Less Free Money In New Mexico?

Recently elected Republican Governor of New Mexico Susan Martinez has this as one of her proposals for cutting the budget:

New Mexico may be running away from runaway production.

One of California’s biggest rivals for film production has proposed a heavy cut in its tax rebate program, which offers filmmakers a 25% rebate on their production costs.

New Gov. Susana Martinez, a Republican who has vowed to curtail government spending, on Monday called for reducing the credit to 15% under a plan to balance the state’s budget.

I write a bit about the real reason vfx jobs for US films leave: government subsidies offered to producers to do the work in other states and countries.

I once asked about the problems these subsidies had for a big facility owner and he cut to the chase:

Look, these subsidies will not last. They can’t hand out free money forever.

Will the new governor be able to lower the subsidy? I don’t know but back when I called the UK Film Council’s report on subsidies bogus (which was closed a month later), I pointed my target at New Mexico and indeed what is happening now is what I predicted:

While the race for governor in the state heats up as the Republican candidate would order a review of New Mexico’s 25% film subsidy. Didn’t I say that Hollywood is a favorite target for conservatives?

In 2007, things were very bleak for the vfx market in Southern California. Imageworks opening facilities in New Mexico. Imageworks and ImageMovers in Novato. Laika in Oregon. VFX projects being lost to the UK. Later, some Imageworkers were being offered 6 month contracts in New Mexico or the prospect of being laid off. Most just ended up going to other facilities in So Cal.

For many who were eager to settle down, buy a home, and start a family, they jumped at the chance to move. One producer I chatted with shook his head and rolled his eyes:

What were they thinking? There are no other vfx companies out there.

Indeed, with so few facilities to bargain with it wasn’t a very good idea. One blog at the time even wrote:

If Sony opens a studio in NM, will many people really pack up their lives and move to a one pony town? I realize the cost of living is lower there (and you can be assured your income will drop too), but is it worth the gamble? If Sony goes through with it, I guess we will find out.

Now almost 4 years later what do we have now? For So Cal there has been quite a bit of work flowing in. However, ImageMovers and Imageworks Novato facility closed. Laika downsized very quickly. Imageworks’ New Mexico facility was supposed to be huge but was scaled back to a few office spaces. The new executive regime of Oshwitz at Imageworks is now focused on Vancouver’s super large subsidy. We’ll see how long that lasts but in the end the work will ultimately go where the talent resides.

As the years passed, I heard of nightmare scenarios where vfx artists signed mortgages and came into work the day it was announced ImageMovers was closing. I point out that buying a home is a bad idea for VFX artists even if it’s affordable because the industry is so unstable and we move around so often.

I was saddened to hear a story by a friend who worked at Imageworks at the time. One executive basically told the group that eventually all of Imageworks would move to New Mexico with just a small crew in Culver City. At one point the executive told the group that they already purchased a home in Albuquerque. Of course it turns out that the executive was lying.

I always found it funny that in every other part of life lying is bad. In business it’s just a part of good strategy.

Soldier On.

8 Responses to Less Free Money In New Mexico?

  1. anon says:

    I’m confused about whether this post is about subsidies, or if you are simply against having offices that aren’t in L.A. Novato is in California, so the ImageMovers and Imageworks offices there didn’t have anything to do with subsidies. If anything, both are examples of those companies opening offices simply because that’s “where the talent is” (SF Bay Area), lack of subsidies be damned. That’s what we should be encouraging — studios having offices in places where talented VFX artists want to live. Unfortunately, both offices were shut down, but for completely different reasons that are hard to generalize. Bringing up those examples (as opposed to New Mexico, which is certainly fair game in the subsidy debate) seems to muddy the issue, IMHO.

    • VFX Soldier says:

      The post is about subsidies but also the mindset at the time here in LA when so much work was “going away” to places that had a lure of “stability”. My point is nothing is stable. You will bounce around facility to facility and the prospect of settling down and owning a home is very tough in that situation.

