prospect of work permits for EU based nationalities makes me uncomfortable as we have traditionally been an open welcoming society. And they cost £1,000 each and every year – a cost which will quickly add up to a significant amount.
3. Our UK advertising business is dependent on the UK economy for which i have some concerns although I am confident that HM Treasury and the Bank of England values the need for supportive economic measures which I hope will neutralise much of the negative sentiment associated with Brexit.
Natascha Cadle, Facility Director and Co-Founder, ENVY
“It is probably too early to predict what the full impact of Brexit will be. It’s not the result a lot of people expected and it’s not the result most businesses wanted. There will be a lot of discussion and uncertainty for a long period of time and decision making will be slow which is not good news for anybody.
However we are a strong industry operating within a vibrant creative economy and hopefully we can weather the storm. We just have to keep doing what we do best and hope our clients won’t be affected too much by the impact.”
John Rogerson, CEO, Halo Post
The obvious one is that if the Pound continues its fall (and sticks at a lower value) production and post production in the UK will be cheaper for overseas (especially US) producers – that combined with the excellent tax breaks (enshrined in UK law not EU law thankfully) should make a pretty compelling case for working in the UK. The ‘unknowns’ are all based around confidence and that’s a tricky one to second guess. The damage that Brexit causes to the wider economy is probably a more likely threat to the post sector, especially if it compounds the already challenging operating conditions caused by high rents, over capacity and cut-throat competition.
As a business in a hugely competitive sector we spend time making detailed plans for most eventualities – this one however is slightly open-ended and it remains to be seen whether Parliament can act to limit the fallout. At the moment it seems everyone is just waiting to see what happens next.
Robin Shenfield, CEO, The Mill
The leave decision has triggered a great deal of political and economic uncertainty, the true impact of which is unlikely to be known for some time.
As with the vote itself, opinion is divided. One EU finance minister called it an act of ‘self-harm’. Others are more optimistic though the inevitable pause before negotiations begin and plans acquire some flesh seem likely to cause tremors across the economy.
On waking up to the news, my first concern was for the status of the EU Nationals who work in London as part of the VFX industry; we alone have over 50 at The Mill in London. Fortunately, and thanks to the work of organisations like UK Screen and the Migration Advisory Council, the VFX industry is acknowledged by the Home Office as an area of ‘skills shortage’ so, as an industry we already have an enhanced ability to source visas for non EU recruits. As and when it becomes a requirement (and that seems likely to be in years rather than months), we are confident of being able to do the same for our staff from the EU. The multi-national and multi-cultural make-up of The Mill is at the very heart of our business and we will continue to recruit from Europe, just as we have always done.
Whatever the economic fall-out, there are a number of reasons why I remain (no pun intended) very bullish about The Mill’s prospects. That is because I see The Mill and Beam as businesses that are absolutely at the top of their game. The Mill’s market-leading position was emphatically demonstrated by our unparalleled awards success at the Cannes Advertising Festival last week (10 Lions, seven of them Gold). We successfully trade not just the UK market but a number of key markets in Europe too. I am confident that we will continue to successfully do that.
While London is a major hub for us, we are also fortunate that The Mill is a strong global business with a very significant presence in the US via our studios in New York, Chicago and Los Angeles. While hoping there is limited or no negative economic impact of Brexit on the UK economy and on the advertising sector in particular, we don’t anticipate a significantly negative economic impact to be felt in the US.
While the vote was underway so was the Cannes Advertising Festival, which provided a timely reminder of the immense scale and breadth of opportunities available to businesses like The Mill. The global advertising economy is changing in ways that put an even greater premium on creativity and innovation. Our clients are very much in the market for the solutions that The Mill’s ever-evolving proposition can provide to them in VFX, via our Mill+ division and in emerging areas like VR. The creative problem-solving capabilities of The Mill are globally recognised and that stands us in good stead if uncertainties persist and markets tighten.
Julie Parmenter, MD, Molinare
"With the shock result from Thursday, the UK is seeing the financial markets impacted by the uncertainty this has caused.
In the cold light of day, the realisation that we have not yet left the EU and have another two years as full members as a minimum, we hope the markets will settle.
For Molinare it remains business as usual, we are having a record year and the recent vote will have little impact on the business in the short to medium term.
We have the license to sponsor individuals to work for us and have done this for individuals from outside the EU previously.
We value the rich mix of cultures in the team and will continue to ensure we attract people from all over the world to work for Molinare.
The UK is an exceptional hub of talent for the TV and Film industry and with the support of the government through the UK tax credits, the UK will remain a highly attractive for international clients to post."
