By Jonathan Price
Any filmmakers who harbor a dream of one day seeing their vision projected onto the silver screen must first exude the audacity to walk across that perilous tight rope known as the production track. Safely reaching the other end is a crucial challenge, as the filmmakers must sustain a delicate balance between fulfilling creative desires and abiding by fiscal limitations. The slightest proclivity towards one end or another could potentially result in the project’s fatal plunge into immense financial debt or artistic paucity. Having caused a significant loss in employment, runaway production has become the hottest topic in Hollywood, leaving film industry employees concerned for their jobs. The decline in revenue it has created has made it an important topic in Sacramento as well. Earlier this year, Governor Arnold Schwarzenegger hosted a banquet in Sacramento honoring the production staff and cast of Be Cool for having kept production entirely in California. The governor has also been working on a tax incentive for production that spends at least 75 percent of its budget in state, but such a deal might not be enough.
The figurative balancing act between creativity and finance is the mainstay for runaway production’s continued growth, which has had an annual $10 billion negative impact on the U.S. economy. Various film and television productions that chose to leap across borders and exploit the tax incentives and weaker currencies of other nations accounted for the estimated 125,000 U.S. jobs that were lost during the 1990s (The Korea Herald). The financial enticements that foreign governments provide can significantly enhance the scope of a motion picture by allowing more of the budget to affect what appears onscreen (a godsend for small independent productions). However, the creative benefits come at a cost of depleting revenue towards below the line talent and ancillary businesses in the United States.
For better and worse, offshore film production is an inexorable facet of the film industry. Its presence has been felt since the 1940s, even though it has just recently gained notoriety within the past decade. In spite of unions petitioning for restrictions and countervailing duties as a means for keeping production anchored in America, such measures are only exacerbating the crisis. Both the film industry and the federal government need to come to terms with runaway production’s permanent spot in the modern global marketplace. Upon doing so, the focus can then shift towards the more productive task of finding new methods in which the U.S. economy can adapt to this increase in foreign competition.
An obstacle impeding the acceptance of runaway production as an inherent part of the modern film industry is the simple inclination to discriminate between acceptable and unacceptable runaway production. By most accounts, acceptable runaway is defined not by how dexterously the balance is struck between financial and artistic interests. Instead, it is defined by what extent the foreign locales enhance the artistic intentions behind the story over how well they shed production expenditures.
When judging films by this criteria, it is obvious why a firestorm of protest and internet petitioning ignited late last year over Miramax’s tentpole Oscar contender Cold Mountain, a Civil War epic budgeted at $80 million that moved its production away from the story’s quintessential American backdrop in favor of Romania as its double. Numerous union workers reportedly offered to lower their fees by as much as 30% to combat this decision and keep the production grounded on American soil (Los Angeles Times). When this tactic failed, a rancorous e-mail and online campaign backed by such groups as the Film and Television Action Committee spread the ruthless message, “Do not contribute to Cold Mountain profiting literally at your expense by buying a ticket” (Los Angeles Times). Myriad campaigns analogous to the FTAC’s concisely underscored the notion that Cold Mountain belonged to the camp of runaway production spurred by greed.
Yet attributing greed as the key factor which served as the catalyst for the film’s offshoring is a difficult argument to defend, as the decision to film in Romania made sense not only from a cost perspective but also based on the logistics of the story. According to director Anthony Minghella, modern American development had encroached upon the “natural, sweeping 19th century vistas” he needed to tell the story, and obtaining the four seasons of weather that figured prominently into Cold Mountain’s plot was more likely to exist in southeastern Europe than in North America (Los Angeles Times). Minghella’s claim that the American landscape has mutated so radically that the Romanian countryside now appears more authentic is rather debatable, yet few if any segments in the film seem incongruous with the story’s setting. On the financial end of the spectrum, the film was deemed as such a financial risk that the original partnership between MGM and Miramax eventually dissipated months into filming, leaving Miramax with the task of handling all the fiscal duties for the film. Ultimately calling it the greatest bet of his career, Miramax head Harvey Weinstein refutes the notion that greed ever figured into his decision to green-light the film:
From a purely hard-nosed business perspective, it was a huge gamble to take on the total responsibility for such a large-scale, expensive project that tackled such weighty themes and ideas. This wasn’t some comic-book franchise property that looked like a commercial home run (Guardian Unlimited).
