Runaway Production...And Why It Happens

Suck it up! You could be stuck in Toronto!! ;)

I’ve never understood the exchange rate argument. Yes, the dollarette is only about $.80 US. But you have to use more of them to buy the same things. A pair of shoes that cost $80 in the US costs CDN $100 (or more).

That said, prices on things that don’t travel across the border well, like, say, rent, are lower. And the people are a bit nicer, and don’t steal your stuff as often.

I have to chime in here because this issue has chafed at me for years. You see, I am originally from Seattle.

Seattle and Vancouver, being the only “large” cities in the Northwest (or Southwest, if you’re a beaver), have always had a neighborly grudge against one another. When Seattle had that massive music scene coverage in the 90s, for instance, the Vancouverians were not particularly happy about it. Then there is the usual mild but good-natured tension caused by tourism and immigration.

The big issue for me and many Seattle people however is how Vancouver “robbed us” of our film industry. For all the reasons you mentioned, Vancouver is a cheaper place to film. Whenever the X-Files would portray a scene taking place in Washington (where all the aliens are), it was actually being shot in B.C. The Seattle film scene has suffered a lot due to Vancouver and its precious tax cuts and reduced union benefits, and there’s absolutely no way for them to ever compete.

For one, Seattle has had until recently extremely high taxes and permit costs for productions. This is due largely to an incompetent government blind to the money that could be made by luring productions into the state. When Governor Gary Locke was put in the spotlight to reduce social spending, one of his first of a slough of targets was to COMPLETELY ELIMINATE the Washington Film Bureau. Pretty stupid, right?

Frankly it irks me that Washington loses all these jobs to Vancouver, solely because it really drains a lot of talent and opportunities from my home town and hurts an economy that is kind of struggling right now (Please don’t leave, Microsoft!).

Now, fifteen years after the fact, Seattle is just beginning to smell the coffee.

And it’s not Starbucks.

For romantic dinners, The Parkside near Stanley Park (parksiderestaurant.ca) is one of the best. The upscale La Gavroche is a cozy little French place in a converted heritage home on Alberni near Robson. Chambar on Beatty has excellent Belgian fare in a romantic setting. You’ll need reservations for all of the above.

For dessert, True Confections on Denman has incredible cakes, pies and pastries. Drinks in the revolving Cloud 9 at the top of the Empire Landmark hotel on Robson will give you a spectacular view of the city while you get sloshed on a variety of martinis before bedtime. Enjoy!

If you enjoy seafood, The Cannery Seafood is the best resturant in the city. Its usually quite full so you’ll need a reservation (just call the day before) but it definately has some of the best fish you’ll taste.

Here’s their phone number: 254-9606

Its downtown, but near the water so you’re in a quiet area.

Jason

AHHHH! The Cannery!

I have been racking my brains for the last three days trying to remember the name of the place I ate three years ago. :)

Thanks!

And thanks for all the tips.

And Alex, yeah, I think the exchange rate isn’t as big of a deal as the tax stuff. I will take issue with the “stealling” thing though. Vancouver has a pretty aggressive junkie population, and unlike L.A., we are constantly being told to never ever leave anything visible inside a parked car.

Our producer had everything stolen out of his car when we were here last time.

Question,

If a studio can shoot a $52 million dollar movie for $40 million in Canada (that’s about a 25% savings) , why don’t the LA production community, the city, and the unions just accept the $12 million dollar cut?

Just go to each vendor, the unions, everyone and say, “Look, here’s the bottom line. On balance, we save 25% shooting in Canada. Give us a 20% break and we’ll stay in LA. Take it or leave it.”

There’s a company called Rural Sourcing that’s doing this to combat outsourcing to India.

http://news.com.com/2061-1022-5449083.html

They’re going to rural, depressed areas like in Arkansas, training people, and then going to AOL and saying, “All right you outsource to India right now, you can outsource through us and we can offer you nearly the same savings, and we can keep these jobs here in the US.”

