Film-makers desert Hollywood

By Peter Bowes
BBC News in Albuquerque, New Mexico

New Mexico is attracting a new breed of cost-conscious film-makers

Los Angeles, the self-proclaimed movie capital of the world, is facing its biggest crisis in the history of film-making .

Hollywood is being snubbed by its own creative talent. There is something of a stampede by the entertainment industry to get out of town.

Long before the global economic downturn kicked in, film-makers were upping sticks and leaving Los Angeles for more cost-effective locations to shoot their movies.

Canada was one of the first countries to benefit from Hollywood's so-called runaway productions, but now the competition is closer to home.

More than 40 US states are offering film-makers tantalising financial incentives, such as rebates and tax-free loans, to make the next blockbuster in their backyard.

This year, only five major movies, defined as having a budget of $75m (£51m) or more, are being produced in Los Angeles.

The figure compares with 21 films last year and 71 in 1996.

Mr Audley has seen a massive decline in LA-based film productions

"It is a dramatic loss and we're seeing similar trends in television," says Paul Audley, President of Film LA, the body that issues filming permits in Los Angeles.

"It has a massive economic impact on, not only greater Los Angeles, but the whole state of California," he adds.

The loss of film production to states offering generous financial incentives to the studios has cost California billions of dollars and tens of thousands of jobs.

After all, there is a huge knock-on effect when a studio decides to relocate.

Catering companies, lumberyards that build the sets, make-up artists and freelance camera operators are all affected.

"It's very frustrating for the industry," says Mr Audley.

"What we're finding, from some of the unions and guilds, is that their members are now leaving permanently for the states that do have the incentives and have the work that is available for them."

Mr Dellheim highlights New Mexico's similarities to California

One of the states benefiting from California's loss is New Mexico. With a similar climate to California - plenty of sunny days with wall-to-wall blue skies - it is a perfect place to make movies.

The state enjoys many of the characteristics that attracted the pioneers to Hollywood, decades ago.

"In the old days people used to come here for westerns, if they had a cowboy movie," says Michael Dellheim, a location manager who has worked in the state for 23 years.

Now, with a state-of-the art film-making facility, Albuquerque Studios, the state is well-equipped to make movies of any genre.

"We do it all now - episodic television with cops chasing the bad guys down urban city streets," explains Mr Dellheim.

Star power

He is currently scouting the state for a location that resembles a beach in the San Francisco Bay.

It is for scene for Denzel's Washington's latest movie, The Book of Eli, which is currently filming in New Mexico.

It is a post-apocalyptic thriller in which the Oscar-winner stars as a lone warrior named Eli, who battles to save the future of humanity.

Much of the movie is being filmed in a desolate desert location on the outskirts of Albuquerque - which makes a perfect setting - but the production company chose the venue because it made financial sense.

"The myth that Hollywood lives here and wouldn't leave is over Paul Audley, Film L.A.

New Mexico offers production companies a 25% tax rebate, to make a movie in the state.

In addition, producers can apply for an interest-free loan of up to $15m (£10m).

"There are places in California that might have worked creatively," explains Andrew Kosove of Alcon Entertainment, which is financing and producing the film.

But he adds: "Not only might the movie have cost more money but I would have lost all those incentives, and so I couldn't have made it."

It is a balancing act that every movie producer is grappling with. Resigned to leaving California, they are shopping around in other states to get the best deal.

Last year, the film industry in Michigan grew from $2m (£1.3m) to around $125m (£85m), thanks to a generous portfolio of incentives.

"I'm no different to any small businessman in any small business, and I'm going to manufacture my product where I can create the highest quality at the lowest cost," says Mr Kosove.

Mr Kosove says the film industry is just like any other small business

"The industry's home is California, but contrary to what may be popular perception - because of a few movie stars that live in big mansions - it's a business with very difficult economics."

California's loss is New Mexico's gain. The state's burgeoning film industry is enjoying a boom period.

"New Mexico is an odd state in that we're usually at the bottom of the rankings in terms of all kinds of horrible things - teen pregnancy, DWI (driving while intoxicated) - but we're number one in terms of this whole incentive thing," says Mr Dellheim.

The use of new film-making technology has also hastened the exodus from Hollywood.

"This movie is being shot on digital media… it's much more easily transported, it's much more of a portable medium," explains David Valdez, executive producer, The Book of Eli.

Californian action

It all begs the question: will Hollywood ever be the same again? The film-making exodus has many people in Los Angeles deeply worried about runaway productions.

California has only just introduced a measure offering film-makers incentives, although the plan has been criticized for being too little too late.

Former action star, Arnold Schwarzenegger's administration has given the green light to a 5-year, $100bn (£68bn) plan to encourage movie producers to stay in the state.

But there is a cap on productions with a budget of at least $75m (£51m), so major feature films are not eligible.

"Every other state gets it - that this is an industry that brings massive economic benefit, and California is just getting it now," says Mr Audley.

"The myth that Hollywood lives here and wouldn't leave is over."