Runaway production
Encyclopedia
Runaway production is a term used by the American
film industry
to describe filmmaking
and television productions that are "intended for initial release/exhibition or television broadcast in the U.S.
, but are actually filmed in another country."
In a 2005 production report by the Center for Entertainment Industry Data and Research (CEIDR), the trend of runaway productions are more frequently linked to American films and television being lured away from U.S. locations to out-of-country locations. A large reason for these productions leaving are foreign subsidies offered to American companies ultimately reducing the cost of making the film. According to the CEIDR report, "The analysis reveals that, while there are certainly general economic factors at play, such as relative labor and exchange rates, the data over the past several years strongly suggests that proliferation of production subsidies around the globe has been one of the most significant factors affecting the choice of production venues for a significant volume of production."
The report further states that "the connection between the advent of Canadian Production subsidies in late 1998 and the dramatic increase in production that occurred in the following year (as reflected by the 144% increase in dollar volume for the 2000 release year films) appears unassailable as there were no appreciable changes in exchange rates or labor rates to justify this dramatic shift from one year to the next, other than the subsidy programs".
, California has traditionally played a large role in the history of the film industry, both in the U.S. and at an international level. The first American film production companies emerged in New Jersey and New York. However, the relatively poor quality of early recording media and lighting systems meant that films had to be shot in sunlit glass studios. In turn, the lousy weather typical of the northeast states frequently hampered production. Eventually, a trend developed towards using the west and midwest United States as ideal locations for shooting.
Los Angeles, California during the early 1910s was an advantageous location for filmmakers. It had very clear, dry weather that "permitted outdoor filming for much of the year. In addition, southern California offered a variety of landscapes, including ocean, desert, mountain, forest, and hillside"
(DGA) defined two classes of runaway productions. "Creative runaways" are film and television projects that are produced, in part or in whole, outside the United States based on requirements of the script, setting, or due to preferences of the actors or director. Alternatively, "economic runaways" are productions made in other countries to "reduce costs." This type of production typically involves films that are set (written to be shot) in the United States but which instead have been outsourced
to other countries such as Canada
, Australia
, Fiji
, Germany
, Hungary
, Ireland
, New Zealand
, South Africa
, or the United Kingdom
.
According to CEIDR, Canada receives 90% of U.S. runaway productions, and offers the bulk of the government subsidies. A subsidy is defined as financial contributions or kickback
s where "government revenue
that is otherwise due is foregone or not collected", according to GATT – General Agreement on Tariffs and Trade
.
, "Runaway film production' has affected thousands of (U.S.) workers in industries ranging from computer graphic to construction workers and caterers. These losses threaten to disrupt important parts of a vital American industry."
The U.S. film industry has voiced concerns about this outsourcing
trend which began in the mid to late 1990s, and which coincided with increased Canadian government subsidy programs.
A DGA-funded study confirmed that the Canadian government has engaged in a comprehensive and aggressive, long-term strategic campaign to lure U.S. productions to Canada. The report estimates that runaway productions cost the United States over 50,000 jobs and at least US$10 billion in production monies annually.
At least $13 billion is doled out annually in corporate welfare to the business sector in combined Canadian federal and provincial subsidies and tax breaks, according to the Canadian Taxpayers Federation (CTF), a conservative tax watchdog. The CTF released a report saying that from 1982 to 1997, the Canadian federal government handed out $11 billion in 32,969 grants and loans to the provinces earmarked as business subsidies or directly to corporations.
In 2004, the MPAA reported employment numbers for the entire United States. The employment numbers were broken into three categories: production and services (P&S), theaters and video tape rental, and other. In 1995, the total number of Americans employed in the motion picture industry was 283,700 (135,200 in P&S); in 1997, total employment was 323,000 (159,600 P&S); in 2000, total employment was 351,600 (182,100 P&S) and; in 2004, total employment was 367,900 (198,300 P&S). Hence, in 1997, according to the MPAA 2004 report, total U.S. motion picture employment of 323,000 represents a huge discrepancy from the MPAA's earlier claim that, in 1996, the industry employed over 450,000 workers in California alone. Adding to the confusion, The Commerce Report—which used the same BLS data cited by the MPAA—claimed 236,152 workers were employed nationwide in motion picture production and allied services in 1997.