I mean, that’s the market. The rest of the world is growing up and they’re ready to compete. We have to adjust, too, if we want to keep jobs in LA. It’s a simple equation.

Why hasn’t this happened, Craig?

Ben

Ben:

It’s complicated. The biggest issue is that the State of California doesn’t seem willing to provide the same kind of tax relief that Canada, Louisiana, North Carolina, New Zealand and other locales are offering.

Schwarzenegger was theoretically going to do something about that. So far…zippo.

The secondary issues have to do with IATSE. The price of labor is just higher here in the U.S. Unfortunately, no labor union can afford to start negotiating with itself to keep jobs in the U.S. It would be a race to the bottom at that point.

The WGA and the DGA and SAG really don’t have anything to do with it. For the most part, those three unions have a monopoly on the creative talent that the U.S. studios use, so it doesn’t matter where the production is…they still have to pay for the members of those guilds.

Really…it comes down to California. Either they’re going to figure this out and do something about it…or they’re not.

I hope they do.

Craig,

What would your solution be, if you were in charge?

Ben

I was originally a Vancouver native, here are some of my favorite restaurants (not necessarily romantic) listed below. If you can get away for the weekend, try http://www.aerie.bc.ca/ it gets a 91.9 from Conde Nast traveller (http://www.concierge.com/cntraveler/lists/goldlist03/world/britishcolumbia). Whister is also a lovely weekend getaway (lots of shopping and outdoor activities in the summer), Chateau Whistler is great place to stay.

Cin Cin Ristorante & Bar - 1154 Robson St., Vancouver

Joe Fortes Seafood & Chop House - 777 Thurlow St., Vancouver

Hy’s Encore - 637 Hornby St., Vancouver

Pink Pearl - 1132 E Hastings St., Vancouver

Agree. However it’s not just economic issues, Canadian cities have a quite the varied architecture, allowing for many settings within one location — Old Europe, to Modern, to Old West in one leap. (Calgary was ‘Old Westernized’, aka ‘Unforgiven’). But Canada wins out, due to tax breaks, a gung-ho focus and a well-heeled film-industry infrastructure, plus a cluster of computer sfx software companies. Bottom-line: Strangehold unions, and crippling Fed and State taxes, same old story. But it goes beyond tax breaks, as the Canadian government wavies permit fees, actively helps in location scouting and deals with local red tape.

I was looking to Schwarzenegger to tackle this issue head on, you’d think it would be right up his alley. Even dead-on supporters like Mark Williams of KFBF, are decrying the ‘cartoon photo-op governorship’ — granted not easy with that legislature, but doesn’t seem much to be much in the way of firm leadership. But this isn’t exclusive to the film industry, it’s every industry in California, particulary manufacturing. Nevada is becoming a boom state.

PS - The big losers in all this? American actors.

If you happen to be in North Vancouver, Brazza has awesome coffee and gelato.

Brazza on Lonsdale 1846 Lonsdale Avenue North Vancouver, B.C. V7M-2J9 CANADA

North Van? Only every day of the week! We’re working out of offices on the Lion’s Gate lot. I’ll check it out.

Brazza…

The Hollywood Reporter ran a good article on runaway production a few weeks ago. It covers some of the things Craig is talking about. Here is a link to the article online:

http://www.hollywoodreporter.com/thr/articledisplay.jsp?vnucontent_id=1000981054

(You may need to cut and paste the link. Either I’m hopeless with html tonight - which is a real possibility - or links are no longer working in comments here.)

My apologies - even cutting and pasting the link does not work. The article ran July 19 and is entitled “L.A.-Area Showbiz Takes Hit”. It should be searchable on the HR website.

There is another factor to the runaway production equation that is being ignored. Canada represents about 10% of the domestic box office or close to a billion dollars. Canadian television spends about $500 million a year acquiring US shows. That’s $1.5 billion going to US companies. The last figures I heard, runaway production to Canada totals around $1.9 billion (and I’m not sure if star salaries and Craig’s per diem are included in that figure). As far as trade deficits go, that’s pretty much a wash. Thanks to Jack Valenti and some bad moves by the Canadian government, US product has a stranglehold on Canadian screen bookings, which is killing indigenous production. Getting that runaway cash is about the only way to balance out the equation.