Martin Poultney, Commercial director, Goldcrest
“I was attending as an industry guest at the FEST New Director’s Film Festival in Portugal when the result for Brexit was announced on Friday morning.
FEST is a great example of EU cooperation at its best as the attendees come from every member state of the EU with a common love of feature film and a willingness to share information, experience and education amongst up and coming European film makers.
There was a general sense of disbelief at the result, followed by sympathy for us Brits who had voted remain. Later on there was a slight sense of anger too. I asked the festival’s Director over dinner how the Portuguese generally felt about Brexit. He said to me candidly that they did not care what happened to the UK going forward but were now deeply worried about the long term effect on the EU as a whole. Even with high rates of youth unemployment, austerity and other perceived EU "evils" he and his colleagues still held a very deep routed sense of loyalty to the EU project and its philosophies of partnership.
Not a particularly proud day to be British.”
Derek Moore, MD, Coffee and TV
“Whilst I’m personally as devastated by the result as the rest of the media community, I do believe that there are a raft of opportunities opening up to us. Obviously the falling value of sterling will make our services more affordable to the rest of the world. Who wouldn’t want to work with some of the most creative and pioneering companies on the globe if they could afford to?
But beyond that, I like to think that the media community as a whole exists almost an independent group in its own right. We will stick together, be inspired by each other, help each other out, work, play and commiserate together, both locally in the UK and with our friends around the world.”
Dave Throssell, Owner, Fluid Pictures
“My main fear for the future is stagnation. We are about to invest in new technology and spent the weekend convincing ourselves that it was still a good idea in this post referendum landscape. It still was, but how many other companies are having the same conversations and deciding to wait before embarking on new purchases, acquisitions and productions. I foresee a lot of green lights starting to flicker. We rely on highly talented freelancers, and in the past a large proportion have come from Europe. Whilst I don’t imagine the doors at Dover slamming shut immediately, I am concerned that we may have difficulties recruiting such talent in the future.
What will happen with Tax Credits? Probably nothing in the mid-term but will they be sacrificed for some greater trade deal? Difficult to see an upside except maybe short-term exchange rate bonuses making us even more competitive in the States.
Neil Hatton, Chief Executive, UK Screen Association
“It’s still early days to know exactly what impacts Brexit might lead to. I’d like to emphasise that the UK will continue to be an attractive destination for international production. We have great talent, great facilities and great tax incentives. The creative sector tax credits are part of UK law not EU and so we don’t anticipate them disappearing any time soon. In the short term, VFX companies and studios servicing American clients will benefit from the lower exchange rate, although this will be subject to volatility, cannot be relied on and has negative effects elsewhere. In the broadcast sector, PACT has highlighted the risks for indies and if they suffer a downturn that is bound to affect facilities serving those clients.”
Russ Shaw, Owner, Nice Biscuits
I think it’s way too early to predict what the effects of Brexit will be on Post Production in the long term, however with sterling sitting where it is, on day two of trading, we’re certainly more competitively priced than we were several months ago! That said many investments are on hold until the markets settle and I would think that means commercial advertisers may well be re-considering their position before making large financial commitments.
Simon Frodsham, md, The Independent Post Company Ltd
"The freelance sector will experience little, if any, change. The only possible adjustments may be to EU employment law, which gives freelancers some fringe benefits. The UK is unlikely to change any such entitlement and, let’s face it, they’ve got so much else to contend with I imagine any employment law tweaks are at least ten years away.
Other than that, Independent Post editors contracted by overseas production companies will probably find the exchange rates go in their favour – for the moment anyway. Otherwise, it’s business as usual."
Nigel Hunt, Glowfrog
“One thing’s certain, it’s going to become more challenging to run a creative company, but hopefully when we get through this common sense will prevail.
London’s cosmopolitan vibe and multiculturalism is something that some of us are extremely proud of. With London being a global creative hub, we have embraced talent from all nationalities, especially the EU. However the uncertainty of Brexit on this European workforce is now unclear. We seem faced with two main choices; remain a member of EEA (like Norway) or WTO (like the USA, China).
Immigration will not change if the UK remains a member of the European Economic Area (EEA). Sadly for our EU friends this scenario seems unlikely now.
