Strong loonie, surging production costs prompt 400 layoffs at Cirque du soleil

MONTREAL – Surging production costs, the strong Canadian dollar, and the worldwide economic downturn were blamed Wednesday by the Cirque du soleil for its decision to cut 400 employees.

Most of the layoffs will be at the artistic giant’s headquarters in Montreal.

Company spokeswoman Renee-Claude Menard categorically denied speculation the Cirque is flailing but acknowledged rising expenses had caught up with the 29-year-old entertainment empire.

“The Cirque is not in crisis,” Menard told a news conference Wednesday. “Let’s get that straight.

“We had a record year in terms of tickets sold. We sold more than 14 million tickets this year. We had a record year for total revenue, with more than $1 billion.”

As well, the Cirque has the most number of shows — 19 — running at the same time in its history, she pointed out.

“We’re still pulling our rabbit out of the hat,” Menard said, calling the Cirque lucky in the current worldwide economic climate. “This being said, there’s also one of the factors that we let grow with our growth and that was our expenses.”

In short, the Cirque didn’t make money, Menard said, explaining the Cirque didn’t put enough emphasis on controlling costs.

“The organization at the moment is not profitable,” she said.

Menard explained the powerful loonie hit the Cirque hard — the company`s profit is affected by nearly $3 million for each cent the currency gains against the U.S. dollar.

As well, she said that while the Cirque used to have many partners who were willing to invest a lot of money in its productions, the Cirque itself has had to absorb more of the financial risk since the 2008 economic meltdown.

“We are now in the process of reviewing within the company worldwide all of our expenses to ensure that we decrease them significantly,” Menard said, noting that the job cuts are not the biggest part of the cost-cutting plan.

New types of partnership deals will also be explored and the Cirque will also look at ways to rein in production costs, Menard said. New markets will also be considered.

The cuts will begin by the end of this month and continue until the end of March. Menard said the entertainment icon will look at all options to reduce the staff, including attrition and end of contracts, the method how the Cirque’s artists are hired.

The job losses are not the first to hit the Cirque. A total of 50 jobs were cut last year.

Cirque founder Guy Laliberte and Daniel Lamarre, the organization’s president, delivered the news to staff in two meetings at the organization’s sprawling north-end headquarters but did not address the media.

Grim-faced employees trooped into the meeting as media arrived for the news conference but didn’t talk to reporters.

The Cirque employs about 5,000 people worldwide, including 2,000 in Montreal.

Menard said “each job, each budget, each function” will be examined in the corporate cost-cutting review.

Besides the 19 productions being presented worldwide, the Cirque is currently working on a new show that will open in May in Las Vegas.

Another touring production that will open in the spring of 2014 in Montreal is also in the works.

But four shows besides the 19 that are still on stage have closed recently.

“Zed,” which was playing to solid audiences at Tokyo Disney, ran from 2008 to 2011, when it was retired in the aftermath of an earthquake and tsunami that hit Japan. The popular “Saltimbanco,” which originally ran from 1992 to 2006, ended last year after a new tour.

“Viva Elvis,” which got mixed reviews, ran from February 2010 in Las Vegas and wound up last August. “Zaia,” the Cirque’s first resident show in Asia, ran from 2008 until last year and recorded lacklustre attendance.

A fifth show, “Iris,” is due to end its run in Los Angeles on Saturday although there are reports the Cirque plans to take the show on tour.

The Cirque’s 3D movie is reportedly doing respectable business internationally. Box Office Mojo, which tracks how much money movies are raking in, reports “Cirque du soleil: Worlds Away” has made more than $23 million worldwide since it opened Dec. 21.

The Cirque, which was founded in 1984 by Laliberte, is credited with breathing new life into the concept of a circus. It threw out the traditional playbook, which concentrated on animal acts, and used colourful acrobatics, a narrative framework and music instead of lions, tigers and monkeys to stir crowds.

It soon gained renown beyond its Quebec base and expanded into an international operation, its name becoming a pop culture shorthand for circuses. It was even satirized in an episode of TV’s “The Simpsons,” although it was identified as the “Cirque du puree.”

Laliberte has become a multibillionaire, space tourist and advocate for clean water.

The Cirque, which initially got financial support from the Quebec government, stopped getting government subsidies in 1992 and now offers support to other artistic organizations. It engages in philanthropy by aiding at-risk youth and contributes one per cent of its gross revenues to help resolve accessible water issues.