Remember all those cars in movies and TV shows? The ones that used to fly over drawbridges, careen wildly around the corners of city streets and crash through police barricades?
There just aren’t as many squealing tires in Hollywood today. Lower budgets, fewer productions, labor unrest and a tepid economy have slowed the movie-car business to a sputtering crawl.
As a result, two of Hollywood’s largest movie-car suppliers, which provide the vehicles used for TV and films, merged their operations earlier this month to save money. As a result, they hope to survive what the owners predict will be a prolonged downhill ride.
Of course, the slow times have hurt many small companies that do business with the major studios across Los Angeles County. Caterers, public relations agencies and even shipping companies have lost revenue and laid off workers.
But movie-car companies have crashed especially hard. That’s because of the high capital requirements needed to buy, maintain and even park automobiles, and because of the swoon in demand for cars on camera. Business is down about 40 percent since 2006.
That’s why Cinema Vehicle Services in North Hollywood, founded in 1976, and Hot Shot Picture Cars in San Fernando, started in 2008, have combined operations under the name Cinema Vehicle Services.
Steve Simons, former president of Hot Shot and now co-president of Cinema Vehicle Services, said it made sense to concentrate on how to best serve their studio customers rather than fight over them.
“We were both strong companies, but we were competing for the same business,” Simons said. “With things as slow as they are, the customer base is still shrinking. Now there is only one piece of pie left, so it’s easier to eat that piece with one fork instead of two.”
Ray Claridge, the other co-president, blames the extended slowdown on labor stoppages and runaway production, or TV shows and movies that film far away from Los Angeles. He traces the turning point to the 2007 writers strike.
“Things fell off a cliff,” Claridge said. “No one has recovered from that.”
The newly formed company has almost 1,200 vehicles, ranging from jalopies to exotic race cars. To eliminate some duplicates, the inventory will be trimmed to about 900 vehicles. The company will store the cars on two lots totaling 12 acres in North Hollywood.
The main savings from the merger will come by consolidating property leases as well as avoiding duplication of administrative, insurance and logistical costs.
“Certainly we hope that the synergies will cut down on overall expenses,” Claridge said. The company hasn’t laid off any of its 35 workers, but it may make “nominal adjustments” to its payroll in the future.
Cinema Vehicle Services isn’t the only picture-car company tightening its belt. Two years ago, Michael Kopilec, owner of Classic Car Suppliers in the Hollywood Hills, had 21 vehicles he rented to the studios. Today he owns only two cars – for personal use. Now he brokers vehicles, meaning he arranges for filmmakers to use other people’s cars and takes a finder’s fee for his service.
“Things aren’t what they used to be, but we are still staying busy,” he said. “I’m not finding cars for as many feature films but more commercials.”
Kopilec also cited runaway production as the reason for the shrinkage of his business.
Statistics support Claridge’s belief that the downturn began with the Writers Guild of America strike in 2007. The number of films released by the major studios fell 29 percent between 2006 and 2009, according to the Motion Picture Association of America. Film LA, the county’s movie permitting agency, reports that the number of location production days for feature movies, TV and commercials fell 41 percent in the same period.
The entertainment industry is still big in Los Angeles. In its Report on the Creative Economy released in November, the Otis School of Design estimated 5,488 companies in the county work directly or indirectly to produce movies, TV shows and music recordings. The number of people directly or indirectly employed totaled nearly 394,000.
Mark Deo, a business consultant in Torrance, said the slowdown has roughed up more than car suppliers. Among his clients who are hurting is a freight forwarder in Long Beach that had a special division that sent film equipment to foreign locations. But the company has closed the division and laid off its four employees.
“It’s hard for casting companies, for food service companies, and it’s probably tougher for car companies,” Deo said. “Hollywood is changing, and the pace of that change is going to speed up.”
For example, low-budget reality shows and sports programming have replaced expensive scripted shows on TV, he said, and computer animation has lessened the need for elaborate live-action staging on locations or in studios. Of course, the economy has mandated budget cutbacks on the projects that do survive.
“The lack of budget in general because of the economy has greatly affected the vendors to the studios,” Deo said.
Time to diversify
Deo advises clients who are show business suppliers to expand their customer base. For example, a movie wardrobe company might move into party costume rentals or consulting for fashion designers. A catering company could open a restaurant or food truck.
“Companies of all categories that are dependent on the movie studios have to diversify,” Deo said. “Also, many companies could leverage technology that already exists to lower their costs and pass that on to their movie studio clients.”
One of Deo’s clients who took the advice was John Libby, president of MediaMax Online in Burbank. The company prepares film clips of upcoming movies and distributes the clips to TV stations around the world on behalf of the major studios.
Until three years ago, most of MediaMax’s work consisted of duplicating DVDs and mailing them out. Shortly before the writers strike started, the company began to upgrade its technology so it could put the clips on a secure website and send e-mail links to the TV stations. The process cut the costs for distribution by 70 percent, and a portion of that savings was passed to the studios.
“Studios aren’t run by creative people anymore, they’re run by financial types,” Libby said. “Their demands for cost-cutting technology and better return on investment will continue to increase.”
With the number of locally produced movies down, and reduced budgets on those that remain, TV shows now account for 70 percent of billings at Cinema Vehicle Services, up from less than 40 percent five years ago.
The company’s rental fees for picture cars range from $75 per day for a golf cart to $2,500 for a Lamborghini or Ferrari. The fees have been flat for the last five years because the market won’t allow for any increases, Claridge said.
Also, TV shows are putting fewer vehicles on the screen than in the past.
“Criminal shows that used to shoot five or six days on the street now only shoot four days,” he said. “The dramas are cutting down on location expenses by staying inside.”
The co-owners of Cinema Vehicle Services aren’t expecting a quick turnaround. Simons hopes new tax incentives for producers to make films in California will help.
However, the state allocated all of its $100 million in film and TV tax credits to 30 projects, exhausting the fund less than three months into the state’s fiscal year, Bloomberg News reported last week. Additional subsidies won’t be available until July.
“It’s going to get worse before it gets better,” Simons said. “It will get better when features start coming back to California.”
Claridge agreed, noting that vehicle rental companies such as his have survived the rise and fall of sitcoms, various economic cycles and the public’s fickle interest in cars.
“I think we have two hard years in front of us, but we’ll make it,” he said. “That was the impetus to merge these companies. It’s easier to fight an uphill battle with a good teammate than it is by yourself.”