By Michael F. Carmichael
March 19, 2009
Once upon a time (how can any story about the movies not include that line) Detroit vied with Chicago, not Hollywood, to be the real film capital of the world. “Film” in that case was focused on what is known as the non-theatrical or industrial market, with hundreds of productions extolling the virtues of Fords, Chevys, Firestones and other products made by Michigan’s manufacturers. According to Arthur Slide’s book Before Video “the Jam Handy Organization [one of the largest industrial film producers] was so anxious to please its client, General Motors, that it built a projection room in the General Motors Building so that its executives need not leave the premises in order to approve the latest sponsored production.”
That was then. Today, Detroit and the rest of the state is rapidly becoming a feature film hub, thanks to a tax credit of up to 42 percent signed into law in April 2008.
The Michigan Film Office points out in its annual report that 35 productions were completed in Michigan in the nine months following the tax credit including All’s Faire, shot in Flint and Holly, Prayers for Bobby, a made-for-TV movie shot in Ann Arbor and Bloomfield Township among other Michigan locations, Tug, produced by Holland’s TicTock Studios and Whip It, shot in Frankenmuth, Birch Run and Ypsilanti. The Film Office Web site, in addition to promoting the tax incentive, also includes photos of “film-friendly” locations throughout the state. The Michigan State Fairgrounds was one of the locations, having been made movie-friendly by a film production crew which provided extensive landscaping that remained behind after filming concluded.
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Dr. Steven Miller is assistant professor and director of Michigan State University’s Center for Economic Analysis, a unit dedicated to applied economic research on issues critical to Michigan. When Corp! asked the Michigan Film Office for someone to talk to about the film business in the state he was said to be the “go-to guy.” While he’s housed in MSU’s Department of Agriculture, he’s “a regional economist who studies regional impacts and trends and Michigan has a lot of rural regions,” he explains. Miller is now considered the state’s expert on its nascent motion picture industry and co-author of “The Economic Impact of Michigan’s Motion Picture Production Industry and the Michigan Motion Picture Production Credit.”
“There’s a lot of need to get us out of the manufacturing morass,” Miller says. “We need to diversify in order to get out of the state’s following the manufacturing sector’s economic cycles.” And with Michigan’s incentive to motion picture producers topping neighboring Illinois, it is doing well with some $93.8 million spent in the state from April through December 2008 on motion picture production and the additional goods and services required to make that magic happen. In all, film production generated the equivalent of more than 1,100 full-time jobs in the state.
“Michigan stands above the crowd,” Miller continues. “It’s drawing a lot of attention from film producers. But, as the crowd continues to up the ante and compete [Illinois, for instance is offering a 30 percent tax incentive], that attention will become more diverse.”
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The state is doing all it can to keep the spotlight focused on it and its incentive program. According to the Detroit Free Press, early this year in the current movie capital “-¦ a group of about 250 Hollywood movers, shakers and Detroit aficionados were being sold on why the time is right to shoot in Michigan right now.” The seller was a familiar sight to the Californians as well as movie-goers everywhere, Clint Eastwood, whose film Gran Torino had been shot in Michigan. “Michigan will be the next film capital,” Eastwood growled in a short film clip.
In order to make that happen, Michigan has to build the infrastructure necessary to sustain the highly technical industry. Current plans call for a $9 million, 71,000 square-foot studio in Lansing, a full-service production facility in Muskegon and as many as three studio facilities in the Detroit area. Almost all of these are buildings that are known as “adaptive reuse” projects, including the former temporary home of the MGM Grand casino and a former General Motors plant in Pontiac.
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Across the state, community colleges from Oakland county to West Shore, north of Muskegon, as well as four-year schools such as Michigan State and specialty organizations, are ramping up to provide the creative and skilled workers not only for the anticipated film productions themselves, but for the equally demanding work that occurs after filming is complete. Detroit’s College for Creative Studies, as one example, offers an extensive menu of courses in its Entertainment Arts program for both undergraduates and adults that are focused on the digital side of production and include offerings on animation, video and live production and post-production.
MSU’s Miller says that once an infrastructure of creative talent, physical facilities and trained craftspeople is in place it’s only logical that even projects that don’t qualify for the incentive program will be produced here. “There is a lot of manufacturing here, and a lot of corporate offices,” he reminds us. “Their marketing efforts, whether commercials or other types of non-qualifying projects might well be done in Michigan, once our infrastructure is in place. It just makes good economic sense.” Some of that infrastructure is being built by former Michiganders returning home from stints in the California film industry. “I know of others who have chosen to come back because of the incentive program,” he says. “I expect more to come as well,”
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“There’s a multiplier effect to any film production,” Miller explains. “The production companies that come in to Michigan are hiring construction workers to put up stages, or to rehabilitate the filming location or to make the filming location friendly to film crews. There’s the purchase of financial services, legal services, bonding, insurance. There’s warehousing facilities being used. When a construction company provides materials to a film crew they then have to buy more materials to restock, thus making more economic activity in the state. That money just keeps traveling through Michigan’s economy in that multiplier effect I mentioned,” he concludes.
To prepare his economic report on the effects of the tax incentive in its first nine months, Miller used an economic computer model called the Policy Insight Model, created by Regional Modeling Incorporated. It was designed to allow economists and planners to determine how changes in governmental policy as well as industry practices will affect the economics of the residents and the business sectors of an area. The model tracks financial transactions in a number of segments of the economy and then makes projections on future activity. The projections were based for this study in part by the experience of Louisiana and New Mexico, two states which had instituted “similar, but lower”, tax incentives several years ago.
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The results show that Michigan can expect, if everything goes according to projections, that total production expenditures will grow some 200 percent by 2012 to nearly $290 million. Nearly 3,000 full-time-equivalent jobs will be created resulting in a total financial benefit to the state of approximately $350 million, thanks to the multiplier effect.
Another aspect of the multiplier effect is the impact the motion picture industry can have on tourism. According to Miller’s report “approximately 30 percent of Mackinac Island tourists revealed that they had learned about Mackinac Island from seeing the 1980 cult classic movie Somewhere in Time. Filmed on location at the Island, this movie has a loyal following of fans that flock to the Grand Hotel every October during the Somewhere In Time Weekend which generates more than 1,000 room nights and nearly $625,000 in annual sales. The report continues, “In 1984, Eddie Murphy’s character in Beverly Hills Cop sported high school insignia that generated more than $1 million in t-shirt revenue for Mumford High School.”
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Asked if he has found that the film industry is counter-cyclical in relation to other national economic sectors, Miller is somewhat cautious. “It’s not so much that it’s counter-cyclical, though I’ve read that in many places, it’s more that it’s stable, even in recessionary times.”
Figures for this year, however, compiled by California-based Media by the Numbers LLC, show that box office gross is up by more than 16 percent and attendance by nearly 15 percent over last year.
Will producers be able to find the financing necessary to take advantage of Michigan’s tax incentives? Miller is more optimistic. “Even in recessionary times I don’t see that filmmakers have as hard a time finding money as the manufacturing sector does.”
With Ohio reopening its film office after several years’ absence because of budget cuts and Illinois boasting of its 30 percent incentive, will Michigan be able to keep its position as a movie-friendly state? Watch this space for the sequel.