Blog: Rob Cleveland

Rob Cleveland knows what it takes to build something out of nothing. A former auto biz writer, he not only grew ICON Creative Technologies Group into a successful 30 person firm, he recently opened the Grange Kitchen in downtown Ann Arbor. Rob believes in the value of tax incentives, and explains how they'll help Michigan develop much-needed entrepreneurs like himself.

Rob Cleveland - Post No. 2: Film Industry Credits Take Time To Take Root

When the State of Michigan began issuing credits to the film industry for bringing their work here, projections on the number of jobs and the impact on the Michigan economy were lofty and, perhaps, even exaggerated.

Now, some special interest groups are roiling up against the credit system, insisting that the money spent has done little for the Michigan economy since the bill was signed in April, 2008.

And there is precisely the problem – a lack of patience. Here in Ann Arbor, the film industry descended on the town quickly and in full force. Almost overnight, well known stars and their extensive crews are blocking off streets, taking over restaurants and cutting deals on everything from office space to haircuts.

The problem: Ann Arbor area businesses haven’t figured out how to capitalize on the film business yet, because it is still relatively new. Back in Los Angeles, (or Toronto or New York), businesses understand their place in the film business, and know how to structure themselves to provide added value that can come at a premium, can be sustained and can be profitable.

Back here in Ann Arbor, Hollywood producers and local businesses are just figuring each other out, with one-off deals and single arrangements being made for facilities, locations and services – no long-term commitments and no investment in the future.

But that will change over time. If the state government sustains the momentum by continuing the credits, dollars will move in and local businesses will begin to make investments that provide greater value to Hollywood, and drive up revenue. As those businesses ramp up, they will need to hire people to manage that new business, and the hiring will begin.

Take the local area fitness center and spa. In Hollywood, staying trim and working out is a religion all on its own. Stars also like privacy and seclusion – especially when they are sweating and gasping for air just like everyday people. A local fitness center can’t afford to lock out repeat local customers for just one VIP, and conversely they can’t really charge that VIP a premium if the place isn’t private.

But that business could decide to make the investment to expand, create a private space and then charge higher dollars for it. And from there it stands to reason that they would need to hire a manager to handle the VIP room, lining up customers and handling them when they came in. The same scenario plays out for caterers, transportation companies, equipment leasing, restaurants, creative agencies, office and studio space – the list could go on.

Of course these investments becomes a bad idea the moment Michigan repeals the credit, and Hollywood takes its caravan on the road. The jobs are lost, the investment is a bust and the area business would have been better off never expanding. Put another way, no business owner worth their wages is going to make an investment in the film business until there is a clear commitment from the state to keep the credits online.

Expecting area businesses to make these investments and generate jobs in only 18 months while investment capital is nearly impossible to come by is incredibly unrealistic. The credit protests smack more of opportunistic political backbiting and less about what is best for Michigan

Until Lansing telegraphs a long-term commitment, yes, the dollars being spent aren’t likely to instigate much in the way of strong, sustainable business that creates thousands of jobs. And just to put the credits into perspective, 45 states offer some type of tax credit to the film industry, with 20 states offering serious incentives. Michigan, right now, happens to be the best. Given that Michigan has had trouble lately being a leader in anything except unemployment, the film credits should continue, and State legislature should give Michigan businesses something they can count on in the future.