Question

Amazon's HQ2 selection and subsequent rejection of New York: What effects will this have on the Long Island City stakeholders - How should they react to the current situation?

Answer 1

Amazon selected New York City and Arlington, Virginia, as the locations for their new headquarters. According to their announcement, Amazon will invest $5 billion and create more than 50,000 jobs across the two new headquarters locations, with more than 25,000 employees each in New York City and Arlington.

Later Amazon canceled its plans to build an expansive corporate campus in New York City after facing an unexpectedly fierce backlash from lawmakers, progressive activists and union leaders, who contended that a tech giant did not deserve nearly $3 billion in government incentives.

The decision was an abrupt turnabout by Amazon after a much-publicized search for a second headquarters, which had ended with its announcement in November that it would open two new sites — one in Queens, with more than 25,000 jobs, and another in Virginia.

Amazon’s retreat was a blow to Gov. Andrew M. Cuomo and Mayor Bill de Blasio, damaging their effort to further diversify the city’s economy by making it an inviting location for the technology industry.

The agreement to lure Amazon to Long Island City, Queens, had stirred intense debate in New York about the use of public subsidies to entice wealthy companies, the rising cost of living in gentrifying neighborhoods, and the city’s very identity.

When Amazon announced plans for a second headquarters in September 2017, it promised 50,000 high-paying jobs and billions in investment for a community that would be coequal to its home in Seattle. The voracious company, whose ambitions outgrew the number of people it could hire in the Pacific Northwest, set off a nationwide frenzy, with more than 200 cities making bids.

Amazon decided last fall that no one city could provide the number of tech workers it needed and split the headquarters in two.

There is no shortage of business reasons why Amazon would want to expand its presence in the nation’s political and financial capitals. But it feels like a deeply cynical denouement of the company’s year-long bake off, and represents a missed opportunity to help stake out the future of the corporation.

For much of the past half-century, big business has served one goal: maximizing shareholder returns. Executive compensation was pegged to stock prices. Share buybacks crowded out R&D and other long-term investments. Operations were combined and dismantled with impunity, so long as it was good for investors.

Amazon's HQ2 deal with New York is officially off — and it means the state and the city could lose out on $27.5 billion in tax revenue.

The wide variety of stakeholders showed up to express concern looked to contextualize the far-reaching risks associated with the deal.

The day began with representatives from New York union groups recounting Amazon’s shaky history with employee working conditions and questioning how the city’s working standards will be impacted if the 50,000 promised jobs do actually show up.

Amazon’s business model depends on its own warehouse workers paying the price for faster deliveries and lower prices, while the company also continues to gain a reputation of being unresponsive to shareholders on labour issues.

Amazon is like a jet aircraft cruising at 35,000 feet, figuring out its sustainability strategy while it barrels across the sky. It has, and has had, some great practitioners and thought leaders cycle through Seattle. So it is likely doing interesting things. But the company remains opaque.

Until Amazon invites stakeholder leaders – change agents, opinion leaders, critics – aboard to help it address the harmful social and environmental impacts of its business model, it will face mounting stakeholder, investor, consumer and regulatory skepticism.