By Dusty J. Cruise
Missouri Enterprise President and Chief Executive Officer
Amazon is making big news as it courts cities nationwide vying to be chosen for the company’s second headquarters. As of the deadline in October of 2017, 238 cities submitted proposals for consideration, and Amazon projects it will announce its “short list” of candidates early this year. Of course, that’s when the real negotiating will begin, with candidate communities offering incentives of all kinds, including tax breaks, infrastructure development and myriad other tempting tidbits to make them the most attractive choice for Amazon. I read that one city even offered to change its name if that would do the trick.
There’s no doubt the impact for the winning city will be huge, with the promise of 50,000 jobs and billions in development costs spent in the chosen city. But it won’t all be roses for the site of Amazon’s second headquarters. In addition to jobs, jobs, jobs, there’ll be pains and changes that will dramatically impact the city of choice, both positively and negatively. In the mad rush to become “the chosen one”, one sometimes wonders whether these communities have really thought through all the pros and cons of having a major employer suddenly land in their neighborhood. Whether it’s Amazon or any other big company coming to town, there will always be points and counterpoints, positives and negatives, good things and bad things associated with the new arrival.
Nothing is tantamount to the promise of thousands of good paying jobs with benefits. Jobs drive a local economy and are a critical part of every community’s strength and sustainability. New jobs mean people have more money to spend, and local businesses, from retailers, to restaurants, to service providers will benefit.
Big companies need significant supply chains to operate, and many local businesses and distributors will become suppliers. Just think of the needs of a big operation; they buy everything from paperclips and paper, to lavatory supplies, to office furniture, computer equipment, phone systems and on and on. They need services too, such as HVAC contractors, wiring and cabling specialists, even window cleaners and coffee vendors. And for many of these products and services, it just makes sense to source locally, so the entire community benefits. For example, cardboard shipping boxes are produced locally in most major cities, so if you manufacture boxes, and an Amazon comes to town, chances are good you’ll have a huge new customer for your products.
But remember, the people to fill those jobs must come from somewhere. It’s not only unemployed local folks who suddenly find work and get back on a payroll. People will leave other, less desirable jobs to take advantage of better pay and benefits, and that can cause job losses in other area businesses. The competition for workers can become an even greater challenge than it is today, especially for manufacturing, where the skills gap continues to be a problem. If you’re a manufacturer in Missouri, imagine the potential impact on your workforce and hiring capabilities if one of the mega companies moves into town; can you compete against their jobs?
Another potential issue is the fact that modern large employers usually have many high end technical jobs they need to fill, and if the local community workforce doesn’t have enough of the right skillsets, others will migrate into town to fill those jobs. Communities with a strong STEM (Science, Technology, Engineering & Mathematics) program in their school systems are likely to have an advantage when big companies like Amazon are looking at them, and we’re fortunate to have some robust STEM programs in Missouri.
It’s important to know that an influx of “outsiders” can be a factor when a huge workforce demand suddenly comes to town. It’s a real phenomenon, and the bigger the influx of people into a community, the greater the stress of accommodating them; consider the possible impact of housing shortages, and subsequently escalating prices for housing, and the burden on school systems to accommodate the quick arrival of many new students, just to name a few.
Another big boon when a major employer comes to town, at least initially, is construction. Whether building new or remodeling existing facilities, the skilled workers in construction will benefit when a major employer arrives, as well as the local suppliers of products like concrete, steel, windows, handrails and more.
In Amazon’s case, they expect to invest over $5 billion in construction in the community where they land their second headquarters. That’s an immense amount for any community. And if people are migrating into town to fill the good jobs, then there’ll be a boost to local housing construction, too.
When a major employer arrives bringing a huge workforce demand, that’s a wonderful thing, but there are always two sides to every coin. There are many examples of communities that have found new life when a big company brings thousands of jobs to town, returning the area to growth and prosperity, with the positives heavily outweighing the negatives.
But on the other side of the coin, such an arrival can also bring upheaval and disruption to a community, causing workforce shortages in other area businesses, exacerbating road congestion through dramatically altered traffic patterns, straining public services and infrastructure, and so on.
Every community will love the jobs, jobs, jobs aspect of the coming of an Amazon, as well as the likely economic boon to their city, but on the flip-side, there will also be problems, issues and, yes, losers, too. It’s a two-sided coin that Missouri is betting on. And if the Show-Mazon State (I actually kinda like that!) cashes in, Missouri Enterprise is here to help. From supplier scouting to on boarding new products, our industry specialists are perfectly qualified to assist your company as well as Amazon pave a “prime” pathway to greatness.