Albert Berger, one of the film’s producers, echoes this sentiment by noting, “Miramax went out on a limb to make this movie. We tried everything…but the movie could not have been made had we not gone to Romania” (Los Angeles Times). Although the veracity behind all these statements is still subject to refutation, what is irrefutable is how factors related to both creative interests and financial realities dictated that Romania was the most practical location for shooting Cold Mountain. These two categories (creative and financial) determine how well a production is handled, a reality that makes judging runaway productions as either “acceptable” or “unacceptable” an impractical cause due to the many nebulous factors which go into the decision making process behind a film’s production.
“…Hollywood is not so much an American industry as it is a global one.”
Though hostility still lingers regarding the film’s inauthentic foreign location, production heads and financiers cannot be expected to act as philanthropists. While keeping productions grounded in the United States would ensure more jobs in the proletarian sector of the film labor force, consequently it would prevent more of the budget from benefiting the movie itself. Film by nature is a precarious investment, one that involves a great deal of blind faith in the ability of the source material to attract audiences around the globe. When at all possible, cutting costs and finding a means to ensure a return profit can help prevent a motion picture studio from going bankrupt or becoming assimilated by a more powerful conglomerate. By taking such measures, this allows a studio to take more creative gambles like Harvey Weinstein alleged he had taken in financing Cold Mountain.
Moreover, Hollywood is not so much an American industry as it is a global one. Hollywood has increasingly relied on foreign audiences, foreign earnings and foreign talent to make and sell its films. This interaction with foreign markets is evident by the fact that Hollywood films take in approximately 80% of the world’s total box office receipts (The Korean Herald). Furthermore, a free market economy entails that the dynamics of the global marketplace should determine where a film or television program could be made most efficiently (The George Washington International Law Review), regardless of whether or not it ultimately benefits their native country. With this in mind, the production heads have an obligation to their corporation’s prosperity, first and foremost, and cannot be held accountable for boosting their own nation’s economy.
While the powers-that-be should not turn their backs on the local lower-skilled union members that play an essential role in the creation of movies, the current climate for film production is far more high stakes than it ever was before, giving strength to the siren calls issuing forth from popular runaway production countries like Canada and Australia. Most apparent is how the number of people employed in U.S. motion picture production has ballooned over the last thirty years from 66,200 in 1972 to 259,200 in 2002 (Variety). While the labor force has nearly quadrupled, the number of productions receiving the green light has, in contrast, progressively diminished in number. For instance, just this year Disney publicly stated it would cut down on its live action productions after both The Alamo and Around the World in 80 Days failed to recoup even a modest return on their mammoth budgets. This leads to a more profound issue: studio budgets have spiraled out of control, with production costs increasing in the past decade by about 13 percent annually while profit margins have shrunk to about 6.5 percent (The George Washington International Law Review). This polarized dynamic is most culpable for the struggles unions now face in supporting their members, as the supply and demand for work rest at extreme opposites from one another.
Exacerbating the situation is how labor unions in the film industry no longer carry the authority they possessed many years ago. Whereas a union membership once denoted specialized expertise that a non-union member lacked, this designation has all but eroded away for below-the-line guild members. Progressively more foreign governments are promoting the training of their workers through tax credits that “stimulate the hiring of local personnel,” which helps improve the local work force and ultimately makes the location more appealing to producers (The George Washington International Law Review). This is a considerable obstacle that prevents local teamsters from attaining employment, as numerous countries grant tax incentives only if a certain amount of local talent is employed. For instance, in order to become eligible for Canadian incentives — 16percent tax credit for local labor costs plus additional provincial rebates — producers must strictly limit the American actors and crew they bring north of the 49th parallel, as any American cast or crew member counts against the calculation of Canadian content required to obtain incentives (Variety). This method of enticing business inevitably aggravates the effect of unemployment on U.S. union members. Not only does it diminish their salaries, but it also hurts other remunerations provided by unions, such as “pension funds and healthcare, which are important to the members since they are essentially independent contractors” (The George Washington International Law Review). As various foreign governments fight amongst one another over a dwindling number of studio films, local labor unions still are not taking the proper action to offer producers an incentive for hiring their services.
