Let me get back to the history.

The first film that made a great box office hit was "Kiki's Delivery Service," directed by Miyazaki and released in 1989. Approximately 2.64 million people went to the theater and the film became the number one hit among all Japanese films for that year. The picture outnumbered all previously released films of GHIBLI both in revenue and box office number. Behind all this success, however, there was a big concern: what to do with the company GHIBLI and how to run it. In particular, the terms of employment and the recruiting and development of staff.

In the Japanese animation film industry, it is common to pay according to how many pieces you drew or painted. This is how GHIBLI was paying its staff. As a result, the staff working on "Kiki's" was severely underpaid, receiving only about half the average salary in Japan. Miyazaki made two suggestions:
1. To introduce full time employment term and a fixed salary system thereby doubling the salary of staff.
2. To recruit staff on a regular basis and to promote training.

Despite the improving conditions of GHIBLI, the conditions surrounding the entire animation industry in Japan was declining. To make a quality picture in such an environment, Miyazaki judged that it was important to maintain a base headquarters, to establish a solid organization, to materialize full-time employment term, and to implement a training & development system for staff. It was clearly a change in management policy, or, so to speak, a beginning of the second phase of GHIBLI. Here, too, there was a support from our president Tokuma.

Allow me to speak a few about myself. It was at this time that I joined GHIBLI. Up until then, I was working as the chief editor of an animation magazine called Animage, published by Tokuma Publishing Company. I worked on Animage from its first publication in 1978, and when Tokuma started the production of "Nausicaa" in 1983, I became involved in GHIBLI as well. In Japanese, this would be called having "a shoe for two legs," meaning having two jobs at one time. The days were hectic, but gratifying. When the new management policy was introduced into GHIBLI, my life was changed too. Both GHIBLI and myself had come to a point where there was no turning back.

After "Kiki's Delivery Service," GHIBLI began its production of "Only Yesterday," directed by Miyazaki. And while the work was going on, in November of 1990, full-time employment term materialized, an animation training program was introduced and regular annual recruitment was implemented.

The film "Only Yesterday," released in 1991, became another box-office hit despite staff concern, and just as "Kiki's," this also became number one for the year. But what pleased us most was the accomplishment of two major targets that Miyazaki had proposed: To double the salary and to recruit on a regular basis. In accomplishing these two items, however, one problem emerged: massive increase in production cost. It was something we had anticipated. We were aware that 80% of animation production cost came from the cost of manpower, and if salary had doubled, so will the production cost.

The new policy for GHIBLI in its second phase, therefore, made us look toward further effort in advertising and thereby increasing box-office revenue. If massive increase in production cost was unavoidable, then the only choice left was to conscientiously and strategically plan for increase in box office performance. It is not that we never thought of it, but it was with this "Only Yesterday" that we seriously started to work on advertising.

It was about this time that Toru Hara, the chief executive officer of GHIBLI then, described GHIBLI as having the 3Hs, 3Hs meaning High Cost, High Risk, and High Return. To produce top quality work, it takes high production cost; and though there may be high risk, or apprehension in the course, the benefit or return will be big. I think this is what he had meant. 4 years have passed and this is still true today. But even if there was high return, because all of it goes into the next production, nothing remains in our hands.

To employ full-time employees now meant having to pay out monthly salary. What GHIBLI did was to create a situation where it had to constantly keep working on a production. GHIBLI, destined now to continually producing, went ahead to start on "Porco Rosso," even before finishing "Only Yesterday." This overlapping situation was the first GHIBLI had experienced. "Only Yesterday" was in the final busiest stage before its completion. In a time when every help was needed, how could we bring the staff to start working on a new film. There certainly was no surplus in manpower. The result was Miyazaki having to work alone on "Porco Rosso" at its start. Of course Miyazaki was not happy. "What? You mean I have to produce, direct and assist all on my own?", he complained, but there was no choice but tell him to do it.