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Amazon's HQ2 search

Sarah Putt, Contributor. 20 November 2018, 7:25 am

In the end two cities were joint winners, and another got a consolation prize, but Amazon's competition to find the location for its second headquarters provides an insight into the kinds of places where, to paraphrase the late Sir Paul Callaghan, "talent wants to live."

New Zealand cities were never in the running - despite some interesting analysis from Lance Wiggs when the competition kicked off last year - because of the obvious point that Amazon didn't want to go outside America. But it is still a fascinating process to watch from afar. The idea that a company can hold a beauty contest to pick a location in which to build another headquarters, and that 236 cities knocked themselves out auditioning, with many investing serious money in trying to attract the online retail giant.

The prize was substantial - the company pledged to create 50,000 full time jobs with the average annual salary exceeding US $100,000 a year. Think of what all that spending power could do in your town!

So why did Amazon split their HQ2 in half, distributing 25,000 jobs each in Long Island City in New York City and National Landing in Arlington, Virginia (with a new operations centre in Nashville)? Amazon describes the process on its Day One blog (for those new to the Amazon lexicon, 'Day One' is how CEO Jeff Bezos says you consider every day - as if you were just starting out). I'm just going to summarise in bullet points the main reasons that Amazon says both cities were chosen:

  • Excellent public transport links.
  • Diverse communities that are culturally rich in arts, architecture, academia, night life and sport facilities.
  • Both cities offered Amazon financial incentives such as refundable tax credits and cash grants.
  • Proximity to tech talent, particularly in software development.

Being close to politicians in Washington DC and Wall Street bankers in New York was probably also a factor, which must leave cities in other parts of the US wondering if the whole 14-month exercise was just a smart way to get better financial incentives. The Wall Street Journal pointed out that Google is planning to double its New York workforce to over 14,000 but hasn't seen the need to extract maximum financial incentives in the same way (it must be kicking itself!).

Meanwhile, in New Zealand, where does that leave our cities, and is there anything we can learn from the process? Aside from the debate about whether local councils should pay a company to set up shop on their turf, those other factors cited by Amazon illustrate what to many might be obvious - fun, lively and liveable cities attract big spenders. Good public transport and a vibrant city cultural life are really important to tech talent, whose high incomes bring economic wealth to the places they locate to. It's something worth considering when those debates arise about whether cycle lanes and waterfront stadiums are too pricey.   


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