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Having recovered from its 2004 slump, Hollywood North is back, raking in over $1 billion last year.

I’m standing over an operating table, looking down at a badly decomposed body. Its withered frame is sunken and appears to be melting into a pool of liquefied flesh. The hapless victim has been sucked dry by a vampire, and left to rot in a congealed mess of white bones and black ooze. I can’t resist the urge to touch the sprawled figure, and reach out tentatively to prod it. The black goop is rubbery, like one of those small pancakes of fake vomit I used to play with as a kid.

My guide, Peter Leitch, president of North Shore Studios (formerly Lions Gate Studios), and chair of the Motion Picture Production Industry Association of B.C., seems to be equally intrigued. Poking around the set of the TV series Blade (based on the Wesley Snipes film), he opens up doors with the curiosity of a child. Each new room reveals a harbour of new delights: a floor drenched in fake blood, an Indian headdress lying on the floor, metal vats filled with blood to sustain the vampires’ thirsty habits. He walks with a quick stride – clearly a busy man – but speaks with genuine enthusiasm as though he’s seeing everything for the first time.

We stop to marvel at the reality of a fake concrete wall. “The walls in this studio are concrete, but they paint these fake ones on plywood because it looks better than the real thing,” explains Leitch. I knock on it, and sure enough, the wall is hollow. The same goes for bricks and pillars, and the view. Large tarps of blown-up photographs (called a translate) are hung outside set windows to make the viewer believe the scene takes place in New York, or Seattle, or even across the road from a house in a rural subdivision.

If there’s one thing I have learned after spending a morning with Leitch at the North Shore site, it’s that nothing is ever what it seems when it comes to the movie industry. It’s much more exciting. And it takes a lot of pre-planning, money and energy to make the end product appear to be the real thing.

North Shore Studios, built in 1989, leapt into the international foray when 21 Jump Street, featuring heartthrob Johnny Depp, became an instant success. These days, a number of U.S.-based blockbuster films and TV series head across the border to film on this 14-acre property or at their Mammoth Studios. North Shore recently wrapped up shooting Night at the Museum (with an estimated $100-million budget and featuring Ben Stiller), and Rise of the Silver Surfer, the sequel to Fantastic Four (starring Jessica Alba), began filming in late August. Both production teams also worked closely with Vancouver Film Studios.

Much of the success of B.C.’s booming film and television industry today can be credited to local mining mogul Frank Giustra, who spent $75 million of his own money in 1997 to purchase the building blocks that would become Lions Gate Entertainment. Within weeks of creating the new company, Giustra announced he had acquired North Shore Studios, where X-Files was filming at the time, as well as L.A.-based production company Mandalay Pictures, which was run by Batman producer Peter Guber. Also acquired was the Canadian distribution and production company Cinepix Film Properties, enabling the business to distribute its films throughout the U.S.

Lions Gate Entertainment, which released Oscar-winner Crash last year, reported in June that it expects revenue for its current ¬financial year to top US$900 million. Chief executive Jon Feltheimer said in a conference call with analysts that he expects a pre-tax profit of about $32 million for its 2007 financial year, partly due to the company’s TV shows heading into syndication, new revenue from library acquisitions and sales from new digital formats.

Another big player in the Canadian market is Brightlight Pictures, a Vancouver-based production company that has been making significant international strides since setting up operation five years ago. Co-founders Shawn Williamson and Stephen Hegyes have produced successful flicks such as Bloodrayne, Alone in the Dark and Slither. But their biggest hit to date was last year’s White Noise, which earned US$92 million internationally – a success they hope to repeat with next year’s sequel.

On track to become the biggest production group in B.C. after Lions Gate Entertainment, Brightlight attracted US$168 million in production last year and is optimistic about continued growth.

Business is looking good for B.C.’s film and television production industry overall. Spurred on by substantial tax credits and a favourable exchange rate with the U.S. greenback, film and television production in this province increased more than 50 per cent in 2005 over the previous year, contributing $1.2 billion to the economy, according to the B.C. Film Commission. That represents a substantial increase from the previous year, when film and television lured a mere $801 million of business to the province.

B.C. attracted 211 productions in 2005, according to the B.C. Film Commission. Domestic spending in that year grew to $225 million, up from $214 million in 2004, and foreign expenditures increased to more than $1 billion. Just past the year’s midway point, the industry is running 23 per cent ahead of last year, new statistics show. At the time this issue went to press, the production roster listed eight animation projects on the go, 11 feature films, eight TV movies, 12 TV series and two shorts.

A number of potential blockbusters were filmed in B.C. this past summer. In addition to Fantastic Four: Rise of the Silver Surfer, Billy Bob Thornton landed on Vancouver shores in September to begin shooting Peace Like a River, Danny DeVito and Matthew Broderick were in Surrey filming the holiday comedy Deck the Halls, and Mark Wahlberg has been in town filming a thriller called Shooter. Other stars in town over the past few months include Halle Berry, Benicio Del Toro and Ice Cube.

