Bidding Frenzy for Amazon's HQ2
Recently New York has entered the fray of bids that are going out to Amazon as they have unveiled plans to build an additional headquarters somewhere in the US. New York got creative by lighting up the Empire State Building and the Dow Jones Industrial Building in orange as an homage to the tech giant.
Many other cities have made it to the top 10 finalists in order: Austin, Atlanta, and Philadelphia. With the Big Apple ranking sixth overall. Amazon measured each city based on business environment, transportation, and cost. In the way of costs New Jersey's infamous governor Chris Christie has offered a huge $7 billion dollar tax break, if the tech giant were to choose Newark as its home.
This has raised many concerns from progressive groups who believe that this generous offer will effect the already slowly diminishing middle class. While, New Jersey and Illinois (who offered another whopping tax abatement) have put some enticing offers on the table, most cities would rather entice Amazon with clever presents and displays, not financial breaks.
One example is local Arizona business boosting group went as far as uprooting a 21-foot cactus and sending it ti Amazon, who quickly gave the cactus back tweeting that they couldn't take gifts. Birmingham, Ala assembled a massive package in their downtown area saying if they wanted the tech giant to come they needed to do something big, very big.
The main reason that these major cities are so frantic to receive Amazon's new HQ is because the sole building will cost about $5 billion to build, granting local businesses a huge boost in their profits as well as generating around 50,000 jobs in that city averaging $100,000. This is the real reason behind why so many cities are jumping at the idea of having this tech mecca set up shop in their city. It will be interesting to see where Amazon picks to place their second HQ and even more interesting to see how it impacts the area around it.
I think it is interesting to hear that cities are going as far as tax breaks to get Amazon to come to their town. I am curious to see to what extent cities will go to, as the debate continues, in order to get Amazon to pick them. In addition, it would be neat to see which of the specific qualification Amazon is wanting the most for their new headquarter. What I mean by this is if one city has the top location, but not the best cost will Amazon pick that city over one who has a decent location and a decent cost? Amazon has a lot to think about when choosing a city and I am curious to see the benefits brought to whatever city is picked.
ReplyDeleteI find it surprising to see the state of Delaware wasn't a big time contender considering they are a popular state for companies to set headquarters. Delaware has low regulations and taxes which makes it ideal for businesses. Nearly half of all public companies are headquartered in Delaware, this could be a place that Amazon has their eye on.
ReplyDeleteI cannot believe there has not been more backlash against the subsidies given to Amazon in the recent years. These subsidies are stimulating their growth to an alarming rate, often times crowding out small firms and brick & mortar stores in the process. There was recently a large debate on the shipping subsidies USPS gives Amazon, often times shipping products at a price below cost. This is illegal, but USPS has found ways around it by artificially "adjusting" the recorded costs of delivery. At some point, I would imagine legislators and lobbyists will step in to put a stop to the subsidies Amazon is receiving.
ReplyDeleteI was surprised to hear that Amazon is not going to New York; it makes sense why they are 6th on the list though. Costs in New York are out the roof, and New York is already doing well in the business world. By moving to a major city further down the list, Amazon will cut costs and create thousands of jobs. This will have a major impact on an up and coming city, leading to a major economic boom. I like how Amazon is thinking and it should be interesting to see where they end up building this HQ.
ReplyDeleteI agree with Rachell - why are they not looking at Delaware? I am also surprised by the volume of tax cuts cities are offering to Amazon - are they really going to make any money by the time they pay for all this extra infrastructure with limited tax revenue coming in?
ReplyDeleteI can see why some people may be worried about the huge tax breaks that states are offering Amazon; however, I believe the concern is a little too high. Having Amazon's second headquarters in one's state would bring about positive economic changes. As you mentioned in your article, building the headquarters alone would throw more money into that state's economy, as well as grant many people jobs. Even after the headquarters has been built, new jobs and opportunities will become available for qualified people. Additionally, the sheer volume of attention given to that state should increase which could cause numerous things to happen. Possibly more people move to the state, more shipping goes through the state, additional licenses for various things will be issued through the state, etc.
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