Construction continues in April on three large, glass-covered domes as part of an expansion of the Amazon.com campus in downtown Seattle. Amazon said Sept. 7 it will spend more than $5 billion to build another headquarters in North America to house as many as 50,000 employees. Elaine Thompson Associated Press
Construction continues in April on three large, glass-covered domes as part of an expansion of the Amazon.com campus in downtown Seattle. Amazon said Sept. 7 it will spend more than $5 billion to build another headquarters in North America to house as many as 50,000 employees. Elaine Thompson Associated Press

Foon Rhee

Associate editor, editorial writer and Viewpoints editor

Foon Rhee

The deck is stacked against Sacramento in Amazon headquarters sweepstakes

By Foon Rhee

frhee@sacbee.com

September 12, 2017 02:15 PM

UPDATED September 13, 2017 07:57 AM

There’s nothing wrong with aiming high. As Sacramento’s chief industry hunter points out, the chances of landing Amazon’s $5 billion second headquarters are “zero if we don’t try.”

Still, as great as I think Sacramento is and as much as I wish it gets HQ2, we shouldn’t get our hopes up that Sacramento is a top contender.

 
Opinion

Just take an impartial look at the criteria the retail behemoth put out Thursday when it dangled 50,000 jobs with average six-figure salaries. Analysts crunched the numbers and, sad to say, Sacramento isn’t on their short lists.

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Sacramento is on the starting list of 55 metro areas because it has at least 1 million residents. But in a New York Times analysis, our fair city doesn’t even make the first cut of the 25 metros with the best job growth over the past decade. After sorting through where cities rank on other measures – skilled labor, quality of life, mass transit and capacity to offer incentives – the predicted winner is (drum roll) Denver.

In a CBS analysis, Sacramento doesn’t survive the first culling based on a highly educated workforce. A contributor for Bloomberg lists six finalists: Atlanta, Boston, Dallas, Denver, Toronto and Washington, D.C. The Atlantic magazine’s CityLab narrowed the field to Atlanta, Austin, Denver, Toronto and Washington, D.C. And a CNN analyst listed eight potential cities, including San Jose, but not Denver.

While it’s clear that the deck is stacked against Sacramento, I don’t blame Mayor Darrell Steinberg and Councilwoman Angelique Ashby – who has the vast, empty Sleep Train Arena site in her Natomas district for quickly anteing up.

But there is a risk of going all in on Amazon: So much energy and hope will go into the bid that there’s lasting disappointment – and that it takes away focus and resources from more realistic options.

Barry Broome, CEO of the Greater Sacramento Economic Council, which is organizing the Amazon bid, says he understands the balancing act and the importance of not getting distracted.

“We don’t want to chase the gold at the end of the rainbow and drop the ball on other companies,” he said. He’s in the final stages of recruiting eight prospects, he told me this week from St. Louis, where he’s trying to land two agri-tech firms.

But he also says it’s worth the effort to go after the Amazon project. “It would be unbelievable,” Broome said. “Everything would change in our entire economy in one movement.”

It’s not just the high-paying jobs, plus the other companies that would be attracted. It’s also the spillover effect in the arts, civic leadership and philanthropy. And there would be the prestige as a headquarters city for one of the world’s best-known and biggest corporations – something that Sacramento sorely lacks.

Broome doesn’t put too much stock in the early handicapping because Denver, Austin and Dallas are on nearly every short list for a company announcement. He says Sacramento has a “real shot” if Amazon chooses based largely on work force and easy access to San Francisco and its existing Seattle headquarters. But if its decision is driven by cost and tax incentives, Sacramento’s prospects are not good, he says.

Actually, it wouldn’t be the worst thing to avoid the whole bidding war that Amazon wants among the finalists.

I’ve seen that before, and it’s not pretty. In 1993, Mercedes-Benz took offers for its first plant in North America, a prize worth 1,500 jobs and a $300 million investment. I covered the North Carolina bid that finished second to Alabama.

The danger is a city or state gives away so much away that it consumes the supposed payoff in tax revenues and taxpayers get soaked. The early reviews were that Alabama got robbed. Critics noted that the incentives amounted to $200,000 per job – far more than what other Southern states coughed up for car plants. But the Mercedes plant has expanded and became the foundation for an auto industry hub in Alabama that now includes Honda, Hyundai and Toyota.

The initial proposals for Amazon’s 8-million-square-foot prize are due Oct. 19. Though it would bruise Sacramento’s ego, it might be better to be ruled out early than to be strung along, only to be eliminated later. The harsh truth is that this sweepstakes will likely be a case of the rich getting richer. If a city ranks high on the measures Amazon is using, that means it’s already attracting good jobs, so would do just fine without Amazon.

Yes, it would be manna from heaven if Amazon picked Sacramento – even more so if it chose the old Sleep Train site. But far more often, economic development is a series of smaller wins that build momentum.

For instance, there’s the 1,500-worker, 855,000-square-foot distribution center that Amazon is building near Sacramento International Airport. Realistically – and as much as I hate to say it – that will be Amazon’s biggest presence in Sacramento.

Broome prefers to look on the bright side. Even if Sacramento doesn’t win, its reputation will be elevated, especially if it makes the top 15, he says. And it will be a good team-building exercise for local officials for the next time.

“You don’t get into the big leagues,” he said, “until you compete in the big leagues.”

Watch robots move packages at Amazon's Sacramento facility

The robots allow the 855,000 square-foot center at Metro Air Park to store 50 percent more goods and ship goods faster than a facility without robots. The facility is set to open in late August.

Foon Rhee: 916-321-1913, @foonrhee