Amazon relocation to North America

Deputy Business Editor looks into the competitive Amazon HQ relocation contest

HOT OFF THE heels of its recent move into a massive 600 000 square foot office in Shoreditch, London, Amazon has set off a bidding war in North America for its ‘HQ2’ project. 238 cities and states across the US, Canada and Mexico have been vying for the chance to host the tech company’s second headquarters. From Chicago to Vancouver, Puerto Rico to Dallas – city leaders have scrambled to try and allure the corporate behemoth to their backyard.

Such a response should not be a surprise. Amazon estimates that the new headquarters will bring roughly 50 000 new full-time employees, with average salaries exceeding $100 000 per year. The company boasts an additional $38bn of investments and 53 000 jobs created in the local economy due to its own investment in Seattle, its original headquarters. With Amazon’s help, the Emerald City is booming; it is the US’ fastest growing city and tops the table for income growth for the top five per cent.

The contenders range from established metropolises to other cities envisioning a bold future with Amazon at the beating heart of their economy. Detroit, once the centre of the world’s car manufacturing industry, now labelled the ‘Comeback City’, has reportedly been shortlisted for the new headquarters. Having become the largest US city ever to file for bankruptcy in 2013, Amazon could potentially make Detroit one of America’s leading cities once again. Detroit’s pitch included a poetic video showing the various aspects of the historic city, with its tagline ‘Move Here, Move the World’.

Others went with a different approach. New York lit up some of its iconic skyline, including the Empire State Building, in Amazon’s signature orange colour. Other bids included Stonecrest, Georgia, which voted to de-annex 345 acres of land and name it Amazon, Georgia. “Jeff Bezos can be the mayor, CEO, king, whatever they want to call it”, said Stonecrest’s mayor, Jason Lary. Bizarrest perhaps was Tucson, Arizona’s decision to mail a 21 foot saguaro cactus so as to catch the company’s eye.

However, it may yet be Newark, New Jersey, which has found the best way to Bezos’ heart. Amazon, like many other multinationals, has a history of tax avoidance. It paid just £15m in tax on European revenues of £19.5bn in 2016. In October 2017, the EU antitrust body ruled in early October that Amazon will have to pay €250m to Luxembourg in back taxes due to an illegal tax arrangement. This is a pittance compared to New Jersey’s offer of $7bn in state tax breaks. A mere 18 minute train ride away from New York City, this could prove a tempting offer for Bezos.

Not all will be rosy however, if Amazon moves into town. Seattle’s Amazonian experience offers a word of warning for potential suitors. Rent prices are up 57 per cent from 2011, and in 2015 Seattle declared a civil state of emergency on homelessness, partly due to real estate being bought up by the company. While it has invested in the transit system, the influx of workers has led to Seattle’s roads being severely congested; its drivers spent roughly 55 hours in traffic in 2016, according to a study by Inrix. These issues have been raised in an open letter from 73 community organisations from 21 states named ‘Our HQ2 Wishlist’. The letter asks Amazon to give assurances to its chosen city on housing, transport, transparency and taxes among others.

Amazon’s new headquarters could transform a lucky city or boost an already wealthy one. But pandering city leaders should be careful what they wish for; the tech giant’s growth will not stop for anyone.

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