May 10, 1999 Vancouver Profits as
Colder, Cheaper Hollywood

from The New York Times

LOS ANGELES -- Seamstresses, steel workers and electronics assemblers have all lost jobs as manufacturing moved from the United States to countries where costs were lower.

Now complaints about similar job losses are coming from workers in a quintessentially American industry: Hollywood's film and television studios.

Pressed by declining profits and ballooning expenses at home, Hollywood has shifted production abroad, particularly the production of low-budget movies made for television. About 55 percent of the 1997-98 season's made-for-television movies and miniseries were filmed in other countries, according to the Entertainment Industry Development Corp., which promotes filmmaking in Los Angeles.

Most were made in Canada, where a weak currency, generous financial incentives and proximity to the United States make production relatively inexpensive and convenient. Of the
14 original movies shown by the Showtime cable network, 10 were made there. And despite its name, 14 of 23 films made for the USA Network were not made in the United States. Current television shows like "The Outer Limits" and "The New Addams Family" are made in Vancouver, which has become known in the industry as "Hollywood North."

Recent feature films made at least partly in Canada include "Jumanji," "Legends of the Fall" and "Good Will Hunting." "Down in the Delta" was really up in Toronto. So was "Murder at 1600."

Runaway production, as it is called by critics, is a hot issue for scores of Hollywood art directors, grips, boom operators, sound mixers, costume designers, makeup artists, prop builders and stunt men. 

"I lost three movies in four months with producers I have worked with for years," said David Lewis, a director of photography. Lewis, 53, said he has made only $1,800 so far this year.

Many experts caution that the amount of offshore production is tiny, compared with Hollywood's overall output. If workers are losing jobs, they say, it is probably because movie studios, which have been hurt by big-budget flops, are cutting back.

Still, about 1,500 people showed up for a "Bring Hollywood Home" demonstration on April 18 in Burbank, organized by the Film and Television Action Committee, a group of Hollywood workers fighting what their chairman, Jack De Govia, called Canada's raiding of American industry.

[FTAC Note: Interestingly, Although Mr. Pollock indicates only 1,500 people showed up, We did in fact collect 2,500 bona-fide voter signatures in petition that afternoon. We do appreciate Mr. Pollock's reporting, greatly, but perhaps even here the problem is still understated, if this is any indication. :ed.]

In Washington, representatives of many of the 196 state and local film commissions met last week to form a new trade group, >Film US. The group will press for federal tax incentives and easier access to national parks and military bases for film crews.

The Directors Guild of America and the Screen Actors Guild are jointly financing a study of the phenomenon. Two bills introduced in the California Legislature would provide tax incentives to keep filmmaking in the state.

In Washington, representatives of many of the 196 state and local film commissions met last week to form a new trade group, Film US. The group will press for federal tax incentives and easier access to national parks and military bases for film crews.

"The industry was created here," said Dawn M. Keezer, director of the Pittsburgh Film Office and chairwoman of the new group. "It's now walking out the back door."

Many of the cities and states the group represents once drew business away from Los Angeles, where costs are high and obtaining a permit to film on city streets is not always easy. Now they find themselves in the same boat as Los Angeles.

Pittsburgh, where five to eight television movies were once made annually, had none in 1997 and only four in 1998, Ms. Keezer said.

New York City, the nation's second-largest production center, continued to report record levels of filming in 1998. Pat Swinney Kaufman, director of the New York Governor's Office for Motion Picture and Television Development, suggested that the city did not see the decline experienced by some other cities because very few television movies are made there.

In the past, as production moved to other states, Los Angeles-based workers could travel from one project to another, like highly paid migrant workers. But under Canadian immigration and union rules, only the top people on a production -- including the director, the producer and the stars -- are allowed in. The rest of the film crew must be Canadian, with rare exceptions. 

Weekly television series and feature films have not moved offshore to the extent that television movies have. Only 8 American feature films out of 77 now in production are being made in Canada, according to The Hollywood Reporter, a trade newspaper.

Still, there has been considerable migration, and not only to Canada. 

Australia, which also has a weak currency, is attracting production. The News Corp., the Australian parent of 20th Century Fox, has just opened a studio in Sydney. 

Warner Brothers executives have said they saved more than $20 million by making "The Matrix" in Australia. "Mission: Impossible 2" is also being made there, as will the next two "Star Wars" movies.

Even "Baywatch," the iconic California beach series, planned to move to Australia, but ended up going to Hawaii instead after the state government and local labor unions made cost-cutting concessions.

The movie business has driven the Los Angeles area's recovery since the collapse of the aerospace industry, and any threat to the business is of great concern. Employment in movies and television in Los Angeles County soared from less than 76,000 in 1990 to a high of
142,500 in February 1998, according to the county.

