Pontiac, Mich., a struggling General Motors town, plans to close half its schools and has an unemployment rate in the double digits. It's not the kind of place you'd expect to find a Hollywood finance guy. But it's exactly where Graham Taylor of Endeavor Talent Agency found himself brokering a deal for a new film studio.
Motown Motion Pictures soon plans to take over one of the huge office buildings in Pontiac that has been abandoned by GM.
Michigan is hoping the movie business will help rescue its ravaged economy. The state is using generous tax incentives to lure production companies, although some are skeptical of the plan.
Clint Eastwood shot his latest movie, Gran Torino, in the state. And box-office draws George Clooney and Hilary Swank are scheduled to film in Michigan in the coming weeks.
"Michigan has one of the most aggressive tax rebate plans in the country," Taylor says. "That plays a major role in your ability to underwrite the cost of a movie or TV show. But you need that, coupled with a place that has a wide variety of topography, and you also have to have a highly skilled crew base."
Michigan definitely has skilled laborers who need jobs. Tens of thousands of people in the state have been exiled from the auto industry over the past decade. And many of them are hoping to get off the unemployment rolls and go to work in the movie industry. Motown Motion Pictures and a planned animation studio in downtown Detroit would create more than 4,000 jobs.
But luring production companies to the Wolverine State does not come cheaply. Michigan is giving a 40 percent rebate to film producers: If they spend $10 million in the state, they'll get $4 million back.
State Sen. Nancy Cassis says the rebates are creating a huge hole in the state budget. For every $1 the state pays out for rebates, it will get only 18 cents back in tax revenues, one analysis shows. And that's at a time when Michigan has a deficit pegged at about $1.5 billion.
Cassis says she also sees little return in the form of jobs.
"Even though it's been touted that this economic activity with the film industry is the best thing since cotton candy, let me tell you: Cotton candy is very sweet, but it will not provide long-term sustenance for Michigan's economic revival," Cassis said.
But the prospect of a new industry — any new industry — has generated some of the only good news Michigan has seen in a long time.
From Auto Supplier To Film Studio
Until last year, Detroit Electro Coatings supplied parts to Detroit automakers. Now the stamping presses and hundreds of workers who filled the factory are gone.
Christos Moisides and two of his cousins, who ran the family business at Detroit Electro Coatings, reopened it as 23rd Street Studios last year. Since then, it has hosted two feature films, as well as commercial and video shoots.
Moisides and his cousins plan to retrofit the factory and build new soundstages this summer. They are hoping to turn the 18-acre site into a full film studio.
Moisides says the tax incentives are key to their success — and thinks state lawmakers would be foolish to scale them back.
"It totally is a gypsy mentality, where whoever's giving the best deal, they're going to come there," Moisides says. "And if the state thinks, 'Oh, you know what, they're all here, we can take it down to 30 percent or reduce it' or whatever, they're kidding themselves, because they'll go somewhere else."
That threat has been enough to sustain an arms race of incentives among the states in recent years. Right now, Michigan is at the top of the heap.
Critics say it's a cruel irony that homegrown businesses struggling to stay alive are now the ones subsidizing those Hollywood enticements.
But the incentives' supporters say the investment will pay off. And they say Michigan can't afford to turn its back on any new industry that's an alternative to the assembly line.
Sarah Hulett reports for member station Michigan Radio.
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