Does Long Island Have What Amazon Wants?

An Amazon warehouse in 2015. (Photo by Scott Lewis).

In 1994, Jeff Bezos left his Wall Street job and moved to Seattle, launching a retail startup that abandoned brick and mortar in favor of electronic sales.

Bezos named the disruption Amazon, after a dictionary search revealed the Amazon River was the biggest on the planet. Bezos envisioned making his new store the biggest in the world.

Famously, he has succeeded. Amazon passed Wal-Mart two years ago as the world’s biggest retailer by market value. Today it ranks among the largest companies in the world. More even than its neighbor Microsoft, Amazon has established Seattle as a fulcrum of economic activity.

Bezos now intends to build a second headquarters somewhere in North America. To start the process, he has solicited proposals from economic-development teams across the continent. Among them is a contingent from Long Island.

Good on us. Amazon will invest $5 billion in building what it calls HQ2, staffing up eventually with some 50,000 workers. Long Island needs the investment and jobs like hot dogs need mustard. The local labor market languishes. Over the past 12 months ending in August, private-sector jobs in Nassau-Suffolk inched forward half a percent, less than a third the state’s tepid growth rate. The last couple of months have produced small losses.

Furthermore, growth in high-paying jobs is weak. People tell me they get paid less these days for doing the same work they did before. Many moonlight to get by.

What’s Bezos seeking for his new home? The company emphasizes incentive packages and a “business-friendly environment and tax structure.”

Translation: Come to the table ready to pay us big bucks to locate where you are and don’t forget the tax write-offs. While you’re at it, be close to an international airport, have a substantial population and a high-quality fiber optic network. Then we’ll talk.

Should LI even try to compete? Here’s how we rank in the competition.

Business-friendly environment. I wonder, does a single business owner or CEO consider Long Island business-friendly? Projects designed to produce jobs, reduce car dependence and add workforce housing languish for decades awaiting permits and approvals.

Stability. Real estate and search executives use the term “stable” to describe balanced government budgets. Both Nassau and Suffolk have borrowed from Peter to pay Paul’s budget items, raising the cost of fines to pay expenditures. Search execs hate that.

Tax structure. Long Island, in particular Nassau County, is one of the highest-tax regions in the country. Executives cringe when asked to relocate to higher-cost areas, asking employers to pay the differential or simply refusing relocation. Search execs hate both those options.

Infrastructure. Major roads congeal twice-daily at rush hours, idling hundreds of thousands. Mass transit, a vital characteristic of almost every major corporate investment, is dead in the water here. Billions of dollars of investment would be needed to satisfy an Amazon.

Power. Long Island companies pay astronomical electric bills which LIPA et al would have to deeply discount to satisfy Bezos.

Work Force. Decades of brain drain means few recent grads or career-changers fit a big company’s new-hire profile. Fast-growth companies need workers who are intellectually curious, broadly-educated, of diverse backgrounds, flexible in their thinking, and multi-skilled in their capabilities. To develop these workers means creating company-specific training modules rolled out by local community colleges whose professors understand the company’s internal processes. None of this is happening here.

Information infrastructure. This is a relative strength. Three fiber optic companies – Cablevision, Verizon-Fios, and Lightower – supply the region. Andy Weitzberg, a board
member and past president of the Association of Continuity Professionals of Long Island, tells me the infrastructure can support a user of Amazon’s size pretty easily, provided the new headquarters is built west of William Floyd Parkway.

I spoke about Long Island’s chances with Tom Stringer, a BDO USA exec helping companies across the country find locations where they can prosper and grow.

“I wouldn’t put us on the short list,” Stringer told me about Long Island’s chances with Amazon. “I can’t immediately define Long Island’s value proposition. The real winners will use this process to figure that out. We’re going to learn some hard truths and hopefully make the changes we as a region need to make.”

Stringer’s right. By chasing Bezos we’ll better understand ourselves and our economic climate. We’ll be better positioned to attract that visionary entrepreneur who right now might be in college or high school who might settle in here and attract other ambitious, hard-driving, intellectually-curious people – the kind needed to build a world-class company.

It’s a time of disruption. It’s time Long Island disrupted itself.

Contributing Editor Strugatch is a journalist and consultant. His website is InflectionPointAssoc.com.

More from our Sister Sites