Ford may ease new demands on commercial producers.

Ford Motor Co., which attempted to control its huge advertising costs by pressuring production companies to cut costs in order to win its business, appears to have pulled back somewhat after the effort raised howls of protest throughout the Los Angeles commercial industry.

In meetings with local production firms last month, Ford had introduced a series of guidelines, including dictating which brand of film it wanted used, where to have it processed and demanding a 25 percent cut in markups charged on travel, rentals and catering, said Matt Miller, president of the Association of Independent Commercial Producers.

The changes, the producers argued, could drive some firms out of business.

"If you take the items that Ford pulled out of the bid, like film, or the items they only allowed limited markups on, what you have effectively done is lowered the markups to 14 percent," Miller said. "For almost any company in the business, that's a money losing proposition. They wouldn't be able to keep the lights on."

After several firms rejected Ford's guidelines as untenable, the automaker made some adjustments. Rather than insisting producers cut the markups to 21 percent from the industry standard 28 percent, Ford came back last week with a revised proposal of 25 percent, according to the AICP and local producers.

Chuck Sloan, owner and president of Plum Productions LLC in Culver City, said he was hopeful the issue could be resolved soon.

"It's a matter of negotiation and right now there is an attitude of cooperation all around," said Sloan, whose firm has produced numerous spots for Ford brands through Ford's Irvine-based advertising agency, Young & Rubicam.

Ford spent nearly $1.3 billion on advertising in 2002, according to the Automotive News and other published reports, but cost-cutting is expected to trim that figure this year.

Ford officials did not return repeated calls seeking comment.

The issue of markup reductions and exclusive deals has particular resonance in Los Angeles County, which is home to numerous commercial production companies, film labs and advertising agencies serving the major automakers.

Nearly 40 percent of the $5 billion U.S. commercial production industry is based in Los Angeles, according to Miller, and a good portion of that business comes from the automotive industry.

Major clients frequently issue guidelines and hire independent consultants to monitor costs at their ad agencies, but Ford's actions created a stir because they subverted the normal relationship between agencies and production companies. Typically, agencies make decisions about which production companies to hire based on a history of collaboration or a desire to work with a particular director.

In this case, Ford reached out to the production companies directly, removing the agency from the equation.

Ford also made a bulk deal with Fuji Film, and has required all its commercials be shot on Fuji stock, Miller said, while identifying preferred film labs in Los Angeles for processing. Those decisions are typically the purview of the director or director of photography--both employed by the production company.

"To me it's penny wise and pound foolish, because if you make a commercial that's less effective you lose out on the big bucks later on," said Andy Traines, an executive producer at Culver City-based Anonymous Content LLC. "They are trying to use techniques that work in the automotive realm to quantify costs and it doesn't work in our realm because each commercial is custom made."

Young & Rubicam officials declined comment, as did representatives of several other local advertising agencies with major automotive clients such as TBWA/Chiat/Day (which represents Nissan Motor Co. brands) and Rubin Postaer and Associates (Honda Motor Co.).

Most outspoken on the issue have been producers not currently working with Ford, who fear that if the automaker can get some of the larger local production companies to accede to its demands others will follow suit.