Friday, July 23, 2010

Re: [MISP] Milken Study on California Film Job Loss

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SELF-SUSTAINABILITY TODAY

Another part of our discussion here and the larger discussion in our state is the purpose of incentives, "the seeming absence of any 'stickiness' of this industry" and the nature of "self-sustaining" industry.

As Gary and Ed note, the traditional view of incentives is that if successful, they should lead - in a limited period - to viable, self-sustaining business.  The (possibly) unfortunate truth is that nearly all industries are changing in a way that places and people are almost more of a commodity and must compete on an ongoing basis.  The older (and still valid) models of factories and farms do exist - and those are industries where a significant investment in physical infrastructure can pay off in advantages that last years. The National Labs, our state's many farms, and Intel are good examples of how this can continue to pay dividends to our state. 

More recently I'd say that investments in the Spaceport and Clean-tech/Green Energy have a similar chance to pay those long term dividends.

More and more however, most industries don't lend themselves to brief investments that lead to long term strategic advantages. Like it or not, the offering of incentives has become part of the standard business practice of states, but of course that isn't only in film; it's part of the equation nearly every time larger companies think about moving.  The valid questions then include, "Are there still industries where a fairly short term investment and New Mexico's existing strengths could create a long term sustainable advantage?" and "Are there existing industries where we can remain or even become more competitive?" (There are many other potential questions.)

I wouldn't try to answer the first question here, but I truly believe that a combination of film and digital media is a good and useful answer for New Mexico on the latter. Through forethought, hard work and luck, New Mexico does have advantages and can maintain and even build on them if we continue to think, adapt and evolve.  On the one hand, we should continue to have a combination of land and culture where people can really live. On the other hand, the infrastructure, crew base and systems we have in place should continue to put us in the top tier of places people *want* to make movies if we remain sane and competitive in other areas. If we continue to streamline those operations and improve the efficiency with which we interact with this industry, we'll continue to be one of the top places people want to do business.

In other words, it'll all be about continually adjusting and improving the way we respond to the needs of our clients that keeps them coming back for more.  Which is yet another reason to involve not only 'traditional' digital media but other related areas like web and software design and development. In these industries, continuous improvement and rapid prototyping are standard parts of how they do business -- it would be useful to apply that thought-process to the rest of the media world as well. 

Apologies for the somewhat rambling reply -- and thanks again for participating!

eric



On Fri, Jul 23, 2010 at 12:11 PM, Gary Gomes <ggomes@soundviewnet.com> wrote:

Eric,

 

I couldn't help myself – so I am responding to your post.

 

I am a supporter of bringing film and digital media industries to New Mexico, but one of the things that, unfortunately, seems to be a recurring theme in these kind of articles is the seeming absence of any "stickiness" of this industry.

 

I know that New Mexico is in the "building" stage, but if California and New York and other established locations are subject to almost immediate losses when incentives are reduced or eliminated, there is pretty strong evidence that this may never be a self-sustaining entity.

 

This is not what one intuitively expects when one looks at long-term models like Silicon Valley, Research Triangle Park, etc.  The concept is that front-end incentives generate private investment and critical mass which results in an industry sector that can grow and thrive on its own.

 

Without sustainability, then state and local  subsidies sound like a preference of one industry over another – why should this sector be singled out?  Worse yet, with virtually all states offering film subsidies, it feels like the U.S. populace is simply increasing the profitability of a nomadic industry owners/investors while creating no net benefit (moving jobs from California to New Mexico may help NM but not the US).

 

In a time of great national need for job creation, logic says that subsidies should be supported by and integrated with n long-term job creation vision that is not well articulated in the discussion surrounding film in New Mexico and the US.  With that in mind, I note that one of the three California recommendations is to establish incentives for digital media – an industry that is experiencing aggregate growth (while film is mature and exhibiting little or no aggregate growth) – for whatever reason, this discussion does not take place in New Mexico.

 

 

Gary

 

From: NM Media Discussion List [mailto:MISP-L@unm.edu] On Behalf Of Eric Renz-Whitmore


Sent: Friday, July 23, 2010 9:42 AM
To: MISP-L@LIST.UNM.EDU
Subject: [MISP] Milken Study on California Film Job Loss

 

***This is a MISP Listserv message. Responses are sent to the list by default.*** ***For more info about MISP and the listserv, scroll to the bottom of the page*** *


There's a new study getting some media play regarding the impact on California on its loss of jobs because it hasn't been competitive with other states and countries.

While the report focuses on California, I think there are at a least a few things for us to look at, consider and share.

