Amazon looms larger in Oregon

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An Amazon fulfillment center in Tennessee

The e-commerce giant is marching south to Oregon.

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Amazon has already announced plans for three new fulfillment warehouses in Salem, Troutdale and North Portland.

Meanwhile business leaders and public officials eye a chance to win the latest economic development Olympics: a second Amazon headquarters (HQ2).

Fierce competition for HQ2 has spawned some bizarre behavior. Tucson, Arizona gifted a 21-foot cactus to Jeff Bezos while Wharton Business School assigned its students to pitch Philadelphia.

Although Portland seems an unlikely choice given its proximity to Seattle and lack of available downtown real estate, the metro area does meet many of the criteria outlined in Amazon’s request for proposals. 

“Businesses are taking it seriously,” says Cliff Allen, dean of the School of Business at Portland State University. “Public officials certainly are taking it seriously as well.”

Since Amazon’s announcement, the economic development agency Greater Portland, Inc. (GPI) has been meeting weekly with public and private partners, including the Columbia River Economic Development Council and Business Oregon, to coordinate a regional response.

Representatives will be visiting possible HQ2 sites today, GPI’s CEO Janet LaBar said. She said the group is scouting locations within seven counties in the Portland area.

Amazon declined to comment on the likelihood of locating its second campus in Portland. A spokesperson pointed to a press release announcing that the fulfillment centers will create 3,500 jobs.

Amazon’s expanding footprint here raises several questions: What will the state gain from the company’s investment in Oregon? How much of our tax base are we willing to share in exchange for jobs and economic development? Does the e-commerce giant align with Oregon values supporting small independent retailers?

How much is Amazon worth to Oregon?

To attract the fulfillment centers, Oregon officials offered Amazon generous tax incentives.

For its Troutdale center, slated to open next year, Amazon will receive $9.6 million over the next five years. Another facility in Salem will net the online retail giant an estimated $3.6 million over three years.

Troutdale Council Member Larry Morgan, one of the key players involved in negotiating tax incentives with Amazon, views the corporation as a progressive company whose business practices will benefit minority groups. 

“I’m over the moon about not only the opportunity that Amazon will create jobs,” Morgan says, “but that they’re going to embrace Oregon values in terms of paying a living wage and offering equal opportunity to minorities and women. Amazon’s commitment is to the 99 percent. I’m going to hold them accountable.”

Amazon Books at Washington Square Tigard Oregon 2017

Economist Tim Duy says tax incentives are a necessary part of doing business with large corporations like Amazon. Although incentives must be distributed “fairly and judiciously,” they are often worth it, he says.

Amazon is more likely to become a long-term player in the Portland business scene than say, a startup. Additionally, the company could reinvest in infrastructure that becomes a public good.

“Unfortunately, competition for firms across states has relied on these tax breaks,” says Duy. “We do need to take the opportunities where we find them.”

Some Oregon business leaders and experts, however, criticize such tax breaks as wasteful spending.

Juan Carlos Ordonez, communications director with the left-leaning think tank Oregon Center for Public Policy, said research shows tax incentives for big corporations like Amazon are overkill.

“Granting Amazon a lot of carrots is a bad idea for Portland,” he said. “Most tax subsidies for corporations are paying them for things they would do anyway. By frittering away our tax base you’re making it hard to have public services like roads and schools.”

Other metro areas have managed to attract large companies without focusing on financial incentives, LaBar said. She added that Amazon’s acquisition of Elemental Technologies (now AWS Elemental) proved creative talent was as much of a lure as financial incentives.

“There’s a way for us to do this differently,” LaBar said. “That company [Amazon] doesn’t need incentives.”

The Headquarters

During the recent GPI summit, LeBar noted that growth in the region is driven by existing companies and that few large corporations have located headquarters in Portland.

That is especially true in the tech industry. Unlike Seattle, Portland does not host the headquarters of tech giants the likes of Google, Apple, or yes, Amazon.

If HQ2 landed here, the move would have a ripple effect on local businesses, possibly catalyze huge investment in transportation networks, housing and other infrastructure and alter the company’s existing relationship with the city.  

NBBJ AmazonInTheRegrade 6401

Amazon’s Headquarters in downtown Seattle. Image credit: NBBJ / Sean Airhart

“That’s the question now,” Allen said. “Do we continue the current relationship with Amazon, or do something huge?”

It’s unclear what kind of tax credit package policymakers would put together to attract HQ2.

Does Amazon align with Oregon values?

Oregon values its “purpose-driven,” socially conscious business model, said Terry Starbucker, co-founder of Built Oregon, a nonprofit dedicated to supporting local businesses.

Oregon consumers remain loyal to companies that recycle, protect minority rights and minimize their carbon footprint.

“If Amazon doesn’t go down that road,” he said, “things are going to fray for them.”

Amazon FulfillmentCtr

He declined to comment on Amazon’s business practices or  HQ2.

Business for a Better Portland, the local business association, did not respond to a request for comment in time for this story.

Amazon’s progress down that road has been disputed. The company has been criticized for unsustainable practicies such as excessive packaging, as well as  grueling working conditions inside fulfillment centers. 

On the other hand, Amazon has been working for years on fixing the packaging through reviews from its “packaging feedback program.” The fulfillment center jobs pay a living wage ($15 an hour), offer health benefits and come with a generous education award.

Troutdale’s Morgan said these benefits suggest Amazon will meet Oregon expectations for equity and inclusion.

“I advocated for some investments in people,” he said. “We give a lot of tax breaks to those at the top, and I wanted to maker sure others get a fair shake.”

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