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On a Monday afternoon not long ago, I found the leader of the anti-Canada movement hard at work, preparing to blow up a downtown Vancouver office building. Once the explosives had been detonated and the building had crumbled to the ground in a cacophony of fire and carnage, a smile must have flashed across Brent Swift's face.

This act of violence, after all, marked a neat confluence of Swift's two jobs. He spent days assembling this scale model inside a Hollywood studio. Its filmed slow-motion demolition, spliced together with scenes shot in the real Vancouver building, would make up one of the bigger bangs in an Arnold Schwarzenegger action movie. And when Brent Swift the production designer wasn't setting this building up for a fall, Brent Swift the lobbyist was busy striking blows against Toronto, Montreal and Vancouver, which he believes have stolen Hollywood jobs. As chairman of the Film and Television Action Committee, a lobby group supported by Hollywood's major film-craft unions, his opinion matters.

Even though this film was conceived, produced and financed in Hollywood, almost all of its shots, and all but a few of its thousands of jobs, were located in Vancouver. It was far from alone. Since 1998, Canadian federal and provincial governments have offered tax-credit subsidies to foreign movie companies that locate their cameras north of the border, as long as they hire Canadian crews (these subsidies are at a slightly smaller percentage but otherwise similar to the credits offered to Canadian movies). The result has been a growing flood of U.S. films and TV shows, big and small, into Canada. Between the subsidies and the cheap Canadian dollar, producers can carve off more than a third of a film's budget: A thriller might cost $60 million (U.S.) to shoot in Hollywood, but can be made in Vancouver for as little as $36 million (U.S.).

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"This movie shows what's wrong with the system," Swift says. "There's no reason not to shoot it in Hollywood, except the Canadian government has paid the producers to take their jobs to Vancouver."

In the past two years, thanks to people like Swift, the "runaway production" has changed from an obscure show-biz term into one of those menacing spectres, like the San Andreas Fault and Africanized killer bees, that enliven dinner-table conversations across the Los Angeles basin. Many people in Hollywood believe the runaway menace is destroying the movie industry. "Our films are leaving, and not coming back," Swift says. "There are literally thousands of people out of work. We're being screwed...this could turn into a ghost town if we don't do anything."

That view is popular enough to have attracted thousands of people to rallies outside the Academy Awards and last year's Democratic National Convention, at which protesters brandished signs showing maple leaves with slashes through them and chanted "Stop Canada" and "Bring Hollywood home." And on the Clinton administration's final day in office, Jan. 19, the U.S. Commerce Department released a study which broadly concluded that tens of billions of dollars in movie and TV work and 20,000 jobs had been lost to Canada.

As anyone trying to navigate downtown traffic can attest, Canadian cities are indeed swamped with U.S. movie productions these days. North of the border, you won't hear the phrase "runaway productions," though. The preferred term is "Hollywood North," and the favoured myth has to do with American money creating a Canadian industry. Hollywood's movie shoots and the jobs and dollars that go with them, the story goes, will help build a lasting Canadian movie industry. In Los Angeles, it may look like erosion, but in Canada it looks like construction.

Those twin myths--the Runaway Recession and the Hollywood-North Miracle--have become the yin and yang of the movie business, feeding on the same statistics, building anger and glee in equal parts. In both cases, they are supported by little more than rhetoric, and the truth is unlikely to please either group.

One thing beyond question is that Hollywood has shipped a lot of its grunt work north. About 300 U.S. movies and TV shows are shot on Canadian sound stages and outdoor locations annually. In some genres, Canada has managed to out-Hollywood Hollywood: American producers shot 154 made-for-TV movies in Canada in 1999, and only 70 in the U.S. Last year, foreigners (almost entirely American) spent $1.5 billion (Canadian) shooting in Canada, representing a third of Canada's $4.4-billion film and TV industry. These numbers are up 37% from the previous year, and have seen double-digit growth almost every year since 1990.

Of course, film editing, post-production and marketing, and almost all of the writing, development, decision-making and financing, still take place in Los Angeles County, and almost all of the stars in these productions are American. At its heart, this is strictly a blue-collar issue, involving the thousands of guys in jeans and T-shirts who populate movie sets, working on short-term contracts. For people like Brent Swift, the numbers look terrifying. Witness a pair of pie graphs published in the Commerce Department's report: One shows movies shot in the U.S. taking up a healthy 71% of all production in 1990. On the 1998 pie, the foreign (mostly Canadian) slice has swollen to nearly 40%.

