Progressing Up the Learning Curve….

From Michael Sellers

Yesterday I had an interesting conversation with an investor who raised a good question that I would like to answer more comprehensively here.

The question was — if EOD cost $5M to shoot and promote, how can Way of the Dolphin, also budgeted at $5M overall, be accomplished within budget considering that the WOD package also includes a) feature film, b) docu, c) dolphin research project, and d) web portal/webisodes and e) at least one higher level cast member to boost the cast.

First, nothing’s easy and this won’t be easy, but part of what the person in my position needs to do is always find ways to increase production efficiency (translation: save money) and get more and more out of every dollar that we spend for production. The short answer is that there are technological advances that allow us to save substantial cost in the production, and particularly the post production, of the feature film; plus there were financing costs for EOD that will not apply to Way of the Dolphin, plus there were aspects of marketing/promotion where, having done it once, we can increase efficiency. I’ve been taking all of this into consideration and have a high degree of confidence that we can do it — and I’ve never had a situation in 15 movies where we went overbudget by more than 5%, so there’s an experience factor backing this up.

Having said that — I believe this is an area that’s worth some extended discussion — more than I have time for in this morning’s blog.

But what I want to do today is first of all describe, as background, one of the most instructive experiences I ever had in my life was when I was, through a twist of fate, put in charge of a world class manufacturing operation for O’Gara Hess and Eisenhardt (which is now known as Centigon). The products being manufactured were armored vehicles for VIP’s including heads of state (Ogara is famous for doing armored vehicles for all US Presidents from Truman to Clinton), etc. This was my first exposure to the way manufacturing engineers relentlessly grind down the costs of creating a product such as — in this case — what we called the “Level 4 Up-Armored Suburban”, which was the top selling vehicle Ogara had at the time. (Ogara also, by the way, makes the up-armored Humvees used by the US military in Iraq, although this was done in other plants.)

Anyway …. here’s what I saw unfold. At the outset, our cost per unit was $110,000 which included $40,000 for the “base unit” (i.e. the original Chevy Suburban), plus all the materials ($35,000) and labor (1600 hours @ 25/hour=$40,000). What I saw unfold over a period of two years was how the manufacturing engineers managed to reduce the materials cost from $35,000 to $22,000 by and, more remarkably, reduce the assembly hours from 1600 hours to 400 hours. The net result is that the cost of the unit dropped from $110,000 to $77,000 through imagination, relentless attention to every detail, searching out new sources of supply, and streamlining the assembly process. And along the way — the product improved, actually got better.

And it kind of taught me to understand the mantra — better, faster, cheaper.

I’ve tried to bring that kind of thinking to the process of production but we are usually hindered by the fact that each film is different — new personnel, new locations, new situations — and usually, the same technology.

Anyway, more on this in coming days — but I wanted to start the discussion today.

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