Wednesday, February 14, 2018

Amazon HQ2 could lead to uncharted waters


By Matt DeVeau, Project Manager

One morning this past September, I stepped out of the office for a few minutes, forgetting my cell phone at my desk. I came back to a screen full of disquieting text message notifications.

“Woah, can you believe this?!?”

“Did not see this coming!”


…and a few unprintable variations thereof.

When I opened the first one to see the attached link, the reactions of my friends and colleagues made sense. Amazon had opened a search for a second headquarters – HQ2 – that would bring 50,000 jobs and $5 billion of investment to a city in North America. And this news was not a product of a leak but rather a press release; this search would be conducted at least somewhat within public view.

There was never a doubt that this would be massive, workflow-altering news for much of the economic development community, and that has indeed been the case. But it did not occur to me how much this would capture the attention of the general public. (Though maybe it should have been given the company’s consumer-facing stature.)

Without exaggeration, nearly everyone who knows me well has asked me what I think is going to happen with HQ2 or shared their own theory. This includes friends with whom I rarely if ever discuss work and people who have no idea what I do – rideshare drivers, travelers at airport bars, and so on. By contrast, I can’t recall a single conversation with someone outside of the economic development world about Foxconn’s planned manufacturing facility in Wisconsin that could receive $4.5 billion in public funds.

I have yet to come across an analysis of the extent to which HQ2 is being discussed in traditional and social media. But a quick look at Google Trends data suggests that HQ2 is a different animal. The following figure is an index with values between 0 and 100 showing the prevalence of Google searches for “Foxconn” in the United States between July 1, 2017 and February 8, 2018. There is a massive spike of interest around the announcement of the Wisconsin facility in late July with only small peaks since that time. Additionally, searches for the term have been heavily concentrated in Wisconsin.



Meanwhile, the following figure shows the search volume for “HQ2” using the same parameters as above. The announcement of the site selection process on September 7, 2017 is a small blip compared to the activity around the deadline for bid submissions in October and the announcement of 20 finalist communities in January. Additionally, searches have been far more evenly distributed from a geographic perspective. (It’s true that these two searches are not exactly apples-to-apples comparisons. There are of course major substantive differences between the projects, but searches for the term “Amazon” also seem to spike around the holidays and “Prime Days.”



Amazon’s HQ2 search is unprecedented. That much is obvious to everyone in economic development. But I think it’s important to acknowledge that the attention it has garnered could have broad implications. Both Amazon and local communities have used the process as an opportunity to learn about one another, and some economic developers have reported that it has helped foster regional collaborations that were previously elusive. The mere possibility of landing Amazon has also influenced public policy discussions in some communities.

But the HQ2 search has also been folded into conversations about housing affordability, congestion and transit connectivity, and the role of public incentives that are heating up in many of the nation’s most economically successful regions. Speculation has even begun about a potential backlash in some communities.

The above is presented without editorial comment merely as an illustration of how HQ2 could have wide-ranging impacts far beyond the community in which the project ultimately lands. And what these impacts will be is just as uncertain this point as which community Amazon will ultimately select.

The takeaway for people in the community and economic development world is to watch this situation closely and be prepared to adapt to how HQ2 could dramatically shift the conversation around economic development. This time around, everyone is paying attention.