After the worst 24 months for Canadian commercial production in decades, everyone is feeling the crunch and, if you believe every rumor you hear, just about every shop is going out of business.

It’s just a disaster… but there’s been surprisingly little fallout. Most of the independently owned spot shops are still kicking, although some, including the Park City Film Company, did close over the summer. Still others (specifically The Players Film Company, now Play), reopened under new monikers.

But in between moans about how poorly everyone is doing, producers are often heard to say, ‘But we’re okay.’ And they are.

So what gives?

Imported Artists Film Company executive producer Christina Ford says the initial shakeup we’ve seen this year is just the tip of the iceberg.

‘It’s my prediction that we’ll see a lot of changes in the coming year, whether you are going to see companies going under or mergers or different thinking about ways of doing business,’ says Ford. ‘I would not be surprised that if in the next year you see mergers taking place.’

Scott Mackenzie, co-chair of the Commercial Producers Association of Toronto, admits that many Canadian production companies are in what he calls ‘survivor mode,’ meaning people are doing whatever it takes to get by until happier, more lucrative days arrive.

‘A production company needs one or two good jobs a month to stay alive,’ says Mackenzie. ‘I would suggest that production companies have been getting those one or two good jobs. What that doesn’t provide is a mentoring environment for anybody who wants to come into the business.’

The Big Film Company executive producer Angie Colgoni agrees. She says it is incredibly hard for any company to nurture young directors when even a company’s regular breadwinners are fighting for jobs.

‘We had a couple of younger directors and we’ve had to cut them loose,’ says Colgoni. ‘There was a time in this business when people would call and say, ‘I don’t have any money,’ and you could say, ‘I’ve got a young guy who is hungry and talented.’ Now a director that wouldn’t have touched a certain board a year ago is considering it.’

Big, it should be noted, is doing well because of the company’s post interests, which keeps it busy (and paid) when the commercial market suffers.

‘That’s a huge help,’ says Colgoni. ‘Diversification obviously never hurts.’

Mackenzie says another important element of the commercial business has been lost in these trying times, and it affects many commercial businesses.

‘If you look at production, the middle class has been ripped out of it,’ says Mackenzie. ‘You either have a good budget or a really poor budget. The middle class was two- or three-day shoots. There was reasonable volume and you could make enough in the middle ground. I think that’s what has been lost.’

There have been rumors of companies without other revenue streams borrowing money, trimming staff and cutting days out of the workweek to keep going. Mackenzie calls this ‘a triple witching hour for production,’ between a recession, SARS and a rising Canadian dollar. And despite how unsettling it all is, he advises colleagues not to panic.

‘January to March was the worst first quarter we’ve ever had as an industry that I can recall,’ says Mackenzie. ‘The second quarter was not much better. Everybody gets nervous and people start saying, ‘I have to make more money in the second half of the year.”

Some have suggested that due to heavy borrowing, some companies could be ruined when interest rates begin their inevitable rise. Mackenzie doesn’t see that as being an issue.

‘Interest rates aren’t going to go up for the next two or three years, and economically it’s the best time to borrow in this country in the last 15 years,’ he says. ‘I think the danger is if the production cycle doesn’t pick up quick enough.

‘What’s the trend that’s going to get us out of the recession?’

No one knows the answer to that, but Mackenzie, Colgoni, and Ford all agree that the market picked up over the summer, especially now that the SARS epedemic has passed. Rule of thumb dictates that July to September will determine how well a production company will do in its year. By that measure, Ford says she saw the local industry pick up somewhat in the late summer/early fall.

‘Everyone had a bit of a surge in August, September and October, and although things have now slowed a bit, we are hoping to see another surge before the end of the year,’ she says.

‘[But] Things have picked up. There was a lot of activity in [Toronto], and most of it for us was Canadian work, which is great. The U.S. work is sliding back right now, and I think the dollar has a lot to do with that.’

Is there a happy ending in sight for this fickle market? Mackenzie seems to think so. ‘I think what we have to do is continue to be cheap and continue to be good, and then we’ll bring the work back,’ says Mackenzie.