Canada concerned over U.S. shoots

Loonie equating dollar threatens productions

MONTREAL — Hans Fraikin calls it the “parity paradox.” Like everyone else in the film biz in Canada, Fraikin — the film commissioner for the Quebec Film and Television Council — is concerned about the future of American film shoots in the Great White North now that the Canuck buck is basically on par with the American dollar.

But for now U.S. shooting is going gangbusters in Quebec in spite of the surging loonie, as the Canuck dollar is known here. In fact, Fraikin says it could be a record year for U.S. shoots in Quebec thanks to Hollywood pics like “The Mummy 3” and “Death Race 3000.” But much of the film and TV production has been fueled by the threat of a work stoppage in Hollywood.

“We’re not seeing any impact,” says Fraikin, who is based in Montreal. “We’ll feel the impact next year. Right now, we’re feeling the reverse. That’s why we call it the paradox. It’s not every territory in the world that’s booming. So it shows that it’s more than just the currency that’s been bringing Hollywood to Quebec. We have studios, special effects companies and a variety of locations. The fact is we have Paris, St. Petersburg and Moscow three streets from each other (in Old Montreal).”

On Sept. 20, the Canadian dollar hit parity with the U.S. buck, the first time this has happened since 1976 and it has hovered at around the same level ever since.

This is in sharp contrast to the situation as little as four or five years ago when the Canuck buck was trading in the 65-cent U.S. level. Back then, U.S. filmmakers saved big bucks by shooting in Canada thanks to the favorable exchange rate. In addition, Canada was one of the first Western countries to introduce tax credits to encourage foreign filming.

But now many other territories and U.S. states have similar credits and many of those other tax-credit programs are more lucrative. “The gossip within the American industry will be — why go to Canada?” says Michael Prupas, president of Montreal production company Muse Entertainment.

Muse services American and Canadian productions, but Prupas notes that even the Canuck pics and TV shows will be hit by the rising Canadian dollar. Muse, like every other producer in Canada, is often paid in U.S. dollars, so a dip in the greenback is bad for his company.

Peter Leitch, president of North Shore studios, Vancouver’s leading studio complex, says his business has yet to be affected by the rising Canadian dollar. North Shore’s stages have been busy all year with TV series, including “The 4400” and “Men in Trees.” But Leitch is nervous about next year, especially with the threat of a strike. “We’ve really become a world-class film center and that’s a huge factor,” Leitch says. “But going forward, I think it’s going to be a lot more challenging. I don’t think it’s a catastrophe. It’s just one factor but we have to work together as an industry.”

Leitch admits he has been getting a lot of calls from U.S. producers looking for better deals on studio space. There are plans for all the major industry groups in Canada to talk in the coming days to try to figure out how to deal with the fallout from this new exchange rate.

Many in the Canuck industry firmly believe the current boom is purely the result of fears of potential strikes next year.

The studios are producing more pics to prepare for a potential labor disruption and many of those shoots happen to be taking place in Canada.

“We’re booming because of the stockpiling,” says Brian Baker, a Montreal-based business agent with the Directors Guild of Canada. “We’re really nervous about the parity. We’ll see what happens after the strike.”

Baker and others believe one way to offset the impact of the dollar/loonie parity is by encouraging Canadian financial players to invest directly in U.S. production.

Quebec has been at the forefront of this trend with the Societe Generale de Financement du Quebec, the provincial government’s investment arm, helping to bankroll two American film slates in the past year.

The investment division of the Quebec government signed a deal with Lions Gate to help finance films and TV shows shot in Quebec and, last year, also inked a financing deal with Joel Silver’s Dark Castle Entertainment to invest in 15 films with the condition that six be shot in Quebec.

The other tactic being contemplated is lobbying the federal and provincial governments to increase tax credits for foreign productions. Several years ago, Quebec, British Columbia and Ontario — the country’s three main production centers — had tax credits that were more lucrative than most other countries. But now they lag behind many other jurisdictions.

Canadian film commissioners are also thinking of wooing European productions, especially if there is a labor shutdown in Hollywood.

Canada has co-production treaties with all the major Euro countries and Fraikin is quick to point out that Montreal and Quebec City can easily stand-in for a variety of European locations.

“The thing we have in Quebec is that old France, old Russia flavor, which is what a lot of European TV series and films need,” Fraikin says.

Toronto has had the toughest year of the three cities, which is why those folks are particularly distressed by the high Canadian dollar.

“It’s not the end of the world, but it’s a bit of a nightmare,” says Paul Bronfman, who runs the Toronto-based Comweb Group, a production services and equipment rental company. Comweb is also an investor in Filmport, the massive film studio being built in Toronto and which is expected to open next spring.

“Right now, we have to find new ways to attract business here,” Bronfman says. “The competition is very stiff from the American states and having the Canadian dollar at parity just makes it more competitive. We’re way behind the eight-ball.”

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