Instead, several below the line unions and advocacy groups are seeking out measures to put an end to runaway production altogether. They intend to halt runaways by both ardently supplicating to the federal government for measures that penalize productions opting to film outside the United States, and by enacting restrictions upon its own members. For instance, the FTAC, a group based in Los Angeles that represents “200,000 carpenters, background performers and other rank-and-file workers,” delivered a petition to the Commerce Department demanding a countervailing duty on movies produced in Canada (New York Times). However, the actual effects from such measures could just as likely impair the economy more. Above-the-line groups such as the American Film Marketing Association, the Motion Picture Association and the Director’s Guild of America declare that, “tinkering with Canadian subsidies will backfire and lead to a further loss of jobs or even trade wars” (The George Washington International Law Review). Similarly, the application of such restrictive legislation could potentially terminate an “amicable relationship that presently exists and is mutually beneficial, at least from the corporate point of view” (The George Washington International Law Review). Such restrictive measures by the unions erroneously believe that weakening the connections that many productions have to these competing nations will eventually force them to work within the U.S., thus boosting the local economy.
In addition, the guilds are imposing restrictions upon their own members in order to hinder the flow of runaway productions. Global Rule One, for example, requires SAG actors to be covered by the same working conditions in overseas productions as members experience at home (Video Age International). In effect, this rule requires all productions using U.S. talent to sign SAG signatory contracts and contribute to a depleted pension fund. Such self-imposed limitations essentially impede the ability for SAG actors to acquire work, while non-union actors continue to search for employment without restraint. Unless countries or states are already unionized, it is unlikely that solidarity will be an attainable goal, as studios will almost always prefer non-unionized, proficient workers to dealing with the unions (The George Washington International Law Review).
Arguments for federal restrictions on the whole neglect to consider how subsidy and rebate programs are essential ingredients to low-budget independent filmmaking. Paul Maslak notes how pictures budgeted at 5 million and under can’t compete with IA’s rates, which are so high that it would mean allocating a much greater percentage of the budget to labor than bigger-budgeted pictures (Scarbrough, Marsha). Maslak additionally observes that nine of out ten independent features will travel to Canada based on the grounds that their rates are more affordable than IATSE’s (Scarbrough, Marsha). ICM’s Shaun Redick exhibits the most supportive stance for runaway production by encouraging independent productions to take full advantage of the benefits offered by international markets:
Every independent feature film currently with a budget exceeding $3 million needs to operate with as much money from incentives and soft-coin programs as possible. The international market is better now than it has been in the last couple of years, but it is slowly reconstructing — and filmmakers and production companies really need to pull as much money from these schemes as possible (Hollywood Reporter).
Clearly, union fees are a significant impediment which hinders the chances of independent features getting produced while consequently promoting their migration to other countries. With this in mind, it is in the union’s best interest to reconfigure its policies so that they are more flexible rather than more rigid. More negotiable policies would greatly encourage productions to work with the unions, as would additional monetary incentives that would distinguish themselves from non-union labor. In order to persevere, unions must shift their goals towards promoting production within the United States rather than hoping to block out the influence of rebates and subsidies from foreign countries.
