In September, Amazon announced plans to create a second headquarters, to be located outside the Seattle region which hosts the current headquarters. The Amazon site states that the company is looking for a locale with strong local talent and “ . . . a stable and business-friendly environment to continue hiring and innovating on behalf of our customers.”
At stake are five billion dollars in direct investments and over fifty thousand high-paying jobs. Amazon estimates that it has indirectly contributed $55 billion to the Seattle economy with forty thousand plus employees; the host city of HQ2 could benefit even more. No wonder that cities as diverse and prominent as Atlanta, Pittsburgh, and Toronto are leading the pack of 238 proposals.
The International Factor
The company web site has specified only that the new headquarters will be located in North America. That leaves open the possibility that the location will be in Canada. In favor of that: A non-US headquarters would signal that Amazon intends to move more prominently onto the global stage.
But doesn’t it already have a global footprint? Yes, but the ratio of Amazon’s North American revenue to World revenue increased from 1.51 in 2014 to 1.82 in 2016. Granted that this isn’t really a problem, considering that overall revenue increased from $89 billion to $136 billion over the same period, but it hints that Amazon is missing global opportunities for parallel expansion. The question then is whether global opportunities are being lost because of a domestic focus. To expand globally one must think globally, and perhaps the thinking of Amazon’s top executive team is that an international perspective might be better gained by having the new headquarters located outside of the US.
The National Factor
Meanwhile, what Amazon needs now is to grapple with its rapidly expanding US operations. Seattle is already bursting at the seams with traffic congestion and skyrocketing housing prices. For domestic operations, Amazon needs to expand from Seattle but still stay in the US.
A central location within the country would make geographical sense. Atlanta might then be selected, as it is an airline hub with direct connections to most cities in the US.
The Texas Factor
Texas is more centrally located, however, and has plenty of room for a company to expand. Dallas, within the fourth largest Metropolitan Statistical Area in the US, has a national reputation for the ‘business-friendly environment’ that Amazon seeks.
Texas may also benefit from a personal factor. In his youth, Amazon CEO Jeff Bezos lived in Houston, spent summers on his grandfather’s ranch in South Texas, and the test bed facility for Blue Origin, his rocket company, is located in West Texas.
The Negotiation Factor
For the beneficence of bringing fifty thousand jobs and tens of billions of dollars in investments to the host city, Amazon just might appreciate something in return. Therefore, the city that becomes the new headquarters will do so by making the best offer. Tax breaks and supporting infrastructure development are likely to be among the negotiated factors that will affect Amazon’s final decision.
Whatever other factors are in its favor as a potential location for the new headquarters, a city will stand above the pack by its willingness to work with Amazon.