Federal Study Backs Claims of Lost Movie Jobs

WASHINGTON —  Drawn by tax breaks, weak currencies and comparatively low wages, production of an increasing number of feature films and television programs has shifted from Southern California to Canada and other countries around the globe, costing the U.S. economy as much as $10 billion a year, the Commerce Department reported Friday.

The study, which reiterates the conclusions of similar past studies, found that losses “have been particularly acute in made-for-television [movie] and miniseries productions, thin-profit shows that first began migrating to Canada in the 1980s to save money. In 1998, out of 308 U.S.-developed made-for-television movies, 139 were produced abroad--a significant increase from the 30 produced abroad in 1990.”

Although the department emphasized that the U.S. film industry still dwarfs that of most other countries, it said, “All of our research indicates that the rates of growth in many foreign countries, particularly English-speaking countries, may well have considerably outstripped the growth in the United States throughout the last decade.”

The study is likely to revive the longtime debate about whether Canada is unfairly stealing production jobs from Hollywood. Directors Guild of America President Jack Shea, echoing Hollywood labor groups, called the Commerce report a “comprehensive study of the loss of production and American jobs to other countries as well as its impact on American workers in the movie and television business.”

But Canadian officials, citing tax records, have said that runaway production studies wildly inflate the problem as well as the dollar amounts of lost production to provide lobbyists with political ammunition. According to the Canadian law firm Goodman, Phillips & Vineberg, Canada’s total film and TV business is only about $2.5 billion a year, of which Canadian officials estimate $750 million to $1 billion is non-Canadian.

“Yes, the Canadian government has provided incentives for film production in Canada,” Canadian Embassy spokesman Terry Colli said. “But those numbers are grossly exaggerated. Only about 3% of film production in North America takes place in Canada, and we make up 10% of the entertainment audience.”

Friday’s report is a compilation of past research, and borrows heavily from a study, funded by the Screen Actors Guild and the Directors Guild of America, released two years ago that reached similar conclusions.

That 1999 study also used the controversial $10-billion number, which does not represent direct production lost but rather the potential economic “multiplier” effect that could ripple through the economy. At the time of the 1999 study, one UCLA economic forecaster disputed that $10-billion number, saying that at most it was only about half that amount.

Commerce began work on the report early last year, but it accelerated the study in September after a bipartisan group of House members called for comprehensive information on the impact of runaway film production on carpenters, drivers, caterers, janitors and others whose work usually doesn’t appear in a film’s credits.

“Runaway film production has affected thousands of workers in industries ranging from computer graphics to construction workers and caterers,” said Commerce Secretary Norman Y. Mineta in summarizing the report that was issued on the last day of the Clinton administration.

The report said that foreign governments offer a variety of incentives to lure U.S. productions, especially made-for-television movies and miniseries. As a result, the film industries in Canada, Australia, Britain and several other countries have duplicated in the last decade the progress it took U.S. studios most of the 20th century to record.

“The Commerce report affirms what we already knew--that runaway production dramatically impacts the lives of Angelenos in a very real way,” said Rep. Xavier Becerra (D-Los Angeles). “The stakes are high when we are talking about people losing jobs.”

But Canadian officials and some economists argue that production jobs are growing everywhere as demand for programming soars. Indeed, the Los Angeles Economic Development Corp. reports that entertainment industry employment in Los Angeles County is up more than 8% from a year ago and now totals 272,500, although it attributes some of that increase to accelerated activity in anticipation of a possible actors and writers strike later this year.

Like many economic trends in the 1990s, the runaway film phenomenon was fueled by advances in computer technology. In the past, the report said, directors, actors, producers and other specialists had to be in the same location to produce a film.

“Nowadays, once a film is shot, it is transferred to videotape format, digitalized, transmitted over the Internet, and an editor sitting at any location in the world can use powerful computers and sophisticated software programs to perform his tasks. . . . Long distances and geographical borders are simply not as important as they once were.”

The department conceded that official statistics “are woefully deficient due to the intangible nature of the industry.” However, it said, “Official labor statistics indicate that 270,000 jobs in the United States are directly involved in film production--more than the number of workers directly employed in the steel industry.”

Far more workers hold jobs that are indirectly linked to U.S. film production, the report said.

Last year, members of the congressional task force on the entertainment industry proposed legislation giving tax breaks to domestic film companies, much as foreign governments have been doing for years. The measure did not pass, but a staffer said lawmakers plan to try again this year.

“Domestic production is the lifeblood of our entertainment industry,” said Rep. Mark Foley (R-Fla.), chairman of the task force. “Hundreds of thousands of jobs across the country depend on domestic production. This report outlines the severity of the problem and underscores our need to work proactively to stem this growing tide.”

Rep. Howard Berman (D-Mission Hills) said the report documented that “the below-the-line employees are really hurting in Los Angeles and other U.S. cities.”

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Kempster reported from Washington and Bates from Los Angeles.