Instead of asking blue collar below-the-line workers to take a pay cut, why not ask the actors and producers to take a pay cut?

Look, in a really, really good year I make about $100K us. Keep in mind that’s in a year where I work 5 days a week 50 weeks a year with maximum over time. I almost never work that much - mostly due to runaway production.

Most of the time I make about 50K per year. The producer on a small movie makes three times that, and actor’s pay can hit the stratosphere. Why ask me to take the hit?

This is the reason why IATSE won’t cut pay. We’ve already been bled enough and there’s a better area to cut costs from.

If you like, check out http://www.ftac.net/

Peggy’s exactly right. The fact is that IATSE has negotiated successfully on behalf of its U.S. members, and it shouldn’t shoulder the burden.

Ben asked me what my solution is.

Simple. We should do exactly what Canada does. The State of California should provide a labor tax rebate to productions. Who ends up shouldering the burden? All of us. The taxpayers of California.

It’s better for us in the long run.

We give up a small amount of tax now to reap the benefits of more jobs and more money spent in our state, which would actually increase our tax coffers.

I don’t need to prove this. Vancouver already has. I’m mystified why California won’t just do it. The politicians are seriously hurting working people in our industry like Peggy, and there’s just no cause for it.

Let’s not forget, that it’s not simply Canada that is doing this to the US, but Australia and New Zealand as well - in addition to countries like Bulgaria and the like - but wouldn’t you say that Australia is running a close second to Canada, which is even more incredible given that it’s 24 hours away?

Yikes!

Craig writes: “We should do exactly what Canada does. The State of California should provide a labor tax rebate to productions. Who ends up shouldering the burden? All of us. The taxpayers of California.”

Two questions, Craig:

1) Suppose CA adjusts its tax rate to achieve parity with Canada: what keeps Canada from indexing lower? Now, consider how this plays out in the limit (CA responds then Canada responds then CA responds….): does this lead to a rational allocation of production resources from a societal level (lets try not to be so provincial :-)?

2) Why should a non-movie going Californian supplement a product that they do not consume? An analagous way of asking the same question: do you think farm subsidies are a good thing for the consumer? (in a rare case of agreement among economists, most will disagree with your assertion that corporate welfare leads to an increase in “our tax coffers”)

Lee

PS How do you do those cool quote thingies?

Peggy,

As much as my heart feels for your cause, and would like to see IATSE living standard erosion halt, my head overrules such sentiments. In fact, I get angry at the ftac approach of targeting producers, stars, and other higher paid segments of production, because it diverts memberships attention away from the real problem.

What is that real problem?

Even with tax subsidies abolished, someone is willing to do your job for cheaper in another country.

I’m curious: how do you respond to this?

Lee

Lee:

Canada would have to index MUCH lower, because they are at an inherent disadvantage. Why? First, no one likes shooting far away from their home, and second, there are hard costs associated with shooting far away from home.

At some point, it stops making sense. However, it clearly makes sense for them now.

Because it’s a major employment industry in our state. Unlike farm subsidies, which are really about the state maintaining price controls and propping up businesses that would otherwise not survive, tax incentives for employers is about attracting successful business to the state.

The more movies that shoot in California, the more people in California are employed and more businesses are contracted out to in California, which means the more people spend their money in California, which is to the direct benefit of all of us.

Essentially, the State of California needs to compete for this work, or it doesn’t deserve it. Free market. It’s not the unions that are causing runaway production. Vancouver has the exact same unions…including The Teamsters and IATSE!

Oh, and if you want to do a quote thingy, it’s < blockquote > and then < /blockquote >

Just remove the spaces.

Talking about Arnold Schwarzenegger. Isn’t he at odds with himself? He comments energically on the Total Recall DVD in favor of having moved the production to Mexico.

