by James A. Bacon
Amazon has announced the launch of two state-of-the-art operations facilities in Hampton Roads that will create 1,500 jobs. One is a multi-story robotics fulfillment center in Suffolk, creating 1,000 jobs, and the other a 650,000-square-foot processing center in Chesapeake, creating 500 jobs. Both operations are scheduled to open in 2021.
Since 2010, Amazon invested more than $34 billion in Virginia through its local fulfillment centers, cloud infrastructure, and research facilities. The company operations network in Virginia encompasses more than 10 fulfillment centers, sortation centers, and delivery stations across the state, plus 13 Whole Foods Markets and three Prime Now Hubs.
“We celebrate the addition of two new, high-tech facilities in Suffolk and Chesapeake that will positively benefit the entire Hampton Roads region,” said Governor Ralph Northam in a prepared statement.
It’s not clear from the press release if the Amazon facilities will be serving the local market, as many other Virginia facilities are doing, or if they will deliver goods to a broader geographic area. The statement also did not say how much Amazon will be investing in the distribution centers. Typically, state-of-the-art facilities require investments in the multiple tens of millions of dollars, sometimes more. Regardless, any time a company announces the creation of 1,500 jobs, that’s good news for Virginia. Continue reading
by James A. Bacon
Amazon.com, Inc., is pushing for an intelligence-sharing alliance with law enforcement and emergency-management agencies around its Arlington office complex, similar to arrangement it already has with its Seattle headquarters, reports the Washington Business Journal.
On the positive side, Arlington police and other participants could gain access to Amazon’s tech, best practices, and intelligence-gathering methods. On the other hand, deeper collaboration and information sharing between one of the nation’s biggest corporations and law-enforcement sounds kind of Orwellian.
“Amazon can take a leadership role in the region and establish a new NOVA/Washington DC Regional Security Council (modeled after the Greater Seattle Security Council),” wrote Florence Chung, in charge of Amazon’s public-private partnerships, in an Aug. 1 email. It would “promote collaboration and information sharing between security leadership from both the private sector and public sector.” Continue reading
NIMBYs against hemp. Farmers across Southside Virginia have turned to growing hemp (the THC-free version used in industrial applications) as a replacement crop for tobacco. But at least one Dinwiddie County neighborhood has risen in revolt. A hemp farm near the Lake Jordan neighborhood emits an offensive odor. The smell is so bad that it’s getting into peoples’ houses and permeating their clothing, reports the Progress-Index. “We’re worried that they’re going to continue planting around, which would basically mean [that] people will have to leave or just tolerate unbelievable skunk-like odors,” said Jarrod Reisweber, a director of the homeowners association. Daniel Lee, vice chairman of the Board of Supervisors held out the hope that, if solutions could be found to control the odor of hog farms, a remedy could be found for hemp as well.
Amazon offers $20 million toward affordable housing. Amazon is offering $20 million to the Arlington County Affordable Housing Investment Fund in exchange for permission to build a bigger headquarters complex than county zoning allows. The sum would amount to the greatest single infusion of money into the fund, reports the Washington Post. Amazon wants to increase the size of its proposed 22-story office towers from 1.56 million square feet to about 2.15 million square feet, reduce the number of parking spaces, and increase penthouse height. If we assume an average of $50 per square foot for office space in Arlington, Amazon’s concessions are worth about $30 million. That’s gross value. Once construction costs are excluded, Amazon would net significantly less. By that comparison, the $20 million offer seems pretty generous.
Virginia Schools turn to solar. An increasing number of public and private schools in Virginia are utilizing solar power. The number of schools with solar has nearly tripled since 2014 — from 20 to 86, reports the Richmond Times-Dispatch. A niche industry has evolved in which entrepreneurs package solar Public Purchase Agreements (PPAs) in which schools put no cash down and start generating positive cash flow from the first year. Pete Gretz with the Middlesex County school system says that ground-mounted solar saved just under $50,000 at its elementary school site. “There’s no drawback to this,” he said. “It’s completely a win-win.” Continue reading
Stephen S. Fuller
For decades, Stephen S. Fuller has been regarded as a regional asset.
His study of the state’s economy as a professor at George Mason University has been praised as insightful, especially his idea that Virginia needs to diversify from its traditional reliance on federal government spending.
So, it seemed odd that Fuller, who plans to retire in the near future, would get mired in a minor controversy over the ethics of an opinion piece he wrote for a local business newspaper.
