Amazon: New York Caused the Divorce – Don’t Go Back

Today’s big news is that New Yorkers are pleading with Amazon to reconsider its decision to halt its HQ2 project in their city. The Wall Street Journal reports that Gov. Andrew Cuomo has been in contact with Amazon executives, urging them to rethink their decision to abandon plans for a headquarters campus – and 25,000 jobs – in Queens.

My recommendation to Amazon: Don’t spend even a second reconsidering your decision.

Billboard critical of Rep. Alexandria Ocasio-Cortez’s role in causing Amazon to abandon plan to create HQ2 in New York

I say that because Amazon’s decision to spread growth among its existing facilities is more sensible than staying in New York. Amazon was jeered at a public hearing in December, including shouts that “Amazon has got to go!” and opponents show no signs of compromising. Being a target for scathing attacks today means that treatment is likely to escalate once leases are signed, employees are hired, and the company is “locked in place.” Who needs to endure long-lasting confrontations?

I wonder what Amazon’s representatives who appeared in New York and experienced boos and shouts are thinking as they read today’s New York Times headline that says, “Andrew Cuomo Speaks With Jeff Bezos, Furiously Trying to Win Back Amazon.” And Bloomberg’s version, “New York Leaders Urge Bezos to Reconsider Amazon’s Dumping City ….”

The Partnership for New York City, a business group, drafted an open letter to Amazon, appearing today as a full-page ad in the Times, saying: “We know the public debate that followed the announcement of the Long Island City project was rough and not very welcoming. Opinions are strong in New York – sometimes strident. We consider it part of the New York charm!”

‘Please reconsider New York’ Open Letter

Really. You think it’s “charming” to hit an incoming company with an almost instant wave of condemnation; to see vile anti-Amazon banners being waved in a public hearing, and to ignore the company’s worries that the opposition would be unrelenting? If you call that charming, I wonder what your definition of hatefulness is. Everyone who signed that letter should have done an open letter to all New York state and city politicians urging them to change their anti-business, high-tax ways.

New York’s harsh treatment of businesses is legendary and companies have been leaving for decades. One recent example is Wall Street’s AllianceBernstein moving its Manhattan headquarters and more than 1,000 jobs to Nashville.

I remember when American Airlines in 1978 said it was considering moving its headquarters to the Dallas/Fort Worth area. Mayor Ed Koch tried to halt the project by offering incentives identical to the Texas package, but the company moved anyway. Tax savings to American were enormous and employees were delighted that in Texas they would have more disposable income.

As Amazon launches projects elsewhere, it is in effect taking a “u-turn” to business-friendly locations, which happens a lot in another business-unfriendly state, California. Amazon might take comfort knowing that those who reversed their California plans and went to greener pastures include Chobani, HomeGoods, Schwabe North America and Tesla Motors.

Last year, in a speech before economic development officials in Texas, I predicted that Amazon would avoid locating its HQ2 in one metro area but would split the project in two, primarily because of workforce availability issues. A few months later, Amazon announced it would do just that by placing offices in New York, in the Long Island City neighborhood of Queens, and Arlington County, Virginia.

But I was only half right in my prognostication. What I underestimated was the extent of jaundiced views in New York.

Organized labor launched a campaign to discredit Amazon as being anti-worker because of its coolness to union organizing. State Sen. Jessica Ramos said the company must not oppose any effort to organize a union. “No union, no Amazon,” she said. That attitude alone was reason to flee New York. At least a dozen of the finalist cities that competed for Amazon’s project wouldn’t think of imposing such a requirement.

Also, New York city council members objected to the state overriding the local zoning process. But city approvals are notoriously difficult so the state offered Amazon an escape clause – the same that the New York Times received in 2001 in moving to a new building in Times Square.

Sparks flew in December when during a public hearing critics called for Amazon’s plan to be abandoned. They believe gentrification will be to the detriment of low-income residents of Long Island City – which can be mitigated with some smart planning – and that transportation problems will worsen, which is hard to believe considering the miserable condition of New York’s subway system. Neither reason was cause to kill the project.

