The Strengths of the Toronto Region Amazon HQ2 Bid
The recent announcement that Amazon is looking for a second headquarters has started a bit of a feeding frenzy amongst cities making pitches highlighting their viability as a location for what has been dubbed "HQ2".
Mississauga and Brampton have partnered with Toronto, York, Halton and Durham Regions in submitting a joint bid to Amazon, through the foreign investment agency Toronto Global. The bid showcases the Greater Toronto Area (GTA) as the place where the online retail giant should set up their second headquarters.
There have been a few second tier bids from some other Canadian cities. A local city councillor from northern Ontario city Sault Ste Marie moved a motion to have that city make an Amazon bid, but jointly along with the Sault Ste Marie across the border in northern Michigan. And in a cross border collaboration, Windsor joined Detroit in submitting a bid.
Outside of Canada, other cities have come forward with their own attempts to lure Amazon, ranging from the eccentric to the absurd. As featured in a recent New York Times article, Tucson, Arizona sent Amazon CEO Jeff Bezos a 21 foot cactus as a gift, and in Tulsa, Oklahoma, a team of around 50 volunteers were corralled into a room in the mayor's office to pour over YouTube videos of Bezos' speeches, perhaps in an attempt to get some insight into the man's business mindset to better prepare their bid. Still, other smaller cities have come up with quirky videos showcasing the unique opportunity of having Amazon's headquarters in their town.
With such an abundance of choices, I'm surprised that Amazon didn't just decide to host an over the top rope battle royale, with the winner getting HQ2—which includes $5 billion worth of investment and 50,000 jobs.
Insauga reached out to both Mississauga Mayor Bonnie Crombie, Brampton Mayor Linda Jeffrey, as well as Toronto Global, on what the GTA Amazon bid would be like. Suffice it to say, there were no gimmicks or conversations with "Alexa" videos involved.
"We aren’t going to rely on gimmicks, just the facts," said Julia Sakas, the Communications Director for Toronto Global in an email to insauga. Mayor Crombie repeated similar sentiments, leveraging Mississauga's existing relationship with Amazon (their Fulfilment Centre is located in Mississauga) as well as the pool of highly skilled talent, national infrastructure and access to international markets via Pearson Airport as benefits for Amazon's HQ2.
Toronto Global presented their response to Amazon's Request for Proposals (RFP) this past Thursday, the deadline set by Amazon. If I could be biased for one moment, the GTA submission is probably one of the top tier ones that Amazon has to choose from.
Rendering from City of Brampton on their proposed site for Amazon HQ2
The first consideration is the emphasis on the pool of Science, Technology, Engineering and Mathematics (STEM) talent that currently exists or is going to exist in the foreseeable future. As Ed Clark, the Ontario government economic advisor, recently stated, "the province is not offering tax and financial incentives; what it is offering is talent and a great place to live and work."
That’s actually a good thing in the long term, because rather than just throwing money or tax breaks at Amazon (a tired and not always successful method of luring business), what is on the table is what is already being done in terms of boosting the province's educational workforce for the emerging economic tech sectors and related areas. Clark's recent speech at the Canadian Club stressed that even if Amazon decides to go elsewhere, the foundation would have been laid for future opportunities from other emerging companies.
While that may disappoint those in the Toronto Region hoping to snag Amazon HQ2, it doesn't mean Ontario isn't an attractive place to invest. In the coming decades, the number of tech jobs in Ontario will surpass the combined numbers from New York and Massachusetts, and the absence of a tech giant would allow a more open, robust and competitive market for startups and other tech companies to set up shop without fear of an overwhelming monopoly. Those concerns were raised in this recent panel discussion on a public affairs program on TVO.
The final consideration is not economic or even business related, but political. The world is currently dealing with a more protectionist United States led by Donald Trump, who himself has feuded on social media with Bezos in the past. In 2015, Bezos purchased the Washington Post in an independent deal apart from Amazon, and the Washington Post published a number of stories about Trump that the president didn’t exactly love. Even though Amazon may have nothing to do with the happenings of the Washington Post, Trump's may not be able to distinguish one from the other.
This is why any Mexican cities bidding for HQ2 would have a very slim chance; can you imagine how Trump would react if 50,000 high paying jobs and $5 billion went to Mexico? If Trump's recent good relationship with Justin Trudeau is to be believed, the President might be a little less upset with jobs going to Canada, but it will still mean jobs not in the United States and Trump is known for changing positions on a dime.
It’s safe to say if politics come into the equation, then the GTA bid is out of the running and Bezos will be settling with an American option. If politics do not prevail over a sound business decision, then it is prudent to say Amazon's second headquarters is likely coming to Canada.
Amazon will announce their choice in 2018. Let’s keep our fingers crossed that Mississauga, Brampton or somewhere in the GTA will land that bid.
But if we don’t, the future is bright and it won’t be the end of the world.
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