Productions Flee to Canada, Study Shows

“Amanda America,” a Civil War-era television movie set in the Deep South, is being shot in Toronto in the Great White North.

A TV movie about New York Yankee Manager Joe Torre was also filmed in Toronto. The recent feature film “A Walk on the Moon,” set against the 1969 Woodstock music festival, was shot in Montreal rather than Upstate New York where the event actually took place.

Rank-and-file Hollywood workers have complained loudly over the last year, with little impact, that increasing numbers of U.S.-developed TV shows and movies are being poached by foreign countries--especially Canada--where costs are low because of weak currencies and governments aggressively offer financial incentives. Now they have figures to back up their claims.

According to a report to be released today, about $2.8 billion worth of film and TV productions and 23,500 entertainment jobs fled the U.S. last year as part of a decade-long trend in which one in four productions now go elsewhere to save money.

Commissioned by the Screen Actors Guild and the Directors Guild of America and conducted by independent consulting firm Monitor Co. in Santa Monica, the study marks the first time anyone has quantified Hollywood’s problem of “runaway” productions. Until now, the debate has suffered from having to rely almost exclusively on anecdotal evidence from the scores of grips, costume designers, directors of photography, electricians and others who say they are having trouble finding work.

Indeed, some workers have begun calling Canada--whose nickname is the Great White North for its snow--the Great Flight North for the work it’s luring from the U.S.

The study is likely to raise the heat on an issue that has recently moved to the front burner both in the industry and in Sacramento as studios cut costs to improve their profit margins.

Officials note that the impact of runaway production has been masked during the extended boom of the last decade that has driven healthy production growth in Los Angeles. The study says, however, that the growth in shooting overseas is not due to a “rising tide” of overall growth, since the percentage of work being done overseas is increasing.

Despite the erosion, few observers believe the U.S. won’t continue to dominate the worldwide entertainment industry, including production spending.

Hollywood’s labor guilds plan to lobby for federal tax and other incentives to keep production here. Shooting in Canada is likely to become an issue in future labor negotiations. And producers may seek concessions from workers if they are to keep productions in the U.S.

The study shows that in 1998, the number of productions leaving for economic reasons--as opposed to shooting overseas because a script demands it--was up 185% over the figure for 1990 and that the overall entertainment-industry job losses during that time amounted to 125,100. Such full-time production jobs typically last from a few weeks to several months, depending on the project.

The $2.8 billion in lost production spending is 16% of the $17.6 billion Monitor says was spent on U.S.-developed TV programs and films in 1998.

About 26% of all U.S.-developed TV and film productions now shoot outside the country specifically to save money, the study found, nearly double the percentage that did so in 1990. One of the year’s biggest hit films, Warner Bros.’ “The Matrix,” cost about $62 million to make in Australia. Had it been shot here, executives estimate, it would have cost roughly 30% more.

Television movies, whose profit margins are even thinner, are by far the most affected genre, with 45% of TV movies developed in the U.S. now shot elsewhere.

Nine out of 10 of those are fleeing to Canada, where a weak Canadian dollar, a growing number of skilled production workers, a large infrastructure of companies serving the needs of entertainment firms and aggressive government incentives have lured Hollywood productions to such busy centers as Vancouver and Toronto.

All told, the study estimates the economic impact on the U.S. last year from runaway production was $10.3 billion, factoring in how the job and tax losses ripple through the economy.

Although the impact on California isn’t broken down in the report, officials conducting the study said the state clearly suffers the greatest impact since the majority of U.S. production takes place here.

The guilds are trying not to stress the consequences specific to California because they need to convince lawmakers in Washington that it is a national problem.

“This isn’t just about Hollywood,” said Screen Actors Guild President Richard Masur. “This is a nationwide industry.”

Indeed, the report notes that four states that in the past have aggressively lured production from California--Texas, North Carolina, Illinois and Washington--have seen spending fall sharply since 1995 as productions have fled to other countries.

Last year, the study notes, 285 productions fled the country for economic reasons. That number could rise to a range of 327 to 476 by 2001 and is unlikely to decline, the study says, potentially involving between 22,500 and 36,000 jobs. The Los Angeles County Economic Development Corp. currently estimates that 131,400 people are directly employed in entertainment, 248,300 when a broader definition is used that includes freelance workers who move from job to job.

The impact is typically not felt by the top actors and directors but rather by the many workers who in the modern Hollywood economy move from project to project and depend on steady availability of work to make a living. A production that flees for another country typically hires 10 to 30 local supporting actors and stunt and background performers, the report says, and 40 to 150 crew members, depending on the size of the film.

To mitigate the situation, the study cites several factors that would have to be addressed. Some, such as the weak Canadian dollar, are impossible to control.

“There’s no silver bullet. If you fix just one piece, it’s not going to solve the problem,” said Mark Lubkeman, Monitor’s senior consultant who supervised the study.

Productions that shoot in Canada save money in several ways. Costs such as salaries, lumber for building sets, costumes and the like are cheaper because Canadian wages are lower and Canada’s dollar is weak relative to the U.S. currency, resulting in cost savings of about 20%, the study found. A costume designer gets about 25% less in Canada than in the U.S., while a director of photography makes about one-third less.

Tax rebates from the Canadian federal government and individual provinces lop off even more. According to the study, a hypothetical television movie with a $2.9-million budget can be made in Canada for 26% less with the reduced costs and tax breaks. A $20-million feature film can be made for $14.8 million, the study concludes.

Canadian officials have long complained that they are unfairly targeted in the debate. Peter Mitchell, director of British Columbia’s film commission, said that the incentives Canada offers only put it on par with other countries and that Canada’s activity pales in comparison to the U.S.

“We’re such a small factor in the overall picture. We get more attention than we really merit,” Mitchell said.

On the Web

For the full text of the study commissioned by the Screen Actors Guild and the Directors Guild of America, go to The Times’ Web site: https://www.latimes.com/production.