News from The Globe and Mail
Ontario's HQ2 strategy may not win Amazon, but it's still a win
Thursday, October 19, 2017
In the race to land Amazon's planned second headquarters and its promise of 50,000 high-paying high-tech jobs, a handful of politicians are making a distasteful attempt to out-bribe one another.
New Jersey Governor Chris Christie is courting the Seattle-based retailer with $7-billion (U.S.) in tax breaks. In Georgia, one mayor offered to sever a 345-acre chunk of his city and rename the city "Amazon" in the company's honour.
Ontario isn't willing to play the who-can-pay-the-biggest-bribe game. The province decided the financial incentives - a word the politicians prefer to bribes - used to win assembly lines and blue-collar jobs a generation back won't capture the affection of software developers and app designers.
As Toronto, Ottawa and Windsor, in partnership with Detroit, put the final touches on bids for what's now known as Amazon's "HQ2" ahead of Thursday's deadline, the province is wagering that talent is the key to landing jobs in a postindustrial world.
The attractive part of Ontario's HQ2 strategy is that even if it falls short - and it likely will, as people who should know say Boston is getting the prize - the province will end up with a work force that's better suited to the knowledge economy, and a well-honed pitch book for the next tech company that comes calling.
As part of its HQ2 campaign, Ontario announced on Wednesday that it will increase the number of college and university graduates in science, technology, engineering and math by 25 per cent over the next five years, to 50,000 students annually.
The province is also teaming up with the newly launched Vector Institute on a $30-million project to crank out 1,000 graduates annually with a masters degree in fields related to artificial intelligence, the hottest degree in tech these days.
The province's chief cheerleader on the Amazon pitch is Ed Clark, economic adviser to Ontario Premier Kathleen Wynne and retired CEO of Toronto-Dominion Bank.
Mr. Clark took the stage on Wednesday at the Canadian Club to share what he learned in the six weeks that have passed since Amazon opened up the competition for HQ2. Mr. Clark said: "We can thank Amazon's unusual process for one thing: They have forced us to look hard at Ontario's qualifications, to measure how we compare against others and to see where we need to do better."
The former bank CEO channelled his inner Jeff Bezos and said: "If I were CEO of Amazon, I would pick a place where I'm assured I can get my hands on all the talent I need, not only now, but as I grow in the future." And Mr. Clark threw out a few facts and figures that will make the HQ2 decision difficult for Mr. Bezos.
Amazon will spend roughly $500million annually on HQ2 real estate - that's the price tag on everything from rent on buildings to property tax and power. Those are costs New Jersey and Georgia politicians are trying to offset.
Amazon's spending on salaries will be 10 times the cost of its real estate: 50,000 staff translate into a $5-billion annual payroll. And Mr.
Clark said the average salary for an IT professional in Toronto, Ottawa or Windsor is at least 30 per cent lower than what these tech jobs pay in Seattle, New York or Boston.
Coming to Canada would save Amazon something in the neighbourhood of $1.5-billion annually.
"Companies want jurisdictions that invest in educated work forces, have livable cities and put out a welcome mat for the best talent," Mr. Clark said. "These are the values that matter to the companies of tomorrow and they are Ontario's strengths."
Without saying Donald Trump's name, Mr. Clark acknowledged that the mercurial U.S. President makes it difficult for Mr. Bezos to drop HQ2 anywhere but in an American city. He said: "We all recognize the political issues for Amazon in picking a location outside the U.S. border ... these days, politics south of the border is unpredictable."
Toronto, Ottawa and Windsor will make bids on Thursday knowing they are long shots in the race to land 50,000 Amazon jobs. But what Ontario's doing as part of the HQ2 pitch creates an environment that should foster the next Amazon.
© The Globe and Mail