It is neither the best of times nor the worst of times for the commercial production industry. This side of both the glory days and the recession, Canadian production houses are trying to come to terms with a reality more restrained than the mid-’80s but less precarious than the early ’90s. Says Carmen Dolgay, executive producer at Magic Inc.: ‘The economy hasn’t taken the turn up people expected. This is the norm and we’d better get used to it.’

On the whole, budgets are tighter, volume is down, and the production house markup has gone from a 20%-25% standard to 15%, 10% on a bad day, although some say it can go lower. The music of the ’80s is back, but clearly the revenue watershed of the mid- to late-’80s isn’t in the foreseeable future for the Canadian advertising industry.

On a more positive note, the industry is probably seeing the end of the trend towards hiring big-name u.s. directors at the expense of local talent. Majority has it that the romance with American directors has waned, motivated in part by lower budgets and in part by client backlash: some clients now ask specifically for Canadian talent.

The other significant change is in pricing structure and bidding procedures. The days of jobs going to the lowest bidder have been replaced by a more balanced weighing of budget and talent, with talent more often being the defining criteria rather than the production house’s ability to come in with a lower-than-dirt budget.

It’s a mixed bag of sentiment left in the wake of the ’80s heyday, the ’90s bottoming out, and the slow upturn in the economy the industry is part and parcel of now.

The survivors can’t help but be optimistic – today is better than the worst, infomercial production may add to the books, and the landscape has changed so that the smaller companies with new young directors feel they stand a chance against The Partners’ Film Company monolith.

On the downside, clients that have been privy to work for budgets a fraction of what they once paid, today hold all the cards. Says industry veteran Derek Case: ‘Clients came out of the recession smarter. They know what things cost and they know what they can get them for.’

Canadian directors a priority again

Ahh, the ’80s. Remembered by those who were in the eye of the hurricane with a fondness the years likely deserve.

In the old days, when Wayne Fenske, now executive producer and owner of L.T.B. Productions, was running rabko, he’d regularly come into work in the morning to find that ‘a barrel full’ of boards had poured in.

‘If a director was awake, I’d give him one. If I got a phone call, I was bidding. Obviously, it doesn’t work that way anymore,’ says Fenske.

Astronomical guarantees were the norm to hold directors and dops, with the obvious guaranteed anywhere from $350,000 to $750,000 and those being brought up given $125,000 just to stay put. There was more than enough work around for the production house to make a hefty profit, even with guarantees on this scale, until the whole thing slammed head-first into the recession at the tail end of the decade and left production houses with horrendous overheads while major advertisers pulled in the reins on ad budgets.

It was, says Case, the beginning of what is politely called stargazing, the importing of American directors to work on Canada-generated projects. American directors didn’t necessarily require a guarantee, and all of a sudden, production companies had huge rosters of directors.

Case remembers being caught by an executive producer at one smaller production house as he was trying to stretch his arms from one end of her row of directors’ reels to the other. ‘I’m big, and I couldn’t. I don’t think there was more than one director actually working for them at the time,’ says Case.

All of a sudden the agencies were inundated with stacks of bright new faces, many of whom had high profiles in the u.s. They were accused of being star-struck, motivated to hire people who were new and therefore exciting, and letting that old Canadian inferiority complex play a hand in taking jobs away from Canadian directors.

But Howard Alstad, vp executive art director at MacLaren McCann, says choice was motivated by money (how much the agency had) and talent rather than a fascination with Americans.

‘I would choose somebody based on their merits and how much money I had to do it, which was a lot then. And quite honestly, the top American guys were better at it because they have more money to work with and work more often. (Joe) Sedelmaier, for instance, is a very funny guy, and frankly, there’s nobody here that can touch him.

‘In retrospect, I think it’s brought the level of competition way up. If there’s quality reels flying around, it gets exposed to the agencies and they demand it from everybody they see.’

The climate is different now. Maybe the Wal-Mart invasion or the Quebec debate has sparked something akin to patriotism on this side of the border, or maybe it’s more the shrinking budgets, but the American import thing is slumping to a degree, say some.

Having seen the groundswell of American directors firsthand, Don McLean, president of The Partners’ Film Company, says the pull of American directors ‘has waned a little bit. There are at least eight to 10 local directors doing extremely well and a whack of fly-ins, so more of the material is back in Canadian hands and that’s good.’

Liane Thomas, new sales rep for Kessler Irish Films, says American directors are still a significant part of the mix, but that a couple of times in her months with Kessler Irish, the agency has said only Canadian directors need apply.

But Case questions whether this supposed increase in support for Canadian talent isn’t mainly lip-service. ‘Maybe I’m a bit cynical, but it’s all very convenient to say yes, that’s quite right, we shouldn’t be importing directors, we should be bringing up Canadian talent, but I don’t see anyone doing a whole lot about it. I spend a lot of time redoing my reel just to make it comprehensive enough to compete with the Americans I’m up against.’

That being said, Case is nevertheless convinced that American directors will at some point cease to be the favorite. Already, clients are speaking up and there’ll be a bandwagon effect since people follow trends, says Case.

Also, it’s sinking in that there is a different degree of attention a local director is able to afford a client compared to that of an imported director. ‘When you get to the point where you have to have a conference call to decide between a red or blue chair, it gets a little silly. The care I can give a job compared to somebody flown in is considerably more,’ he says.

