Expectations fade for Toronto's HQ2 bid as US leaders' reports emerge

Toronto's chances of becoming the headquarters of the second global headquarters of Amazon.com Inc. seem to diminish, as the city's bid executives claim to have had no contact from the company for decades. months, although there are reports of late talks with three US cities have emerged.

The e-commerce giant is expected to choose a host city for its planned US $ 5 billion (HQ2) and 50,000 employees by the end of the year. Amazon officials traveled to the Toronto area in the spring, according to regional investment agency Toronto Global, who piloted the proposal, but there has been little communication since. The Toronto area was the only remaining Canadian competitor after 238 bidders were selected for 20 finalists earlier this year.

"We received an e-mail from them this summer informing them of the process," said Toby Lennox, Toronto Global President and CEO, who has already begun to refer to his offer in the past: "C & # 39, was an excellent opportunity for us. "Mr. Lennox now sees QG2 as offering a calling card to attract investment to the region. "It gave us a platform to promote the Toronto area as a whole, in a way we would never have had," he said.

Similarly, Amazon has not contacted Toronto Mayor John Tory since he spoke to company officials in the spring, his office said. Amazon has not responded to requests for comments.

According to reports in the Wall Street Journal and the Washington Post this weekend, Crystal City of New York, Dallas, and Northern Virginia, in the Washington area, is in talks with Amazon in preparation for possible further advancement. the head office 2; An article in Monday's Review suggested that QG2 could be split between two cities. Fourteen months after Amazon invited the North American jurisdictions to submit proposals to host the second headquarters, they were looking for contenders with a large pool of labor, enough real estate and an "environment". and a stable, business-friendly tax structure with incentives, including taxes, to offset costs.

Some of the US finalists have done everything possible to offer incentives to Amazon, such as the widely announced bid in New Jersey for a tax credit of up to $ 7 billion (US) if the company chooses Newark. Toronto and Canada are now seen as a long-term plan for HQ2: In addition to months of silence from the retailer and the cloud service provider, leading Canadian bidders have not offered tax-efficient treatment to Amazon in their proposals.

However, a series of email exchanges by the Globe and Mail shows that Global Affairs Canada staff worked for weeks in September and October to manage numbers and coordinate existing incentives for jurisdictions that planned to bid on QG2.

Under the leadership of Marie-France Paquet, Chief Economist, Global Economic, Investment and Trade staff worked tirelessly to convince Amazon to create its head office here. While unique federal tax breaks were on the agenda, GAC staff compiled lists of pre-existing credits, grants, and funds, as well as complementary government and third-party statistics, to kick-start inch to at least 11 Canadian bidders.

More than 7,000 Canadians work for Amazon across the country, in technology development, warehousing and cloud services, and 6,000 additional jobs have already been announced. But regardless of which city or region wins, QG2, which has 50,000 employees, would also experience significant urban and economic change. The subsequent investment would spill over to all facets of city life, from residential and commercial real estate to public transit and education systems. The company said its investments in its hometown of Seattle contributed to an additional $ 38 billion (US) in the local economy between 2010 and 2016.

E-mail exchanges between federal employees were received from a request for access to information provided to the Globe and Mail by NDP ethics critic Charlie Angus. He said he was frustrated that many of Global Affair's discussions focused on the low cost of Canadian technology talent compared to American workers, which has emerged in several Canadian offerings, including those in Toronto and Vancouver. According to Angus, this approach to worker compensation "is in competition with Eastern Europe and South Asia. It's not the economics of innovation.

In an interview, Lennox said that, without any exclusive incentive, the bid for Toronto 2's head office aimed to position his talent in an appealing way for Amazon, with the help of payroll badysis figures that he He had received from the federal government. The quest for Global Affairs staff has led departments, including Transport Canada; Innovation, Science and Economic Development Canada; the Privy Council Office; and Statistics Canada. "They immediately said," Whatever help you need, we will provide you, "said Lennox.

A number that sparked a lot of discussion in e-mails concerned health care economies. Assuming the project employs 50,000 people whose average salary is US $ 100,000, officials have calculated that Amazon could save up to US $ 600 million a year in health and medical expenses. employee benefits, based on the "best extrapolation we can do". an average cost savings of 12% for each employee, largely due to Canada's universal health care system.

This $ 600 million in particular appeared four times in the QG2 proposal for the Toronto area. Global Affairs also contacted an anonymous member of the Boston Consulting Group, who said it was "compelling statistics," a "more global view of lower operating costs" in Canada would be between $ 1 billion and $ 1.5 billion. Whatever the case may be, the $ 600 million figure has become the main topic of discussion and has also featured in city offers such as Vancouver and Halifax.

"All the known bidding cities have received the same information," Global Affairs spokesman Brendan Sutton said in an e-mail about the offers. "Attracting, retaining and expanding foreign investment is a fundamental mandate of Global Affairs Canada, and we have close working relationships with provinces, territories and cities on investment issues. foreigners. "

At the same time, the minority owner of an unused 62-acre lot, located just outside the city's downtown core, called East Harbor, was considered a formidable opponent of HQ2's Toronto headquarters. Mark Cowie, an investor who is also a leader of Colliers International, said the development plans were underway "regardless of the final decision made by Amazon."

With a report by Rachelle Younglai