Bid for new Amazon headquarters a winner even if we lose
Written by Michael Lewis on September 26, 2017
Tri-county economic development chiefs, adhering to Amazon’s rule of just one bid from any region, are wise in jointly pitching the expanding giant on a headquarters site.
Multiple bids would doom all three counties. Even united, it’s a hard battle with more than 100 bidders from across North American, some of whom will give away the store. We surely won’t.
In eight detailed pages, Amazon gave regions until Oct. 19 to pitch a second corporate home, with plans to pick a winner in 2018. But the prize will be costly.
While Amazon is dangling up to $5 billion investment for up to 8 million square feet of offices and up to 50,000 jobs averaging $100,000 a year, most construction would be after 2027, investment would flow over 15 to 17 years and jobs would grow “over multiple years.”
Meanwhile, Amazon is asking areas scrambling to win the jobs and investment for incentives ranging from free or low-cost land to a variety of tax credits. Wisconsin just gave Taiwan’s Foxconn Technology Group $3 billion in incentives to invest $10 billion in a Racine campus that could employ up to 13,000 over six years. What would 50,000 Amazon jobs yield in incentives from a hungry region?
Whatever it is, it’s far more than South Florida and the state together would offer. So our offsetting values need to be mammoth.
Amazon aims to dominate the globe in retailing, web hosting, streaming video content, consumer electronics and who knows what. It’ll be a bonanza for the winner of this headquarters – and a great exercise for our economic development leaders to jointly analyze our strengths.
Our hope is that, win or lose, they focus on repairing weaknesses. We need to be honest with ourselves and build on what we learn. What are our real strengths and how fast can we achieve the goals that Amazon set?
At the same time, we should be wary of whether actually winning would overwhelm us. The office space Amazon seeks, for example, would be more than one-seventh as much as Miami-Dade now has everywhere, including not just giant new towers but every tiny office. This would be the tail that wags our community’s dog.
The 50,000 jobs Amazon dangles total one for every 27 Miami-Dade workers. Housing demand magnitude would be similar. In current headquarters Seattle, 40,000 Amazon workers skyrocketed housing costs. Miami is already severely short of workforce housing. What would vastly more housing competition do to that gap?
Miami has long endured the claim that we dropped the ball when Walt Disney sought a Florida theme park site across the nation from his Disneyland. Details of whether it was fair competition and who did what are tangled, but Central Florida did become synonymous with Walt Disney World and we didn’t.
Nobody wants us to make that error with Amazon, though this is not an either-or competition but a choice among many.
Even then, the fine print in the request notes that Amazon might pick not just one winner but several finalists, then let them raise their offers in a heated bidding war for the prize. Or, as the last phrase makes clear, “it may select no proposals and enter into no agreement” – all the work might end up in no prize at all.
Miami has plenty of attributes to spotlight.
Amazon wants a place where key executives might choose to live and work instead of in rainy, cold Seattle. And it wants to be certain that heating of its 8 million square feet would be affordable. If these were the only yardsticks it’s game over, we win.
It wants to be within 45 minutes of an international airport. We offer several.
It wants a friendly regulatory environment. If county commissioners can avoid creating barriers to squeeze a new corporate giant, we have a lock.
It wants favorable taxes. Lack of a personal income tax makes us a magnet for the nation’s well-to-do, and our business taxes are relatively low.
Amazon wants livability. We offer the normal amenities plus top-level culture, sports, outdoor recreation 12 months a year and more.
Amazon seeks “a diverse population.” Is there a more internationally mixed city than Miami?
The company seeks sustainable and affordable energy. Our electricity prices are far below average, though Amazon will eye our long power outages after Hurricane Irma. And solar panels on its new campus would be productive in this climate.
Amazon also seeks affordable wages, and ours far undercut what the company now pays as it has forced up wages in Seattle.
If Amazon’s headquarters choice is also to be far from Seattle to spread resources, we win – how much farther away could they get?
As for being able to build 8 million square feet, if there’s one thing Floridians know how to do, it’s build and build and build some more.
Some theorize that Amazon, as a disruptive force, wouldn’t mind breaking ground in areas new to high tech. If so, this is almost virgin territory.
Plus, Amazon founder Jeff Bezos graduated from Palmetto High 35 years ago and knows the territory. How he recollects his high school years might, in fact, tip the balance in whether he’d want to spend half his time back in Miami.