The alternative Global Britain Free Trade Option means that the UK will operate directly under the World Trade Organisation (WTO) rules, as do most developed and developing nations outside the EU such as Australia, Canada, the USA, Switzerland, India and China. Leaving the EU and EEA offers new opportunities to build bridges with other countries, such as developing visas for professions as opposed to those just linked to employers. This may sound like to positive scenario for exports but ignores where the labour that creates them comes from. The creative services sector is one of the most important industries in the UK generating £71 billion and creating jobs across the whole country. WTO may in effect be devastating for the UK creative industry bringing a return to skilled Tier 2 General visas for all EU and EEA members. This will bring in a minimum salary threshold of £35,000. Yes, many working in London earn more than £35,000 and will likely qualify, but it will have a massive culling off of anyone paid lower than this including all younger talent, entry to mid level positions and skilled support staff from the EU.”
Gina Fucci, Managing Director, Films@59
"In relation to the facilities sector, there may be a slow down in growth and further consolidation as investors "lay low". Some will see it as a time of opportunity. Thanks to the UK tax treaty, there may be more capacity for lower budget feature work which might keep things "ticking over". From my research, our industry has been facing a few challenges, that I think it will continue to face:
– delayed commisioning due to high level exec moves
– low margins – lots of work, but little leftover for investment.
– technological change
So the uncertainty brought on by the vote (and indeed the USA elections this November) could breed more caution but could also ignite collaboration! Manufacturers are certainly trying their best to sell and show confidence.
One article quoted that we have to remember that "the UK is the fifth largest economy globally putting it in a strong position when negotiating trade deals with both EU countries and elsewhere after Brexit. The UK is still the EU’s largest customer and a devaluation in sterling is likely to boost demand for UK exports as they begin to look cheaper. Where we have been dependent on foreign goods: AVID, Sony, Panasonic – maybe there are a few "hidden" gems?
The reality is, the facilities industry will probably "coast" and continue to concentrate it’s efforts on finding ways to continue to support production creativity whilst finding efficiencies in time and budget.
I have written to our staff and reminded them that at Films at 59 it is: "business as usual" – continuing to work collaboratively, remaining calm, balancing opportunities and risks, delivering under pressure. We have always tried to embrace change.
I do believe that leaving or staying would have had implications. So it’s up to all of us to now engage, gather facts, focus on our work and homes and make a difference in our communities. For our city, we are all part of Bristol’s success and we have to see ourselves as part of: the Southwest, England, Great Britain, Europe, and Earth! I am hoping we can all channel courage rather than fear and stay calm, focussed and lead by example."
Patrick Fischer, Creativity Media
"The shock result of the EU referendum will affect the filmmaking community negatively in the short and long term. Most noticeably in EU MEDIA funding for companies, producers and funds like Screen Yorkshire. In terms of post-production I don’t think there will be a marked effect, films will still get made and weaker sterling will actually be helpful in attracting overseas projects. We are certainly seeing a very active film post-production market right now."
Steve Owens, Group CEO of Loveurope Group, owners of Locomotion Soho
"What we’re seeing in the immediate aftermath of last Thursday’s vote to leave the EU (and I’d remind everyone that leaving the EU doesn’t mean we’re no longer European!), is a fairly tectonic macro reaction across the entire economy.
Whilst in the immediate sense that doesn’t specifically impact Loco, it has clearly impacted on general business confidence and this will be felt across our client-base. We need to be realistic and expect this to have a generally negative impact on our clients short-term marketing spend. I’m therefore hoping for a fairly quick bounce back towards more normal market conditions, where our clients current marketing plans and 2016/17 budgets remain broadly intact in an immediate sense.
In the longer-term the challenge for the post-production sector and Soho specifically, really is to maintain that energetic creative culture and ability to attract the very brightest creative talent, that has made us the leading centre of excellence for the pan-European market. In this sense, those other European creative centres such as Amsterdam and Berlin, must be shaking their heads in disbelief, whilst rubbing their hands together at the opportunity the UK vote has presented to them.
That’s not to say we shouldn’t be confident and opportunistic ourselves!
Smart communication and technology has allowed the creative industries to flourish in an increasingly flexible and virtualised world, where talent is not defined by borders, territories or the ability of people to move freely between markets.
This actually presents a fantastic long-term opportunity to reinforce our position on the global stage. To reach out to new markets with renewed confidence, trade on our reputation for international excellence and build an increasingly virtual talent model that genuinely leverages the brightest creativity from across a world, that may now be brought more sharply into focus by the decision to Vote Leave.
So at the risk of sounding horribly clichéd, it’s a case of riding out the current rapids, steering a course for some clearer waters as quickly as possible and then plotting a course for some new oceans of opportunity…. apologies, that was horribly clichéd!"