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But look again. For the past couple of years, it's been hard to find anyone without a job in Hollywood. In recent months, the threat of strikes by writers and actors has created a panicked boom in employment, and those strikes may lead to a temporary slump--but even in 1998, 1999 and 2000, when labour conditions were stable and Canada supposedly was draining away jobs by the thousands, Hollywood looked like a boomtown. Where is the crisis?

"I don't think I would characterize anything as a crisis," chuckles James Gikas, the senior vice-president of Recon Research Corp., a Hollywood firm that tracks entertainment-industry employment trends for such clients as The Wall Street Journal. He's one of the few people who have a firm handle on show-biz employment levels; the numbers aren't tracked well by the U.S. or Canadian governments. As we spoke, he pulled a graph of Los Angeles movie employment onto his computer screen. It showed a steep upward curve: from 130,000 jobs in 1993 to 190,000 in 1999. In the past two years, the line has risen more slowly, to just more than 200,000 jobs, but it has never dipped. If tens of thousands of jobs have fled to Canada, a lot more must have marched in to replace them. "When they say that 20,000 jobs were lost," Gikas says, "I'd say it would be hard to find any job loss at all in this sector."

It might be truer to say that 20,000 new jobs were forfeited to Canada. But there probably weren't enough people in California to fill them anyway: Unemployment rates in L.A. have hovered between 4.6% and 5.5% in the past year, Gikas says, and, since those figures include the city's poorest neighbourhoods, the rate is probably much lower in the movie colony. In other words, if those 20,000 jobs were to return to Hollywood, they'd probably have to import skilled workers to fill them--from somewhere like Canada.

In 1999, Los Angeles was home to $31.2 billion (U.S.) in feature-film production, according to Variety. Canadians, as Heritage Minister Sheila Copps is fond of pointing out, make up 10% of the U.S. movie market (Canada is the only country in the world that Hollywood treats as part of its "domestic" audience). Yet, since almost all of Canada's movie theatres are U.S.-owned, we underwrite Hollywood's fortunes without reaping any of its benefits. Meanwhile, Canada's entire film and TV sector, far from being a threat, is not even one-tenth the size of L.A.'s, even considering Canadian-content movies and TV series, the CBC and the National Film Board on top of the runaways.

Canada's cut-rate lure has undoubtedly had an impact on Hollywood, but a very small one, more than offset by the growth in each of internet entertainment, cable TV and independent film. In 1990, 716 Hollywood feature films were shot north and south of the border; by 1998, the number had grown to 1,075 (and that doesn't include TV movies or series). Canada's slice may be growing, but the pie is much bigger.

On a typically sunny day a few months ago, I visited Occidental Studios, a soundstage-rental facility in Hollywood. Since they are little more than landlords who offer very short-term leases to movies and TV shows, sound-stage companies tend to track the industry's fortunes very closely.

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At Occidental, manager Scott Eberlin told me that 10 of his 12 stages were full, with productions ranging from a Pamela Anderson series to a cooking show to several small feature films and some live-action filming for a web site. The whole facility was pretty solidly booked for several months, to the point that Occidental was trying to buy up nearby blocks of houses so it could expand.

Eberlin told me that he's heard of the boom in Vancouver and Toronto, but it has not had any noticeable effect on his bookings. "No," he said of the runaway threat, "that's just an excuse people use when they're not making it in this business."

Touring Occidental's barn-like stages, Eberlin and I came to Stage 1, where the cameras were rolling on a teen-romance feature, Slackers. Jason Schwartzman (Rushmore) was practising his proclamation of love to the leading lady in front of a few dozen idle crew members. Just then I noticed that this was, of all things, a Canadian movie, produced by Toronto's Alliance Atlantis Communications Inc. in conjunction with an American partner. As such, you would think it could be made at far lower cost in Vancouver or Toronto, possibly using Canadian-content rules to gain even larger subsidies than the runaways receive.

It was not the first Canadian production I'd found in California in recent months. These stray northerners-sun-away productions-seem to confound everything Canadians and Americans expect from their movie mythologies. At the time, I had no idea how to explain them.

