Howes: Spurned Amazon can't get what it wants in the Big Apple
Amazon.com Inc. is dumping its plan to build another North American headquarters in New York, a harsh reminder that the most valued company on the planet can’t always get what it wants — especially in the Big Apple.
The online retailer says half of its second headquarters will go nowhere else as it presses ahead with plans for a second HQ2 in suburban Washington, D.C. Maybe that's because Seattle-based Amazon is wising up to the fact that 200-plus communities across the United States originally vying for their jobs are wising up to Amazon's tactics.
They don't want to play its game: supply a data-driven company fueled by consumers relevant economic and competitive data on your community; tout your strengths, unique characteristics and public assets; package and underwrite it with taxpayer commitments measuring in the billions.
This for one of the most valuable companies in the world. Its cash hoard exceeded $41.25 billion at the end of last year. Its market cap totaled $796.6 billion at Thursday's close. Its chairman, Jeff Bezos, is the richest person in the world — hardly a persuasive predicament for pleading corporate poverty.
Amazon promised New York's Long Island City in Queens a piece of a $5 billion investment to create 25,000 jobs paying an average of more than $100,000 a year, an economic game-changer for just about any city. All New York had to do was offer a measly $3 billion in taxpayer-backed incentives and shut up about community-benefits deals and unions.
In return, they'd get the prospect of steadily rising property values, more congestion and yet more demands of obeisance to a corporate giant slowly choking retailing as we know it even while demanding community payouts. Bad optics don't begin to describe Amazon here, the latest Master of the Universe to feel the wrath of the little people.
“I want the deal to be scrapped in its entirety,” Queens Councilman Jimmy Van Bramer told The New York Times before Amazon confirmed its decision to scuttle its New York HQ2. “They want to crush unions. They want to work with ICE. They want to bypass community review. They want to take giant subsidies. I don’t see them changing one bit and so, yeah, they’re not welcome here.”
In a statement, Amazon said: "While polls show that 70% of New Yorkers support our plans and investment, a number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project we and many others envisioned in Long Island City."
Which raises a question for Detroit, whose fancy proposal quarterbacked by Quicken Loans Inc. Chairman Dan Gilbert didn't make Amazon's first cut of 20 semi-finalist regions: would America's Comeback City, a place desperate to show its reinvention is real and sustainable, spurn Amazon, too? Would taxpayers revolt at the prospect of backing even more than New York in subsidies to one of the richest companies on the planet?
"Plenty of companies (even large ones) move to NYC without needing an unprecedented $3b tax giveaway that isn't extended to other local business owners," U.S. Rep Alexandria Ocasio-Cortez, D-N.Y., tweeted. “Today was the day a group of dedicated, everyday New Yorkers & their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.”
Would our progressive, anti-corporate activists angling for community-benefits agreements, union-friendly workplaces and led by a firebrand first-term member of Congress (U.S. Rep. Rashida Tlaib, D-Detroit) prove as effective at alienating Amazon as their comrades in New York actually did, led in part by Tlaib's colleague, Ocasio-Cortez?
Wouldn't rule it out. But here's the rub: Detroit needs that investment a lot more than New York does. It needs the jobs, needs the rise in property values that expand the tax base, needs the incentive to improve its woeful public transit and public education systems. Most of all, it needs the affirmation and the positive press that comes with it.
Business investment creates tax-paying jobs, the base ingredient needed to trace the virtuous economic circle that is a necessary precondition for Detroit to continue its reinvention. Doesn't mean Detroit's necessarily a candidate anytime soon to attract major investment from the likes of Amazon.
But it does mean there are lessons to be learned here to avoid the same mistakes. Be transparent. Make your case to the community by partnering with it, as Ford Motor Co. is trying to do with its planned renovation of the historic Michigan Central Depot in Corktown. Enlist politically connected allies beyond the usual business and civic groups.
Answer critics factually and patiently. And be honest with yourself: how is the company and its treatment of employees perceived, accurately or not. If you intend to run a non-union shop, and have no intention of declaring neutrality if faced with a unionization drive, why are you investing in a union town?
Because you're a Master of the Universe accustomed to calling the proverbial tune? Not today in New York — and probably not in more towns with each passing month. From Queens to Wisconsin, evidence is growing that corporate investments that seem too good to be true are turning out to be exactly that.
Too expensive, too dismissive of community expectations (however outlandish some may be), and downright phony. Foxconn Technology Group's highly touted $10 billion investment outside Milwaukee, greased by $4 billion in taxpayer subsidies, is increasingly looks like yet another Foxconn boondoggle.
Add Amazon to the list. Sixteen months ago, its request for bids sent business and political leaders across the country on a mad scramble to develop a pitch to woo mighty Amazon to their town. For all but 20, it went nowhere.
At least one place lucky enough to survive the process took a closer look at the fine print and said, "No thanks." My guess is that Detroit would have come to a different conclusion had it been in New York's position — but it didn't get the chance.
Daniel Howes’ column runs Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN, listen to his Saturday podcasts, or catch him 3 and 10 p.m. Thursdays on Michigan Radio’s “Stateside,” 91.7 FM.