In August 2005, the Los Angeles Economic Development Corporation (LAEDC) released a report commissioned by the California Film Commission on the economic impact of runaway productions. The report compared motion picture employment numbers gathered from the MPAA and the United States Census for the same year, 2002. The data from the MPAA and the Census was divided into two categories: (1) overall motion picture employment in the United States and; (2) the amount of motion picture employment in California—how much California captures of the total U.S. figure. In 2002, the Census reported that 153,000 people worked in the motion picture industry in the United States and, of that amount, 88,500 worked in California. The MPAA data for 2002 reported 353,076 workers in the motion picture industry in the United States, with 245,900 of those jobs in California.
The MPAA, in 1996, claimed that the film industry employed 750,000 Americans, a number that remained on the MPAA's Web Site in 2008.
When faced with the prospect of a worldwide subsidy war, Ron Haney, executive director of the Directors Guild of Canada
is quoted as saying, "Everybody can compete with tax credits now... It's absolutely frightening."
According to a study by the Canadian government, productions are beginning to "run away" from Canada as well. Productions are now going to countries that have introduced competing and/or counter-incentives and/or subsidies. Many productions are starting to return to the United States due to recent legislation to counteract runaway production.
While film and television employment attributed to foreign location spending and actual spending levels by such productions increased in 2008, the state film incentives enacted in U.S. states showed clear increases in the number of productions shooting in the respective enacting U.S. jurisdiction.
Several Canadian companies are also pulling their support for Canadian Television Fund (CTF) because, "(It) was never intended as a permanent source of funding" to subsidize broadcasters and programmers. One Canadian company stated that, "Our understanding was that after the initial five-year period, the fund would be self-sustaining and self-financing from a return on investment in successful productions."
"The Vancouver Sun's Michael McCullough points out that California not only has the world's highest production costs it also has no tax credits. How do they do it? That's the question BC's film industry should be asking, rather than looking to taxpayers to buck up... The tit for tat tax credit game is one with only one loser, the taxpayer. There will always be other jurisdictions that will out-subsidize BC. Louisiana
offers a straight 20% subsidy for production costs, is that the next industry demand? It is not the job of the government to keep up with incentives but the industry's role to remain competitive."
(DGA), the Screen Actors Guild
(SAG) and others, who have been lobbying state and federal governments to introduce American legislation and counter-incentive programs. Several studies have concluded that foreign government subsidies for film and television production put American film industry workers and companies at an extreme disadvantage.
FTAC believes that foreign government subsidies such as those Canada uses to support its film industry labor are in violation of the WTO rules restricting or prohibiting the use of government subsidies to prop up previously undeveloped industries (such as the Canadian film industry). On September 4, 2007, the FTAC filed a Section 301 complaint with the United States Trade Representative (USTR). In the petition, the FTAC argued subsidies offered by Canada to lure production and filming of U.S.-produced television shows and motion pictures were inconsistent with Canada's obligations under the WTO. Six weeks later, October 19, 2007, the USTR rejected FTAC's petition. In a press release, the USTR's office stated:
have attempted to counter the runaway production situation with counter-incentives.
The Jobs Creation Act of 2004 was just such legislation. The language in the bill allows U.S. producers of films with budgets under $15 million ($20 million if shot in a low-income neighborhood) to immediately write off their costs in a single year (if 75% of their principal costs are incurred via shooting in the U.S.) It also allows producers to be taxed at a capital gains rate of 15% (rather than at the higher 35% personal income tax rate). Previously producers had to amortize those costs over several years. It is not a cost "subsidy" program, but an indirect benefit by cutting down the red tape and taxes to encourage American film and television productions.
Local and state governments have also implemented counter-incentive programs in an effort to encourage domestic film productions to remain in the United States and the federal government has attempted to rein in all outsourcing
with legislation to support and defend American jobs from unfair foreign competition.
Louisiana and New Mexico reaped tremendous benefit of being "first movers" to offer film incentives, which established a robust film and television production industry in their respective states. As other states noticed the success New Mexico and Louisiana were enjoying, they began enacting their own film incentive programs in the hope they could attract Hollywood productions as well. By August 2005, according to The Los Angeles Times, roughly 15 states had enacted film incentives. In February 2009, that number jumped to 40 states, with each incentive getting more generous to stay competitive.
in November 2002. By March 2003 cases were seen in people returning to Canada from Hong Kong, particularly in Toronto – a major runaway production location. According to the World Health Organization
(WHO), at the time there were 774 worldwide deaths related to SARS and Canada saw 438 probable SARS cases, with 44 deaths. According to Rhonda Silverstone, Toronto's film commissioner, Canadian production suffered a drastic downturn as American productions stayed home or located elsewhere. SARS scare aside, according to the Center for Entertainment Industry Data and Research, if it weren't for large subsidies, most U.S. producers prefer to stay home and shoot in the United States anyway.
initially affected productions in Ontario, later spreading to Manitoba, Quebec, and Saskatchewan. The labour dispute led to the cancellation of two major film productions scheduled to shoot in Toronto
.
