The scene opens on Pontiac, cold and quiet.
This corner of the city used to be the nerve centre of General Motors’ truck and bus production. Today it is home to the deserted offices and warehouses of a once-thrumming business campus. On Centerpoint Dr. the “For Lease” signs sprout with the weeds in front of abandoned office buildings. At the 3.4-million-square-foot truck plant, a spectral hush has descended.
But just around the corner, the air tingles with the sound of industry. Engines turn over. A metal beam is dropped with a clang on a concrete floor. Forklifts beep their slow progress through what looks like a warehouse, built where GM workers used to park their cars.
This complex of seven sound stages for movie and TV productions opened in April, an $80-million (U.S.) investment grown out of Michigan’s desperate attempt to move beyond the collapsed auto industry.
Three years earlier, Michigan introduced the most aggressive film tax incentives in the country, hoping to create jobs in a state where the unemployment rate is almost three times the national average. Studios are allowed to claim up to almost half of what they spend here.
The program has been a steroid shot for Michigan’s film industry: In just three years it has grown from attracting $2-million in annual film expenditures to nearly $300-million.
The effort comes at a time when state finances are under the microscope. Michigan, battered by a recession so intense and long-running that some call it a one-state depression, is a symbol of North American industrial decline. How it pulls itself back up – if it does – contains lessons for other regions.
Many consider the state’s film incentives as crucial to that effort, but that’s up for debate. In a report, economist David Zin and his colleagues at the non-partisan Senate Fiscal Agency in Michigan, noted that for every dollar spent to encourage productions to film in the state, Michigan gets back only 11 cents in revenues. But another report by Ernst & Young estimates that for every dollar spent on incentives, other Michigan businesses such as caterers and hotels gained roughly $6 of additional sales.
Now the film program is under threat. In February, new Michigan Governor Rick Snyder released his budget for this year, proposing to scrap the incentives as too expensive. State coffers have been hurt as employment has fallen every year since 2000, and laid-off workers pay less tax.
In total, Gov. Snyder proposed $1.2-billion in cuts to state services to help deal with a $1.4-billion budget shortfall.
The Republican governor wants to cap film payouts to $25-million per year, less than a quarter of what studios collected in tax refunds last year for their in-state expenses. A House subcommittee has proposed cutting it altogether.
In Pontiac, where L.A.-based Raleigh Studios has built its brand-new soundstages, the staff aren’t worried about the proposed cuts – for now. A big-budget film is scheduled to start shooting soon. But with cuts likely on the way, it’s hard not to wonder: Michigan has built it, but will they still come?
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Randy Smith is in a different kind of auto industry, a micron of a business compared to the Big Three.
But the owner of Chuck’s Transmission got his own bailout when the movies came to town. In the summer of 2009, the remake of Red Dawn started shooting, and Mr. Smith starting fixing up old cars to rent to the movies. In his parking lot sits a cruiser with the back seat ripped out to make it easier to film the driver in motion; a lineup of yellow taxi cabs; fake cop cars; and all the spare parts and extra tires needed for a business that lets clients crash its products, race them, spin them out, or blow them up.
Red Dawn used 100 cars from his new Michigan Film Cars company. Then Transformers 3 came along, with a string of other movies and TV projects. He charges as much as $200 per day to rent a car, and $2,500 to blow it up. All the new activity saved his business.
