Hollywood Production in Canada Declines on Currency, Tax Blues

2012-31 BKLOT Canada Pacific Rim H

Guillermo del Toro's sci-fi epic "Pacific Rim," with Charlie Hunnam and Rinko Kikuchi, used all seven stages at the massive Pinewood Toronto Studios.

The foreign location shooting retreat, especially in Vancouver, follows three years of strong growth, despite a rising Canadian dollar and competition from rival U.S. states.

TORONTO – Foreign location production, mostly by U.S. producers, has taken a breather in Canada.

Total budget spending here by Hollywood studios in the year to March 31, 2012 was down by 10.6 percent to $1.68 billion, according to the Canadian Media Production Association’s Profile 2012 survey.

The year-on-year fall was down to Hollywood finally feeling the pinch of a rising Canadian dollar, compared to the American greenback, and reduced production levels in Vancouver, where two-thirds of American location shooting occurs.

The foreign location shooting retreat followed three years of strong growth, from $1.44 billion in activity in 2008/09 to $1.87 billion in 2010/11.

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Canada in recent years has kept Hollywood coming here, despite a stronger Canadian dollar and competition from rival locales like Louisiana and New Mexico, by juicing its film tax credits for foreign producers, especially in Ontario and Quebec.

And Vancouver became a magnet for U.S. TV series production, especially during pilot season, on top of feature film shoots.

But the upcoming disappearance of the film-friendly HST tax and British Columbia’s film tax credit not keeping pace with tax sweeteners in Ontario and Quebec finally has Vancouver's production center struggling.

During 2011/12, British Columbia’s foreign location shooting activity fell 19.2 percent to just over $1.1 billion, with shrunken feature film production – especially after Vancouver lost the blockbuster feature The Wolverine to Sydney – in part explaining the trend.

The irony is British Columbia, which in the last decade absorbed much out-sourced production from Hollywood, has seen foreign film and TV shoots run away to Toronto and Montreal.

Ontario boosted its foreign location shooting activity from $224 million in 2010/11 to $382 million during 2011/12, the last period surveyed by the CMPA report.

Toronto production was boosted by local shoots for Guillermo del Toro’s Pacific Rim and the Robocop reboot and NBCU’s Defiance and Warehouse 13 TV shoots.

But with British Columbia accounting for 66 percent of all foreign production volume in Canada, any decision by Los Angeles producers to bypass Vancouver because of currency and tax issues is bound to worry Hollywood north as it continues to hold itself out as a paragon of stability to the major studios.