But employment has dropped by about 10,000 since then. Filming of movies, television shows, commercials and music videos on Los Angeles streets fell 8 percent in 1998 and 2.9 percent further in the first quarter of 1999.

The downturn has hit people like Betty Pecha Madden, a costume designer for 24 years, who said that in the past she had made between $80,000 and $120,000 in a good year

Ms. Madden said she had lost two jobs to Canada in the last year. "I did a commercial for three days in January. That's the only work I've had since March 14 of last year," she said, adding that her husband, who supervises children on film sets, has also had trouble finding work. "We're scared of losing our home," she said. 

Peter Mitchell, the director of the British Columbia Film Commission, said the anger of workers like Ms. Madden is misplaced. Production of American movies and television shows in Canada generated about $1.5 billion last year, he said, compared to $27 billion in Los Angeles alone.

"If we were to evaporate as a production center overnight, or double, it would not have any effect on California at all," Mitchell said. As with other industries, he said, manufacturing jobs have come to Canada while more lucrative financial and creative jobs stayed in the United States.

Some Hollywood executives say that even now, film employment in Los Angeles is way ahead of where it was a few years ago and the overall economy is healthy.

These executives attribute the dip not to runaway production but to runaway budgets, which have crimped profits and caused studios to make fewer films. The Walt Disney Co. says it plans to make 20 movies a year, down from more than 30, cutting its budget by $500 million. Television networks are also tightening their belts.

"I don't really know that so-called runaway production is really any more an issue than it's always been," said Tom Rothman, president of production for 20th Century Fox. "I think there is an increasing cost consciousness with the business overall."

Still, film production in British Columbia, most of it in Vancouver, grew by roughly 20 percent in 1998 to about $550 million, measured in U.S. dollars. Right now, 30 productions are under way or about to start there, including 12 television movies and several feature films. These include "Detox," starring Sylvester Stallone; "Reindeer Games," starring Ben Affleck, and "Mission to Mars," a big-budget Disney picture starring Gary Sinise.

British Columbia is recruiting film work heavily. The province's premier, Glen Clark, visited Los Angeles last year to meet with studio executives. Last year, British Columbia introduced financial incentives similar to those instituted by the Canadian government in 1997.

Together, the programs provide a rebate equal to 22 percent of a film's spending on Canadian labor. Similar incentives are available in Toronto, Canada's other major film center

. On top of that, the Canadian dollar has depreciated to 69 American cents from nearly 90 cents early in the decade. Locating in Canada results in a roughly 30 percent saving on labor, which typically accounts for about 40 percent of a movie's costs. Some of the savings are offset by travel and hotel expenses for American crew members. "Between the Canadian dollar and the tax advantage they give you, it's very hard to beat it," said Leonard Goldberg, the producer of "Double Jeopardy," a thriller made in Vancouver that is scheduled to be released this fall.

Ed Lammi, executive vice president for production at Columbia Tristar Television, said moving to Canada could save up to $200,000, or 10 percent of the budget of a one-hour television show.

"Unfortunately, on a lot of shows you just can't overlook that," he said. Columbia Tristar, a unit of the Sony Corp., made 5 of its 20 pilots for next season in Canada. 

"Everybody in town is there," Lammi said. "It obviously works."

In some respects, this trend represents an odd turn of events. Canada has long been concerned that its culture is being overrun by movies and television shows made in the United States. Now some people in Hollywood worry that Canadians are usurping the creation of American culture

. "Would you like to have to tell John Wayne, 'You're going to have to take "The Alamo" and do it in Canada?"' asked Luster Bayless, the owner of American Costume of North Hollywood, who was once Wayne's personal costumer. 

While some angry film workers have called for a movie boycott on Memorial Day weekend, many say the studios are merely reacting to economic forces.

"I can't blame the studios; they're a business," said Richard A. Ludt, who gave up union construction work five years ago for a job as a grip, moving and positioning cameras. Unable to find work, Ludt, 35, temporarily went back to construction early this year.

Some groups are exploring whether Canada's incentive system could be attacked under world trade rules or the North American Free Trade Agreement, but they say such moves do not look promising. Many local unions have agreed over the last few years to accept lower wages for low-budget productions to keep them in the United States, but Canada is still cheaper.

Migration to Canada could level off. In January, a Canadian government commission recommended eliminating incentives, saying they were attracting too many foreign companies and interfering with the greater goal of fostering Canada's own film and television production. Canadian actors are threatening to strike for higher pay, and film crews there are stretched thin.

"The X-Files" moved to Los Angeles this season after five years in Vancouver, because one of its stars, David Duchovny, wanted to spend more time with his wife, actress Tea Leoni. But few people have enough clout to get a movie or television series to relocate.

"We'd all rather be working at home," John V. Stuckmeyer, a producer of television movies, said in a telephone interview from Vancouver. But, he added, "For every 'X-Files' that leaves here, three more show up."

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