The "perfect storm" metaphor has beenflying around Canada's service production industry of late. There's nothinglike a handful of negative coincidences to put the fear into people.

Item One: Mel Brooks decides to shoot theadaptation of his hit musical TheProducers in New York.

Item Two: the state of New York and NewYork City both introduce tax credits to boost local production while the newSteiner Studios soundstages set to open their doors in Brooklyn's Navy Yard.

Item Three: the Canadian dollar reaches aeleven-year high against the Yankee greenback. It's now worth 80 cents,compared with 63 cents only three years ago.

Item Four: the US Congress is set to pass abill creating a nation-wide production tax credit.

Item Five: Forty states, the most activebeing Louisiana, are now offering some kind of film production incentive.

Now, let's put these items in perspective:

To be fair, items one and two should begrouped together. Mel Brooks, the New York state and city tax credits andSteiner Studios represent a terrific photo opportunity. In Canadian terms, itpresents less of a threat than a learning opportunity in marketing. "When itcomes to self-promotion, nobody does it better," says Ken Ferguson, thepresident of Toronto Film Studios, the company that will be building Toronto'snew giant soundstage facility. As he points out, even with the New York taxcredits, shooting in Toronto remains far more economical.

Regarding the shifting exchange rate, theUS dollar has been losing ground against currencies in those other territories,with the exception of Mexico, where so-called runaway production takes place,including the Sterling, the Euro and the Australian and Kiwi dollars. Whingingabout the rising Canadian dollar is pointless given the level playing field.

The proposed US tax credit bill that ismaking its way through Washington will affect productions with a total budgetof $15m or less. Very few US-financed films that shoot in Canada have such lowbudgets small; it's more the budgetary realm of movies-of-the-week, a formatrendered moribund by the advent of cheaper reality television programming.Canadian service producers have all but given up on such productions already.

As for competition from the other states,the bark is worse than the bite. Any jurisdiction can offer tax credits but thefact remains that without an established infrastructure few can provide thevalue presented by Toronto, Montreal or Vancouver when it comes to access to alarge talent pool, fully-trained crews, and soundstages and post-productionfacilities.

"Storms don't last forever," says PaulBronfman, chairman and CEO of Toronto-based Comweb Group, Canada's largestproduction equipment and facilities suppliers. "Canada is very much on theradar screen of US production. They can still save money here. They just can'tsave as much."

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