The labour dispute was resolved on February 21, 2007, with wage increases to bring Canadian performers on par with their American counterparts. One of the primary issues involved establishing compensation for Internet use of productions. American studios were reluctant to agree to a deal when no similar agreement exists with U.S. actors. According to ACTRA's chief negotiator Stephen Waddell, "we're the first union that has a collective bargaining agreement that specifically covers this area."
Walt Disney Motion Pictures Group
had decided against shooting in Montreal and Toronto "for fear of a strike or lockout," allegedly threatening to shift those shoots back to the U.S. According to the Canadian Film and Television Production Association, at least three large scale U.S. productions have canceled plans to shoot in Canada due to concerns over the possibility of a long strike and the lack of predictability of Canadian labour. "It's an absolute disaster," said Paul Bronfman, chairman and CEO of the Comweb Group, a leading supplier of film services and equipment in Canada, "Our industry is in deep, deep s---." According to a National Post article, "Mr. Bronfman said the strike could kill Toronto's once-bustling film industry, already suffering after 9/11, SARS, the rising dollar and growing international competition. I am currently in Los Angeles making the rounds with major and independent studios, and everyone is giving the same message: You guys are not competitive anymore, (and) your actor strike is the final nail in the coffin for avoiding Canada like the plague," Mr. Bronfman said."
, many new "Made in NY" counter-incentives have been developed to lure film productions back to the "Big Apple". According to the film industry trade magazine Variety, after installing counter-incentives New York City hit a record high for production, re-upping its number of shooting days 10% from 2005.
Inspired by the success of New York's campaign to regain lost jobs, Los Angeles
Mayor Antonio Villaraigosa
is hoping to initiate counter-incentives to lure film productions back to Los Angeles.
boom has meant that many U.S. television productions are more likely to be shot where they are situated, in the United States.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
film industry
Film industry
The film industry consists of the technological and commercial institutions of filmmaking: i.e. film production companies, film studios, cinematography, film production, screenwriting, pre-production, post production, film festivals, distribution; and actors, film directors and other film crew...
to describe filmmaking
Filmmaking
Filmmaking is the process of making a film, from an initial story, idea, or commission, through scriptwriting, casting, shooting, directing, editing, and screening the finished product before an audience that may result in a theatrical release or television program...
and television productions that are "intended for initial release/exhibition or television broadcast in the U.S.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, but are actually filmed in another country."
In a 2005 production report by the Center for Entertainment Industry Data and Research (CEIDR), the trend of runaway productions are more frequently linked to American films and television being lured away from U.S. locations to out-of-country locations. A large reason for these productions leaving are foreign subsidies offered to American companies ultimately reducing the cost of making the film. According to the CEIDR report, "The analysis reveals that, while there are certainly general economic factors at play, such as relative labor and exchange rates, the data over the past several years strongly suggests that proliferation of production subsidies around the globe has been one of the most significant factors affecting the choice of production venues for a significant volume of production."
The report further states that "the connection between the advent of Canadian Production subsidies in late 1998 and the dramatic increase in production that occurred in the following year (as reflected by the 144% increase in dollar volume for the 2000 release year films) appears unassailable as there were no appreciable changes in exchange rates or labor rates to justify this dramatic shift from one year to the next, other than the subsidy programs".
Hollywood
Los AngelesLos Ángeles
Los Ángeles is the capital of the province of Biobío, in the commune of the same name, in Region VIII , in the center-south of Chile. It is located between the Laja and Biobío rivers. The population is 123,445 inhabitants...
, California has traditionally played a large role in the history of the film industry, both in the U.S. and at an international level. The first American film production companies emerged in New Jersey and New York. However, the relatively poor quality of early recording media and lighting systems meant that films had to be shot in sunlit glass studios. In turn, the lousy weather typical of the northeast states frequently hampered production. Eventually, a trend developed towards using the west and midwest United States as ideal locations for shooting.
