Will Amazon Build Its New HQ in Detroit?
Since Amazon’s announcement that it is searching for a city to build its new HQ – mayors across the US have been courting the tech giant in a bid to bring a short-term boost to economic prosperity in their region. Whilst there are many credible candidates, one city immediately that would surely be the most symbolic comes to mind. The totem of a forgotten America, shadowed by coastal tech and financial sector prosperity: Detroit.
The motor city’s legacy as a manufacturing heartland turned upside down by the globalisation of the car industry still lingers. This was reflected in the city’s rich musical lineage; as the boom years of the 50s gave rise to the joyful sounds of Motown, the decline of the city was equally soundtracked by the primitive Garage Rock of MC5 and The Stooges. By the 1980s, the city’s abandoned warehouses provided the incubation period for the glacial Techno of Derek May and co, before diffusing into the post-industrial corners of the world.
The decline in manufacturing was one of the many reasons attributed to Donald Trump’s unexpected Presidential victory. The real estate mogul’s campaign broke the Democratic Party’s Rust Belt stronghold across Wisconsin, Michigan, Pennsylvania, a support base that had largely stood firm since Ronald Reagan’s 49 state triumph in 1984. Hillary Clinton barely campaigned there until the final weeks of the election, by which point it was too late. Leveraging a public image built on reality TV as a successful business man, Trump ran as a ‘jobs creator’, an alluring prospect to those in a region whose decreasing employment rate obscures a harsher reality that well-paid manufacturing jobs have since given way to service employment and ‘gig economy’ shifts. Documentary film maker and Michigan native Michael Moore was among the first to identify this trend’s impact on the election, warning of Trump’s appeal within this demographic as early as 2015. Although the margins were thin (just 40,000 votes across the region going the other way would have given Clinton a narrow electoral college victory), these states ultimately switched to Trump.
Aside from these issues, there are certainly positive influences drawing Amazon to the motor city:
- Influential patrons: I recently got into a discussion at a hotel bar with a couple from Michigan. In discussing the city, one name kept coming up: Dan Gilbert. The Billionaire has become the symbol of the city’s rejuvenation, buying up real estate and catering to all resident’s needs (laundry, retail) through his various enterprises. He was painted as a mythical figure, a power broker within the city, and is already courting Amazon over the prospect of building their HQ in the city.
- Impetus for Michigan’s start-up community: Tech history reveals it often just takes one company to catalyse a dramatic shift in a region’s fortunes. Shockley’s semiconductors move to what we now call Silicon Valley resulted in the birth of Bell Labs and launched hundreds of companies.
However, Amazon will run into issues regarding human capital in tech employment. Detroit’s start-up culture is already flourishing, with skyrocketing rents in New York and LA drawing artists and entrepreneurs to the city in recent years to capitalise on cheaper costs of living. However, whilst the HQ will create local jobs, Amazon will still want to staff certain departments with graduates from the main tech universities. Migrating those from MIT (by American standards, a brisk 10 hour road trip west from Massachusetts) may prove easier, but the greater challenge for Amazon would be convincing Caltech and Stanford graduates to leave sunny California for a region they may feel increasingly ideologically divorced from. Leveraging Detroit’s cultural factor, both past and present, may prove critical here.
There is additional sobering news. Amazon may well want to move to Detroit or another Midwestern city than anywhere else, yet there is an elephant in the room when it comes to such a decision. Donald Trump’s promise of renewed job prosperity in the region means every positive development across these states serves as a confirmation in the minds of voters of his divisive platform, one of anti-globalisation that threatens Amazon’s present incarnation. It is no secret that Bezos and Trump share a mutual resentment and the Amazon founder and CEO may prove reticent to do this in the short-term, less it appears a concession to Trumpian ideology and thus aid the President in his 2020 re-election campaign. As Amazon grows, a Midwestern gesture may be saved for a few years down the line as bulwark against criticisms of the company’s size and influence across various industry’s (e-commerce, groceries, Hollywood, advertising etc). This trajectory seems inevitably on-course for anti-trust suites. As a service to a region hardest hit by the world-shift that Jeff Bezos’s company have embodied and so lucratively benefited from, Amazon would amply benefit from the PR angle of such a gesture.