That’s a lot of pluses for a South Florida proposal. If they were the whole package we’d be in front.
But let’s be honest about what else Amazon might weigh.
The package highlights sustainability. Amazon looks decades ahead. So how do we talk about rising sea levels and flooding, or do we ignore the knee-deep elephant in the room?
The proposal targets connectivity, asking cities to “demonstrate multiple cellular phone coverage to ensure optimal service.” How many of us had no service from multiple carriers after Irma swept through? How many still lack internet? The nation heard about those outages. How do we show that this could never happen again?
Emphasized in Amazon’s package is fast, efficient and multi-modal transit, including mass transit directly to its future campus. You can bet they don’t mean a Metrobus route stopping at the corner to drop off 50,000 people each morning.
The same with autonomous vehicles: Amazon wants us to be ready to handle them. Frankly, we’re not even ready to handle rush hour. And one key elected leader says he doesn’t expect us to use autonomous vehicles until his small children are grown.
If transit is a focal point, we don’t stand a chance. We have yet to agree what transit modes we need or how we’re going to build or fund them. Amazon isn’t going to await a county commission or transit organization vote. We’re a decade late.
What should be Amazon’s most important concern isn’t transportation, however, but that 50,000-person workforce. We can easily find 50,000 willing workers at reasonable pay levels, but not necessarily the workers Amazon wants.
The proposal says “a highly educated labor pool is critical and a strong university system is required.” It notes the 50,000 jobs will be executive and management, engineering with a preference for software engineers, legal, accounting and administrative.
We can handle the legal and accounting and administrative areas, but software engineers are a problem – and they’ll be the bulk of jobs. Information industry jobs in all of Miami-Dade County now total just 19,200. The Brookings Institution ranks Miami near bottom in the nation in its technical worker pool. And there’s no big company Amazon can raid for top employees, unlike in Seattle, where Microsoft is only 25 minutes away.
As for our universities, whatever their strengths they aren’t pumping out qualified software engineers by the thousands each year.
Then we come to the thorny question of incentives we might cobble together to lure Amazon. Miami-Dade’s standard incentive for Qualified Targeted Industry jobs is $3,000 each. That could total $150 million for Amazon over perhaps a decade, which isn’t going to cut it when Wisconsin is shelling out billions rather than millions – about $77,000 per job.
Miami-Dade had set aside $75 million in voter-approved bond borrowing to lure a game-changing enterprise like Amazon. Unfortunately, several years ago the county chopped up that fund among 11 projects that are minuscule by comparison, with more small projects approved if any of the 11 drop out. That leaves exactly zero for an Amazon.
As for the state stepping up, it has cut Enterprise Florida, its economic development arm, to ribbons, with some trying to eliminate it and job incentives altogether. Incoming House Speaker José Oliva says not a penny should go to incentives (see page 4). Without state aid, the county would lose 80% of even the incentive power it now has.
We are likely to be at the bottom in incentive firepower unless the county hands Amazon absolutely free hundreds of acres of former Homestead Air Force Base land it has near Homestead. But how would Amazon workers get to the airport in under 45 minutes without mass transit, which we don’t have?
Where, in fact, could 8 million square feet of offices be situated so that they connect easily on foot, as the proposal requires? That’s a lot of low-cost space – Miami-Dade annually fills exactly one-tenth that much in added offices everywhere. And don’t forget, the space must link to mass transit. To put it into perspective, it’s 500,000 more square feet than every inch of offices in the whole Brickell area.
Nationally, everyone is handicapping the race for the second Amazon headquarters. South Florida isn’t in anyone’s top tier.
But the only opinion that really counts is Amazon’s. We should want to be in the race for the headquarters of a cutting-edge firm, especially one with 380,000 jobs and $136 billion revenue last year.
We have nothing like that in Miami – another pitfall in the bid rules, which clearly state “we encourage testimonials from other large corporations.” Who, please?
Still, it’s important to run the race and assess ourselves candidly to fix weaknesses for the next opportunity – and, far more importantly, fix them for those who are already here and are already creating jobs.
If something here troubles Amazon, it probably poses problems for current South Florida businesses, too, and harms both our economy and our quality of life. We won’t make those fixes until we admit problems exist.
Thankfully, Palm Beach, Broward and Miami-Dade counties joined to bid. Neither opportunities nor problems stop at the county line. Closer cooperation will help us all.
An Amazon bid, if nothing more, focuses us more tightly on vital issues and that vital cooperation.