Canada shouldn’t pursue Amazon’s second headquarters

Anthony Lacavera and Bruce Croxon think Canadian cities need to temper their enthusiasm

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When Amazon announced plans to establish a formal, full-fledged second headquarters, the company did so with all of the subtlety of a freight train.

The host city had to be able handle close to 33 specific Amazon buildings. The city needed to be able to support 40,000 Amazon employees — plus their families. The city needed to have the appropriate facilities to be able to welcome all of the company’s numerous guests. As a cherry on top, Amazon also wanted to find a city that could stand to benefit from a benevolent “additional $38 billion [USD] to the city’s economy.”

What’s important to note is that Amazon wasn’t interested in doing any of the heavy-lifting itself. It didn’t want to reach out to cities itself — it wanted cities to pitch themselves.

In response, major cities around the world announced plans to bid for the honour of hosting Amazon’s HQ2 premises.

On the same day as Amazon’s HQ2 announcement — September 7th, 2017 — City of Toronto mayor John Tory took to Twitter to announce his intentions to include Ontario’s capital in a bid.

One-week-later, a Toronto, Mississauga, Brampton, York Region, Halton Region and Durham Region announced that they had joined forces in an attempt to convince Amazon that it’s worth investing in Canada.

London and Hamilton also wanted a slice of the Amazon pie.

It wasn’t just Ontario that got caught up in Amazon hysteria. Almost every major Canadian city expressed some form of interest in hosting Amazon’s HQ2. Case in point, cities from Halifax to Vancouver, including Calgary and Edmonton, have all announced plans to bid on Amazon’s second headquarters.

For those cities without public officials stepping up to make a bid, columnists — like Celine Cooper from the Montreal Gazette — have taken on the responsibility of advocating for their hometowns.

And why shouldn’t Canadian cities attract a global, digital giant like Amazon? We’ve got the talent and we’ve got the space. HQ2 wouldn’t just put Canada on the map, it would irreversibly change the course of history for whichever Canadian city would play host to the company.

Canada would have to be crazy not to want a piece of what Amazon can bring us. Right?

Contrarian’s corner

Of all of the critics who have spoken out against Canada hosting Amazon’s HQ2, none have been as vocal as Wind Mobile (now Freedom Mobile) founder and former CEO Anthony Lacavera.

To say that he thinks it’s a bad idea for Canada to play host to Amazon would be an understatement.

“I’m astonished that our elected officials would be chasing this short-term headline jobs number over what is long-term beneficial to Canadians,” said Lacavera.

“We need to do what small, very competitive innovative countries…do.”

For Lacavera, the issue isn’t welcoming Amazon into Canada. The company already has a corporate headquarters in Toronto, as well as a series of fulfilment centres across the country, and Lacavera acknowledges the economic benefits of opening Amazon’s HQ2 somewhere in Canada.

“I want to be very clear, I’m fully in support of fair and open competition and I’m fully in support of welcoming these companies into Canada,” said Lacavera.

Instead, Lacavera’s true concerns lie with the potential loss of Canadian talent to an American multinational corporation — not to mention tax incentives that encourage foreign companies to set up shop in Canada.

“We can be global leaders in technology…”

“We need to do what small, very competitive innovative countries like Israel and Scandinavian countries do,” said Lacavera. “They focus and create their own sectors where they dominate.”

Lacavera believes that Canada should focus on enabling its own developers, engineers and entrepreneurs to build their own technological power-players.

“We can be global leaders in technology, we just have to put our minds to it,” said Lacavera.

Preventing the digital economy from going the way of the automotive industry

To understand Lacavera’s concerns, one needs look no further than Canada’s automotive industry.

Canada currently plays host to a series of foreign multinational automotive brands, including Ford, Chrysler, GM, Mitsubishi and Honda.

“We’re very reliant on those foreign multinationals.”

In the early days of the industry — when automotive jobs weren’t heavily influenced by robotic automation and global automotive brands relied, in part, on Canadian parts manufacturers and other members of industry — business was booming.

Today, however, the industry that was built up around the automotive economy has been negatively affected by reduced labour needs, as well as foreign trade deals that encourage the manufacturing of automotive parts to take place abroad.

“We’re not making a Canadian car, we don’t have our own Canadian car,” said Lacavera. “We’re very reliant on those foreign multinationals.”

“…there’s a tremendous opportunity with money starting to flow here…”

Lacavera believes that hosting Amazon’s headquarters — indeed, hosting a large-scale headquarters for any giant global multinational — would only cause long-term harm to Canada.

He’s also not alone in this thinking. Bruce Croxon — the co-founder of Lavalife, co-host of BNN’s The Disruptors, and a former Dragons’ Den investor — agrees with Lacavera’s concerns.

“With me, there’s a tremendous opportunity with money starting to flow here…to build Amazon-type companies right here in Canada,” said Croxon, in an interview with MobileSyrup.

“…there is a very low chance that Jeff Bezos would risk the headlines in the U.S….”

Just like Lacavera, Croxon also sees the short-term benefits of hosting Amazon’s HQ2 in Canada.

“From the perspective of a parent with kids who are one day going to enter the job market, obviously the first reaction is ‘Great, the more jobs the better,’” said Croxon. “From the perspective of an entrepreneur who’s trying to build the next Amazon here, I’d rather have that talent build early-stage companies here that will have a chance to be the next Amazon.”

Acknowledging the elephant in the room

While both Lacavera and Croxon recognize the benefits of hosting Amazon’s HQ2, Lacavera is quick to address a subject that few of Canada’s leaders have acknowledged: Amazon almost definitely won’t choose a Canadian city for the new headquarters.

“[There’s an] extremely remote chance,” said Lacavera. “Near zero chance, and I think that just makes the whole situation that much more embarrassing for Canada, that we would have our elected officials in six cities trying to secure that headquarters.”

“…I can envision the tweet from Donald Trump…”

Lacavera emphasizes that it’s not an issue of tax incentives or the presence of an educated labour-force or the lack of space to construct the sheer number of buildings Amazon hopes to erect. Quite the contrary, Lacavera believes that the response that Amazon would receive from U.S. news publications — as well as U.S. politicians — would be enough to dissuade the company from investing in a Canadian city.

“Even if all of that added to some economic benefit to Amazon, there is a very low chance that Jeff Bezos would risk the headlines in the U.S. that he’s moving jobs to Canada,” said Lacavera. “I can envision the tweet from Donald Trump…I think Jeff Bezos is one of the smartest executives that ever lived and I don’t think he’s going to take that chance.”

For now, the Amazon HQ2 bid submission deadline is October 19th, 2017 and some of Canada’s major economic and cultural hubs have put their names in the running. Only time will tell if Canada’s top cities succeed in their bids.

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