Another factor in the return to Canadian talent has to be the new wave of young directors rising up in a multitude of production companies. For the first time in several years, companies like Avion Films, ltb, Partners’ and Stripes have found the resources to train young filmmakers, taking a chance on new faces like Martin Granger (Avion), David Hackl (ltb), Eric Yealland (Partners’), and most recently, Clay Staub (Stripes).

The time and money sunk into young directors isn’t simply an exercise in altruism, says McLean. When talent is the turnkey for competition, production companies have two choices to keep their client base from eroding. ‘Either you build up your American list, which we’ve downplayed a bit, or you build up with some young male and female directors.’

But although Case is seeing some new faces in the industry, he questions exactly how much leeway executive producers have to invest in young talent. ‘Who takes a job that hasn’t got sufficient budget because they’re building a reel? Everyone’s got numerous amounts of imports they can throw in because they don’t want to risk losing a job.’

But McLean contends he’s still willing to lose money on boards to give a new director something for the reel. ‘I’ve never low-balled. I bought boards. If I was building Marco Brambilla and I saw a good board, I’d buy it. We all did that and still do. We have a batch (of young directors) on their way now and I’m looking for more.’

The success of companies like Spy Films speaks volumes about what’s possible in this environment where clients and agencies are willing to risk a young director for the sake of finding one who truly knows the 18-35 market and can help tap their sizable disposable income.

‘We didn’t take any kind of chance on (director) Pete (Henderson),’ says Alstad, who hired him to shoot Molson’s ‘I Am Canadian’ pool this year.

‘Yes, he was young with only one or two commercials, but his music video experience meant he could work a tough, dirty and fast shoot. It was a smart choice.’

Yet it’s not as if a group of young people can hang a shingle now and expect to make a go of it based on youthful enthusiasm, says Fenske, who financially backed the start-up of Spy.

‘The agencies are looking for that young, edgy perspective, but at the same time, you can’t just take these new people out without strong, stable backing. They have to have something to fall back on if necessary, plus practical budget know-how, which is often easier with new people who aren’t encumbered by old production rules. They get a camera and shoot.’

Michael Schwartz, executive producer at Avion Films, who started up Avion with Partners’ industry veterans George Morita and Stanley Mestel last year, says when Avion’s doors opened, it had enough cash behind it to carry the company for a year even if it didn’t get a single spot. It hasn’t turned out to be financially necessary, but any start-up company needs to have the capital behind it to do the job right, says Schwartz.

‘You have to make sure that if you lose money on a couple of jobs, you don’t close your doors, that you’re able to provide the comfort level the agencies and clients need. If you’re going to play, you’ve got to play it right – develop new directors, be able to take on a job where you don’t make money because you’re trying to build someone, and at the same time, not have to worry that you’ve got your overhead covered.’

Doing more because there’s less

At the tail end of a July, long on bidding and short on work, the environment is as cutthroat as it was mid-recession. The return to Canadian talent and investments in the next generation may be somewhat inspiring, but small budgets, less volume, and slimmer profit margins is where commercial producers live day-to-day.

With the impact of market fragmentation leveling out, the industry hasn’t taken as bad a hit this year as it has in the past, although no one wants to speak in specific percentages. There are a few companies reporting an increase in budget or volume, due mainly to work awarded outside the country.

For example, at Apple Box Productions in Vancouver, budgets are up slightly over last year, maybe by 5%, says Greg Bosworth, executive producer. About 60% of the company’s work is coming out of Detroit, Cleveland and Baltimore, where budgets are higher on average than in Canada. In the Vancouver market, the impetus for American companies to sign Canadian directors is relatively consistent: the 40% on the Canadian dollar and the ability to buy out talent, says Bosworth.

To compensate for lower budgets and less volume, you need to access the rest of the world, says ltb’s Fenske. Last year, ltb did a dozen spots for Kellogg’s in Japan, was awarded Kellogg’s in Korea two weeks ago, and is currently bidding for the same account in Germany.

For companies incorporating some lower budget jobs into their mix, tighter purse strings combined with a more service-savvy client are driving business in.

At Magic, budgets are plumper and the bottom line is improved, in part because Magic houses its own editing and sound facilities, says Case. It makes a difference financially to own instead of rent the equipment today, especially with the low budgets on which people are accepting jobs.

Commercial production houses are brainstorming ways to go about increasing the bottom line. Some are tackling budget levels which they say have become almost absurd. Low-balling may be diminishing, but it’s only because the budgets are already rock bottom.

Karen Silver, executive producer at The Artists Company Canada, says events of the last few years have left commercial producers with no bargaining power. ‘Clients have become used to getting something for less than it’s worth,’ she says frankly.

‘If you get an estimate for an addition on your house at $150,000 and you say, ‘I only have $100,000,’ he’s going to say, ‘Lose something or forget it.’ People seem to have forgotten this is a business. Partners’ has spoiled them and we’re at the point we either have to swallow it or step aside.’

Partners’ McLean has long been fielding low-ball accusations, but says the battle to come in on budget is simply how the game is played in this environment.

‘The dollar is still part of the process, not because I low-ball, because I haven’t done that in many years, but because clients are saying over and over, ‘This is how much money I have for the job.’

‘It has nothing to do with my low ball or Avion’s low ball, because believe me, everybody in this city has rolled over for a job in the last few years. The clients have had incredible leverage and are now calling the shots.’

But Silver challenges that with one company no longer cornering the market as was long the case, it may be time for the industry to band together to establish guidelines. ‘The acpat is a powerful force. It has guidelines and people pay attention. Nothing will change unless we put our collective foot down, and the kind of force we need may be possible now.’