New Zealand faces the somber prospect of losing as much as $1.5 billion fallout once Warner Bros., backers of the $500 million “The Hobbit” film project, proceed with their plan to relocate to England.

Reuter’s Adrian Bathgate reports that ANZ-National, the largest bank in New Zealand, projects such losses will come from the economic effects of missing out on such a major project. It spins-off from “employees, sub-contractors, domestic suppliers of goods and services, it flows through the economy," said ANZ economist Mark Smith.

Grossing $2.9 billion from box office sales worldwide, the Lord of the Rings film trilogy not only helped bolster New Zealand’s film industry but also the local economy with the birth and rise of “Tolkien tourism.”

No wonder the New Zealand government is bent to block all exit doors for Warner Bros. as the issue on the film’s location has gone top level with TVNZ’s report of the Wellington meeting next week of the company with no less than New Zealand’s Prime Minister John Key and his Economic Development Minister Gerry Brownlee.

Prime Minister Key is considering “softening New Zealand labor law to accommodate the studio,” and even looking at “whether there is any room to move the tax rebate for film companies from 15% to try to sweeten the deal.”

Already, “The Hobbit” labor dispute is sending fear on the hearts of people who are planning to do projects in New Zealand. Chief executive of Film New Zealand, Gisella Carr said, on the TVNZ report that, “international filmmakers were already beginning to ask questions about filming in New Zealand.”

A report from nzherald.com also mentions the call by the 2011 Rugby World Cup executives for a guarantee that they will not have the labor disputes experienced by “The Hobbit.” David Lowe of the Employers and Manufacturers Association (EMA) employment manager says, “It would be reassuring if the Council of Trade Unions would confirm now that it will not Hobbit the Rugby World Cup.”