Los Angeles, California during the early 1910s was an advantageous location for filmmakers. It had very clear, dry weather that "permitted outdoor filming for much of the year. In addition, southern California offered a variety of landscapes, including ocean, desert, mountain, forest, and hillside"
Creative and economic runaways
A report commissioned by the Directors Guild of AmericaDirectors Guild of America
Directors Guild of America is an entertainment labor union which represents the interests of film and television directors in the United States motion picture industry...
(DGA) defined two classes of runaway productions. "Creative runaways" are film and television projects that are produced, in part or in whole, outside the United States based on requirements of the script, setting, or due to preferences of the actors or director. Alternatively, "economic runaways" are productions made in other countries to "reduce costs." This type of production typically involves films that are set (written to be shot) in the United States but which instead have been outsourced
Outsourced
Outsourced is a romantic comedy film, directed by John Jeffcoat, released in 2006.-Plot:When Todd Anderson's job and entire department are outsourced, he reluctantly travels to India to train his replacement...
to other countries such as Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, Fiji
Fiji
Fiji , officially the Republic of Fiji , is an island nation in Melanesia in the South Pacific Ocean about northeast of New Zealand's North Island...
, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, Hungary
Hungary
Hungary , officially the Republic of Hungary , is a landlocked country in Central Europe. It is situated in the Carpathian Basin and is bordered by Slovakia to the north, Ukraine and Romania to the east, Serbia and Croatia to the south, Slovenia to the southwest and Austria to the west. The...
, Ireland
Ireland
Ireland is an island to the northwest of continental Europe. It is the third-largest island in Europe and the twentieth-largest island on Earth...
, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
, South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
, or the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
.
According to CEIDR, Canada receives 90% of U.S. runaway productions, and offers the bulk of the government subsidies. A subsidy is defined as financial contributions or kickback
Bribery
Bribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
s where "government revenue
Revenue
In business, revenue is income that a company receives from its normal business activities, usually from the sale of goods and services to customers. In many countries, such as the United Kingdom, revenue is referred to as turnover....
that is otherwise due is foregone or not collected", according to GATT – General Agreement on Tariffs and Trade
General Agreement on Tariffs and Trade
The General Agreement on Tariffs and Trade was negotiated during the UN Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization . GATT was signed in 1947 and lasted until 1993, when it was replaced by the World...
.
Canada's subsidies and the effect on American workers
According to a 2001 U.S. Department of Commerce report by Commerce Secretary, Norman MinetaNorman Mineta
Norman Yoshio Mineta, is a United States politician of the Democratic Party. Mineta most recently served in President George W. Bush's Cabinet as the United States Secretary of Transportation, the only Democratic Cabinet Secretary in the Bush administration...
, "Runaway film production' has affected thousands of (U.S.) workers in industries ranging from computer graphic to construction workers and caterers. These losses threaten to disrupt important parts of a vital American industry."
The U.S. film industry has voiced concerns about this outsourcing
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
trend which began in the mid to late 1990s, and which coincided with increased Canadian government subsidy programs.
A DGA-funded study confirmed that the Canadian government has engaged in a comprehensive and aggressive, long-term strategic campaign to lure U.S. productions to Canada. The report estimates that runaway productions cost the United States over 50,000 jobs and at least US$10 billion in production monies annually.
At least $13 billion is doled out annually in corporate welfare to the business sector in combined Canadian federal and provincial subsidies and tax breaks, according to the Canadian Taxpayers Federation (CTF), a conservative tax watchdog. The CTF released a report saying that from 1982 to 1997, the Canadian federal government handed out $11 billion in 32,969 grants and loans to the provinces earmarked as business subsidies or directly to corporations.