And when Amazon asked for future discussions to be held in private, city council members said, no, there will be more public hearings – or, shall we say, public beatings.

When Amazon withdrew, a predictable corporate-bashing tweet by Democrat Rep. Alexandria Ocasio-Cortez (AOC) said: “Anything is possible: today was the day a group of dedicated, everyday New Yorkers and their neighbors defeated Amazon’s corporate greed, its worker exploitation, and the power of the richest man in the world.” Oh? She celebrates the fact that New Yorkers will now find at least 25,000 fewer job openings?

Peter Kauffmann, a former spokesman for Hillary Clinton and longtime Queens resident, noted in The Wall Street Journal that Ms. Ocasio-Cortez was elected with fewer votes than Amazon was promising in jobs.

It seems that she inspired others – the energy that radical opponents poured into their activities was summarized by the Philadelphia Inquirer, to wit: “Activists, including some with the Democratic Socialists of America, had begun canvassing neighborhoods in Queens and in the subway cars to educate people about the deal.”

Her opposition inspired the Job Creators Network to post billboards in Manhattan highlighting Ocasio-Cortez’s role in the economic consequences of Amazon’s pullout.

Amazon’s critics said the company didn’t deserve government incentives totaling $3 billion. As one who has negotiated incentives, I understand and respect such controversy because, well, it goes with the territory.

About economic incentives, a conservative view is that they amount to crony capitalism. As the Tax Foundation put it, they “represent an attempt to gloss over problems with a state’s tax code, which would be better addressed through comprehensive tax reform.”

A liberal view is held by Michael Gianaris, a Democrat who represents Amazon’s proposed location, who warned in USA Today that “In an era of historic income inequality, granting massive subsidies to a very wealthy corporation does not mean we were smart: It means we were played.” The Senate nominated him to the Public Authorities Control Board, where if seated he could kill the state’s deal.

Love incentives or hate them, the fact is New York’s competitors also offered such enticements to Amazon.

Amazon had signaled that New York’s $3 billion incentive package was not the key factor in deciding to locate there. Other cities offered much more – Newark and New Jersey offered $7 billion, Philadelphia and Pennsylvania offered $5.7 billion – and Amazon doesn’t seem to be in a hurry to re-engage those communities.

In retreating, Amazon was gracious in thanking Mayor Bill de Blasio who “supported us during the process.” Mr. de Blasio’s thin-skinned response: “Instead of working with the community, Amazon threw away that opportunity. We have the best talent in the world and every day we are growing a stronger and fairer economy for everyone. If Amazon can’t recognize what that’s worth, its competitors will.”

Speaking of competitors, 18 metro areas lost out on the half-headquarters project. Not all, but many are working diligently to grow the number of workers with the talents Amazon is seeking. Many also take great satisfaction in their cultural and recreational assets, as well as their excellent schools, affordable housing and friendly people.

Economic development officials in those finalist locations can say more – they can cite Chief Executive Magazine’s latest survey, which found New York to be the next-to-the-worst state in which to do business. California holds the bottom spot. Business taxes? The Tax Foundation ranks New York at 48, with only California and New Jersey being worse. Workers’ compensation costs? The Oregon Department of Consumer and Business Services in a new report finds New York has the nation’s most expensive workers’ comp rates.

For employees, the cost of living is lower in 48 states, with New York ranking 49 and Hawaii at the bottom, based on data from the U.S. Bureau of Economic Analysis.

It’s hardly a surprise that mayors in America’s heartland are calling Amazon and saying, “If New York doesn’t want you, we do.” Their people are ready to greet Amazon not with insults and threats – but with open arms.

Joseph Vranich provides location advisory services whose motto is “Helping Businesses Grow in Great Locations.” His company is Spectrum Location Solutions LLC, but he also has been known as the Business Relocation Coach. He recently issued a report on business relocations entitled, “Why Companies Leave California” which can be found at https://spectrumlocationsolutions.com/california/

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