Saturday, April 21, 2018
Business

Crunch time: What Amazon wants for its new HQ

Just 20 cities are left standing in the competition for Amazon's second headquarters and the 50,000 jobs it will bring.

Now comes the hard part for the finalists — and for Amazon. Based on the cities that made the cut, and what the company told some of the cities that didn't, the company will likely scrutinize six key criteria when making its final call. It plans to announce its decision later this year.

The 20 cities include Austin, Texas; Atlanta; Boston; New York City; Washington, D.C.; Los Angeles; and Nashville, Tennessee.

Here's what's important:

— TALENT, TALENT, TALENT

Among all of Amazon's needs, high-skilled workers are at the top of the list. The company has ventured far beyond retail and shipping into cutting-edge technologies, including artificial intelligence, robotics, drones and voice recognition for its home speaker, the Echo.

That's likely to give a leg up to cities that already have large tech sectors, such as Boston, New York, Washington D.C. and Raleigh, North Carolina, all of which were on Amazon's list.

"They're going to want to see that in the current workforce, but will also want a community that can come together and marshal that in short order," said Alan Berube, a senior fellow at the Brookings Institution's Metropolitan Policy Project. That means strong relationships between area businesses, community colleges and universities.

Amazon executives bluntly told officials from Kansas City, Missouri, that the region's lack of highly-skilled technology workers cost it a spot on the final list, according to Tim Cowden, CEO of the Kansas City Area Development Council.

— SIZE MATTERS

The state of Connecticut applied for HQ2, including proposals for Hartford and Stamford. But it was told the cities weren't big enough.

"We received positive feedback from Amazon officials, but at the end of the day did not have a large enough metropolitan area for this particular proposal," Governor Dannel Malloy said.

Smaller cities on the list, such as Raleigh, Nashville and Indianapolis might be challenged by the sheer size of Amazon's expected needs. Nine of the nation's 10 largest metros are on Amazon's list.

"Even among the largest places on the list, the market for tech workers would be transformed by the new demand for 50,000 workers," said Jed Kolko, chief economist at Indeed, a job listing website.

Denver, Pittsburgh, Austin, Indianapolis, Nashville, Raleigh and Columbus, Ohio — all among the top 20 — all have populations smaller than Seattle's roughly 3.8 million. That could make it harder for those areas to provide enough top-notch technical, managerial and financial talent.

— QUALITY OF LIFE

Not all those 50,000 workers have to be located right now in whatever site Amazon chooses. The company said its 50,000 hires will occur over 10 to 15 years, and it clearly expects to pull in talent from elsewhere. Amazon says it wants a city with amenities that its future employees will want to move to.

That includes everything from bike lanes to fast Internet and mobile phone connections to "recreational opportunities," according to Amazon's request for proposals.

That could help Nashville, with its music scene, or Denver, with its proximity to the Rocky Mountains. But it could also benefit cities with cheaper housing and lower overall costs, such as Pittsburgh, Indianapolis, Atlanta and Philadelphia.

"The thing that will attract people more than anything else is an engaging job at a high wage, especially if their high wages aren't eaten up by high housing costs," Kolko said.

— HIGHER ED

To ensure a supply of highly-skilled labor in the future, Amazon said in its request for proposals that "a strong university system is required."

Most cities on the list can fulfill that demand, Berube and other economists said, with the possible exception of Indianapolis.

Columbus is the home of Ohio State, while Nashville has Vanderbilt. Pittsburgh boasts Carnegie Mellon, which houses leading programs on artificial intelligence and robotics.

— PLANES, TRAINS AND BUSES

One thing Indianapolis does have going for it, Berube noted, is that city residents recently approved an additional tax to pump millions of dollars into buses and light rail. Most of the other finalists have extensive public transit systems, said Tom Stringer, a managing director at BDO Consulting, who leads the firm's site selection practice.

A large, international airport within 45 minutes is also critical, particularly for frequent flights to Seattle and beyond. That could be a roadblock for smaller cities such as Columbus, Indianapolis and Pittsburgh.

— GOODIES

It won't all depend on objective criteria, to be sure. Newark may very well have landed on the list at least partly because it and the state of New Jersey offered $7 billion in tax breaks and other incentives.

"They're not a half-trillion dollar company for nothing, and they are going to see what they can extract," Berube said.

That might inflict pain in the Washington, D.C. region, which has three locations on the list: The city of Washington itself, suburban Montgomery County, Maryland, and Northern Virginia, a collection of counties to the south of the city. The company could play all three against each other, Berube said.

Toronto, the only city outside the United States to make the cutoff, has said it won't offer tax breaks or other subsidies.

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AP Writers Jim Salter in St. Louis, Missouri and Susan Haigh in Hartford, Connecticut, contributed to this story.

Original Article

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