Conflicting employment data on the U.S. motion picture industry
In 1992, the MPAA claimed 164,000 Californians were directly employed in entertainment production, rising to 226,000 in 1996. Furthermore, in 1996, the estimated number of California jobs indirectly generated by the entertainment industry ranged from 233,000 to 253,100, which brought the "industry's total employment to well over 450,000." The MPAA claimed that entertainment production in California during 1996 generated $27.5 billion in economic activity for the state. The astonishing economic growth from 1992 to 1996, according to the MPAA, exploded for two reasons: (1) as the growth of multiplex theaters and cable television rose, it created a higher general demand for more entertainment media productions; and (2) "the possibility that this new production activity would occur outside California, or in other countries, did not materialize."In 2004, the MPAA reported employment numbers for the entire United States. The employment numbers were broken into three categories: production and services (P&S), theaters and video tape rental, and other. In 1995, the total number of Americans employed in the motion picture industry was 283,700 (135,200 in P&S); in 1997, total employment was 323,000 (159,600 P&S); in 2000, total employment was 351,600 (182,100 P&S) and; in 2004, total employment was 367,900 (198,300 P&S). Hence, in 1997, according to the MPAA 2004 report, total U.S. motion picture employment of 323,000 represents a huge discrepancy from the MPAA's earlier claim that, in 1996, the industry employed over 450,000 workers in California alone. Adding to the confusion, The Commerce Report—which used the same BLS data cited by the MPAA—claimed 236,152 workers were employed nationwide in motion picture production and allied services in 1997.
In August 2005, the Los Angeles Economic Development Corporation (LAEDC) released a report commissioned by the California Film Commission on the economic impact of runaway productions. The report compared motion picture employment numbers gathered from the MPAA and the United States Census for the same year, 2002. The data from the MPAA and the Census was divided into two categories: (1) overall motion picture employment in the United States and; (2) the amount of motion picture employment in California—how much California captures of the total U.S. figure. In 2002, the Census reported that 153,000 people worked in the motion picture industry in the United States and, of that amount, 88,500 worked in California. The MPAA data for 2002 reported 353,076 workers in the motion picture industry in the United States, with 245,900 of those jobs in California.
The MPAA, in 1996, claimed that the film industry employed 750,000 Americans, a number that remained on the MPAA's Web Site in 2008.
Competing subsidies
"Who is representing the interests of taxpayers here?" asked CTF Saskatchewan director David MacLean. "The film industry is playing the Saskatchewan government like a worn-out movie script, drawing them into bidding war with other provinces. It's a race to the bottom where nobody wins except film producers."When faced with the prospect of a worldwide subsidy war, Ron Haney, executive director of the Directors Guild of Canada
Directors Guild of Canada
The Directors Guild of Canada is a Canadian labour union, founded in 1962, which represents more than 3,700 professionals from 48 different occupations in the Canadian film and television industry. The DGC represents directors, assistant directors, location managers, production assistants and...
is quoted as saying, "Everybody can compete with tax credits now... It's absolutely frightening."
According to a study by the Canadian government, productions are beginning to "run away" from Canada as well. Productions are now going to countries that have introduced competing and/or counter-incentives and/or subsidies. Many productions are starting to return to the United States due to recent legislation to counteract runaway production.
While film and television employment attributed to foreign location spending and actual spending levels by such productions increased in 2008, the state film incentives enacted in U.S. states showed clear increases in the number of productions shooting in the respective enacting U.S. jurisdiction.
Several Canadian companies are also pulling their support for Canadian Television Fund (CTF) because, "(It) was never intended as a permanent source of funding" to subsidize broadcasters and programmers. One Canadian company stated that, "Our understanding was that after the initial five-year period, the fund would be self-sustaining and self-financing from a return on investment in successful productions."
"The Vancouver Sun's Michael McCullough points out that California not only has the world's highest production costs it also has no tax credits. How do they do it? That's the question BC's film industry should be asking, rather than looking to taxpayers to buck up... The tit for tat tax credit game is one with only one loser, the taxpayer. There will always be other jurisdictions that will out-subsidize BC. Louisiana
Louisiana
Louisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
offers a straight 20% subsidy for production costs, is that the next industry demand? It is not the job of the government to keep up with incentives but the industry's role to remain competitive."
Other U.S. attempts to end runaway production
The movement of industry jobs to other jurisdictions has led to the formation of non-profit U.S. industry groups, such as the Film and Television Action Committee (FTAC) as well as other groups such as the Directors Guild of AmericaDirectors Guild of America
Directors Guild of America is an entertainment labor union which represents the interests of film and television directors in the United States motion picture industry...
(DGA), the Screen Actors Guild
Screen Actors Guild
The Screen Actors Guild is an American labor union representing over 200,000 film and television principal performers and background performers worldwide...
(SAG) and others, who have been lobbying state and federal governments to introduce American legislation and counter-incentive programs. Several studies have concluded that foreign government subsidies for film and television production put American film industry workers and companies at an extreme disadvantage.
