Date
12 December 2017
Texas is home to Amazon's newly acquired Whole Foods Market grocery chain. Dallas and Houston are among the cities keen to bid for Amazon's planned second headquarters. Photo: Reuters
Texas is home to Amazon's newly acquired Whole Foods Market grocery chain. Dallas and Houston are among the cities keen to bid for Amazon's planned second headquarters. Photo: Reuters

Amazon opens bidding for US$5 bln second HQ

Amazon.com Inc. said on Thursday it would build a US$5 billion second headquarters in North America, kicking off a competition between cities and states to offer tax cuts and incentives that could bring 50,000 new jobs, Reuters reports.

The largest e-commerce company said it intended to create “HQ2”, a headquarters that would be a “full equal” to its Seattle office, chief executive Jeff Bezos said in a statement. The company wants a metropolitan area of more than a million people with an international airport, good education and mass transit.

Amazon was likely to land its second headquarters in a cheaper city than Seattle and score subsidies. The company promised up to 50,000 jobs averaging more than US$100,000 in annual compensation over the next 10 to 15 years.

Cities and states immediately began saying they would bid. Dallas, Houston, Toronto, St. Louis, Kentucky and Miami are a few that are committed to bid. Chicago Mayor Rahm Emanuel has made a case for his city in discussions with Bezos, a Chicago spokesman said.

Companies with two headquarters are rare and distance could challenge the management abilities of Bezos and other leaders, but some investors and analysts also saw the geographical diversification as a way to cut costs and risk. It would also make it easier for the conglomerate to break up down the line if it so chooses.

“The company is changing radically and it depends so heavily on disruptive thinking. Moving to a new city and finding a new talent pool is a good idea,” said Antony Karabus, chief executive of HRC Retail Advisory.

Incentives from land to fee cuts to relocation packages will be a major part of the decision, Amazon said.

Local governments have gone to great lengths to secure jobs and investment. Wisconsin’s legislature, for instance, recently voted to give Taiwanese manufacturer Foxconn a US$3 billion incentive package to build a US$10 billion liquid crystal display factory in the state.

Amazon’s plan will also boost its political leverage at a time when it has been blamed for the decline of bricks-and-mortar retailers. President Donald Trump has criticized Amazon as doing “great damage”, costing jobs in cities and states. The Wisconsin Foxconn factory will be in the home district of Paul Ryan, Speaker of the US 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 metropolitan area population Amazon targets. Likely contenders could include U.S. Midwest states, where Amazon has many warehouses; Texas, which is the base of the Whole Foods Market grocery chain it acquired this year; and other business-friendly states.

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