Companies and unions across Canada are starting to offer lower rates when dealing with U.S. customers in order to offset the ill effects of the surging loonie which, now trading at well above the US$0.80 mark, is threatening to drive service shoots out of the country.

Lions Gate Studios in B.C. has dropped its rates by some 10% and is now negotiating on a show-by-show basis, according to president Peter Leitch.

Toronto Film Studios recently announced that it has fixed its rate at US$0.78 for new projects while the Comweb Group has, for two recent productions, adjusted its prices so that they correspond to an exchange of US$0.76 to US$0.78. IATSE Local 891 in Vancouver, where production volumes have dropped almost 30% since last year, is offering unspecified discounts in the hope of attracting pilots and features in early 2005, according to president Don Ramsden.

The high loonie – now trading well above the symbolic US$0.80 mark – is threatening to deflate Canada’s service industry, forcing stakeholders to tighten their belts.

‘The higher the dollar goes, the more we eat [into our profits],’ says Comweb chairman and CEO Paul Bronfman.

The goal, he says, is to weather the downturn by keeping the people, equipment and facilities working and to be ready for the next economic uptick.

‘Nobody is making money right now in the business. Anybody who says they are is lying,’ he adds.

Ken Ferguson, president of Toronto Film Studios, insists that the cuts are ‘not about discounting,’ but are meant to ease the uncertainties of American producers.

‘It gets everyone thinking about a better way to do business,’ Ferguson explains. ‘There are lots of reasons not to film in Canada and the dollar taking off is one of them.’

Elsewhere across the country, stakeholders continue to strategize about the high loonie. On Nov. 22, the Motion Picture Production Industry Association of B.C. held a special meeting of 500 industry suppliers – everyone from studio executives and equipment houses to hoteliers and car rental companies – at The Bridge Studios in Burnaby to discuss various cost-cutting options.

Whether that includes ‘pegging the dollar’ – a process by which suppliers lower their rates en masse – or otherwise offering better services, it’s clear that expenses must come down if Canada is going to continue to attract lucrative U.S. productions.

‘We’re all in this together,’ says Leitch, also MPPIA-BC chair, but the industry association is not recommending one cost-cutting strategy over another. ‘How do we create an environment to make it easier for our customers to shoot in Vancouver? Now we have the reputation that, hey, Vancouver is willing to negotiate.’

Crawford Hawkins, managing director of the DGC-BC, favors a pegged dollar of US$0.76. ‘But I’ll live with US$0.80,’ he says. ‘If we want to do any business here, we have to do something. Our competition will eat us alive. We’ll have no business at US$0.85.’

Hawkins says Vancouver recently lost the Stephen Cannell-produced series The Dark to incentive-rich Louisiana because of the Canadian dollar issue. He adds that because of the economic climate there are few production prospects on the horizon.