16 November, 2018

2HQ2 – Two new seats for the new Amazon.com Headquarters, not one

Screenshot of an article by J. David Goodman and  Emma G. Fitzsimmon published online 
at the New York Times, November 6 (2018). Photo by Hilary Swift

The race is over now. As the result of a widely communicated search for its new North American headquarters (HQ2) that began back in October 2017, Amazon.com announced last Tuesday that it would place its new basecamp in two cities: one in Long Island City in Queens, New York, and the other in Crystal City, Arlington, a suburb of Washington D.C. The search campaign was part of a massive orchestration by Amazon that turned out to be extremely clever, given that this campaign received wide spread media coverage for which the firm did not have to pay a cent. The campaign comprised of a public call for tender, which found almost global recognition; 238 municipalities and regions applied for the honor of being the host city/region; and this was followed by a months-long speculation as to who would eventually make it, and for what reason … By last week, well informed sources already assumed that there might be two localities – not one – to be chosen, and these two would be most likely located on the East Coast, close to major metro areas, and not in North Dakota or the sunny side of Phoenix, Arizona. The existing breed of “world-class talent”, so the company told us, was the decisive argument for choosing the two, not proximity to money (NYC) or politics (DC). Believe it or not. (-1-)

The search for HQ2 and the associated bid campaigns were run by city and county governments across the continent, supported by economic development boards, policy alliances and a broad range of planners and stakeholders, and even academics. Thanks to the Internet, even remote observers were able to follow this process and reconstruct the current state of urban-regional competition, which provided a perfect sense of how that game is played under today’s framework conditions. Much of this is already public, such as the contracts that Amazon agreed upon with the selected municipalities (which included the incentives and subsidies to be paid for every job created). Great stuff to read that probably offers more instruction on how places sell themselves and are being evaluated - and will thus be ‘produced’ - than any economic geography or planning textbook. (-2-)

Actually, one may wonder whether city managers and economic development board chairs could have afforded not to run for such an offer. (We know that a few decided in the very end not to apply, see our entry here). Obviously, the temptation and excitement about this opportunity – 50,000 jobs created, an overall investment of about US$5bn – and hence the desire to apply was much greater than any doubts and reservations might have been, which might have prevented public officials from bidding. No, almost everybody in charge of urban and regional policy and practice had to run for this: That is at least what the competition (and the way it was publicly framed and perceived) looked like. Whether the offer will indeed be a great chance for the selected cities, or whether it will make them even more overcrowded and divided, remains to be seen.

The benefits provided by the huge number of highly paid jobs that will be created (or moved there) will have to be balanced against public cost, i.e. the massive tax discounts that Amazon was successful in negotiating with the authorities of New York City and State, and the State of Virginia, respectively. “New York promised Amazon $1.525 billion in incentives, including $1.2 billion over the next 10 years as part of the state’s Excelsior tax credit. The state also pledged to help Amazon with infrastructure upgrades, job training programs and even assistance ‘securing access to a helipad’ — none of which came with a price tag. Virginia promised Amazon an incentive package worth $573 million, including $550 million in cash grants — $22,000 per job. The state also pledged $250 million to help Virginia Tech build a campus in Alexandria, near the Amazon site in Arlington, offering degrees in computer science and software engineering. (Virginia, too, offered to help the company get a helipad.)” (New York Times, 14 Nov 2018, p. B1)

In terms of the definitive location choice, the pros and cons of agglomeration were obviously carefully weighed and balanced – actually more carefully than one would have expected in the beginning. Even Amazon officials might have learned from the well disputed prospect of placing 50,000 employees at one single locale – a promise that quickly turned into a threat for many. Some commentators were also pointing at an earlier blogpost by Joe Cortright who expected nothing but a split of the big HQ into at least a few locations; otherwise cities wouldn’t be able to handle that injection of money, buildings, people and their demand. How is it possible to suddenly provide housing for that sheer number of people? How is it possible to add so many daily trips to transport networks that are already working far beyond limits? Seriously, why not take into these issues into account and dedicate a subway line for the exclusive use of Amazon staff, as The Onion has already suggested (thus evoking the Google-bus controversy from the SF Bay Area …)?

Now the cake is divided into two, with each city getting 25,000 jobs each, plus another 5,000 for a tech-fulfilment basis in Nashville, Tennessee. We will have to wait and see how this sort of massive place-making will work. Soon after the decision went public, Crystal City seemed already re-branded into the somehow superficial “National Landing”. There will be more of this coming up in the near future. Inserting a global player’s headquarters into actually existing urban life-worlds (i.e. places that already tend to suffer from having too much of everything…) will become a rather exciting experiment for urban studies. Current and future student generations are well advised to keep an eye on the framing, implementation and contestation of all of this.

Of course, the race is not over yet in more general terms as well. Amazon.com will likely continue to fight its “store wars”, trying to achieve hegemony in the retail business – not only through running its e-commerce platforms, but also with brick & mortar-outlets that are fully equipped with digital devices and algorithms, and almost no staff; in Seattle, this model has already proven to work quite efficiently. The company will also move on with trying to squeeze out as many tax rebates and subsidies from the public (state and local governments’) budgets as possible, when the next promise for investment will be made. The firm will continue to pursue its mission of becoming the one ‘one-size-fits-all’ solution for everything that customers need; driven by a first class combination of spaces and flows, thus becoming really hegemonic and leaving behind a devastated landscape of traditional retail (and in terms of competitive power, most likely providing less, not more choice to customers). (-3-)

Last but not least, if the planet is going to get desperate with the never-ending race to the bottom for more, then Bezos will bring those who can afford outer space, where ‘Blue Origin’ will offer them a safe, extraterrestrial haven. Cynical? No, it’s just about customer dedication, technology and the modern world, stupid.

Markus Hesse

Further related readings
Hesse, M./Carr, C. (2018) The Corporate City Looming Part II: The “smart” City competes
Carr, C. (2018) Wagering the Waterfront? Angling the abc & xyz of Quayside Toronto
Carr, C./Hesse, M. (2017) The Corporate City Looming? Part I
Carr, C. (2017) Digital Cities - Toronto trying to get ahead

-1- Those who are interested in learning more about this case: Planetizen.com provides an excellent overview on the subject matter and various responses from cities, stakeholders, observers.
-2- Wondering to what extent the new, tech- and data-trading big corporation, its locational imprint and the associated ramifications for people and place(s) have already been covered by textbooks. They actually deserve the same treatment as it was the case with the industrial corporation (see e.g. Phillip O’Neill: The Industrial Corporation and Capitalism’s Time –Space Fix. In: Trevor J. Barnes, Jamie Peck, Eric Sheppard (eds.) The Wiley-Blackwell Companion to Economic Geography, pp. 74-90. Chichester: Wiley-Blackwell).
-3- See my book chapter on “The logics and politics of circulation. Exploring the urban and non-urban spaces of Amazon.com”, in K. Ward, A. E. Jonas, B. Miller, D. Wilson (eds.) Routledge Handbook of Spaces of Urban Politics, pp. 404-415. Abingdon/New York: Routledge (2018).

No comments: