The Austin Chronicle

Migrating North

The Texas film industry -- and the whole of the U.S. -- feels the burn of runaway production to Canada and beyond

By Marc Savlov, October 4, 2002, Screens

Here's a question for you: How many jobs have to go elsewhere before a homegrown, multibillion dollar, all-American industry suddenly turns around and finds itself a shadow of its former glory, dependent on offshore investments and relying on an infrastructure that increasingly is being dismantled and sought on the cheap in other countries?

For the answer, you need look no further than Hollywood, or speak to the many and varied economic casualties of what's been dubbed "runaway" film production. Increasingly, feature films and television movies born in the U.S. are heading to Canada and beyond when it comes time to go before the cameras, lured by favorable currency exchange rates, economic incentive programs, and tax rebates that -- for the cost-conscious Hollywood producer -- make it virtually unthinkable to stay put and shoot stateside.

Inevitably, this has affected the Texas film community, from the local crew members -- strapped for work because their staple diet of films has hightailed it to Vancouver -- to the various support industries such as restaurants, hotels, truck and car rentals, and all the other services that are the unheralded infrastructure of the Hollywood dream machine.

The dicey question of runaway production is a crisis of national, even global, proportions. Texas Film Commission Director Tom Copeland points to traditional American outposts of film production that have taken a hit.

"Places like Seattle have really been hurt because of their proximity to Vancouver," he adds. "Chicago will probably survive -- although they've been hit really hard, too, since they're so close to the border -- but even New York City, which will always be a location for people, has also taken a beating."

Regional film hubs like Dallas and Houston are reeling from the northern exodus. Just last week the Dallas Film Commission, headed by Commissioner Roger Burke, shuttered its doors after the city of Dallas announced a $95 million shortfall and the resultant inability to fund their $135,000 segment of the Commission's annual price tag. "This isn't related to runaway production," says Burke, although the blow has left the always-active Metroplex film community smarting. (The Dallas Film Commission isn't the first to fall; most recently, the Massachusetts Film Office closed in late July, another victim of "budgetary constraints.")

At least for now, Austin appears to be weathering the storm. Gary Bond, director of the Austin Film Office (which handles incoming productions for the city of Austin under the Austin Convention and Visitors Bureau), says Austin is "a little bit of an anomaly" in that film production here has been fed by local heavy hitters such as Mike Judge, Robert Rodriguez, and Sandra Bullock.

"Our crew in Austin is famous throughout the world," he adds. "They're as good as it gets, and although every place else I'm aware of in the country is suffering from runaway production, we're getting off fairly easy in Austin."

Still, Austin has been wounded. Copeland notes that such mainstays as the once-popular television "Movie of the Week" productions that in the past would regularly shoot in Austin (and which provided steady work for many Austin-based crew personnel) have now evaporated almost entirely; currently there are far fewer M.O.W.s shooting in Texas, with even fewer slated for the foreseeable future. These days, they're all in Vancouver. Hollywood's own version of rampant globalization is hemorrhaging jobs over cash flow, and the parallels between what's happening in other sectors with mammoth trade groups such as the WTO and what's currently going down in Tinseltown are too obvious to ignore.

Distressingly, it seems that old Chinese proverb "may you live in interesting times" has arrived with a vengeance, but for the film industry, both here in Texas and elsewhere in the country, things began to get interesting just under a decade ago, when old industry friend and neighbor Canada initiated a sweeping series of governmental economic incentive programs designed to attract film production from south of the border. Even previous to that, Toronto had become a hub for expatriate Asian filmmakers, who had arrived in droves before and during the British hand over of Hong Kong to mainland China in 1997. Despite that city's cosmopolitan flair and the HK influx, it didn't take a cartographer to discern that Jackie Chan's Rumble in the Bronx should have been called Rumble in a Bad Facsimile of the Bronx, Possibly Toronto, and other productions shooting Canada-for-elsewhere have taken a variety of critical hits along with their financial savings (Steve Miner's Texas Rangers -- shot in Alberta and looking alarmingly un-Texan -- springs to mind).

The Canadian incentive programs -- which include production tax subsidies that can cover more than 40% of a small-to-mid-budgeted film's below-the-line costs -- have worked better than anyone on the northern side of the U.S.-Canada border could have hoped for. Discounts on below-the-line costs (including carpenters, electricians, drivers, and so on) have resulted in a 17% decline in gross production expenditures on theatrical releases filmed in the U.S., from $3.93 billion in 1998 to $3.24 billion in 2001, according to the Center for Entertainment Industry Data and Research. That's a total of $683 million worth of moviemaking exiting the U.S. for the far cheaper pastures of Canada, and increasingly elsewhere, as well. (It should be noted, however, that CEIDR [] has been accused of playing fast and loose with its numbers by British Columbia Film Commission Director Lindsay Allen, who notes that the organization is funded in part by L.A.'s Raleigh Studios. For its part, CEIDR stands by its figures.)

Add to this the wildly advantageous Canada-U.S. exchange rate and Canada's "labor rebate incentive programs," which give producers up to 35% off their bills when they employ Canadian crews, and it's no wonder that producers begin to salivate when they find a project that calls for piney woods and snow flurries.

Exact numbers on how much business and how many jobs are being lost are in dispute, due in part to the unavailability of concrete information as to how many Canadian-bound productions would have remained in the U.S. were it not for the rebates and incentives up north. A producer who may be thinking about Texas for his film's location and who opts for Canada instead isn't likely to call the Texas Film Commission to let them know they lost out.

CEIDR has reported that "the U.S. economy has lost some 25,000 jobs per year and an estimated $4.1 billion in economic benefits related to the production of theatrical length films alone since the onset of the Canadian rebates." Those heavyweight numbers are echoed by the Los Angeles-based Film and Television Action Committee, an industry group headed by former Hollywood production designer Brent Swift that counts Oscar-winning cinematographer Haskell Wexler and actor Elliot Gould among its ranks. The FTAC is currently engaged in lobbying for a variety of remedies to the situation, including trade sanctions and employer subsidies.

Additionally, the so-called Industry Alliance -- consisting of labor organizations such as the Director's Guild of America, the International Alliance of Theatrical and Stage Employees, the American Federation of Theatrical Stage Employees, the Screen Actors Guild, the Producers Guild of America, the Academy of Television Arts and Sciences, the American Film Marketing Association, and Film US (which comprises some 200 national, state, and local film commissions -- but not the Texas Film Commission) -- is lobbying federal and state legislatures for a two-tiered, wage-based system of tax credits for film and television/cable production in the U.S. via House Resolution 3131, sponsored by U.S. Reps. Mary Bono (R-Calif.), Xavier Becerra (D-Calif.), and Robert Matsui (D-Calif.).

Confused? It's a thorny issue and one made all the more so by the global economic slide resulting from 9/11. The one thing that's inarguable is that below-the-line film industry workers are suffering from the general move north. For producers, the bottom line is the bottom line: "How can I save money?" is often the only question that gets asked at the end of the day.

Ironically, Hollywood's box office receipts remain at an all-time high of $14 billion (for the 2001 fiscal year), but the flip side of that can found in the U.S. Dept. of Commerce's estimation that the U.S. economy is hemorrhaging money and industry-related jobs to the tune of an estimated $10 billion per year, thanks to runaway film production.

In Texas the numbers are dismal as well, although Austin -- one of the state's filmmaking hubs and home to the Office of the Governor's Texas Film Commission -- is doing better than most places. According to the TFC, Texas film production hit a high in 1996 with a total of 54 film and television projects being shot in-state. Long an attractive destination with Hollywood producers thanks to a number of sales tax exemptions, fuel refunds, and waived hotel occupancy taxes, Texas (and in particular Austin) has been a center of television production, most notably the aforementioned Movie of the Week productions.

Not so today, with the number of M.O.W.s (network and cable) in 2001 at four total, down from a 1997 high of nine (according to the Texas Film Commission). Combine those with the feature films and TV series/miniseries/specials/pilots that have chosen to shoot north of the border, and that drop translates into a loss of $55.7 million for the state of Texas alone, down from 1995's peak of $330.3 million to last year's $274.6 million.

Short of tariffs, taxes, and an outright trade war with Canada (and anyone who caught filmmaker Michael Moore's goofy Canadian Bacon knows how awful that would be), what's to be done? There are those who are calling this the beginning of the end of traditional U.S. filmmaking, comparing the current runaway production situation with the disastrous effects of globalization in other industries such at textiles and steel. Then there are those who think that Hollywood can weather the storm and keep enough productions here in the U.S. to make it worth your local gaffer's while to stick it out. And then there are those who have already pulled up stakes and headed to the land of back bacon and less-than-classic Jackie Chan movies.

Austin production designer Cary White is a respected 20-year veteran of Texas filmmaking. He cut his teeth on Tobe Hooper's 1986 The Texas Chainsaw Massacre 2 (which was shot here in Austin, using as its production offices and effects department the buildings that the Austin American-Statesman currently occupies). Since then, he's designed the look of films ranging from Lonesome Dove to Spy Kids. White knows the finicky vicissitudes of the business as well as anyone in the Austin filmmaking community, but he's quick to point out that the mass exodus of film to Canada is something different from the occasional Canadian gig he held in the past.

"I actually went to Canada to do a film called White Fang 2 in the mid-Nineties" says White. "Productions have been going up there to save money for a long time now. That particular film was set in Alaska, and so it was logical to do it there, but at the time I was just amazed at how much production was going on up there. They were really going for it in Vancouver -- they had this old factory that made bridges once upon a time and had converted it to the Bridge Studios and they were just cranking out shows up there, one after another after another."

British Columbia -- and in particular Vancouver, with its varied locations, seemingly boundless talent pool, and Left Coast proximity to Hollywood -- has become a mecca of sorts for productions arriving from Los Angeles. Television shows, from The X-Files to USA Network's The Dead Zone have used the city's woodsy ambience and cheap labor for years (although a recent report in Playback Magazine reported that several new fall series, including CBS' Haunted and Touchstone/ABC's That Was Then, have opted instead to stay in L.A. after cast and crew pressured the producers to steer clear of Canada).

That said, White notes that despite current fears of runaway work for Austin film professionals, the city's talent pool is only so deep: "Austin can handle maybe three large productions at a time, but once you're beyond that you have to start bringing people in from elsewhere or you're going to be using people who don't have much experience. And the same thing is true in Vancouver. If you're the last kid in with a production, you're going to get people who just don't have much experience, and sometimes don't even care all that much. They're not the cream of the crop as far as the labor pool goes. And the same is true of Austin.

"What I'm really concerned about as far as our industry goes," says White, "is that we're destroying the whole infrastructure for the business here. If everything is exported overseas for a cheaper price, people will no longer be able to get the necessary experience and eventually they'll begin to do other things. What was once a very viable industry which led the world in movie producing will be left with nothing but the financiers and no one else."

Ultimately, White says, it's all about putting more money in more producers' pockets. Hollywood has always been innately in tune with the bottom line, and if there's money to be saved by choosing Great White Northern locales over desperately needy American crews (and damn the stars $20+ million salaries), then Canada it is.

"I do see a little bit of hope," says White. "There are now some actors who are saying they're not going to go to Canada to shoot. A producer friend of mine was just telling me that Whoopi Goldberg was refusing to go up north. Possibly some other actors will follow suit as more and more information is presented to them, but I'm not even sure if that could really help all that much at this point.

"I don't do this for fun and I doubt many other Austin and Texas crew members do, either. I do this for a living. I've got two boys in college and I need to keep making that money one way or the other."

Tom Copeland knows the logistics of Texas filmmaking better than anyone else does in the state. As head of the Texas Film Commission under Governor Rick Perry, Copeland and his small staff daily disseminate information on the state of Texas film, assist in securing production locations, and in general act as an indispensable liaison between Texas government and Texas film. Hardly a dour guy on the worst of days, Copeland, however, is glum on the subject of runaway film production -- and more so than most.

"What you really notice if you look at our economic impact charts," begins Copeland, "is that in the early Nineties up until like '96 or so, you could just see this big build-up of productions. We were going places. Our numbers were reaching up to almost sixty projects a year, which was pretty much doubling what was considered to be good prior to that.

"But what you can see now is this erosion that started happening a few years back, and it has to do primarily with television movies first and foremost. Movies of the Week -- you don't see many of them on your TV anymore -- but in production terms those are just gone. They went to Canada. Any sort of production that's going to be impacted by a 20% reduction, or more, in filming costs, is going to head up north. To pay for what talent costs these days it takes the below-the-line away, and so there was no place for them to go but to Canada. And then the lower-budget features followed suit. It's just like anyplace else -- this northern migration isn't specific to Texas -- once someone goes then other people start following them."

As Copeland notes, the slice of pie that Texan filmmakers and crews have traditionally had their hands on has become progressively smaller, and just lately it's been getting even more so, as Canada begins to feel the first impacts of -- ironically enough -- their own bout with runaway film production. Notably, the recent Vin Diesel action flick XXX, which in the past would have likely been shot in a locale such as Vancouver, instead opted to shoot all the way across the globe in Prague and other Czech locales. Even Canada, it seems, is not immune to the siren song of cheap labor and even cheaper locations. After all, why pay set and production designers to build a 17th-century castle from the ground up when there are plenty of the damn things lying around unused in Europe? Similarly, honorary-Austinite director Guillermo del Toro is slated to begin work soon on Hellboy -- not in Austin, Texas, not even in North America, but in Prague, further evidence that Canada, too, feels the sting of runaway production.

When asked what can be done to stem the tide, Copeland offers the following: "What you'd have to do is get the labor unions -- SAG, IA, the Teamsters and so on -- to fight this stuff by cutting their rates back here in the United States, and I'll guarantee you that's not about to happen anytime soon. There might be some things that the SAG could do to make it a little more interesting, but I don't see the Industry Alliance helping out.

"It's complex, though: First of all there's the whole labor problem. We've got to get the prices here more in competition with what's being made available in Vancouver and Toronto, but of course with the economy being what it is these days, that's going to be very, very difficult. What we need more than anything else is the federal government to step in. They haven't done it for textiles, and they haven't done it for steel, and they haven't done it for some of these other things that are being hit by similar instances of globalization, but they need to step in there and see if there's something that can be done that, if you were going to go shoot a film in a foreign country, when it comes back through there would have to be some sort of embargo, some sort of taxation.

"And who's going to fight that? The motion picture studios? They don't give a shit. There's no patriotism there -- if they can go to Canada and save some money below-the-line they're going to do it, just like when they went to Texas or Georgia or North Carolina or wherever. So your lobby for getting the feds to do anything about it is really with the motion picture producers, and they don't care.

"What you would really need would be labor, federal, state, and local governments working on this problem together."

Not everyone is so eager to head north in pursuit of below-the-line savings. A number of Texan filmmakers, Austinites all, have opted to keep things strictly local. The most well-known of these is Robert Rodriguez, who, alongside wife and producer Elizabeth Avellan, recently filmed both of the popular Spy Kids films (with a third on the way) in and around Austin. Mike Judge, creator of Beavis and Butt-head, shot his debut live-action feature, Office Space, in town three years ago and plans to shoot his sophomore effort -- as yet untitled -- here as well. (On the other hand, longtime Austin booster and Austin Film Society founding member Richard Linklater is set to film his upcoming The School of Rock in New York.)

The big news for Austin lately, however, is that Tim McCanlies -- who penned the animated film The Iron Giant -- and wrote and directed cult favorite Dancer, Texas Pop. 81, has chosen to film his dream project, Secondhand Lions, in and around town, with stars Robert Duvall, Michael Caine, and Haley Joel Osment. Although the film has just begun production, it's the kind of feature that has already managed to generate the sort of buzz usually reserved for potential Oscar picks.

Initially, producers New Line Cinema wanted McCanlies to shoot the film -- which is set entirely in Texas -- in Canada. Not surprising, sure, but McCanlies balked at the suggestion and ended up keeping the film in Texas by sheer willpower. Well, that and some pretty massive pay cuts:

"I fought, and fought, and fought to keep this film in Texas. We really trimmed the budget to the bone; basically, I deferred quite a bit of my salary. Because of the dates that Bobby Duvall could work on the film, we don't [start filming] until the first of October, [therefore] I was able to convince the studio that shooting in November in Canada for a movie set in the summer in Texas just wasn't feasible. It was a combination of all those factors. They were telling me, 'Oh, you can make it work somehow,' and I'd have to tell 'em, 'Look, you can't grow corn in the snow!'

"People are working for less than their normal fees right across the board. It's funny, because the actors generally aren't the ones that take a cut in pay. I have millions being spent above the line but then everyone else is working for less. I had to look for a director of photography at this level, and fortunately the script attracted guys who would come in and take a big pay cut. So we've got Jack Green as DP, who's done all of Clint Eastwood's movies, Unforgiven, The Bridges of Madison County. He's coming in for, like, half his usual range."

McCanlies cites the studio's "almost knee-jerk reaction" against shooting in Texas as a major stumbling block in initial production talks, although he readily admits that once the numbers were done, there was no way on earth he could argue his way around them without taking his own cut in salary.

"You want to just sit there and argue with these people," he says, "but when you start doing the numbers, with the difference in exchange rate and the fact that you don't have to pay health and welfare and pension up there because it's a government-run system, you just can't argue the numbers. There's just no way. Canada has it all over us when it comes to saving money on a production."

Plowing through the varied and voluminous articles, petitions, declarations, screeds, and rants that have dogged the issue of runaway production for the past half-decade, it's tough not to feel that at least some of the brouhaha has been informed by perhaps more than a touch of panicky hyperbole.

Groups like the Film and Television Action Committee and the Center for Entertainment Industry Data and Research, while acting in their own best interests (which not coincidentally mirror for the most part the interests of many below-the-line film production workers), have issued scads of reports, bulletins, and the ever-popular "action alerts" that in their strident tones call to mind the sort of national fear mongering that borders on the surreal. The Canadian film industry may be sporting a crimson maple leaf, but they're hardly the Red Menace.

At this point it hardly seems fair to continue without letting Canada -- or a spokesperson therefrom -- have a say.