Things started to become clearer when I visited Bridge Studios, a sound-stage facility several thousand kilometres up the Pacific coast in Burnaby. Back in the mid-1980s, the only runaways housed in what was then the abandoned Dominion Bridge factory were the teenage kind. Nowadays, it is behaving like a factory once again. In the wake of Expo 86, the plant was picked up by the B.C. government, and turned into Vancouver's first and largest sound-stage facility with about $10 million in government money. At first, this seemed a dubious public investment, but it has since been returned several times over. In 1999, B.C. had its first $1-billion production year, almost all of it coming from Hollywood features and TV series.

The day I visited, the upstairs portion of Stage 1 was home to the short-lived U.S. TV series Breaking News; Stages 5 and 6 were filled with the "Stargate Command" set for the U.S. sci-fi series Stargate SG-1. Stage 4 contained giant mushrooms and flowers, as baby wranglers tended to the four toddlers who would star in a diaper commercial. And the main chamber of Stage 1, a space that could hold a couple 747s, was swarming with welders and carpenters putting together the set for the action feature Thirteen Ghosts.

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All manner of Hollywood product was on view here, but there was one thing I did not find: a Canadian film. "We don't get a lot of Canadian features," said Susan Croome, the general manager. According to operations manager Ron Hryniuk, only a handful of domestic features have been booked here in the 14 years he's been around. "Generally," says Croome, "the domestic productions in B.C. just haven't had the budgets to build big sets or use sound stages."

In other words: Even as northward-bound, $100-million Hollywood blockbusters have given Canada a billion-dollar film industry, Canada's own movies remain small and cheap. The average budget of a Canadian feature in 1999 was $2.9 million, a figure that varied only slightly throughout the 1990s and that does not appear to have increased recently.

Which is not to say that a movie must be big to be good. But it must at least be seen. Canadian movies, even acclaimed titles like Denis Villeneuve's Maelström, which cleaned up at the Genie and Jutra awards, are rarely seen by Canadians. Maelström played on seven screens in French, and on one screen in English in Montreal, Toronto and Winnipeg. According to Statistics Canada, only 3% of the movies seen in theatres by Canadians are from their own country, and only 2% of video rentals are Canadian. This, too, has varied little in the last 10 years.

So the real issue of runaway productions is not whether they're damaging the American film industry-they're certainly not--but whether they're doing anything to help the Canadian film industry.

Ottawa has been trying to build Hollywood North since 1967, when the agency now known as Telefilm Canada began offering grants to filmmakers. Over the next few decades, a variety of tax shelters and subsidies were fielded, some disastrous and some successful, leading to an artistic renaissance in the 1980s, with such admired directors as David Cronenberg, Atom Egoyan, Denys Arcand and Patricia Rozema gaining international attention. In the 1990s, the movie business seemed to stall: Money was being made, but the culture wasn't there.

And then Canada began writing cheques to Hollywood. As activists like Swift are eager to point out, government subsidies to foreign businesses are generally considered unfair under free-trade agreements. But Canada negotiated an exemption for cultural industries under the Free Trade Agreement, ostensibly to protect Canadian culture from American competition. It is therefore a little sneaky for Canadians to use that protection to subsidize Hollywood productions.

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By most estimates, Ottawa and the provinces now write between $50 million and $100 million in tax-credit cheques to Hollywood producers each year. The implicit justification for these subsidies, and for the millions spent on publicly owned sound stages and film offices that mainly serve visiting Americans, is this: Not only will the subsidized Hollywood productions create thousands of temporary jobs here, but they will also bolster Canada's own movie industry, seeding the skills and knowledge to create Hollywood North.

"By offering conditions that foster growing numbers of foreign productions, the Quebec government is creating the conditions that will bolster the domestic film and television industry," Quebec's film agency said in 1998, offering a typical justification for the tax breaks. "The economic spinoff and job creation that will result from foreign film productions in the province can only spur domestic productions."

But do those foreign productions really spur domestic productions? After three years of subsidies to Hollywood, there is little sign that Canadian culture has been aided. On the contrary, there is every sign that runaway productions are actually damaging Hollywood North.

Last year, for instance, Ontario reported an unprecedented boom in Hollywood location shooting: half a billion dollars spent on 83 American movie and TV projects, an increase of 22% from 1999, which was itself a record-breaking year. But domestic production actually dropped, to $468 million from $491.3 million in 1999. Last year, British Columbia saw a record 84 foreign productions, valued at $760 million; domestic productions declined to 108 from 116 in 1999. Atlantic Canada saw a 6% drop-off in Canadian culture, while U.S. money more than doubled.

