Location report: Canada

The country's golden age of runaway production might be over, but a number of ambitious new tax breaks could help turn back the clock.

TORONTO -- For a while, it seemed too good to be true: During the late 1980s, Canada became the shooting destination of choice for cost-conscious American producers in need of versatile locations, irresistible tax breaks and experienced crews. After all, why shoot on location in New York when a project's budget could be cut in half by tapping scenic Montreal as a stand-in?

The boom helped mint an experienced local roster of production and location managers, crew members and acting talent, and even as the increase in runaway shoots in Canada drew the ire of Hollywood-friendly politicians, the Screen Actors Guild and the Directors Guild of America, Toronto, Vancouver and Montreal became legend as the industry's newest backlot.

As the saying goes, however, all good things must come to an end -- or, at least, a slowdown. With nearly every major territory worldwide and most U.S. states offering financial incentives to attract bottom-line-minded film producers, Canada finds itself in a unique position, vying with such rival locales as Eastern Europe and Australia for American production dollars that were once practically guaranteed.

Making matters worse, the value of the Canadian dollar has risen sharply of late compared with that of the American dollar, reducing potential cost savings for U.S. producers, and labor disputes have disrupted business within some of Canada's largest production sectors.

Of course, the flow of U.S. productions into Canada has not stopped altogether. Two of the most recent best picture Oscar nominees, 2005's "Brokeback Mountain" and "Capote," shot in Alberta and Manitoba, respectively, and several other high-profile Hollywood projects are now filming north of the border. Vancouver stands out as a location used by those movies, buoyed by a string of studio shoots including Fox's planned June release "Fantastic Four: Rise of the Silver Surfer," directed by Tim Story; Paramount's Halle Berry starrer "Things We Lost in the Fire," helmed by Susanne Bier; and Paramount's "Hot Rod," directed by Akiva Schaffer and starring Andy Samberg of NBC's "Saturday Night Live."

"We've been fortunate," says Peter Leitch, president of Vancouver-based Lionsgate Studios and executive committee chairman of the Motion Picture Production Industry Association of British Columbia. "The last six months have been pretty steady -- we have no complaints right now."

Still, given so much competition from around the globe and a strong loonie, Canucks in the rest of the nation are not as optimistic. Toronto, in particular, has seen better days.

"This year has been disappointing," says Ken Ferguson, president of major operator Toronto Film Studios. TFS' soundstage occupancy decreased 6%-7% from year-earlier levels during the first half of 2006, "and 2005 wasn't a banner year," he adds.

Paul Bronfman, chairman and CEO of Toronto-based Comweb Group, a major studio operator and production-equipment supplier, believes that foreign location shooting in Toronto actually risks being derailed by an impasse between studios and the U.S. union IATSE over the issue of producers being forced to hire local union members based on seniority.

"Yes, there's competition from U.S. states, and the (Canadian) dollar is high," he says. "But producers will not be forced to use seniority -- it's an outdated system."

Others speculate that labor problems are precisely the reason so many feature-film projects are choosing Vancouver over other Canadian locations. In Vancouver, local technical unions and guilds have coalesced peacefully within the British Columbia and Yukon Council of Film Unions, so foreign productions need not worry about becoming embroiled in the nasty labor conflicts that have plagued business in Toronto and Montreal (the latter is home to an ongoing turf battle between IATSE and AQTIS, Quebec's traditional technicians union).

Hans Fraikin, film commissioner for the newly established Quebec Film and Television Council, believes that agreement among unions is essential as Canada's locations sector undergoes its current transition.

"The unions' mandate is to represent employees," he says. "It's against their interest to start disturbing the industrial peace."

Most Canadian professionals are heeding that call to unity, determined to do everything in their power to lure back foreign productions. In addition, several provinces have begun to institute tax-credit hikes for non-Canadian producers: Nova Scotia recently introduced a 5% frequent-filming bonus and raised its foreign tax credit from 30% to 35% for shoots in Halifax and from 35% to 40% for shoots in the rest of the province, and Manitoba followed suit by hiking its foreign tax credit from 35% to 45% while retaining the province's 5% rural bonus and 5% frequent-filming bonus. The upshot of the latter? A foreign location shoot in Manitoba can enjoy tax credits worth as much as 55% of its production costs.

Thus far, the generous incentives seem to be working.

"We're at capacity for crews," Manitoba Film & Sound CEO Carole Vivier says of the recent influx of U.S. independent movie productions to her province. "Films prepped in January, and it has been very busy through the spring and the summer."

Manitoba recently has hosted productions including Warner Bros. Pictures' Brad Pitt starrer "The Assassination of Jesse James by the Coward Robert Ford," directed by Andrew Dominik and planned for a 2007 release; Warners' Stephen Berra-helmed "The Good Life," also slated for release next year; and Miramax's Jeff Daniels starrer "The Lookout," directed by Scott Frank and tentatively set for release this year.

After Manitoba and Nova Scotia increased their tax credits, Canada's largest production centers --Toronto, Vancouver and Montreal -- introduced "me too" hikes. British Columbia and Ontario raised their foreign tax credits from 11% to 18% to keep Los Angeles-based producers interested, and Quebec raised its credit from 11% to 20%.

Ann MacKenzie, CEO of the Nova Scotia Development Corp., which promotes foreign location shooting in that province, argues that the ongoing -- albeit increasingly small -- differential between the Canadian and American dollars means shooting north of the border can still save Hollywood producers money. "Until we're dollar for dollar on par, there's some economic benefit," she says.

But while foreign and domestic producers are drawn to such cities as Winnipeg and Halifax because of higher tax credits, they incur extra costs when flying in -- and putting up in hotels -- key cast and crew members, not to mention production executives.

"Does it amount to a savings, or would it make sense to make your movie or TV series in Toronto or Vancouver anyway?" asks Ira Levy, co-founder of and a producer at Toronto-based Breakthrough Films & Television.

It's a provocative question that Canadian professionals should continue to debate heatedly during the coming months.