FTAC believes that foreign government subsidies such as those Canada uses to support its film industry labor are in violation of the WTO rules restricting or prohibiting the use of government subsidies to prop up previously undeveloped industries (such as the Canadian film industry). On September 4, 2007, the FTAC filed a Section 301 complaint with the United States Trade Representative (USTR). In the petition, the FTAC argued subsidies offered by Canada to lure production and filming of U.S.-produced television shows and motion pictures were inconsistent with Canada's obligations under the WTO. Six weeks later, October 19, 2007, the USTR rejected FTAC's petition. In a press release, the USTR's office stated:
"As provided under USTR regulations, the petition was reviewed by an interagency committee of trade and economic experts. Based on a thorough review of the economic data, other facts, and legal arguments set out in the petition, the interagency committee unanimously recommended that the USTR not accept the petition because a dispute based on the information and arguments set out in the petition would not be effective in addressing the Canadian subsidies."
Countervailing efforts in the United States
In recent years, some members of the United States CongressUnited States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
have attempted to counter the runaway production situation with counter-incentives.
The Jobs Creation Act of 2004 was just such legislation. The language in the bill allows U.S. producers of films with budgets under $15 million ($20 million if shot in a low-income neighborhood) to immediately write off their costs in a single year (if 75% of their principal costs are incurred via shooting in the U.S.) It also allows producers to be taxed at a capital gains rate of 15% (rather than at the higher 35% personal income tax rate). Previously producers had to amortize those costs over several years. It is not a cost "subsidy" program, but an indirect benefit by cutting down the red tape and taxes to encourage American film and television productions.
Local and state governments have also implemented counter-incentive programs in an effort to encourage domestic film productions to remain in the United States and the federal government has attempted to rein in all outsourcing
Outsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
with legislation to support and defend American jobs from unfair foreign competition.
Louisiana and New Mexico reaped tremendous benefit of being "first movers" to offer film incentives, which established a robust film and television production industry in their respective states. As other states noticed the success New Mexico and Louisiana were enjoying, they began enacting their own film incentive programs in the hope they could attract Hollywood productions as well. By August 2005, according to The Los Angeles Times, roughly 15 states had enacted film incentives. In February 2009, that number jumped to 40 states, with each incentive getting more generous to stay competitive.
The SARS scare
Severe Acute Respiratory Syndrome (SARS) originated in southern ChinaChina
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
in November 2002. By March 2003 cases were seen in people returning to Canada from Hong Kong, particularly in Toronto – a major runaway production location. According to the World Health Organization
World Health Organization
The World Health Organization is a specialized agency of the United Nations that acts as a coordinating authority on international public health. Established on 7 April 1948, with headquarters in Geneva, Switzerland, the agency inherited the mandate and resources of its predecessor, the Health...
(WHO), at the time there were 774 worldwide deaths related to SARS and Canada saw 438 probable SARS cases, with 44 deaths. According to Rhonda Silverstone, Toronto's film commissioner, Canadian production suffered a drastic downturn as American productions stayed home or located elsewhere. SARS scare aside, according to the Center for Entertainment Industry Data and Research, if it weren't for large subsidies, most U.S. producers prefer to stay home and shoot in the United States anyway.
Canadian labour disputes
In early 2007, a six-week strike by members of the Canadian actors association ACTRAACTRA
The Alliance of Canadian Cinema, Television and Radio Artists is a Canadian labour union representing performers in English-language media. It has 22,000 members working in film, television, radio, and all other recorded media....
initially affected productions in Ontario, later spreading to Manitoba, Quebec, and Saskatchewan. The labour dispute led to the cancellation of two major film productions scheduled to shoot in Toronto
Toronto
Toronto is the provincial capital of Ontario and the largest city in Canada. It is located in Southern Ontario on the northwestern shore of Lake Ontario. A relatively modern city, Toronto's history dates back to the late-18th century, when its land was first purchased by the British monarchy from...
.
The labour dispute was resolved on February 21, 2007, with wage increases to bring Canadian performers on par with their American counterparts. One of the primary issues involved establishing compensation for Internet use of productions. American studios were reluctant to agree to a deal when no similar agreement exists with U.S. actors. According to ACTRA's chief negotiator Stephen Waddell, "we're the first union that has a collective bargaining agreement that specifically covers this area."