      • anon says:

        No single facility is stable. (Except possibly Pixar and Dreamworks, both would seem to need multiple spectacular failures in a row to be in real trouble.) But geographic regions can be as stable for us as any other profession if there are enough facilities to choose from. The Bay Area has several major VFX and animation studios as well as lots of game development and Silicon Valley nearby (not so much for artists, but the techies can find work in a pinch). I wouldn’t discourage VFX workers from buying a home in the SF area, although I think they’d be *insane* to do so in Albuquerque.

        The interesting question to me is: are London and Vancouver stable in the kind of way the Bay Area and LA are? If subsidies go away (which some day they surely will), do all those facilities die? Or is there enough critical mass that the industry can keep going and VFX workers who like those cities can continue to find work?

        I’m glad there are now many places around the world each with multiple employers, some of which are downright nice places to live. I found the old days of “LA or nothing” pretty oppressive.

        I totally agree with you that the subsidies have got to go, they are dragging the whole industry down.

  2. postTHis says:

    it would be way cheaper to buy a home in albuquerque than San Francisco. unless you want to live in oakland slingin crack on the side than my bet would be if you had a good job in the vfx industry with your wages around the same in both locations your money would go farther in new mexico.

  3. RoadRunner says:

    Ive made the move back here to NM to hopefully take part in the expanding film industry. I’ll say that its fair to not want VFX jobs to move from where they are now…Primarily the So Cal area. I would say that if anyone thinks for a split second that Albuquerqu isnt a vibrant and creative city than you simply have not been here. I think its worth noting that environment and NATURE have always played a huge role in the artists life. We are no major city so if your looking for the ability to drive endless miles through developed complexities you would have to be in Cali or London…I cant contend with Vancouver as they too offer this to those who want a “sane” place to live and work…I wish Imageworks had moved to the Mesa Del Sol facility. They are currently teaching through our University. We have developed an active Siggraph chapter. We even just hosted a mini Comic-Con! Theres alot here that could aid in the development of a real solid VFX workforce. Its just a matter of getting even one more major animation studio to relocate here. Our new governor unfortunately hasnt yet seen permanence we could establish if we just manage a few more studios…Its Albuquerque…Some of the best skiing of my life within hours. Awesome food and culture…Im not gonna bother selling you this place. Im sure you’ll write me off becasue im not really mentioning anything about the money factor…But we have something very profound here. If it leaves completely…I’d be amazed at this point. Bug Bunny stopped here! We are joking around.

  4. RoadRunner says:

    We have made the single greatest impact on all of Hollywood. We scare them becasue we actually stand to make a permanent stand. The underlying vibe is that we are poised to be the next mecca for film making eventually rivaling that of even tinsel town itself.
    Thats why such HUGE players have spoken of us…We are doing what Hollywood knows best. Standing out of the crowd.

  5. Winston Smith says:

    http://latimesblogs.latimes.com/washington/2011/01/susana-martinez-new-mexico-state-of-the-state-text.html

    “In order to protect classroom spending in education and basic healthcare for those most in need we must find savings elsewhere. That’s why I propose reducing the state’s film subsidy from 25% to 15%, which is where it first started.

    This has been incorrectly referred to as a tax credit. It has nothing to do with taxes. The way it works is when a film is made in the state, New Mexico taxpayers cover 25% of the costs. It’s a simple and straight-forward subsidy –- 25 cents on the dollar.

    And it’s been taken advantage of. … One film company spent $100,000 chartering an actor’s private jet and New Mexico taxpayers paid $25,000 of it. We have a responsibility to see how each and every tax dollar is being spent. … How many jobs are being created and whether we’re getting a good bang for our buck. Eight states have reduced, suspended or completely eliminated their film subsidies. Studies found them too expensive for the few jobs they created.

    I support the film industry and support maintaining the incentive at 15%. But in these tough times, when New Mexicans are facing an historic budget deficit, I cannot support subsidizing the expense of Hollywood by cutting programs like child care services for working moms.”

  6. […] Sony quickly left New Mexico when the newly elected Governor announced intentions to limit the film subsidy program there. If studios are sensitive to costs how will they react to Quebec making it effectively 20% more expensive to do work there? […]

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