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Tim Cook & Katie Culp: What Indy won in the Amazon HQ2 process

November 16, 2018

cook-culp-viewpoint-2018Thank you, Mr. Bezos, not just for the miracle of Amazon Prime but also for the understanding you’ve brought to the outside world about site selection.

Amazon’s prominent search for HQ2 (should we now call it HQ2 and HQ3 with a Nashville twist?) has enabled us to finally explain our profession. Goodbye, blank stares. From now on we will encounter sympathetic nods and eyes that widen in comprehension when we answer the question, “What do you do?” We are talking about you, strangers we meet at cocktail parties, intake clerks from our doctor’s offices, and even (cough, cough) our spouses.

The dust has barely settled on Amazon’s selection of New York and Virginia as co-winners for HQ2 and Nashville, Tennessee, for a previously unannounced operations center. But Hoosiers are already asking whether this endeavor was a good use of resources. We believe the answer is yes.

The true highpoint for Indy was making the list of 20 finalists, a bragging right that can’t be touted by a long list of peer cities, including Minneapolis, Phoenix, Cincinnati and Detroit. This means Indy has established such credibility in the economic development space that it caught the attention of one of the biggest companies in the world. That fact can and should be touted when the next big opportunity comes our way.

Another huge benefit: The bevy of data and marketing materials Indianapolis developed in pursuit of HQ2 can be used to aggressively compete for future projects. HQ2 was always a longshot for Indy, but the city presumably expended the resources to the degree it did—at least in part—in order to lay the groundwork for future successes.

So, if this exercise made sense to pursue, why did Indy lose HQ2 to two areas with exorbitant real estate prices and higher-than-average business costs?

We believe it came down to workforce. The cost of the project, while critically important, never trumped its key determinative factor: people. Size, skill levels and growth rates of the qualified labor pool were indispensable considerations. With that criteria, Amazon chose New York and D.C.

And what about that Nashville twist? Amazon threw into the HQ2 mix an unexpected decision to spend $230 million and hire 5,000 six-figure-salaried employees at a new “Operational Center for Excellence.” Undoubtedly the Indy team pursuing HQ2 found this news disconcerting, especially considering it was never given a chance to compete for a project it appeared to be ideally suited for on paper.

There’s more work to be done. We have great confidence in our public sector friends and colleagues who worked tirelessly, collaboratively, and swiftly to put Indy in the best possible position to compete for HQ2. The final challenge for this team will be to retain that collaborative spirit to proactively seek input about why we lost HQ2, and what we might have done to vie for the Nashville deal. This action will position us better for the next big opportunity.

In the meantime, we should let Mr. Bezos know that, like Amazon, we will honor a 30-day return policy on all three of these site selection decisions. We are friendly Midwesterners, and we’re happy to sweep any of his initial buyer’s remorse under the rug.•

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Cook is CEO and Culp is president of KSM Location Advisors.

 

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