Lindsay Allen is the director of the British Columbia Film Commission. Allen and his staff oversee much of incoming film production in Canada's most popular city, Vancouver, and while he doesn't skirt the issue of runaway U.S. productions, he also understandably feels that he and other members of the country's film industry are getting a bad rap. That U.S. films are heading out of Los Angeles and moving up north is nothing new, he notes, and furthermore, the outflux isn't all going to Canada.

"It's gone to New York," he says, "it's gone to South Carolina, it's gone to Florida, and to Europe. It started going to Canada with the stronger U.S. dollar, and right now they're looking around Eastern Europe, Australia, and even South Africa, which is probably going to be the next flavor of the month. Hollywood is looking for the latest, greatest, cheapest -- and that's the way it's always been."

Canadian film professionals have a right to feel miffed at the hue and cry swelling in the U.S., Allen argues, noting that many of the facts and figures that bolster the arguments against heading north are contrived or just plain silly. (Allen calls CEIDR's statistics, in particular, "meteoric flights of fancy, even by Hollywood standards.")

"The whole thing is along the lines of a 'Blame Canada' campaign," he says, paraphrasing South Park. "Singling out Canada is strange. In terms of production centers for U.S. product, it's Los Angeles, New York, Vancouver, and Toronto, in that order. One report recently stated that runaway production doubled in the last decade. Well, come on -- the industry in the U.S. doubled in the last decade, and it's continued to grow. So of course you're going to see corresponding numbers.

"Let's look at those numbers: In terms of direct investment in production, Hollywood is currently at $32 billion a year. Last year in Vancouver, we had about $450 million U.S., of U.S. production in Vancouver. So we're talking about less than 1.5% of Hollywood productions going to Vancouver, and that's hardly what I'd call a 'runaway' industry. To top it off, you know, we didn't invent tax credits, the United States did. There's 41 states that have various forms of tax credits, some of them much more generous than anything in Canada, like for instance Missouri, which has a 50% tax credit.

The bottom line?

"Los Angeles needs to learn to compete in the global market."

As of today, the Industry Alliance-spearheaded move to pass their "countervailing tariff petition" (Senate Bill 1278 and House Bill 3131, to be exact), and the federal income tax credit program the bills represent, are languishing before both the House and the Senate (with 74 and 27 supporters on record as of July 31). Pressure, in the form of letter-writing campaigns, web campaigning, and whatever else the Industry Alliance can bring to bear on Washington, is running high. Tempers are flaring, and yes, jobs have been lost and will continue to be lost, but whether either bill is likely to pass into law is anyone's guess. There are as many people opposed to the tariff as there are for it, and the end is far from in sight.

At least, it's not in sight in Texas. Two neighboring states -- New Mexico and Louisiana, respectively -- have recently, and to nearly everyone's surprise, taken matters into their own hands.

On Aug. 5, shooting began in New Mexico on the Tom Cruise-produced Suspect Zero, a sci-fi thriller from Paramount starring Aaron Eckhart and The Matrix's Carrie-Anne Moss. In an unprecedented move to draw the high-profile production to Albuquerque, New Mexico, initiated its own film investment program, which allows incoming film productions to borrow up to $7.5 million entirely interest-free. The incentive program is unique among states and, if all goes well with this initial foray, is almost guaranteed to net further film production deals in the future. Not coincidentally, it arrives on the heels of a previous 15% tax credit approved by the N.M. state Legislature earlier this year.

Louisiana, too, has canned the rhetoric and stepped up to the proverbial plate with a particularly aggressive tax incentive program, announced in mid-August, which offers incoming productions up to 15% off the total production costs in-state. Coupled with additional tax credits of some 20% of in-state payroll costs, exemption from state sales on film-related goods and services, and a chance at loan guarantees and matching funds from the state, Louisiana now has one of the most competitive incentive programs in the country, one that rivals Canada in terms of potential savings to incoming producers.

That Texas is nestled snugly between these two film-funding upstarts is a hot topic. If state government could be convinced to shore up Texas' already film-friendly aspects (such as existing tax exemptions and its status as a "right to work" state), people like the Texas Film Commission's Tom Copeland think a power trio of that magnitude might be a perfect way to stem runaway production.

"If there were real savings involved in shooting American," says Copeland, "then I think you would find most people would stick around and forego going to Canada and elsewhere.

"But as long as it's 20-25% and in some cases as much as 30% cheaper to be there, then American film production is going to continue to head over our borders. And I don't blame them. It's just like any other sort of industry, whether you're going to China or Mexico or Taiwan or wherever it may be: Cheap labor is cheap labor. That's all there is to it." end story

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