Walt Disney Motion Pictures Group
Walt Disney Pictures
Walt Disney Pictures is an American film studio owned by The Walt Disney Company. Walt Disney Pictures and Television, a subsidiary of the Walt Disney Studios and the main production company for live-action feature films within the Walt Disney Motion Pictures Group, based at the Walt Disney...
had decided against shooting in Montreal and Toronto "for fear of a strike or lockout," allegedly threatening to shift those shoots back to the U.S. According to the Canadian Film and Television Production Association, at least three large scale U.S. productions have canceled plans to shoot in Canada due to concerns over the possibility of a long strike and the lack of predictability of Canadian labour. "It's an absolute disaster," said Paul Bronfman, chairman and CEO of the Comweb Group, a leading supplier of film services and equipment in Canada, "Our industry is in deep, deep s---." According to a National Post article, "Mr. Bronfman said the strike could kill Toronto's once-bustling film industry, already suffering after 9/11, SARS, the rising dollar and growing international competition. I am currently in Los Angeles making the rounds with major and independent studios, and everyone is giving the same message: You guys are not competitive anymore, (and) your actor strike is the final nail in the coffin for avoiding Canada like the plague," Mr. Bronfman said."
The September 11, 2001 attacks and aftermath
In an attempt to reconstruct the film industry in New York after the September 11, 2001 attacksSeptember 11, 2001 attacks
The September 11 attacks The September 11 attacks The September 11 attacks (also referred to as September 11, September 11th or 9/119/11 is pronounced "nine eleven". The slash is not part of the pronunciation...
, many new "Made in NY" counter-incentives have been developed to lure film productions back to the "Big Apple". According to the film industry trade magazine Variety, after installing counter-incentives New York City hit a record high for production, re-upping its number of shooting days 10% from 2005.
Inspired by the success of New York's campaign to regain lost jobs, Los Angeles
Los Ángeles
Los Ángeles is the capital of the province of Biobío, in the commune of the same name, in Region VIII , in the center-south of Chile. It is located between the Laja and Biobío rivers. The population is 123,445 inhabitants...
Mayor Antonio Villaraigosa
Antonio Villaraigosa
Antonio Ramón Villaraigosa , born Antonio Ramón Villar, Jr., is the 41st and current Mayor of Los Angeles, California, the third Mexican American to have ever held office in the city of Los Angeles and the first in over 130 years. He is also the current president of the United States Conference of...
is hoping to initiate counter-incentives to lure film productions back to Los Angeles.
The reality television boom
Although feature filmmaking in Los Angeles is still negatively affected by runaway production, the reality TVReality television
Reality television is a genre of television programming that presents purportedly unscripted dramatic or humorous situations, documents actual events, and usually features ordinary people instead of professional actors, sometimes in a contest or other situation where a prize is awarded...
boom has meant that many U.S. television productions are more likely to be shot where they are situated, in the United States.
See also
- Branch plant economyBranch plant economyThe branch plant economy is the phenomenon of United States companies building factories in Canada, primarily to sell products in the Canadian market. In the period between the American Civil War and World War I, U.S. companies began to look to Canada as a new market. The branch plants built in...
- Cinema of Canada
- Cinema of the United StatesCinema of the United StatesThe cinema of the United States, also known as Hollywood, has had a profound effect on cinema across the world since the early 20th century. Its history is sometimes separated into four main periods: the silent film era, classical Hollywood cinema, New Hollywood, and the contemporary period...
- List of movie-related topics
- Movie production incentives in the United StatesMovie production incentives in the United StatesMovie production incentives are offered on a state-by-state basis throughout the United States to encourage in-state film production. These incentives came about in the 1990s in response to the flight of movie productions to other countries such as Canada. Since then, states have offered...
- OffshoringOffshoringOffshoring describes the relocation by a company of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Even state governments employ offshoring...
External links
- The Creative Coalition – member's advocacy work against runaway production
- "The New Rules Project" By Simona Fuma Shapiro Fall 2000 "The Culture Thief"
- The Rocord.com – Insider – "Another Twist in ACTRA Strike Drama" (Feb 2, 2007)
- 2003 – Congressmen Dreier, Berman Re-Introduce Runaway Production Legislation
- Reuters – Canada "Court orders arbitration in Canadian actors' strike" Wed Jan 31, 2007
- 2004 – Governor Schwarzenegger Joins with Other Big State Governors to Push for Federal Incentives Package to fight runaway production
- Variety 7/31/2006, 2006(subscription) "Runaway drain? Study: Pic biz in big production pickle"
- Los Angeles Times January 22, 2007 "L.A. airports fly high with film shoots" By Tony Barboza, Times Staff Writer