B.C. film and TV industry insiders are expecting another strong year in wake of the provincial government's decision to renew its refundable labour tax credit on foreign productions shot here.

The 18-per-cent wage break is expected to help maintain, if not exceed, the $1.2 billion worth of activity that occurred in B.C. in 2005.

"We're as busy as we've ever been," says Peter Leitch, president of the Motion Picture Production Industry Association of British Columbia (MPPIA.)

The B.C. government has extended its popular wage-subsidy programs until 2008. In addition to reimbursing foreign producers, the province grants a 30-per-cent labour tax credit for Canadian productions that are developed locally.

Wayne Chose, Business Edge
Lions Gate Studios president Peter Leitch says the three-year funding extension is good news.

According to recently released provincial government statistics, B.C. film and TV producers increased their expenditures more than 50 per cent in 2005 to $1.23 billion from $801 million in 2004. Production companies completed more than 200 productions, including 63 feature films, 31 TV series, 37 movies of the week, 15 TV pilots, five miniseries, 16 short films and 24 animation projects.

Canadian producers spent $225 million while their American counterparts, based mostly in Hollywood, doled out more than $1 billion.

The B.C. film and TV industry employs 20,000 people directly involved in productions and another 10,000 who are indirectly linked to them. B.C. ranks third in North America in film production behind California and New York.

Leitch and other industry insiders view the Liberals' decision last year to boost the foreign production labour-tax credit to 18 per cent from 11 per cent - in response to a similar move by the Ontario government - as a key to the increased activity following a slowdown in 2004. They say tax credits play an important role in keeping B.C. globally competitive, because most other jurisdictions offer them.

"We have a difficult time having a viable business without tax credits," says Leitch, who is also the president of North Vancouver-based Lions Gate Studios, one of the largest production facilities in Canada. "So the confirmation that we've got tax credits for another two years is great news for us."

There would have been a "dramatic reduction in production" if B.C. could not match Ontario's tax credit on foreign works, he adds.

"(Operating without it) is equivalent to your neighbour selling the exact same product much cheaper," says Leitch.

The tax credits only apply to productions, so studio operators such as Lions Gate and service companies such as lighting firms do not qualify.

Leitch says the government boosted the benefits after the industry fulfilled - in a number of ways - its request to become more competitive. The industry continues to build studios that attract American producers, studios and service companies have provided reasonable, and in some cases lower rates, while labour unions have made concessions on low-budget productions.

"The film community has come together to be as competitive as we can - in a marketplace that's becoming more and more competitive," says Leitch.

He says this year's activity level will hinge on how much production Hollywood producers farm out, the rise of the Canadian dollar and other factors. Vancouver has become a very reliable place to shoot because there have been few labour disputes "We're nervously optimistic," says Leitch.

Elmar Theissen, president of IATSE Local 891, the labour union representing technicians, artisans and craftspersons in the entertainment industry, expects this year's expenditures to match the 2005 outlay. He predicts the labour tax credit will account for 10 to 15 per cent of this year's total B.C. film budget.

"(The labour tax credit) has been very useful as a key factor (in boosting production), mainly because of the rise of the Canadian dollar," says Theissen.

Production activity tends to go in three-year cycles, he says, with an excellent year, a medium year and a poor year. He adds 2006 "will be a very good year," but it won't result in a record production value.

B.C. production will also hinge largely on labour relations in Los Angeles.

"The challenge is to provide the work to film the high-budget projects and the low-budget projects," says Theissen, because the industry tends to serve American producers while local producers have different needs.

But labour disputes are not likely to occur here. Four of the major five unions representing directors, technicians, transportation and security personnel and camera operators have signed new contracts under a master agreement that runs until 2009, with actors remaining to be signed.

Workers will receive a three- per-cent raise this year, and 3.5- per-cent hikes in 2007 and 2008. The deal includes wage discounts on Canadian film and TV productions at a variety of budget levels and low-budget cable and syndicated TV shows.

"Producers can pretty much budget for the next two years because they know what their costs will be," says Theissen.

However, like other B.C. job sectors, the film and TV industry has to compete for construction workers who are in high demand across the province. Theissen says his industry is currently running out of carpenters because they are fleeing to the lucrative housing industry, which offers longer projects.

"In summer, work takes place indoors in a lot of dark studios, and everybody would like to be outside," says Theissen.

B.C. film commissioner Susan Croome says the boost in production values in 2005 was gratifying in wake of the increased labour tax credit, adjustments made by suppliers of goods and services, and labour organizations that helped the industry become more competitive.

"(The labour tax credit) is a significant factor when we look at our global competitiveness and when we look at other motion-picture activity," says Croome.

Other jurisdictions offer more perks to producers but they don't have the same great scenery, infrastructure and quality of cast and crew, she adds. She says the start to the year has been very good, but the B.C. industry must continue to provide the best value for producers.

Motion picture production activity is more precarious than other sectors because most of the investment comes from outside the province.

"It's somebody getting on the plane in L.A. with a bag of money and getting off a plane in B.C. and making a film, and getting on a plane with a bag of film," says Croome.

While most shows will be generated from Hollywood, B.C. producers will also be busy with domestic productions this year. According to the B.C. Film Commission's website, B.C. producers are currently putting together 16 feature films, including Night at the Museum starring Robin Williams and Ben Stiller, three animations, 12 TV series, one film short and six TV movies.

Shawn Williamson, co-owner of Vancouver-based Bright Light Pictures Inc., which develops, finances and produces independent feature films and TV shows for the domestic and international marketplace, says it's hard to predict how busy this year will be because the industry is so transient.

"The money is so portable that it disappears as quickly as it comes," says Williamson, adding he could get a project one day and lose it the next.

It's very difficult for independent producers to produce what they want because demand is high for studio space, casts and crews.

Bright Lights Pictures produced $167 million worth of projects last year and recently completed shooting on its biggest-budget project yet, the $60-million feature Dungeon Siege, starring Jason Statham, Ray Liotta, Burt Reynolds and Kristanna Loken.

But Williamson says the tight market makes it virtually impossible to shoot low-budget works in the $1-$2 million range.

Meanwhile, takeover of Lions Gate Studios by Burnaby-based Bosa Development Corp. is now complete. Bosa acquired the studio company from former U.S.-based parent Lionsgate Entertainment, the producer of the Academy Award-winning movie Crash.

Although the North Van firm and Lionsgate Entertainment no longer have any ownership ties, Leitch says they will continue to work closely together.

(Monte Stewart can be reached at monte@businessedge.ca)