Twin Cities approaches Amazon bid with little flash, verging on ambivalence

One of Detroit's biggest businesses is offering to empty downtown offices for Amazon.com to move in. Chicago's mayor organized 600 business and civic leaders to help him attract Amazon's new headquarters.

With an expected capital investment of $5 billion and the prospect of an office that will house tens of thousands of well-paid workers, Amazon presents the economic development opportunity of a generation. Minnesota leaders and executives, however, are approaching the Amazon headquarters proposal with far less flash and considerably more ambivalence than cities elsewhere.

Gov. Mark Dayton has said he thinks the state has a good case to make to Amazon, particularly about the strength of the local workforce, and he has directed nonprofit Greater MSP and the Minnesota Department of Employment and Economic Development (DEED) to put together a proposal.

But beyond that, the groups haven't revealed a lot. Dayton himself said any incentives would be "restrained," given the importance of Amazon competitors Target and Best Buy in the state. No private sector executive has stepped forward to put a prominent face behind the local effort, and a survey by the Star Tribune of major local businesses prompted few to publicly embrace Amazon.

Even the chief development executive at the Minnesota Chamber of Commerce last week suggested landing Amazon might not be entirely beneficial.

"When folks are thinking about Amazon, if that facility came here, would that statewide community change and grow?" chamber executive Bill Blazar asked. "That's the test on projects. … As great a development as it might be, if it's going to compromise that [regional business] diversity, then you might need to take a pause."

There are valid reasons for caution. For one, pursuing Amazon could turn into an expensive competition that would require big incentives. And with unemployment in the state below 4 percent, an aggressive hiring push by Amazon would only make it harder for other employers to get and keep talent.

"At the very least, it shows a wariness and lack of strong enthusiasm for the project, which in turn does not bode well for the broad support necessary to craft the incentives necessary to win the project," said Mark Sweeney, a senior principal for South Carolina-based McCallum Sweeney Consulting, which provides site selection services and economic development consulting.

Due to its size and the negative impact it could have on labor availability, real estate costs and other factors, Amazon could be seen as a threat to many companies, said Sweeney, whose firm has helped with major headquarters projects.

As part of Amazon's request for proposals, the company said it encouraged testimonials from other companies. Greater MSP has not said specifically if it is soliciting any, but a spokesman for the group said leaders from the private and public sector have been briefed on the region's approach to the Amazon bid.

"They are all very supportive of our efforts working with DEED in this endeavor and see [Amazon's potential second headquarters] as a great opportunity for our region," said Mike Brown, vice president of marketing and communications for Greater MSP. "There will be ample opportunities for regional leaders to weigh in on the process. We are unified in our belief that Minneapolis-St. Paul is an exceptional place for any business, Amazon or otherwise."

Amazon's deadline for the confidential bids is Oct. 19.

While not addressing Amazon specifically, Marilyn Carlson Nelson, former chairwoman and chief executive of Carlson Cos., said in a statement, "I always welcome economic growth in the state of Minnesota."

Minneapolis-based Xcel Energy was careful not to upset the other big city where it operates.

"We're excited that Minneapolis and Denver — the two largest communities we serve — are in the running for Amazon's selection of a second corporate headquarters," said Matt Lindstrom, an Xcel spokesman. "Both communities meet all the key criteria Amazon has established, and that is why we're working with economic development partners in both communities on their proposals."

Historically, Minnesotans have had more success starting and building companies here than in attracting them from elsewhere.

State demographer Susan Brower said companies sometimes struggle to recruit employees to Minnesota, in part because of the perception that the state is not welcoming to outsiders. She said it is difficult to figure out whether that reputation for standoffishness might also scare off companies.

John S. Adams, a University of Minnesota professor who has done research on regional economic development policy, said the state simply has a long record of growing businesses from within.

"I don't believe it's true that business leaders here don't believe in growth," Adams said. "But they don't believe that the best way to grow is to band together and bring in companies from other places. They believe there are good companies here that have constraints on their growth, and the best way to grow is to remove those constraints. They don't think job growth is going to come from somewhere else."

When the Fortune 500 list was first created in 1955, the Twin Cities area was home to nine companies that made the cut. Over the years, it has added a total of 40 companies and lost about 30. Out of those top companies that were added, all but one were homegrown.

"Certainly, our experience has been growing companies," said Myles Shaver, a University of Minnesota professor who is writing a book about the concentration of corporate headquarters in the Twin Cities. "That doesn't mean that we shouldn't be looking to attract them, but growing them is better than not growing them and not having them move here."

The Minnesota Chamber of Commerce, whose Grow Minnesota program focuses on business retention and expansion for Minnesota companies, has been meeting weekly with the group leading the local bid for Amazon. But the dramatic lengths other regions are going to — such as the offer by the mayor of the Atlanta suburb of Stonecrest to rename part of the town Amazon — is just not Minnesota's style, Blazar said.

For Minnesota as a brand, such authenticity pays, said Tom Lindell, managing director of Minneapolis-based Exponent PR. "As Minnesotans, we don't brag — and that goes back to being true to who you are," he said. "It's the most effective marketing vs. trying to be something you are not."

Bob Hess, a site selection expert at Newmark Knight Frank in Chicago, said the early stage of the Amazon process may not be the time for a showy push anyway. "Everybody is waiting to see how serious" the company is, Hess said. "If it gets to the next level, then you have to bring it. You really have to bring it."