Production Costs

Shares of several chemical companies fell Tuesday after industry leader Dow Chemical Co. announced its second set of wide-ranging price hikes in less than a month, again trying to offset record costs for energy and raw materials. Midland, Mich.-based Dow said it would raise the prices of its products by as much as 25% in July after across-the-board price increases of as much as 20% on June 1.

The most prominent manufacturer of maple bats said Tuesday that baseball players and owners should ensure the quality of bats by paying roughly triple the price.

To pitch his product, George Wallace has glad-handed every concierge in Las Vegas and talked up hundreds of taxi and limo drivers. He's gotten up at 4 a.m. to do drive-time radio on the East Coast. He's pored over spreadsheets, working to stretch the hundreds of thousands of dollars he spends on billboard, newspaper and radio ads. Then, shortly after 10 p.m.

EVERY year, film crews roll into national parks. They set up actors and products beneath towering redwoods or sandstone buttes and use the scenery to sell cars, beer or a blockbuster movie. Hollywood makes millions of dollars from these images, ad agencies get rich and actors get paid. With no costly sets, nature provides a dirt-cheap stage for motion pictures, TV shows, commercials and documentaries. In exchange, the National Park Service gets nearly nothing.

Cockroaches rent for $25 a day. Blowing up a car costs $500 to $1,000 just for explosives. A top cinematographer earns $25,000 a week. An A-list movie star goes for $20 million a picture. Toss in $5,000 a week for the star's meals, $4,500 a week for his hairstylist, $3,000 for his masseuse and $40,000 every time he hops aboard a private Gulfstream jet to take a break from filming and you get some idea of why the cost of studio-made movies is spiraling out of control in Hollywood.

Here are typical costs associated with producing a major Hollywood studio movie. The figures come from interviews with studio executives, filmmakers, trade union officials and vendors conducted for this story.

Just four years ago, Japanese auto makers were struggling to make ends meet in the United States. The weakening of the dollar forced their vehicle prices up, giving the Big Three a $3,000 price advantage per car. So Toyota, Honda and Nissan began instituting changes aimed at making profits even if the dollar fell another 15% to a level of 85 yen. Their already-world-class development and production costs were lowered more. Now the worm has turned. The yen is weak and the dollar strong.

We like to think of ourselves as independent and modern. We live here because of something to do with the American Dream and California and how it all ties together. We have left the rest of America, the world even, behind. We can, if it is legal, have what we want. And sometimes what we want is a nice pastrami sandwich on rye. With a little mustard. Some ice water. Then a little apple pie and coffee. A simple meal. We don't want to make a lot of fuss.

In a bid to regain investors' affections after a disappointing first quarter, Fluor Corp. on Tuesday named a longtime company executive to head its chief operating unit and vowed to shave operating expenses by $100 million a year. It is not clear whether the cost-cutting effort will include layoffs. Fluor's operating expenses totaled $10.6 billion, so a $100-million annual savings would represent less than 1%.

For years, Big Three auto executives openly worried about cost-cutting efforts by Toyota Motor Co. As the yen's value rose against the dollar, the rumors flew that the already-lean Toyota was getting leaner. The speculation was right. The proof is now on display--to the Big Three's dismay--in the 1997 Camry, a fourth-generation mid-size family sedan that goes on sale today in dealer showrooms nationwide.