One couldn’t ask for a more loaded sense of circumstances. Retail giant Amazon, which is building its second headquarters near Reagan National Airport with a payroll of thousands of people, wanted Fuller to write and pitch a story extolling the virtues of the multi-billion dollar project.
Amazon’s public relations people wanted the article out before the Arlington Board of Supervisors was due to consider $23 million in incentives for the plan in March.
Fuller agreed and made one bad mistake. He showed a draft of the work to Amazon and asked for their comments. He got some, rejected them and then tried to pitch it to the Opinions Section of The Washington Post. Continue reading
Everybody who pays attention to economic development in Virginia knows by now who Stephen Moret is. He is the Louisianan, recruited to turn around the Virginia Economic Development Partnership and rethink the state’s economic development strategy, who landed the Amazon HQ2 deal. Few are familiar, however, with the theoritician behind the practitioner, a man with a near-identical last name — Enrico Moretti.
Bacon’s Rebellion readers learned of Moretti, a Berkeley University professor, when I reviewed his book, “The New Geography of Jobs,” back in 2012. Moretti’s analysis of the primacy of labor markets in the Knowledge Economy — metropolitan areas with deeper, richer labor markets enjoy a tremendous competitive advantage in competing for both corporate investment and skilled/educated workers — has informed my economic-development commentary ever since.
Well, it turns out that Moret is a big fan of Moretti. Indeed, when fashioning a new economic development strategy for Virginia, Moret engaged Moretti for input. That insight emerges from an excellent article in the Washingtonian by Luke Mullins, “The Real Story of how Amazon Won Amazon’s HQ2.” Mullins’ article provides the most incisive reporting on how Virginia won HQ2 that I have yet seen. Continue reading
Source: Virginia Public Access Project
Speaking of alien overlords (see previous post)… I believe I’m correct in saying that Bacon’s Rebellion’s Steve Haner was the first pundit to note that if you like Amazon as a major player in Virginia’s economy, you’d better get accustomed to Amazon as a major player in Virginia politics. Now comes the Washington Business Journal noting that the Seattle-based technology giant and its political action committee have reported $75,000 in contributions to major political groups in Virginia.
Amazon has spread its money pretty evenly between Democrats and Republicans. I have posted the Virginia Public Access Project summary above.
Crowd at Arlington Board meeting Saturday March 16. Source: Arlington Now
The Arlington Board of Supervisors endured six hours of public hearing marked by local hooligans screaming at Amazon company representatives, then voted 5-0 Saturday for the modest local incentive package negotiated to bring the tech giant to a new location near Reagan National Airport and Crystal City.
A review of the final county staff presentation (here) puts the $51 million in identified incentives, spread out over several years, side by side with the $174 million in projected local taxes over the first 12 years, and the $342 million in local taxes over the first 16 years. Those assume Amazon hits 25,000 employees by around 2030 and 37,850 employees by around 2034, and ultimately occupies 6 million square feet of owned and rented office space. Continue reading
The road to the Silicon Swamp is paved with gold.
1-The Future. In 2011 Marc Andreessen, founder of Netscape, wrote an essay for the Wall Street Journal titled, “Why Software is Eating the World.” The eight years since Andreessen’s essay was published have served to vindicate, validate and verify the accuracy of his thesis. Yet while software eats the world, it doesn’t necessarily dine in the same old restaurants. Car making used to be centered in Detroit. Now Silicon Valley is the new Detroit. Not only are upstarts like Tesla centered in The Valley but traditional car manufacturers are heading west too. As Andreessen noted, traditional non-technology companies all need to become software companies in order to survive. Metropolitan areas with strong software skills will attract not only technology companies but non-technology companies as well. Embrace software or be eaten by it. The future belongs to those who code.
2-Ecosystem. Silicon Valley isn’t Bentonville, Arkansas. No one company dominates Silicon valley and therein lies its enduring strength. The Valley is an economic growth machine fueled by start-ups, spin-outs, mergers, acquisitions, bankruptcies and oceans of venture capital. The idea that NoVa’s benefits from the Amazon deal start and stop with Amazon is myopic. Talented employees will come to National Landing, work for Amazon, and then leave to start new ventures. The 25,000 Amazon jobs should be seen as a starting point rather than a final outcome. In fact, startups founded by Amazon veterans like Fugue are already operating in the area. Continue reading
Artist rendering of possible Crystal City to Reagan National Airport pedestrian bridge. Source: Crystal City Business Improvement District. Click for larger view.