Craig,

So your argument is: given a level playing field, California has the inherent production advantage; so let’s subsidise the industry to remove the tax credits in Canada and California will win. But there’s a gross perversion to that logic: it says we need to pay money to realize an advantage we already have! It’s far more reasonable to remove the artificial (non-market) causes of the production shifts: namely, any tax credits on either side of the border; then let the invisible hand sort resources in the most efficent way possible.

It’s somewhat surprising to see you advocate the State becoming involved in picking industry favorites, given what I know of your politics. What you call “free market” and “competition” is nothing but State sponsored corporate welfare, Craig; you know that! Are you advocating this position of favoritism because it happens to be your industry? Or do you take this position because you feel it’s just easier for California to match the tax credits, rather than for the US to leverage Canada to remove the subsidies?

Lee

Lee -

I don’t think non-movie-goers or even movie-goers would bear the burden of tax breaks. I think the idea is that the people employed in California because of the production staying in California will have higher incomes and therefore higher CA taxes. They will bear their own burden. But I admit I don’t know the details.

And, sure, in a true free market Canada would end its tax refund regime. But we in the US don’t have any way to do that for them and they up there have no incentive to stop.

I wonder if the guys from Freakonomics could take this on. Maybe there’s no benefit at all, somehow!

Hmmm… everything in my “a” tag was stripped out except the “a” itself. The link is http://www.freakonomics.com.

I believe in fair and moral business practices, but that can work only if they are applied multilaterally.

That means that subsidies are removed outside the USA and within USA and in all areas. For example, the heavy subsidies of farming in the USA which allows dumping of the world market with the result that it kills farming industries in poorer or less powerful countries.

It means an end to the stranglehold distributors have in the foreign countries which use blackmail and threats that result in their films not finding distribution even in their own countries.

As far as the film industry is concerned, let’s not forget that most of the revenues come not from the USA, but from foreign markets. They are responsible for more than 50% of the revenues and as such have their fair share of the industry, especially when you considering the unfair practices of the distributors.

Fair business practices is a two way road, don’t you think?

DL

Ralphie,

The “tax credits save jobs because they create more income through employment taxes” is oft cited by those asking for a business hand-out. But even if one accepts the ‘net increase in the tax coffers’ argument (which I - and many economists - do not), one is still left with the ugly fact that the State is picking favorites by granting industry specific tax credits, and that any State increase in funds have been shifted from corporate to individual tax returns (which is grossly regressive).

Or so the guys at Freakonomics would say….

Lee

There’s a great place called RELISH on Nelson and Hornby in Nelson Square. They’ve got a great risotto dish and peanut-butter creme brulee.

Best,

Mike

Don’t forget to mention deductions when you are having that romantic dinner……that really gets the girls excited! ;-) cheers Dave.

While in Vancouver you should definitely go by Bishop’s (John Bishop’s place), Villa Del Lupo, Le Crocodile, and Il Giardino. I did some power dining there while on location for a film.

Oh, and for breakfast, try out the Elbow Room, if it is still there. It’s a fun quirky place as is Sophie’s Cosmic Cafe.

And go by the Meridan hotel on Burrard, right near Robson. Try there “Death by Chocolate” buffet on Friday nights, if they still offer it. (I think it’s still a Merdian.)

There’s an article in todays onliine NY Times about how CA is close to offereing subsidies to deal with runaway productions - check it out -

They have been ‘close’ how many times, I will believe it when it happens, and even then not so sure. As they say in Missouri, show me. :)

Lowering taxes, is never picking favorites, the tax code is anything but fair, it takes lawyers to sort through all the rules and differing regulations by industry. To say, that it’s picking favorites, you have to start with a fair tax-base across the board, something anyone can tell you, is not how things are done in California. If an industry is hurting find out the root causes and fix it. :)

Can you ask David Zucker if he and Jim Abrahams and Jerry Zucker will ever reunite for another full-on ZAZ movie? If not, why?

