Amazon’s plan reminiscent Boeing’s Chicago move

Last year, Seattle Times aerospace reporter Dominic Gates wrote about the similarities and differences between Boeing’s corporate office move to Chicago and Amazon’s plan for a second headquarters.

  • Wednesday, October 25, 2017 3:15pm
  • Business

Last year, Seattle Times aerospace reporter Dominic Gates wrote about the similarities and differences between Boeing’s corporate office move to Chicago and Amazon’s plan for a second headquarters.

Boeing wanted to leave Seattle in an effort to separate its corporate leadership from manufacturing sites while Amazon, with an unusual strategy, plans to keep its headquarters here but set up a parallel operation elsewhere.

Boeing hoped to find a more conservative business climate while Amazon wants a city which is a “cultural fit.”

Gates reported that in March 2001, Boeing shocked Gov. Gary Locke and Seattle Mayor Paul Schell announcing its headquarters since 1916 would leave Seattle and named Chicago, Dallas and Denver as the leading destinations. CEO Phil Condit invited each city to submit proposals.

Chicago won after Illinois agreed to provide Boeing with up to $41 million in tax breaks and various state grants over 20 years. The city offered an additional $19 million in property-tax relief over a similar period and a $2 million grant.

Chicago also promised to establish a downtown heliport that could shuttle executives to and from the central city and contributed $1 million to retire the lease of the existing tenant in the space that Boeing now occupies. Chicago’s proposal was that detailed.

Amazon publicly announced its desire for a second headquarters. The world’s leading online retailer estimates what is called “Amazon HQ2” is worth $5 billion and will bring with it 50,000 jobs.

The company accepted bids from metropolitan areas with good roads, high quality education, mass transit, and, a business-friendly environment. However, the decision may hinge on which city, state or, in the case of Canada, federal government has the richest package of incentives.

New Jersey Gov. Chris Christie proposed $7 billion in potential credits against state and city taxes if Amazon located in Newark and sticks to its hiring commitment. Georgia is offering $1 billion and California, Florida and Colorado have $100 million plus packages. Many cities submitted multi-million dollar bids as well.

Who would pass on a “$5 billion, 50,000 jobs” deal? Not many, but San Antonio officials sent an open letter to Amazon CEO Jeff Bezos saying it is not entering the bidding war. “Blindly giving away the farm isn’t our style.”

While tax breaks are part of most corporations’ DNA these days, Amazon has taken the them to a new level. It assembled a group of highly talented and experienced people who actively work for taxpayer incentives in areas it plans to locate.

“Since its beginnings as an online bookseller in 1994, Amazon has had a savvy approach to taxes, collecting no sales tax for many purchases until recent years, and now pitting governments against each other to win tax breaks,” Reuters recently reported.

Unfortunately, as distasteful as these public incentives are, they entice companies to cities, states and other countries. The best remedy to counter them is to focus on improving the business climate so corporate leaders won’t look elsewhere.

In 1991, Boeing CEO Frank Shrontz warned that unless our state’s business climate improved, the Puget Sound region could become “an aerospace rust belt in the 21st century complete with padlocked factories, unemployment lines and urban blight.”

While Amazon has not been as open in its criticism of Washington and Seattle’s taxes and regulations, it wants a city which has lower operating costs.

Boeing, Amazon and other Washington companies are coveted by other states and countries. The key to keeping them here is to have reasonable regulations and taxes, good education and transportation, safe streets and a high-quality environment; and, a place where people can afford to live.

Don Brunell, retired as president of the Association of Washington Business, is a business analyst, writer, and columnist. He lives in Vancouver and can be contacted at TheBrunells@ msn.com.

More in Business

Washington’s expensive culvert court case

Too much money is spent in court where it should go to increasing the salmon population

Straw pulp looks like a game changer

250,000 tons of straw will soon be pulped for paper products.

New Enumclaw wine bar aims for broad audience

Bordeaux Wine Bar is scheduled to be open Wednesdays through Sundays.

Streamlining regulations makes more housing affordable

There were over 21,000 people homeless in Washington State last year.

New approaches needed to fight super wildfires | Don Brunell

Last year, wildfires nationwide consumed 12,550 square miles, an area larger than Maryland.

Skilled trade jobs go unfilled in our robust economy

Known as blue collar jobs, they routinely pay $45,000 to $65,000 a year or more.

Streamlining regulations helps Americans compete

The cost of regulations is a key American competitiveness issue. It is a major reason our companies re-locate to other countries and our manufacturers and farmers have difficulties competing internationally.

Water pressure mounting in West as population spikes

What is happening in California with water allocation disputes is a harbinger of what is to come in our state as well.

Railroads implementing positive track

While the investigation continues into the deadly AMTRAK derailment near Dupont, the clock continues to tick on the implementation of Positive Track Control (PTC). The deadline is Dec. 31, 2018.

Keep the holiday spirit all year long | Don Brunell

During the holidays, our thoughts naturally turn to giving — not just giving gifts, but donating our time and money to charities, disasters and community programs.

Finding balance in occupational licensing

Recently, the Institute for Justice (Institute) determined state licensing barriers for lower-income workers and aspiring entrepreneurs not only hurts people trying to establish themselves in a profession, but annually drives consumer prices up by $203 billion.

Remember 1993

Twenty-five years ago, business took a beating in Olympia. The swing to the left in the 1992 general election was swift and potent. It drove higher costs to employers and more government regulations.