Read this and more just like it and then ask yourself...wouldn't it be smarter to take this money and energy and use it to grow the multitude of small to mid-market companies? Post2grow.com
Capturing the Seattle-based company’s second headquarters would be transformative, creating thousands of good-paying jobs while making Chicago a technology and new economy leader. Chicago submitted its opening bid Monday and all bids are due Thursday.
But this is a high-stakes game, so get ready, fellow taxpayers, because any government-backed Amazon invitation is going to be a whopper — a bid likely worth many billion of dollars in tax incentives, infrastructure investments and maybe some perks not considered yet.
Amazon, which in September started the nationwide competition for HQ2, knows it’s in the catbird seat and will press its advantage.
Over the past couple of years, the expanding e-commerce company has gained a reputation for adeptly pressuring state and local government for tax breaks in return for opening new distribution, fulfillment and other facilities.
In Illinois, for example, Amazon has qualified for at least $80 million in state-backed incentives over 10 years for opening nine facilities that will employ up to 9,000 workers.
Judging by what’s occurring these days with other smaller developments, the Chicago play for Amazon will be numbers unlike any ever seen before.
Wisconsin lawmakers recently approved a $3 billion tax incentive package over 25 years for Taiwan-based Foxconn Technology Group. The maker of flat-screen televisions and other electronics intends to employ 13,000 in a manufacturing plant in southeast Wisconsin, along the Illinois border.
Meanwhile, Toyota and Mazda — which are searching for a U.S. location to build a jointly owned auto factory — is reportedly looking for up to $1 billion in government incentives for the estimated 4,000 jobs it will create.
Last week, the state of Illinois agreed to provide Haribo of America, which makes gummy bears, $1.6 million in incentives provided it adds 55 new jobs to its Rosemont headquarters by 2021.
If those companies are getting such fat deals, imagine what Amazon could fetch.
It’s planning up to 50,000 new positions within 10 to 15 years at the second headquarters. Amazon CEO Jeff Bezos is also stressing that many of the HQ2 jobs will pay over $100,000 a year.
The open secret here is that Amazon, with a market capitalization of $482 billion, doesn’t need tax incentives to build another headquarters or expand its distribution and other facilities.
Neither does Foxconn, Toyota and Mazda or the gummy bear people.
Personally, I find it obnoxious for a healthy company to insist on getting these enticements but I’m pragmatic enough to realize it’s now a fact of corporate life.
For example, New Jersey is reportedly offering $7 billion in incentives for Amazon’s HQ2.
Chicago and Illinois have little choice but to play the incentive game. The city’s central U.S. location, proximity to two major airports, and healthy business climate already make it an HQ2 front-runner. But, Amazon craves tax and incentive benefits too.
At least in this case, the ultrapositive economic and social benefits that arise from having an Amazon headquarters will outweigh the publicly backed giveaways needed to ink an agreement.
Over a 17-year period, the site is expected to generate $7.4 billion in construction-related spending and $341 billion in total spending from ongoing business operations, according to a study commissioned by World Business Chicago that was released Monday as part of a joint statement from Emanuel and Rauner.
It’s worth raising a note of caution: When suitors become over-anxious, they can get scammed or fleeced. To hedge against such a possibility, the Chicago backers should make dead certain there’s an abundance of safeguards within a deal to protect the public purse should Amazon fail to hold up its end of the bargain.
That means production schedules, expansion timetables and, most important, job guarantees. Otherwise, we get the money back.
Luring Amazon’s headquarters is a once-in-a-generation opportunity.
That means city and state leaders should take their best shot at winning this competition — even if it means paying top dollar.
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