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Trendspotting-Dollar-Loonie Impact

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All around, it’s been a tumultuous year in Canada, with the loonie smashing all records against the U.S. greenback, an actor’s strike earlier this year, and the spill-over effects of the writers’ strike.
Gone are the days when a producer could get 30 cents on the dollar by shooting or doing postproduction in Canada, leveraging the currency difference to get a little more bang for the buck.
The Canadian dollar’s value has been driven up by the nation’s abundant natural resources — especially oil — as the U.S. dollar falls in relation to other currencies.
From January to November of this year, the Canadian dollar went from 85 cents U.S. to peak at more than $1.10 U.S. — an increase of more than 25 percent.
Recognizing that this spiral isn’t good for U.S. production budgets, British Columbia Film Commissioner Susan Croome announced an industrywide initiative with B.C. industry suppliers committing to conduct future contracts with U.S. clients in U.S. dollars at par (or offer equivalent discounts).
In an open letter to the industry, she said, “In the spirit of B.C.’s longstanding partnership with the U.S. production community, the offer aims to stem budgeting uncertainties around currency fluctuations.”
The list of companies that have signed up for the “U.S. dollars at par initiative” includes everything from hotels and car-rental companies, to postproduction facilities like Technicolor Creative Services Vancouver; studios like Vancouver’s venerated North Shore Studios; as well as rental houses like Clairmont Camera, William F. White and Sim Video.
But B.C.’s production industry is a little more TV-centric. Big U.S. TV shows shooting there, like Battlestar Galactica and Bionic Woman, have already had to shut down due to the WGA strike.
Ken Ferguson, president of Toronto Film Studios and also president of the huge new Toronto film studio called Filmport, reported that the market conditions are a bit distorted right now due to the threat of a SAG strike.
“We’re not seeing real market conditions right now, partially because of the writer’s strike, and probably more because of the potential of a SAG strike. There’s still a push for feature films to be produced before SAG go on strike, so there’s a lot of activity,” he said.
Toronto Film Studios is predominantly focused on feature film work, where script development cycles are a lot longer than episodic television.
“They seem to have stockpiled some scripts. Those are being done, and a fair share of them are still coming to Toronto,” he said. “They’re sort of ignoring the effects of the dollar at this point. It’s more important to them that they get certain products produced than the fact that they are paying more.”
“By June, if the dollar is still high, we will definitely feel the impact,” he added. “I think there’s going to be less feature film production after June, whether there’s a strike or not, simply because there’s such a push to create product now.
Ferguson reported that the breakdown at Toronto Film Studios is probably 60 percent U.S. work and 40 percent domestic Canadian production.
Nick Lannelli, VP of sales for Deluxe Postprodution, Toronto reported that “We’ve been asked [for a break] by a few U.S. producers who budgeted back in June when the dollar was pegged at a certain exchange rate, and this is really affecting them significantly. At that point, they could have gotten a Canadian dollar exchange in the high 80-cent range and now they’re into $1.05, so it translates to 20 percent, and that’s a significant cost.”
He explained that the company is willing to work with U.S. producers who find themselves in this situation to accommodate them, and that “because we have American and Canadian operations, we’ll just invoice them in U.S. dollars.”
But Lannelli admitted the company is taking a financial hit in doing so.
“We want to keep the work here,” he said.

Written by Scott Lehane

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