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Memphis area awaits outcome of Amazon headquarters ‘sweepstakes’

By JACK WEATHERLY

Memphis is part of the stampede of U.S. cities bidding for Amazon’s second headquarters with 50,000 potentially jobs and $5 billion in corporate investment.

Some counties across the Mississippi line stand to benefit from the promised gargantuan development.

Those counties help the city meet one requirement of the giant online retailer, that of having a population of at least 1 million. The Memphis metropolitan statistical area stood at 1.34 million as of 2016.

That includes DeSoto, Marshall, Tunica, Tate and Benton counties in Mississippi.

The Mississippi Development Authority said in an email asking for comment on the potential impact of the Amazon headquarters that it “does not discuss what may or may not be an economic development project.”

Phil Trenary, president and chief executive officer for the Greater Memphis Chamber of Commerce, said “whether intentional or not, it is true” that the pro-business organization speaks for the populace that falls under the metropolitan umbrella.

“The Greater Memphis Chamber is the best marketing arm for north Mississippi,” Trenary said.

And while the chamber has become the official spokesman for the recruitment effort, the Memphis City Council on Oct. 3 approved $60 million in cash incentives.

Yet that pales in comparison with New Jersey’s offer of $5 billion. The University of Texas at Dallas wants to give Amazon 100 acres to next to its campus.

Trenary acknowledged that many rankings issued since Amazon made its announcement in September don’t list Memphis among the leaders, based on the criteria set by the Seattle-base company: population size, stable business climate, ability to attract technical talent and an international airport within a 45-minute drive.

Yet he said the chamber has seen two studies that put Memphis in the top five.

Business Insider included Memphis and Nashville in the top eight cities in a Sept. 17 article.

“If we get them here [to visit], our chances go way up,” Trenary said in a Tuesday phone interview.

“To live here and experience Memphis . . . is a much different experience than some might expect,” Trenary said.

While the city’s strengths and its current $9 billion in commercial development underway – comprise a long list, there are some shortcomings, he said.

Memphis International Airport lost its hubs for Northwest Airlines and Delta Air Line.

At one time there were 90 nonstop flights at the airport, but now the number is about 30, he said. “It would take a little faith” that those hubs would grow, he said.

Memphis has the “cool factor” and is attracting millennials from places such as Austin, Nashville and San Francisco, according to Trenary.

Cost of living is low compared with many of the competing cities, which is another magnet, he said.

But the best asset to attract Amazon is FedEx, the overnight shipping giant based in Memphis and has more than 30,000 employees there, according to Trenary.

While there are some scenarios that see Amazon becoming a FedEx competitor, “any analyst who takes a look at that realizes in a hurry that’s a “long, long, long way off.”

It could take Amazon years to establish such a service, John Eade, president of Argus Research, is quoted as saying in a CNBC article.

Fred Smith, president of FedEx, said flatly in a March interview with Fortune.com: “Amazon is a retailer. We’re a transportation company.”

That was six months before Jeff Bezos announced his plan for a second headquarters.

In early November, Chris Allen, a FedEx spokesman, told the Memphis Business Journal that he “would understand if Memphis is under consideration.”

But he couched Amazon as a customer. “We have many customers that have added distribution centers or other significant facilities in Memphis, as it provides immediate access to the FedEx global network.”

FedEx reports that Amazon provides 2.5 percent of its revenue.

While Amazon has built a small fleet by leasing large jets, it would be at odds with anyone shipping via Amazon internationally because shipping manifests would reveal proprietary information to competing retailers, according to Flexport blogger Ryan Petersen.

Yet the fleet could make sense domestically, Petersen wrote.

Amazon has not been explicit in saying it why needs a second, equal headquarters. But its Seattle operations employ 40,000 and the rapidly growing company, which earlier this year bought Whole Foods, may simply be running out of space.

The online retailer says it would grow its work force in the new headquarters in 15 years, likewise for the projected investment of $5 billion.

Some are skeptical of those numbers.

But Amazon is not coy about what it wants.

Its request for proposals states: “Incentives offered by the state/province [theoretically, Canada and Mexico are potential sites] and local communities to offset initial capital outlay and ongoing operational costs will be significant factors in the decision-making process.”

The fact that Tennessee has no income tax weighs in favor of Memphis,

Trenary said. Likewise, Austin can make the same case for Texas.

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