Why Amazon Reconsidered NYC as HQ2

March 4, 2019
Why Amazon Reconsidered NYC as HQ2

After an in-depth search and selecting the locations for their new second headquarters (HQ2), Amazon has changed its mind.

Amazon had selected two sites for HQ2, to complement its current headquarters in Seattle, Washington.  The two locations were the Crystal City neighborhood of Arlington, Virginia, and Long Island City in Queens, New York.

After considerable pressure from state and local politicians, Amazon has decided against the Queens, New York location.  New York City and the State of New York had offered close to $3 billion in performance incentives.  The addition of 25,000 Amazon jobs was estimated to bring in $27 billion in revenue to New York.

For past OM in the News posts on Amazon’s search for a second headquarters, check out The 20 Amazon HQ2 Finalists and Amazon’s HQ2.

Video Spotlight: Amazon cancels NYC HQ2 plans

This post is based on the CNBC.com article, Amazon says it will not build a headquarters in New York, by Lauren Feiner, February 14, 2019; the Chicago Tribune article, Chicago and Illinois are still after Amazon’s HQ2, or at least part of it, by Aly J. Yale, February 8, 2019; and the YouTube video, Amazon cancels NYC HQ2 plans, by CNBC/NBR, February 15, 2019. Image source: © Ditto/Corbis.

Discussion Questions:

1. Should Amazon have walked away from the New York City location for HQ2?

Guidance: This is a difficult decision.  It appears that the majority of the population and Governor Cuomo and Mayor de Blasio continue to support Amazon.  And, $3 billion in incentives were available.  However based on the Amazon statement, it appears that they were very concerned about the political climate in New York.  Statements from politicians, such as Alexandria Ocasio-Cortez, about worker exploitation raised doubts with Amazon as to the business environment.  Already, they had a bad taste in their mouth from the proposed “head tax” the Seattle government had planned.  In the end, a potential anti-business environment overrode a possible $3 billion in incentives.

2. What should Amazon do in regards to HQ2?

Guidance: There were twenty finalist for HQ2.  Amazon could turn towards these locations for the other half of HQ2.  One of the finalist, although not getting HQ2, did receive Amazon’s new home for its operations hub with a possible 5,000 new employees.  So obviously, Amazon was impressed by some of the finalists.  It appears that Amazon will expand in a variety of locations rather than looking for one additional location.

3. Should New York have offered almost $3 billion in incentives?

Guidance: The obvious answer seems to be yes, if a $3 billion investment brings in $27 billion in revenues.  Plus all of the trickle down impact that it would have on the economy.  However, it does put a target on the back of many politicians.  Why should one of the most successful companies in the world receive $3 billion in incentives using tax payer money?  Wouldn’t this money be better spend on the homeless, for example?


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