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
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
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
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
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.