Exports from the American motion picture and television industry accounted for nearly $14 billion in 1999. However, as productions have "runaway" to other countries, significant production "clusters" have been created, in effect developing infrastructures in these countries that can handle greater volumes of production than ever before. The investments in these foreign infrastructures by major motion picture studios, spurred in large part because of the tax incentives and rebates offered by foreign governments, have greatly damaged America's competitiveness in one of the nation's most important industries.

An extensive study and report on runaway production was issued in January, 2001, by the U.S. Commerce Department, initiated through a request from a bipartisan group of U.S. House of Representatives members because of their growing concern about the loss of film and television production to foreign shores.

The Department of Commerce Report drew its research from a number of sources, including industry representatives, trade associations, representatives of state and local governments, including film commissions and Canadian Government sources. The report concludes that runaway film production could threaten to disrupt important segments of a vital American industry and the thousands of workers who depend on it, including small businesses, which, in turn, could seriously impact local communities and families around the country.

Bullet Points from the 2001Department of Commerce Report:

• The entire production of a film or television program provides substantial economic benefits to any locality where it is produced.
  
  
• Canada has developed a wide variety of wage and tax credits, financing packages, and funds for equity investment to encourage foreign production in Canada. The U.K., Ireland, and Australia have modeled similar programs after the Canadian model.
  
  
• Runaway films are produced abroad, not for artistic reasons, but because of reduced production costs arising from a variety of factors including reduced location costs and government incentives designed to attract foreign film production.
  
  
• The total economic impact of U.S. economic runaway productions was $10.3 billion in 1998. This figure has increased over fivefold from $2.0 billion in 1990.
  
  
• 1999 U.S. productions of 6-weeks-or-greater were down 32% from 1998.
  
  
• In 1999, following British Columbia's 1998 tax credit, foreign production growth increased 51.2%
  
  
• North Carolina, Florida, Texas, Illinois, New York and California account for approximately 88% of national revenues generated directly by the motion picture industry in the U.S.
  
  
• When sound stages in North Carolina, Florida, Texas, Illinois, New York and California and other parts of the country began to operate at less than full capacity, the impact was not only felt by production companies, but also the small and medium sized companies servicing the entertainment industry, many of which went out of business.
  
  
• The U.S. film and television industry is a significant component of the U.S. economy, providing an important source of economic growth and employment for hundreds of small businesses and independent contractors including equipment rental companies, construction workers and even local gas stations, to name just a few.
  

The U.S. Department of Commerce study followed a ground breaking 6 month study conducted in January 1999, when the Directors Guild of America (DGA) and Screen Actors Guild (SAG) retained Monitor Company, a leading management consulting firm, to conduct an investigation into the phenomenon of "runaway" film and television production from the U.S. The Guilds (on an anecdotal basis) had been noting an accelerating runaway phenomenon, and the need to create an objective quantitative analysis led to the study being commissioned. The study had two objectives - quantify the extent to which runaway production has been occurring since 1990, and identify the major causes.

Bullet Points from the 1999 Monitor Report:

• The direct production expenditures lost from the U.S. due to film and television economic runaway production was $2.8 billion in 1998. This figure has increased almost six-fold from $0.5 billion in 1990.
  
  
• In 1998, 27% of U.S. developed film and television productions were economic runaways (285 out of 1,075): this represents an increase of almost triple the number (100) and double the percentage (14%) of economic runaways in 1990.
  
  
• In 1998, 45% of U.S. developed movies for television were economic runaways (139 out of 308).
  
  
• In terms of the total economic impact of U.S. economic runaways, movies for television account for $2.7 billion, followed by feature films with budgets over $25 million at $2.4 billion, feature films with budgets under $25 million representing a $2.3 billion impact and $2.9 billion in lost spending and tax revenues.
  
  
• Canada has captured the vast majority of economic runaways, with 81% of the total. In particular, Canada secured more than 90% of economic runaway movies for television in 1998.
  
  
• The Canadian government has engaged in a comprehensive and aggressive, long-term strategic campaign to attract U.S. producers. This program includes government incentives and tax rebates, which, coupled with lower production costs, have made it economically attractive for producers to film in Canada. This successful Canadian approach could become a model internationally.
  
  
• In addition to the substantial impact on DGA and SAG members - directors, unit production managers, assistant directors, principal and supporting actors, stunt and background performers - by far the greatest impact in terms of lost employment opportunities has been felt by the men and women who work in below-the-line production positions including caterers, drivers, costumers, suppliers of props, grips, art directors, etc.
  
  
• The total employment impact of U.S. runaway production on entertainment industry workers rose 241% from 1990 to 1998, with the number of full-time equivalent positions lost rising from 6,900 in 1990 to 23,500 in 1998 -- a cumulative total of 125,100 positions.
  
  

What the Canadians say about their production levels

• According to a PricewaterhouseCoopers study done for the Canadian Film and Television Production Association and Association des producteurs de films et de television du Quebec, entitled "The Canadian Film and Television Production Industry: Profile 2001," Canada saw a 37% growth in foreign producers shooting in Canada in 2000.
  
  
• The average annual increase of foreign production in Canada from 1994-1999 was 28%.
  
  
• Total U.S. production in Canada reached $1.5 billion in 1999-2000.
  
  
• According to the same report, total Canadian production was up 12% in 2000.
  
  
• The Profile 2001 report also noted that U.S. film and television production in Canada has increased steadily over the last seven years, rising from 27% in 1993-94 to 44% in 1999-2000.
  
  

Canadian Press Releases:

• A total of $1.07 billion (Canadian dollars) was spent on 198 productions in the province in 1999, up from $808 million (Canadian dollars) spent in 1998.
  
  
• Foreign activity accounted for $66 million (Canadian dollars) of spending in British Columbia in 1999, up 50% from $444 million (Canadian dollars) in 1998.
  
  
• Benefits to Canadians of film/television production in Canada: Hotels, food suppliers, accounting services, vehicle rentals, gas stations and lumberyards are just a few of the businesses that benefit directly and significantly from film and television production.
  
  
• Ontario Film and Television production increased 8.3% in 2000.
  
  
• While domestic production grew by slightly more than 40% between 1995 and 2000, foreign and service production grew by almost 250% during the same period.