Why Austin is a top contender for Amazon’s HQ2

Dave Manzer, ‎Founder of Manzer Communications in Austin


By DAVE MANZER
‎Founder of Manzer Communications in Austin
Guest Post

Let me just state for the record that I am not an economist nor an economic development professional with a chamber of commerce. Nor am I familiar with the different economic incentive packages (tax breaks and otherwise) that nearly 250 communities across the U.S., Canada, and Mexico have put together to win the Amazon HQ lottery.

I do know that Amazon will consider a wide variety of factors when deciding where it should build its HQ2. In my own view, Austin is on a very short list of cities that Amazon is actively considering, despite the city’s inherent growth challenges like traffic, zoning, and cost of living. Here are some obvious, and some not-so-obvious, reasons why:

Talent pool

There’s no question that Austin has become one of the few cities in America where there’s an abundance of tech talent. I know. I know. There is still a talent shortage for some jobs, and there has been upward pressure on wages because of it according to recent surveys by Dice and Hired. Still, Austin has proven adept at attracting new blood in order to meet the constant demand. Very few communities have the ability to absorb the number of startups and existing technology companies that call Austin home. Plus, with UT here and Texas A&M and Texas State University both within a 90-minute drive, you have no shortage of new graduates ready to enter the workforce.

Existing operations

Amazon caused quite a stir in the media when it purchased Whole Foods. The e-commerce giant has been quietly working to bring Austin’s iconic brand into the fold without any major disruptions. There’s a rumor that Whole Foods is ramping up hiring to beef up its software development team, including many operations the grocery chain used to outsource. Let’s not forget that Amazon also has a major distribution warehouse in San Marcos with plans to fill 1,000 openings. That gives Amazon a major workforce cluster in Central Texas that would make it easier for it to leverage as it looks to grow and integrate human resources across its disparate parts.

Logistics & Cost

Amazon is already in the farthest northwest corner of the lower 48 states. It makes a great deal of sense that it looks to locate somewhere other than the west coast or northeast corridor if only from practical perspectives like logistics and cost of living. Locating somewhere in the south or southeast of the U.S. comes with the advantage of lower cost of living and easy access to a different part of the country. The cost of doing business in California and New England is far greater than the south and central part of the country. What gives Texas an advantage is that it has a business-friendly climate. It’s also one of the few states with no personal income tax, which would allow Amazon to either give its employees a 3-8% raise or lower its salary structure for HQ2. DFW may have an edge on Austin when it comes to logistics owing to its airport being a hub for several airlines. That said, I feel confident that Austin’s bid included a promise to incentivize major airlines to add more direct flights to and from the Austin-Bergstrom airport, which would effectively negate DFW’s advantage.

Don’t forget politics

We are living in a highly polarized time in American politics. Right now, Amazon has its roots and global HQ in Seattle, Washington, a location known for progressive ideals and liberal politics. Seattle was one of the first and only cities to vote in a $15 minimum wage to help lower income earners enjoy a livable wage. Setting up shop in Austin would be a very shrewd move for Amazon in that it would instantly become a major employer in a red state with a powerful congressional block. Austin would allow Amazon to keep true to any ‘goodwill’ it has earned relative to being a progressive technology company based in the northwest. At the same time, Amazon can lobby Texas’ powerful Senators and Representatives to defend its business against a wide variety of legislation aimed at curbing Amazon’s influence. A long-term impact of Amazon locating in Austin would be to grow Austin’s power base in Texas, allowing it soften the rough edges Texas politics has developed over the past decade.

So, if you are a Machiavellian business mogul like Jeff Bezos with Libertarian leanings, an affinity for tech-friendly culture and a growing footprint in Central Texas, wouldn’t you put Austin on your shortlist, too?

Dave Manzer is the founder of Manzer Communications and PR Over Coffee in Austin. (Manzer Communications also an advertiser with Silicon Hills News)

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