Why you should care
Because for one lucky city, this could change everything.
Phones rang off the hook in the offices of mayors and in chambers of commerce across North America when the news broke Thursday morning. Amazon had whittled down its list of suitors to a thrifty top 20, adding fire to the arms race that led 238 cities and regions to pitch the tech colossus on why they should be home to its second headquarters — plus the $5 billion investment and 50,000 jobs promised to come with it. Here are just a few of the takeaways from those who won, and lost, in this cutthroat, corporate version of The Hunger Games.
The Jeff Bezos rat race is upping the nation’s game
“The sentiment you would hear in Orlando today is … disappointed,” Tim Giuliani, president and CEO of the Orlando Economic Partnership, which handled the city’s bid, told OZY shortly after the announcement.
But talk to him further and it’s clear that the excruciating process of trying to win Amazon’s approval has made the city’s economic forces sharper. It showed the region’s strengths: a talent pipeline (half a million students within a 100-mile radius), a commitment to public transit ($10 billion in infrastructure to hit the region in the next decade) and a diverse community (including a Puerto Rican population displaced by last year’s hurricanes). As iron sharpens iron, the bid process has sharpened the city’s focus. “It gave us a lot of confidence that we’re able to compete in the big leagues for the biggest projects,” Giuliani said.
Creative cities pitch more than just tax breaks
When Amazon announced it would interview its own employees about where they would like the new headquarters to be, Toronto saw an opportunity. Using Facebook and LinkedIn, Toronto Global paid $25,000 (Canadian) to directly target Amazon employees with ads extolling the virtues of living in the Queen City — a tactic arguably smarter than those used by Tucson, Arizona, which sent Amazon a giant cactus, or the mayor of Kansas City, who bought 1,000 Amazon products and left five-star reviews bragging about his city on each.
Early on, Toronto — the only Canadian city to make the top 20 — decided “we weren’t going to try to play that game” on tax incentives, said Janet Ecker, vice chair of Toronto Global. Cities like Atlanta and Chicago have offered billions in breaks, led by New Jersey, which under Gov. Chris Christie cleared $5 billion in tax cuts for an Amazon offer in January. Instead, they’ve pitched the savings from universal health care ($600 million annually) and a favorable conversation rate on salaries (another $1.5 billion). “Canadians are sometimes known for hiding their light under a bushel, so this is an opportunity to make our case,” she added. Meanwhile, New Jersey argued it was offering more than a tax incentive: dozens of universities, a nine-million strong workforce and Newark’s internet speeds, “the best fiber optic network in the world,” said Michele Brown, CEO of Choose New Jersey.
You can pitch to Amazon and get lasting gains, even if you lose
In October, Ontario announced plans to increase STEM graduates by 25 percent over the next five years — and promised to partner with the Vector Institute to graduate a thousand masters students in artificial intelligence–related fields. The move was a naked bid for Amazon … “but it will also benefit our current investors, homegrown or otherwise,” Ecker said.
Trump’s America First promise may be working
Or at least it’s likely to when it comes to Amazon. Ecker acknowledged the political realities that would make an Amazon foray across the border a statement that would face severe backlash. “It’s a very different environment American businesses are dealing with,” she said. “And quite frankly, it’s very different for us. All of a sudden our major trade partner is saying it may not want to trade with us, so there are a lot of factors beyond our control.”
Don’t count out the South
Recently, Ryan Combs remembers overhearing a site selection consultant: “When it comes to incentives, the South is the big leagues.” And after his region, the Research Triangle — including Raleigh, Chapel Hill and Durham in North Carolina — made the most recent cut, he wasn’t shy about acknowledging “our business-friendly tax climate” as a major reason.
Most of the South still struggles with mass transit, one of the key asks Amazon detailed in their initial request for pitches. The three Research Triangle counties have reacted, adopting half-cent sales tax increases to raise a billion for building out public transportation. No other region can offer so much, though, in terms of incentives: what critics might call a race to the bottom, but Combs sees as unavoidable. “We’ve got to compete with Virginia, Tennessee, South Carolina. We offered $1.5 billion to get a Toyota Mazda manufacturing plant … and we lost out to Alabama.”
“It’s a necessary evil,” Combs adds.