More in what will surely be a wave of analyses and opinion pieces on getting the Gorilla to come to town. My perspective? Big risks, big rewards. No guarantees for long-term success, except for Amazon.
First: from the Globe and Mail, and many thanks to Jeff Gray and Sean Silkoff.
Brad Duguid, Ontario’s Minister of Economic Development and Growth, says his government had given out $3-billion in various subsidies to businesses since 2004, resulting in $27-billion in private investment and 170,000 jobs. . .
He said his government was willing to put up significant subsidies if it meant Amazon would put its massive complex somewhere in the province: “You’re either in the game of attracting these kinds of jobs, or you’re not. … We’re no stranger to this kind of competition.”
Second: the Washington Post, with thanks to Abha Bhattarai. The focus, like so much else from the US these days, turns quickly to politics and immigration, and then moves on to the more usual money issues.
“The fact that Amazon is even considering Canada and Mexico shows how important politics has become in the site-selection process,” said John Boyd, a Princeton, N.J.-based location consultant whose clients include Boeing, Chevron and JPMorgan Chase. “This is a high-profile search, and Amazon has an incredible amount of wherewithal to influence state and federal legislation.”
Toronto, where it is easier to hire foreign workers than in the United States, could be a top contender for Amazon’s new headquarters, according to Boyd. (Other areas he thinks are likely: New Jersey, South Florida, Northern Virginia, Atlanta.) . . .
To date, Amazon has received more than $1 billion in state and local subsidies as they’ve built warehouses across the country, including more than $85 million so far this year, according to Good Jobs First, a watchdog group that tracks government subsidies to businesses.
“This is a company that is scientific about getting tax breaks,” said Greg LeRoy, the group’s executive director. “Most companies — 99.9 percent of them — go to great lengths to keep their search a secret, so this is a very unusual, highly public episode. What we’re about to see is a textbook auction for tax breaks.”
Given Amazon’s main HQ is in Seattle, and given all the hoopla about NAFTA and Making America Great Again, my bet is on a NE state closer to major population centres with right to work legislation, I.e. not MA, NY or NJ but one of the Midwestern states of Michigan, Indiana, Iowa, Missouri, Nebraska and Wisconsin – specifically Detroit, MI. Atlanta, GA also would make sense.
Why does the hoopla about NAFTA and MAGA lead you to bet on a US location? If anything I’d say the opposite – Amazon would be looking to hedge on politics and Canada would be a great hedge.
It’s too risky if 80% of their North America business is in US. Wages also too high in Canada, gasoline too high and electricity in Ontario far too high. Car makers are abandoning Ontario for that reason.
Why? They’re not moving headquarters; they’re creating a second headquarters. How does NAFTA come into it?
North-American cross border trade is being re-adjusted to “make America Great Again” .. in case you have not noticed. As such, any major non-US is more risky the next few years !
But this is about a headquarters, not trade. I don’t see how NAFTA affects headquarters.
At any rate I now understand your logic.
Wages in the high tech sector tend to range about 50-66% of those in the US. Add in the exchange rate and you get an extremely affordable workforce, especially among the highly skilled and experienced workforce required at Amazon’s HQ (vs a distribution plant). Employee benefits costs can also be significantly lower Canada (especially for health care)
North American cross border trade is being re-adjusted the “Make America Great Again.”
Until, at the earliest, the mid-term House elections next year, and next, the presidential election in 2020. Trump will likely face a real opposition capable of enacting its own laws. Close to 40 states, many of them led by ultra-conservative GOP governors, senators and congress members, will not let their majority of trade, which happens to be with Canada, fall down with Trump’s amateur and incompetent economic policies. They have been silent so far, but when the livelihood of their constituents relies on Canadian investment you can be sure they will vote for the status quo and not with Trump. The negotiators know this.
The timing of Amazon’s HQ2 plans does seem curious. Eight months into Trump’s disasterous and incompetent administration and one of America’s newest and largest tech giants is willing to consider a second HQ as big as the original set up in possibly a foreign nation.
Interesting reads at the Seattle Times:
Amazon’s second headquarters: Expect the unexpected
http://www.seattletimes.com/business/amazon/amazons-second-headquarters-expect-the-unexpected/
End of Amazon’s Seattle monogamy should be lesson to civic leaders
http://www.seattletimes.com/opinion/editorials/end-of-amazons-seattle-monogamy-should-be-lesson-to-civic-leaders/
Toronto will mount a sophisticated bid. It is the strongest Canadian contender. People in B.C. are forgetting the its economic and talent powerhouse in southern Ontario (several large universities in technology, engineering, etc.). And only 100 km. west of Waterloo.
Texas? Do large technology firms want to locate in disaster prone areas?
Toronto’s house & condo prices are as ridicolous as Seattle’s or Vancouver .. although Mississauga and area towards KWC is actualy not so expensive anymore and indeed a real contender for office jobs. Vancouver is too close to Seattle for it to be a real contender.
Dallas, TX is not disaster prone. Don’t believe all the TV images of Houston either. Quite a bit of it was dry. It just doesn’t show so well on TV.
Many other contenders: Miami, Atlanta, Denver .. my bet would be on a US east cost city.