retail news in context, analysis with attitude

There has been a ton of coverage in the media of Amazon’s announcement yesterday morning, reported here on MNB, that it has begun the search for a second headquarters city in North America that it said “will be a full equal to Amazon's headquarters in Seattle, and is expected to grow to 50,000 employees as part of the company's ongoing job creation,” and that it is prepared to invest more than $5 billion in construction and operation of the new facility.

The Seattle Times writes that “the company said it’s aiming for a metropolitan area of at least 1 million residents, opening up, theoretically, a few dozen cities in the U.S., from New York to Tucson, and a handful more in Canada. It’s unclear whether Amazon would consider a bid from a Mexican city.

“The company also mentioned proximity to good universities and a pool of well-educated employees, particularly software engineers, to draw from.” Also of importance to Amazon, various stories point out, is the existence of a strong public transportation system and a modern, accessible airport.

Among the cities that seem to be most prominently mentioned are Atlanta, Austin, Boston, Calgary, Chicago, Denver, New York, Pittsburgh, Toronto, with a number of other cities and states - including Milwaukee, Minneapolis and Connecticut - saying they plan to make bids.

The Seattle Times has a story suggesting that this move could have enormous negative implications for Seattle, which has served as Amazon’s home since its inception and which has enjoyed enormous economic growth as a result.

“Even slowing from the pace of growth here would be felt in mostly negative ways,” the Times writes. “It might moderate house prices some — but remember that cuts two ways, hurting owners’ biggest source of household wealth. In the long run, barring war, volcano eruption or severe earthquake, Seattle real estate is now West Coast pricey.

“Things could get dicey in a serious recession or other downshift where Amazon must make choices, including which location becomes the real headquarters amid a severe restructuring and downsizing. The Midwest is littered with headquarters losses. If Seattle lost out in such a scenario, it would make Boeing’s move to Chicago look like a brief squall by comparison.

“Many will say it can’t happen. Amazon has too many sunk costs here and Seattle offers too many advantages. Even in the worst-case scenario, other tech giants would rush to fill any void. Maybe it’s nothing more than Amazon deciding it’s outgrown the viable footprint here. And maybe all this is true.”
KC's View:
This competition, I suspect, will end up being a lot like the Hunger Games, and will make the traditional competition to host the Olympics seem like a tea party in comparison. After all, the Olympics tend to have a transitory impact, and Amazon could maker a long-term difference in the economic health of a community.

I also think that while Canada might look interesting, Amazon wouldn’t want the political backlash of moving outside the US.

I got a number of emails yesterday suggesting places that people think Amazon ought to build HQ2, but I have to wonder if many of the emails and stories are missing one point that could be important to Amazon. I think that it will be looking for a state or community that it sees as being in synch with its own political and cultural priorities. That would mean being friendly to minorities and immigrants, and being progressive in its relationship with the LGBTQ community. It would mean a place that is not mired in divisive debates about bathroom access, or about the meaning of confederate statues, or about whether immigrants play a critical role in the country’s growth. It probably means a blue state, or at least a blue community (like Austin) that happens to be in a red state.

I’m just speculating here, but I think this kind of stuff would be important to Amazon. At the moment, I’m thinking that Detroit or some community in Ohio seem like potentially strong candidates.