Findings include:
"for every job created in California's film sector, another 2.5 jobs are created in other sectors"
Jobs lost had an average salary of $92,000 a year (while this may not translate exactly to New Mexico, it's clear that film pays above the NM average)

The recommendations from the press release are... worth looking at too: "The report makes a series of recommendations on how California can turn the tide, including:
  • Design a two-tier film incentive program — one set of benefits to engage big-budget studio films that are not covered under the current incentive program, and another set to attract smaller independent production.
  • Implement a new digital-media tax credit to attract and retain developers of digital animation, visual effects, and video games.
  • Make tax incentive programs permanent, signaling long-term commitment.

The long-term or evergreen clause approach many of us have been calling for, especially as without this commitment it's difficult to imagine how the businesses we need can invest in bricks and mortar and infrastructure. The study looks at the dampening effect of California's incentives, set to expire in 2014 -- of course it's much worse to have ours threatened on an annual basis.

I know I'm preaching to the choir here, but it's important to remember and share two things:
1.  Our existing incentives are a net gain to New Mexico's economy
2.  The loss of production work due to crippled incentives will lead to losing some of our most talented people and/or greatly increased costs due to lack of employment for those who stay

Best wishes -- and thanks to all those who continue to make New Mexico a great place to live, work and make media.

Eric

LOS ANGELES, CA–(Marketwire – July 22, 2010) –  California has lost 10,600 entertainment industry jobs, more than 25,500 related jobs, $2.4 billion in wages and $4.2 billion in total economic output since 1997 as film and TV production has moved to other states and countries, according to a new Milken Institute study, Film Flight: Lost Production and Its Economic Impact on California.

States like New York, New Mexico and Michigan, and countries like Canada and Germany have been aggressively courting the lucrative film industry with extensive tax and wage incentives. "The Blind Side," "No Country for Old Men" and "The Incredible Hulk" are among the many movies that have been filmed outside of California in recent years.

"There's no doubt that incentives have been drawing jobs and wages away from California," said Kevin Klowden, Director of the Milken Institute California Center and lead author of the report. "And while California's incentive package, passed in February 2009, appears to be working, we have a lot of catch up to do just to get back the share of production we had in 1997."

According to the report, forty-two states (including California), plus the District of Columbia, are currently vying for a piece of the $57 billion U.S. film production industry by offering tax incentives. In July 2009, California implemented a tax credit for projects filmed in state with budgets of $75 million or less. Since its inception, 75 projects have been approved to receive credits. These projects were estimated to spend more than $1 billion in the state, generating $500 million of wages for below-the-line staff. The report notes that California's tax credits are set to expire in 2014 and are more attractive to independent films and television series than to big-budget studio productions, because only projects with production costs below $75 million are eligible.

Among the findings of Film Flight:

  • The number of movies either wholly or partially filmed in California has fallen sharply, from 272 in 2000 to 160 in 2008.
  • California's share of North American employment in the industry has declined from 40 percent in 1997 to 37.4 percent in 2008.
  • Jobs losses go beyond the movie industry, because for every job created in California's film sector, another 2.5 jobs are created in other sectors.

The report makes a series of recommendations on how California can turn the tide, including:

  • Design a two-tier film incentive program — one set of benefits to engage big-budget studio films that are not covered under the current incentive program, and another set to attract smaller independent production.
  • Implement a new digital-media tax credit to attract and retain developers of digital animation, visual effects, and video games.
  • Make tax incentive programs permanent, signaling long-term commitment.

The report includes an analysis of what other countries and states are doing to attract film production and post-production business such as digital special effects, animation and 3-D video game development. Included in the analysis are Canada, Australia, the U.K., Germany, New Zealand, New York, Georgia, Louisiana, New Mexico, North Carolina and Michigan.

Film Flight: Lost Production and Its Economic Impact on California is a product of the Milken Institute's California Center, which is dedicated to measuring, evaluating and analyzing the state's economic, demographic and social conditions and trends.

About the Institute: The Milken Institute is a nonprofit, independent economic think tank whose mission is to improve the lives and economic conditions of diverse populations around the world by helping business and public policy leaders identify and implement innovative ideas for creating broad-based prosperity. It is based in Santa Monica, CA. (www.milkeninstitute.org)

Contact
Jennifer Manfre
Associate Director of Communications
(310) 570-4623
Email Contact

The LA Times blog has its write-up here: http://latimesblogs.latimes.com/entertainmentnewsbuzz/2010/07/film-and-tv-flight-cost-california-36000-jobs-study-says.html


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Eric Renz-Whitmore
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Eric Renz-Whitmore
twitter: @ewhitmore
cell:     505-227-1086

Program Coordinator, ARTS Lab
http://artslab.unm.edu
http://artslab.blogspot.com
http://www.facebook.com/artslab
twitter: @artslab_nm
office: 505-277-2253
LEAVING THE LIST /LIST INFO: To leave the list, please email us at: artslab@unm.edu For other list info, please visit: http://groups.google.com/group/nm-media-industries/web/media-industries-list-info Available in RSS: http://groups.google.com/group/nm-media-industries/feed/rss_v2_0_msgs.xml

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