The post-production industry, often overlooked, is facing significant challenges despite the relief in Hollywood's creative communities over the prospect of labor peace. The aftermath of potential strikes has created a unique and challenging landscape for this sector.

When SAG and WGA threatened walkouts in early 2001, the number of films going into production surged, from 35 to over 80. This increase put immense pressure on facilities, leading to new tactics such as completing sound work during filming, which added considerable costs.

Now, with the possibility of a rapid slowdown, the post-production industry, already operating on thin 7% profit margins, is bracing for a period of scarcity. Post-production schedules typically span 18 to 22 weeks, following a 100-day shoot. This lag means that post houses are eagerly awaiting the resumption of studio activities, likely toward the end of the year.

Patty Blau, Senior Vice President of Feature Production at Industrial Light and Magic (ILM), explains, "We come last in the filmmaking process, so the impact is delayed for us."

The visual effects (VFX) community, in particular, is set to suffer. ILM, currently working on several high-profile projects like "A.I. Artificial Intelligence," "Harry Potter and the Sorcerer's Stone," and "Star Wars, Episode II," faces a much lighter slate next year, with only "Minority Report" and some final shots for "Star Wars II." Similarly, Sony Pictures Imageworks, after handling "Spider-Man" and "Stuart Little 2," will experience a quieter period.

Smaller VFX shops are even more vulnerable. The worst-case scenario includes price wars, layoffs, and consolidation. Patty Blau warns, "If the studios don't have enough work to keep the smaller shops afloat, it could be a major problem. It can make or break you, and this period could be extremely damaging to them."

However, not all companies are panicking. Some predict that there may still be enough work, including upcoming tentpoles like "Men in Black 2," "The Matrix" sequels, and "The Incredible Hulk." Lower-budget films that require post-production work might also provide some relief.

In the sound editing sector, the impact is expected to be more severe due to its dependency on actors. Facilities like Skywalker Sound, currently busy through the holiday season, anticipate a significant slowdown afterward. Glenn Kiser, General Manager of Skywalker Sound, notes, "We’re 30% busier than usual, but we’re feeling the pressure right now. After the holidays, things will quiet down."

Companies that rely heavily on television production, such as Laser Pacific and Liberty Livewire, may fare better, as the TV season is proceeding as planned. These companies have also diversified their services, launching DVD production, high-definition editing, and film production arms to ensure they have enough work.

Despite the challenges, many in the industry had time to prepare. A high-level executive at a Hollywood-based post house says, "There was enough warning to address cost issues, conserve resources, and plan our lives and purchases around this impending event."

The industry is also reflecting on the long-term changes brought about by the strike threats. For instance, the commercial actors' strike last year has led to advertisers extending the run of spots, reducing production needs. As Patty Blau notes, the situation could have been worse if both the SAG and WGA strikes had occurred simultaneously.

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