Unavoidably, a degree of government intervention is also necessary in order to assuage the economic unrest. After all, runaway production affects workers far beyond the breadth of Hollywood’s grasp. Just as over 270,000 U.S. jobs directly depend upon the film industry, thousands other ancillary businesses such as caterers and carpenters also serve the industry on an “as needed” basis (The George Washington International Law Review). Among the most fascinating attributes of the film industry is how its basic functions produce ripples of profit in the seas of commerce. Through the very act of shooting a motion picture, the production provides business for the surrounding area and eventually helps sell a location’s culture. Their increasing relocation to foreign countries has consequently deprived the U.S. economy of these waves of revenue and new jobs. However, the means by which the government should salvage its film industry and encourage it to produce movies in country remains a complex subject devoid of easy solutions.
“Incentive programs unique to each state have already helped curb the tide of offshore productions…”
A pressing question that immediately rises based on such government intervention concerns the types of content matter it could support financially. Unlike other governments, the U.S. government generally does not subsidize the arts; rather capitalism rules the federal government’s approach to the arts (The George Washington International Law Review). This methodology has kept the government from applying subjective judgment over artworks, which would likely serve as the death knoll to freedom of speech. Such First Amendment concerns likewise serve as the crux for many of the industry’s hands-off stances on federal involvement, which similarly prompted the development of the Motion Picture Association of America’s (MPAA) rating system as a means for allowing expressive freedom (The George Washington International Law Review). However, the substantial alterations that have been incurred in the modern film industry places its autonomy into jeopardy. According to Heidi Wicker:
Unlike eighty years ago, today’s entertainment corporations are just that — corporations — not partnerships, not unions of artists, and not necessarily dedicated to artistic development of the craft. Rather, the modern entertainment corporation looks toward the bottom line-toward profits-which provides an additional danger when the federal government gets involved of unwarranted interference in the competitive marketplace (George Washington International Law Review).
Federal involvement in financial policies affecting the entertainment industry could lead to a very real threat to freedom of speech, one that, if started, could potentially not be stopped. Yet in order for the federal government to bring employment back to the unions, they must follow the leads of union competitors and grant subsidies to local productions, making sure that the content of the film does not influence their financial policies.
Incentive programs unique to each state have already helped curb the tide of offshore productions, but these too are growing hazardously close to harmful government interference. Some states, such as North Carolina, employ a “right-to-work” approach which allows producers to choose freely from a unionized and non-unionized crew. Competition between the states has become so visible that certain bordering states, such as Kansas and Nebraska, sometimes try to best each other. For instance, Kansas removed a hotel tax on 28 day stays or longer, which bests Nebraska’s offer by two days (Backstage). Yet certain state subsidies are slowly penetrating the divide between government assistance and detrimental government interference. New Mexico has employed a co-investment program that results in the state’s actually owning a stake in the movie being produced there (Variety), with last August’s Suspect Zero serving as the first film to utilize this incentive. Such co-investment programs could establish a dangerous precedent that would blur government intervention with creative interests.
Runaway production is an essential competitive element in this current economic climate, one that has no clear remedy. On one end, our modern workforce will continue to suffer from unemployment issues that cannot be put to an end altogether based on the sheer volume of workers currently employed in the industry. Yet the preconceptions that runaway is inherently destructive and can only hurt the proletarian sector of the film labor force should be reevaluated. Due to how closely Hollywood interacts with other international film markets, it is more essential to keep these relations strong than to weaken their bonds in a vain effort to paralyze Hollywood productions. Additionally, if the unions and teamsters want to continue to exist, they will have to find new ways to accommodate the filmmaker’s needs. Eventually, the federal government and film industry must subscribe to the idea that runaway production, like any form of job outsourcing, cannot be stopped, but only acclimatized.
About the Author:
Jonathan Price is a second-year student from Fort Worth, Texas majoring in cinema-television production. Despite the rather discouraging findings from the research he conducted above, he still clings onto a small glimmer of hope that he may one day find a secure job in the heavily bloated film industry. The films he has worked on thus far have granted him such opportunities as working in East L.A.’s most famous porn studio, painting the exterior of a hippie commune off of Pico and Crenshaw, and experience building vampire cages.
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