You might try CRU on west broadway. I’ve heard good things. You’ll find it on the web at www.cru.ca/splash.asp

You may want to check out the article in today’s LA Times regarding how TV series are the income generators in Hollywood right now, as film goes elsewhere…

Very interesting.

If you’re up for a little adventurous dinning consider trying The Afghan Horseman. Its (or so they say) the only Afghan food restaurant in North America (or… is it the oldest, I can’t remember but I am sure they are more than willing to tell you).

Call ahead for reservations in the cushion seating for the full experience. 604-873-5923… Its on Broadway just east of Cambie.

Great Kabob’s, Lamb, and Vegetarian dishes.

Craig,

Every Thursday the “Vancouver Sun” newspaper has a pull-out section called “Queue” which includes both restaurant reviews and listings. It’s always very handy for tips on new or interesting places to try, particularly for special occasions. You shouldn’t have any problem getting one from the hotel. There is also a fee weekly called “The Georgia Straight” that has an extensive dining section.

Hasn’t the subject of runaway productions existed long before now? I watched an episode of the old Roger Moore series “The Saint” and the term was used in the opener. In fact, the episode involved a Hollywood sword n’ sandals epic shooting overseas. In the 1960s studios looked to Italy, Spain, Mexico, and the U.K. as cost-saving alternatives. Now it is Canada, Australia, New Zealand, and increasing the former “Eastern” European countries. Canada of course picks up that much more because of the incentives you mentioned, and because of its proximity to the studio power bases in the U.S. British Columbia is on the same coast, same time zone, and flying time is less than three hours.

Wouldn’t you agree that if the price of movie making does keep climbing producers & studios will look to even less expensive places to shoot?

Don’t believe the hype. The fact is “runaway production” is far more complex than the easy, knee-jerk, xenophobic reaction that many have to the issue.

The fact is, most of the productions filmed in Canada would not happen at all if they stayed “at home.” That’s right. There are only so many dollars any studio has to spend in a year, and most of those dollars are spent right in the U.S. of A. But then you start running out, and the choice is to make less product, and NOT shoot that other (perhaps YOUR) risky, and perhaps just plain bad, movie. Alternatively, you have your cake and eat it too and shoot at a lower budget (i.e., take it overseas or to Canada). Eventually, if all production stayed in L.A. the “monopoly” that L.A. would have would make costs go higher and higher until there would only be a few movies filmed a year.

The fact is, L.A. ran out of studio space a long time ago. A city can only have so many studio facilities. They’re huge and expensive complexes. And they’re FULL to capacity in Hollywood. Don’t be fooled. So, a studio has to start looking for other facilities in foreign lands.

The fact is, everything shot in L.A. starts to look BORING. Same light. Same trees. Same building. X-Files looked cool and different because it explored a new landscape. The old Star Treks that shot everything on a sound stage or in the California desert started looking really, really repetitive. Artistically, wouldn’t you want to be able to shoot in Prague, or New Orleans, or Montreal, or the mountains of the Canadian Rockies if you could?!

The fact is we live in a global economy. Opportunity will inevitably shift and migrate with time. L.A. is still king of all media. That isn’t going to change soon. And 99% of the productions shot in Canada by U.S. studios rely on American writers, American directors, American stars, American editors. Yes, some caterers might be looking for work in L.A. Some grips too.

The fact is the economy, and the film industry, is about survival of the most talented. A great talent will work no matter where they’re located. And so they should. A filmmaker shouldn’t have a God-given right to studio dollars just because he lives in L.A. He should get that money if he has a great product.

The fact is Canada spends more dollars per capita on U.S. entertaiment than any state in the United States, save maybe California itself. Studios regard Canadian box office take as DOMESTIC box office (not foreign) and actually control Canadian theatres, forcing Canadian financed films (inevitably smaller, indie films) from their very own multi-plexes. From that perspective, is it really so wrong that Canada has a (SMALL!) share in making what they help FINANCE through consumption?

Other reasons for runaway production:

http://www.theonion.com/infograph/index.php?issue=4134

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