Nationally, only 30 Canadian feature films were made last year, down from 33 the previous year. Across Canada, culture bureaucrats have begun to realize that all those foreign movie productions have done little for their own artists. "This has been a huge boom in employment, but proportionately our domestic production isn't going up, so we should be concerned about that," says Adam Ostry, Ontario's film commissioner.

And here lies the root of the problem: Runaway productions, with their big, stable budgets in U.S. dollars, are far more attractive to film crews. According to Paul Harding, president of the Toronto local of the International Alliance of Theatrical Stage Employees, runaways typically pay 14% to 16% more than local productions. His members face only 2% unemployment. "Water finds its own level," Harding said. "There's a [Hollywood]production boom and the market gravitates toward the better wages. The indigenous productions will have to come up to that level-which is good for us."

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It is not so good for Canada's movie producers, who must already wrestle with the complex rules of a half-dozen government agencies just to make a low-budget movie. In its most recent annual report, the Canadian film and TV producers' association warned that demand for skilled workers had outpaced supply, and noted that "U.S. producers are often in a position to outbid local Canadian producers for local crews."

Some producers have simply given up on Canadian culture. "To be honest, I'd like to be doing a [Canadian]film, but right now it's not worth it," Patrick Whitley, president of TV-movie specialist Dufferin Gate Films, told me last year. "I just can't get around all the red tape and interpretation from government bureaucrats." With American networks willing to assume the risk, and offer cash budgets with little bureaucracy, why bother with local culture?

And other producers have begun to explore an even more radical course: the sun-away production. There are a number of reasons to go south. Often an American partner wants to be close to the action. Other times (as with the Alliance Atlantis production I witnessed in L.A.), you might want to be close to U.S. stars and locations. And nowadays, there's another reason: In some cases, it might actually be cheaper.

As Canada's movie wages have been spiralling upwards, Hollywood's have been adjusting downwards: According to Gikas, the Hollywood economist, average weekly wages in the L.A. motion-picture industry jumped from $800 to $820 (U.S.) per week in 1993 to $1,300 to $1,350 in late 1998 and early 1999, but have now fallen back to $1,150. This is still considerably more than the Canadian average, but in some cases the narrowing wage differential, and higher availability of workers in California, have made it desirable to send movies south.

"A non-union shoot in San Diego is cheaper than doing it in Canada right now," says Jay Firestone, president of the Toronto-based production house CanWest Entertainment, who is producing the series Even Steven in San Diego. Firestone's movie-production office, Fireworks Pictures, is based in Beverly Hills, and he expects to make most of its movies and some of its TV shows south of the border. Meanwhile, Landscape Entertainment, run by L.A.-based Canadian movie executive Robert Cooper and founded with a controlling $49-million investment from CTV, has ambitions to become a full-scale Hollywood studio. Alliance Atlantis, Canada's biggest film and TV production company, has a significant share of its feature-film production staff located in L.A. Canada, to everyone's surprise, is beginning to send a good number of its own films south. "It's a supply-and-demand cycle," says Firestone. "The demand's huge, the [Canadian labour]supply is now used up, so prices are going up."

Canada's movie boom, it turns out, is really just Hollywood's latest movie boom, with its sweatshop work done in colder climates. That impending stateside strikes over purely Hollywood issues threatened to annihilate the Canadian "industry" this spring only underlined our branch-plant status. The power and creative talent have stayed south: The Americans love us for our body, not our mind. And our attempt to build a national culture by writing cheques to Hollywood has backfired: Discouraged by the rising costs, some of our filmmakers have given up, others have moved south, and the rest are resigned to their new role, as hewers of miniseries and drawers of movies-of-the-week.


Canada disappears in productions lured here by tax incentives. In 3000 Miles to Graceland, Vancouver plays Vegas. Other recent major films in which Canada has pretended to be the U.S. are Battlefield Earth, Rollerball, Finding Forrester, The Sixth Day, X-Men and See Spot Run. ("Tech work is clean but quite standard, using Vancouver locations that are becoming extremely familiar from overuse in such recent films as Saving Silverman." - Variety)

Canada disappears, too, when its home-grown movies are given fleeting runs at a mere handful of theatres. The awards (13 genies and Jutras) for Denis Villeneuve's Maelström outnumber the screens it was seen on across the country (10). Other recent Canadian films that didn't get the exposure they deserved include Such a Long Journey (10 screens), Hard Core Logo (seven screens) and New Waterford Girl - a relatively robust 20 screens.

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