One of the self-styled revolutionaries seeking to prevent Amazon from planting its second headquarters in Arlington County complains the local incentive package offered is $23 million. A research fellow at the Mercatus Center at George Mason University puts the total at $51 million. The actual monetary value is elusive and still to be determined.
Both critics appear in a story from the politically-charged “news” outlet The Blaze, showing Amazon’s local incentives are national news. So far, the much-larger state package, now approved by the 2019 General Assembly, has been the focus. That was before a band of New Yorkers spit out their piece of Amazon Pie, inspiring Northern Virginians of similar ideological bent to step up a local battle.
UPDATE (2 p.m.): The Arlington Board of Supervisors is set to vote on its agreement with Amazon on March 16, and here is the draft of the contract, just posted. Continue reading
Gilbert Bland, CEO of the GilJoy Group and the Urban League of Hampton Roads, sees opportunities everywhere.
Northern Virginia progressives opposed to subsidies for Amazon are grievance-mongering nihilists who have nothing to offer but spittle and bile. Far from helping the people they purport to speak for, if they were successful in scuttling the Amazon deal — the Arlington County Board still must vote on county subsidies — they would cause only harm.
Instead of trying to kill the deal, progressive whiners and complainers could be working to capture a share of the influx of public and private monies for the benefit of Arlington’s poor. An example they could emulate, but never will, is Gilbert T. Bland, chairman of the GilJoy Group and CEO of the Urban League of Hampton Roads, who, according to Virginia Business magazine, is leading initiatives to improve housing, education, health and workforce development for the region’s African-Americans.
But working within the establishment is not how progressives roll. Listen to Roshan Abraham with Our Revolution Arlington, as quoted by NBC News: Continue reading
Apple headquarters in Cupertino, California.
When Apple decided to build a new corporate headquarters, it designed a massive structure that resembled a flying saucer. The facility was an architectural marvel but it was entirely self contained, permitting no interaction with the surrounding community. It was impossible for employees to walk to work from home, and the campus was located far from public transit. For all practical purposes, the only commuting options were riding in cars, vans, and corporate buses.
Amazon might compete with Apple for the title of world’s most valuable company, but Amazon has a very different philosophy regarding real estate and facilities. Think of Amazon’s East Coast headquarters in Arlington and Alexandria as the un-Apple. Amazon does not regard itself as a company apart. To the contrary, the company wants to embed itself into the urban fabric. Here’s how the Washington Business Journal described Amazon’s thinking:
Danny Cendejas, an organizer with La ColectiVa, addresses concerns about HQ2. Photo credit: Washington Business Journal
Amazon’s decision to scrap a $2.5 billion investment in New York City has emboldened far-left progressives in Northern Virginia to oppose the e-commerce giant’s plans for plans to build an East Coast headquarters in Arlington. Critics of HQ2 are targeting $23 million that Arlington County will contribute to the pot of incentives, reports the Washington Business Journal.
For veteran observers of the Virginia General Assembly, a brief oral exchange between an Amazon executive and the chairman of the Senate Finance Committee on Wednesday was a bright flash of insight into Virginia’s new political landscape.
You do not see people, especially not people seeking a major expenditure of state funds, get that cavalier with the chair in that committee. The nervous laughter from the audience that followed, and then lingered for a few seconds, was exactly that: Laughter from nervous people.
A very big player has arrived on the scene in Virginia. Everybody else just moved back one or more steps in the pecking order. Live with it.
Source: Mercatus Center
George Mason University’s Mercatus Center does not like the deals struck by Virginia and New York to split Amazon, Inc.’s $5 billion HQ2 project. In a new commentary, the market-oriented research center raises a valid consideration rarely mentioned by politicians touting favored government expenditures of any type: alternate opportunity cost. Money spent on “A” is money not spent on “B.” Continue reading
Amazon, Inc.’s $2.5 billion investment in major new East Coast headquarters in Arlington/Alexandria will generate $14.2 billion in economic activity over the next 12 years, projects a new study by Richmond-based Chmura Economics & Analytics. While Amazon has committed to hiring 25,000 employees, indirect effects of the investment will create more than 59,000 jobs.
“The entire state of Virginia will benefit from Amazon’s decision to locate part of its second headquarters in Northern Virginia,” said Christine Chmura, the firm’s CEO and chief economist. The Richmond Times-Dispatch has the story here. Continue reading