Economic Development and Film

GRBJ 30th Year: West Michigan has a walk-on role

Film industry not yet a key ingredient in the state’s economy.

September 13, 2013
| By Pete Daly |
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GRBJ 30 Year Movie
The film and digital media industry at one time was limited to advertising. Michigan film incentives helped expand the expertise to movie making. Photo by Johnny Quirin

In the U.S. film industry, Michigan has had mainly a walk-on part — but state subsidies for the film industry became a Technicolor addition to the usual drama in the state Legislature after then-Gov. Jennifer Granholm got the Michigan Film and Digital Media Incentive passed in 2008.

Many Michiganders who once made a living involving film production were working in the advertising industry in southeast Michigan, making car commercials for the Big Three. Corporate jobs like that began to shrink by the 1990s, so eventually, feature films were seen as a potential way to put many of those professionals and their equipment back to work in Michigan.

In July, a report was published that compiles the experiences and perceptions of 70 Michigan residents still working in the Michigan film and digital production industry. It’s timely because the Michigan Film Office, a state agency that is charged with encouraging movie-making investments in Michigan, is now working on a strategic plan to guide growth and development of the industry, and it is due Oct. 1.

The independent report finished in July was done by Deb Havens and Mark Adler, co-founders of Film Friendly Michigan and film industry professionals with long experience in Michigan productions.

GRBJ 30th Year

The report is posted on filmfriendlymichigan.com/blog. A key short-term recommendation of the report is to involve members of Michigan’s film and media industries in the Michigan Film Office’s strategic planning process, but Havens said that does not appear to be the case at this time.

Michigan’s feature film industry — that’s where there’s usually a lot of people employed and big Hollywood bucks are spent — began in 1946 when Esther Williams and Jimmy Durante were on location at the Grand Hotel on Mackinac Island for the production of “This Time for Keeps.”

Grand Rapids had a taste of Hollywood excitement when George C. Scott came here for filming of background scenes in “Hardcore,” a 1979 movie about a conservative Midwestern businessman — Jake Van Dorn, played by Scott — whose teenage daughter disappeared during a church youth group trip in California and ended up in porn movies.

Michigan’s next and really big walk-on role for Hollywood was “Somewhere in Time,” the 1980 movie starring Christopher Reeve and Jane Seymour — and the Grand Hotel in all its glory. The film was so popular there are still groups visiting the Grand Hotel every year to watch it on DVD and dress up like high-society folks from the early 1900s.

Eric Johnson, who formed Gorilla Pictures with Eric Machiela in Grand Rapids almost 10 years ago, told the Business Journal they spent a lot of time working on films out of state “because there wasn’t a lot going on here at the time.”

“Usually in a small market like this, the talent emerges, outgrows the area, and then leaves for L.A. or New York or Chicago,” said Johnson. “You would be amazed at the amount of musicians and filmmakers that have come from West Michigan over the last 20 years — they’re just not here anymore.”

The Great Recession and near-death experience of two of Michigan’s Big Three automakers led to the state’s energetic effort to lure the film industry and create jobs.

Before 2007, said Havens, the state’s incentive to the movie industry amounted to something like a 30 percent discount on the crew’s hotel rooms. “That was just so, so minor,” she said.

Then, in 2007, there was a significant incentive approved by Granholm that was a 20 percent sliding-scale for some production costs.

Granholm’s next legislation, in 2008, offered the most generous incentive in the nation to the movie industry: 40 to 42 percent of the cost of filming would be refunded to the movie moguls, and it also covered television and digital media productions. There was always a complaint, however, that it did not cover television commercials.

The legislation also tried to spur capital investments in movie studios with a 25 percent subsidy for new film-related facilities, and there was a 50 percent tax credit for training of Michigan residents to work in the industry.

The studio investment incentive led to a huge controversy in Grand Rapids in 2010 when a pair of investors said they were buying Hangar 42, a vacant auto parts plant in Walker, for $40 million — although it had previously been listed at $10 million. Felony fraud charges were brought by the Michigan attorney general (later dropped), and before the dust settled, there were lawsuits filed by companies that had been working for the two would-be studio owners.

Due to the incentives, movies were shot in Grand Rapids, and some continue to be, although not at the scale once hoped. As stated in the Film Friendly Michigan report: After the passage of Granholm’s 2008 legislation, Michigan immediately became one of the top three U.S. competitors for filmmaking in the world, competing with New Mexico and Louisiana, which also had attractive cash incentives. Regional film offices were established in Ann Arbor, Detroit, Macomb and Oakland counties and in Grand Rapids, and there was studio investment in Pontiac, Detroit, Allen Park and Manistee.

Film Friendly Michigan notes that in 2008, Michigan’s film industry expenditures grossed $125 million, up from $2 million in 2007, creating an estimated 2,800 jobs with incentive investments totaling just less than $48 million. By 2010, the film industry had produced nearly 150 films in Michigan, spending $642 million and generating more than 5,000 jobs in production and approximately 8,000 acting jobs. The statistics were obtained from Michigan Film Office annual reports.

Meanwhile, there were persistent critics of the incentives each year, and in March 2011, newly elected Gov. Rick Snyder said he wanted a $25 million cap on the incentives.

Public Act 291 of 2011 became law on Dec. 21, 2011. The legislation made the Michigan Film Office part of the Michigan Economic Development Corp., which the FFM report said was underscoring the state’s intent to increase the real economic impact of the film incentives. However, Act 291 did not provide separate funding for infrastructure and work-force development.

A cap of $50 million for the film incentive was authorized for 2012, and Snyder wanted it cut to $25 million for fiscal year 2013-2014 but was overruled by the legislature.

As stated in the FFM report: “The impact of reduced support for the film industry was immediate. Many films scheduled for production left the state, followed by workers pursuing jobs in the film industry.”

When they finished writing the report in July, Adler and Havens noted “the state has had difficulty in recruiting film projects and spending in numbers equivalent to those prior to passage of Public Act 291 in 2011. In fiscal year 2012, just under $17 million was spent from the $25 million appropriated for incentives.”

The report also notes the MFO has approved projects for FY2013 that would total about $33.5 million out of the $50 million appropriated by the legislature. Slightly more than $24.5 million is currently unspent. “Based upon these indices, it is clear that past assumptions about how to grow the film and digital media industry no longer serve to attract or support” that form of economic development to maximum effect.

The report states the film industry people working in Michigan believe “unanimously that the new iteration of incentives (2011 to present) is not effective when compared to the impact made by the preceding initiative (2008-2010). Further, participants perceived that building Michigan’s indigenous (film industry) work force was no longer a priority; and that stimulating the state’s economic growth and development was significantly hampered because of continuing political controversy over the incentive program.”

Havens told the Business Journal the intent of the FFM report is to “get the insight of the people” who are actually working in film and digital production in Michigan now, while the MFO is revamping strategy.

A key long-term recommendation in the report is that Michigan “establish high-tech zones to help interested communities attract and locate film and digital media companies within economic development areas similar to the current Medical Mile in Grand Rapids, Auto Alley in Oakland County, etc.”

The report says professionals from established film companies should be recruited to set up shop in these high-tech zones, including agents for actors and writers, film distributors, and managers in production and post-production companies.

Havens mentioned that the state of Michigan is looking in the Middle East for companies willing to invest in Michigan.

“Those countries do have a thriving industry in film, and they have a lot of financial resources. The question is, what would it take to get them to invest here in film? We’re inviting them for everything else — why not film?”

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