Business gravitates to any one of Vancouver’s major studios, which include North Shore Studios, Vancouver Film Studios, Bridge Studios, Mammoth Studios (owned by Lions Gate), Canadian Motion Picture Park and Insight Film Studios.

Outside North Shore Studios, the sun is beating down over the lush green mountains. A handful of little girls chatter giddily as they emerge from a separate sound stage, their hair in braids and ponytails, swinging Barbie dolls at their waists.

“They’re doing a toy commercial in there,” explains Leitch, leading me on swiftly.

It’s just 11 a.m. and yet the film studio is a hub of activity. We walk on toward the set of The 4400, but are sidetracked by the sight of a cheery group of men clad in black suits.

“Those guys are probably extras,” Leitch says, pointing in their direction. “You never see guys in suits around here.”

Sure enough, Leitch is dressed smart but casual in a blue shirt and beige slacks. It must be a welcome change of pace for celebrities who come up from L.A. to shoot scenes in Vancouver. No stuffy media bosses, no traffic jams, no clock-watching L.A. beach babes in heels scurrying you along to the next set in a flurry of over-exaggerated dramas.

Elmar Theissen, president of the International Alliance of Theatrical and Stage Employees (IATSE) Local 891, concurs. He says B.C. is hot filming property because it offers quality services in a spectacular setting. We can offer a wide “availability of various locations, from forest to desert to mountains to city, small town, lake, river and ocean, all within a 30-mile radius” of Vancouver, he says, plus the capability to shoot 40 projects simultaneously.

While blockbusters account for less than two per cent of productions shot in B.C. in any given year, each one accounts for around $50 million of revenue for the province. When X-Men: The Last Stand spent four months shooting in Vancouver last year, millions were pumped into the provincial economy. Although 20th Century Fox never releases budget figures, the movie website boxofficemojo.com lists the budget of the movie as US$110 million.

This kind of investment ultimately creates spin-off benefits for everyone, from hotels and food suppliers to accounting services, vehicle rentals and gas stations. On average, more than 90 per cent of production crew is made up of British Columbians, and the Film Commission estimates that about 30,000 people in the province rely on the industry for their livelihood.

But it may not all be smooth sailing for B.C.’s film industry. The soaring Canadian dollar, for one, is a cause for concern. Leitch says the ever-climbing loonie is the “biggest issue” facing the industry, because Canada is mostly competing against jurisdictions across North America. However, he remains optimistic.

“The dollar is a challenge, but it’s something we can’t control so we don’t dwell on it. The focus is to remain competitive, and we do have a competitive tax policy. We feel B.C. is a great place to shoot because of its diversity, great infrastructure, great crews and great locations,” he says, speaking also on behalf of North Shore Studios.

Not surprisingly, B.C. Film Commissioner Susan Croome says she is convinced 2006 will be a strong year, despite the rising ¬dollar. She says film studios have tried ¬cutting costs by moving their productions from B.C. to overseas locations such as Romania, but have ¬returned to the province after discovering that they didn’t get the same value elsewhere. While labour costs and equipment rentals may have been cheaper, producers found it was harder to do business due to language barriers, longer flights and poorer production quality.

Whether the climbing dollar will affect the industry won’t be immediately noticeable, because most current productions locked into a contract six to eight months ago. This practice, called “buying forward,” means B.C.’s industry won’t begin to feel the crunch of the climbing dollar for at least six to 12 months. Only time will tell how the international players will react.

A second issue facing the industry is the labour-based tax credit offered by the provincial government. Although the tax credits have been negotiated through 2008, officials are constantly reviewing them to ensure they prove economical. But industry insiders say that if the credit were suddenly axed, many U.S. producers would pick up and head south back over the border, where similar tax breaks are offered in various states. The incentive is substantial: for a mega-movie with a $100-million budget, producers can expect to see a $6.5-million cash rebate simply by using B.C. labour.

“Tax credits are very important to offset the rising dollar,” says the IATSE’s Theissen. “The credits stimulate investment in ¬productions, which puts crews to work, which generates taxes. So far, the cost-benefit analysis is good both for the government and the producer.”

Unfortunately, B.C.’s tax credit has been a bone of contention in California. To the consternation of U.S. politicians, guilds and trade unions, blockbuster films have been heading into Canada to cut costs, spurring anti-Canadian sentiments. California started taking the issue seriously about 10 years ago, and lobbyists even attempted to have the B.C. tax credits declared illegal, citing provisions in NAFTA. Arnold Schwarzenegger, governor of California, vowed to bring jobs back to L.A. when he took up office in 2003. But luckily for B.C., he has so far been unable to pass a film-tax-credit bill.

As for how these issues will play out, only time will tell. “It’s challenging and difficult to project what the industry will be like two to three years from now,” says Leitch. “B.C.’s film industry has strong resiliency because it has built up its infrastructure and developed excellent post-production facilities, so we are optimistic about the future.”