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Minnesota Leaders Plan Bid for New Amazon HQ
Photo by Robert Scoble (CC)

Minnesota Leaders Plan Bid for New Amazon HQ

Amazon promises to bring billions in construction and as many as 50,000 jobs to a region that can promise a big incentive package.

Minnesota leaders are all-in on a bid to lure Amazon to build its second headquarters (dubbed “HQ2”) in the state—a bid that is likely to face cutthroat competition given Amazon’s promise of as much as $5 billion in construction spending and 50,000 permanent jobs.
 
Governor Dayton announced Thursday afternoon that local agencies were already assembling a bid after getting word of the request for proposal late Wednesday evening.
 
“With as many as 50,000 new jobs possible for Minnesota workers and families, I have directed [DEED] Commissioner Shawntera Hardy and the Department of Employment and Economic Development to work with city, regional, and state partners on a proposal to bring Amazon’s new headquarters to Minnesota,” the governor said in a prepared statement.
 
Dayton added that he would be meeting with Hardy on Friday to discuss ways the state could leverage its assets to make a compelling proposal.
 
“DEED leaders are already working with local and regional economic development partners, including Greater MSP, to craft a response to Amazon’s request for proposal, which is due October 19,” Hardy said in a separate release.
 
Mike Brown, vice president of marketing and communications at Greater MSP, told TCB that Minnesota’s strengths, particularly its workforce and education, would likely take center stage in the state’s proposal. “We’ll also talk about the corporate infrastructure here: We have a number of Fortune 500 and other major companies headquartered here,” he said. “I’m guessing quality of life will become an issue although I haven’t heard that. It seems for a headquarters location, [Amazon would] want to make sure their headquarters workers have things to do, can own homes, have good education for their children—so we’ll talk about all of those aspects.”
 
Amazon already maintains a presence in Minnesota. Last year, the retailer opened its Shakopee fulfillment center, which now employs over 2,000 people. It also leased space in the new T3 building in downtown Minneapolis earlier this year to house tech development workers.
 
To land the facility in Shakopee, the city gave the company a roughly $5.8 million subsidy. Shane Delaney, spokesman for DEED, told TCB that the state is still in the early stages of determining what it plans to offer Amazon this time around.
 
“Three of the nine requests in Amazon’s request deal with incentives, so there’s no doubt that will be part of their selection process,” he said. “But I would say it’s way too early for us to know what that picture would look like here in Minnesota.”
 
It its open call to cities, Amazon noted the impact its Seattle campus has had on the area, namely an additional $38 billion to the city’s economy and a $1.40 return for every dollar Seattle invested in the company. Amazon also hinted that its presence in the city helped attract and build Fortune 500 companies, which improved from seven total in the state in 2010 to 31 in 2017.
 
The company’s Seattle presence has also been criticized, namely around the city’s gentrification and rapidly increasing home prices.
 
 

Could Minnesota be picked?

In recent years, Minnesota has had some success in landing major expansion projects. In the spring, state officials convinced tech products provider Digi-Key to expand its headquarters in Thief River Falls through a subsidy package. Prior to that, in 2016, home siding company Louisiana-Pacific agreed to construct a new manufacturing plant in the Iron Range in exchange for $66 million in state support. (Plans to build the new facility were recently put on hold.)
 
Moreover, with the addition of the new Vikings stadium, Minnesota has recently managed to outbid other metro areas for major sporting events, including the X Games and upcoming Super Bowl.
 
In an interview with TCB last month, Governor Dayton commented on the state’s past subsidy efforts. “It’s really competitive with other states offering subsidies,” he said. “Now, there are studies that have shown they are not effective, but the reality is that a company like Digi-Key, interested in expanding in northwestern Minnesota, is a huge economic benefit to the region.”
 
When it comes down to whether Minnesota should aggressively pursue bringing Amazon’s headquarters to the state, George John, a professor at the University of Minnesota’s Carlson business school, believes the answer is obvious. “Absolutely,” he said. “If Amazon does choose Minnesota, it is a huge boost to our ‘retail’ cluster which currently includes Best Buy and Target.”
 
Amazon’s presence, John added, could even improve the state’s job market, which is flush with open positions but not enough bodies to fill them.
 
“People tend to locate to places where career alternatives (within the same general business or industry) exist given the ups and downs of the job market,” John said. “Looking back, we used to have a mainframe computer cluster back in the 70s and 80s which crashed and burned, and was replaced by our medical device cluster. Retail is going through a tough time, so getting Amazon here will help us to improve the visibility of Minnesota’s retail cluster.”