Amazon choosing Virginia over New York for HQ2 is the right decision.

Harned4tech
23 Dec 2019
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Harned4tech
23 Dec 2019
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Choosing Virginia over New York City was the right business decision for Amazon

Virginia is listed at the top of the best states for business in 2019. The state offers the best workforce in the nation, according to a CNBC survey. The number of professionals in STEM careers is one of the highest in the region.

As part of the deal, Amazon was offered the following by the state of Virginia - 

  • Workforce cash grants totaling up to $550 million for the 25,000 new jobs, or $22,000 per new job that's created with a wage of at least $150,000. That's considered the first phase of hiring. Amazon is eligible for another $200 million in grants if it creates an additional 12,850 new jobs beyond the initial 25,000.
  • $295 million of nongeneral fund money in infrastructure investments, including new entrances to the Crystal City Metro station and the to-be-built Potomac Yard Metro station, improvements to Route 1, a pedestrian bridge connecting Crystal City and Reagan National Airport and a transitway expansion that serves all of National Landing.

From Arlington County, it includes:

  • An annual performance cash grant totaling $23 million across 15 years tied to Amazon's ability to meet office occupancy targets for 6 million square feet in that time. Those funds come from up to 15 percent of the county's Transient Occupancy Tax, which a tourist and traveler tax for rooms or other lodging they rent in local hotels, motels or homes. Five percent of the tax goes to directly to the county's general fund while .25 percent goes to the agency that promotes tourism.
  • $28 million in tax-increment financing across a projected 10 years, based on 12 percent of future property tax revenue expected from Amazon. The county said it would use that funding toward improving streetscapes, community parks, on-site infrastructure and open space in National Landing.
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38% of Virginia's population has a Bachelor's degree.
Virginia has a significantly aging population with the median age of the state being 37.8 years
The right decision because of proximity to Washington DC
There are other factors beyond incentives that weighed-in in favor of North Virginia
It is unclear from the proofs offered here that Virginia had the best workforce compared to others
Arguably, Virginia offered Amazon the best workforce
Choosing Virginia over New York City was the right business decision for Amazon
Choosing Virginia is a strategic decision made based on qualitative analysis, not quantitative.
Virginia is not on the top 10 list of states that rank better for business growth, number of patent creation and taxation
The Virginia state did not offer competitive incentives

The state has over 38% of it's adults with a bachelor degree or higher. Virginia has the nation’s fourth highest concentration of crucial science, technology, engineering and math (STEM) employees, making up 9% of the workforce in 2018. All of this in a right-to-work state with a minimal union presence — something companies prize.


Average age of Amazon employees is 31 years. The median age of the state of Virginia is around 38 years. The rate of unemployment is 2%. This may seem like a deterrent in terms of job creation and also long term employment opportunities Amazon would offer to the people of Virginia.

 


Most of Amazon's profits come from renting web services to the federal government.  

Most of their important issues going forward are regulatory. 

Choosing to locate in Virginia was a strategically  correct decision because it will allow more influence on Washington.  This is why  most of the population  in any banana republic eventually winds up in the capital city. 


Atleast according to Amazon's senior management following factors helped Virginia to win the deal.

  1. Best transit access - 3 Metro stations, commuter rail access, Reagan National Airport all within walking distance.
  2. High Quality of Life -  The community has a variety of hotels, restaurants, high-rise apartment buildings, retail and commercial offices. It has abundant parks and open spaces, with sports and cultural events for residents of all ages throughout the year.
  3. Amazon will be able to attract the top-tier talent given the factors like education levels and the thriving technology business community that is already present in the area.
  4. Vicinity to DC, without the hassles of setting up there.
  5. Dated Architecture and public places are being re-developed.

Reference: https://www.northernvirginiamag.com/culture/culture-features/2018/12/20/everything-you-need-to-know-about-amazon-coming-to-northern-virginia/


However the key factor of the decision appears to have been proximity  to Leviathan, for lobbying and influence purposes.  this seems similar to how the capital city always grows giant  in banana republics.

 


The deal offered to Amazon also included significant public investments in transportation and education which amounted to roughly $800 million along with the financial incentives offered. 

Virginia offered to boost the local university curricula and to increase the tech workforce pipeline.

They already had one of the most educated workforces.

 


Virginia is listed at the top of the best states for business in 2019. The state offers the best workforce in the nation, according to a CNBC survey. The number of professionals in STEM careers is one of the highest in the region.

As part of the deal, Amazon was offered the following by the state of Virginia - 

From Arlington County, it includes:


On the corporate level, Amazon has faced and will face far more potential challenges emanating from the federal city in recent and coming years.

D.C.-centric issues include : - 

Accordingly, the company has surged its lobbying in recent years, spending $13 million on lobbying in 2017, according to Amazon’s public financial disclosures. That’s more than quadruple the $2.5 million they spent as recently as 2012, according to the Center for Responsive Politics.

Reference: https://www.northernvirginiamag.com/culture/culture-features/2018/12/20/everything-you-need-to-know-about-amazon-coming-to-northern-virginia/


Based on factors like business growth, patent creation and taxation following are the Top 10 States for Business to set up their HQs.

This is based on the report published by USNews.

https://www.usnews.com/news/best-states/slideshows/10-best-us-states-for-business


In all, Virginia and Arlington are offering roughly $800 million in public incentives, considerably less than the roughly $1.8 billion New York has proposed based on Amazon's new job and real estate requirements and the $8.5 billion and $7 billion incentive plans that Maryland and New Jersey, respectively, had been prepared to throw the online company's way. 


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