Jeff Bezos and friends are on a bit of a spending spree. Amazon just announced that it's looking to drop a cool $US5 billion on a "second headquarters" that will employ as many as 50,000 workers. In characteristically splashy fashion, the company also announced that cities across America will get to bid on the project. We can only assume this will be a competition for the biggest tax breaks.
There are a couple quirky things going on here. First of all, it's a little bit unusual that Amazon is building a second headquarters in the United States. "We expect HQ2 to be a full equal to our Seattle headquarters," Amazon chief Jeff Bezos said in a statement on Thursday. "Amazon HQ2 will bring billions of dollars in upfront and ongoing investments, and tens of thousands of high-paying jobs. We're excited to find a second home."
Establishing two official headquarters is a weird thing for any company to do. Big international companies like, say, Apple might have a European headquarters in addition to its main headquarters in Silicon Valley. Typically, companies claim just one headquarters in its home country. Amazon does like to be different, though.
The second wacky thing going on here is the fact that Amazon posted a request for proposals (RFP) for cities to bid on the chance to host its second headquarters. The company listed the possible upsides for the winning city right at the top of the dedicated Amazon HQ2 web page. "Amazon estimates its investments in Seattle from 2010 through 2016 resulted in an additional $US38 ($48) billion to the city's economy," reads the page, "every dollar invested by Amazon in Seattle generated an additional $US1.40 for the city's economy overall."
But the seemingly free money the winning city will get isn't exactly free. In addition to some pretty specific location requirements — like proximity to an international airport, size of the local population, and access to fibre optic internet service — Amazon does want the competing cities to offer some incentives. Here's a snippet from the company's RFP:
This part of the plan is where Amazon has lots of experience. It's long been the company's practice to work with local governments to come up with a set of deal that's appealing to both parties, and location matters to Amazon since it wants to get orders to customers as quickly as possible. (Trading tax breaks for jobs has also been the way that companies decide where to build offices and factories since forever.) Recently, Amazon has been building loads of fulfillment centres around the country, each of which creates thousands of jobs. The company is even building its first fulfillment center on Staten Island in New York City. That project got announced on Wednesday, the day before the Amazon HQ2 news.
For now, it's anybody's guess where Amazon will plop down its second headquarters. It probably won't be Alaska or Hawaii. But amongst the lower 48, you can place place your bets now.