Amazon.com Inc said on Thursday it would build a $5 billion second headquarters in North America, kicking off a competition between cities and states to offer incentives and tax cuts that could bring 50,000 new jobs.
The largest e-commerce company said it intended to create a headquarters that would be as important as its Seattle base. It wants a city of more than a million people with an international airport, good education and mass transit.
Incentives from land to fee cuts to relocation packages will be a major part of the decision, Amazon said, and local governments have shown they will go to great lengths to secure jobs and investment.
Wisconsin’s legislature recently voted to give Taiwanese manufacturer a $3-billion incentive package to build a $10-billion liquid crystal display factory in the state, for example.
Amazon‘s investment plan also gives it new leverage with politicians at a time when President Donald Trump has criticized the company as doing “great damage” to retailers, costing jobs in cities and states. The Wisconsin Foxconn factory will be in the home district of Paul Ryan, Speaker of the U.S. House of Representatives.
Amazon said it was seeking proposals by Oct. 19 and would select the location next year.
More than 50 cities have the 1-million population Amazon targets. Likely contenders could include U.S. Midwest states, where Amazon has many of its warehouses; Texas, which is the base of the Whole Foods Market grocery chain it acquired this year; and other business-friendly states.
Amazon has been awarded 70 state and local subsidies, totaling at least $732.79 million in value since 2000, according to nonprofit Good Jobs First, which advocates for transparency on government subsidies. Texas leads the way with the value of subsidies to Amazon, followed by Kentucky, Ohio and Illinois, it said.
“I would be suspicious of any claim that one new Amazon job creates a rippled effect of one indirect job,” said Greg LeRoy, executive director of watchdog Good Jobs First.
LeRoy, who has written critically of Amazon, said the reality of moving a headquarters has more to do with the executive talent pool, the amenities, schools, housing stock and quality of life, rather than municipal finance incentives.
Amazon‘s shares were up 1 percent at $978 on Thursday.
SPRAWLING SEATTLE CAMPUS
Amazon pointed to its expansion in Seattle as a sign of what it could do. Its workforce has exploded to more than 380,000 from under 25,000 since it moved to downtown Seattle in 2010, as it rapidly expanded to become a global retailer – selling everything from groceries to appliances.
The company’s total revenue has grown to $136 billion at the end of last year from $34 billion in 2010. Amazon recently snatched up Whole Foods Market for $13.7 billion.
The project would initially need more than 500,000 square feet and up to 8 million square feet beyond 2027, Amazon said.
“We want to find a city that is excited to work with us and where our customers, employees, and the community can all benefit,” Amazon said.
Amazon expects the new headquarters to be a “full equal” to its Seattle office, Chief Executive Jeff Bezos said in a statement.
The Seattle campus is spread across 8.1 million square feet in 33 buildings and employs more than 40,000 people.
Incentives for Amazon’s new headquarters could make sense as a long-term investment that could change the image of a metropolitan area, said Michael Mandel, chief economic strategist for the Progressive Policy Institute, a liberal think tank.
“The question is, how much of a tax break would you have given to have Apple set up shop in your state? It’s not so much the jobs as becoming a focal point for growth. No one can put a price tag on that.”