Hollywood Tells Panel of Losses to Canada

Hollywood’s skirmish with Canada picked up steam during a special state Assembly hearing on Wednesday as union representatives, suppliers and state officials contended that Canada’s weak currency, government tax incentives and restrictive work rules threaten to eat into Hollywood’s already slowing production activity.

Estimates during the hearing, chaired by Speaker Pro-Tem Sheila Kuehl (D-Santa Monica), of potential economic and tax losses varied widely, reflecting the lack of solid data on the issue. But Ed Kawahara, deputy secretary of the California Trade and Commerce Agency, said that if 1% of entertainment production leaves the state, state tax revenue would decline by nearly $9 million.

“It’s basically ours to lose,” Kawahara said.

Since the early 1980s, Canada has been competing for Hollywood production work typically on low-budget, thin-margin television movies, programs for children and lower budget syndicated TV shows. The issue of Canadian competition has been exacerbated lately by the flattening of what had been a torrid growth pace for Southern California’s entertainment industry.

Several causes underlie the slower pace, such as studios trimming their films slates, drops in commercial production due to economic uncertainty and cost pressures on both the TV and film industry. A number of those testifying spoke about the slowdown in activity during the last few months compared with the rapid growth pace the industry experienced during the previous five years.

Michael Moore, president of Raleigh Studios, a major sound stage facility in Hollywood, said occupancy is about 55% now compared with 94% in 1996.

Bruce Doering, executive director of Local 600 of the International Alliance of Theatrical and Stage Employees, said he called three owners of camera rental houses before the hearing to gauge how business was. The first, he said, told him business was down 50% from a year ago, while the third was in Canada inspecting a new office opened there.

Screen Actors Guild President Richard Masur complained that he U.S. entertainment industry has exported its expertise to Canada. Masur said that while Canada once only had two crews each in Toronto and Vancouver, those cites now have enough trained crews to handle from 30 to 40 productions.

Canadian officials argue that many of the productions in Canada are low-budget and low-profit. They also argue that Canada’s growth in entertainment mirrors similar international growth.

No Canadian representatives were invited to speak at the hearing at the Hollywood Entertainment Museum, although Jerry Kramer from the Canadian Consulate General’s office in Los Angeles attended and buttonholed Kuehl during a break to plead Canada’s case. Kuehl responded that she see doesn’t fault Canada being aggressive in trying to get production business, but feels that California should fight to protect its home grown entertainment industry.

Among the proposals is for the state to offer aggressive tax breaks. Patti Archuletta, director of the California Film Commission, said that Los Angeles needs to look at ways it can trim the fees it charges the industry.