CITY FAILS TO MAKE AMAZON SHORTLIST
Posted January 18, 2018 9:27 p.m. EST
The online retailer Amazon.com eliminated Houston as a candidate for its second headquarters on Thursday, making it the largest U.S. city taken out of the running for the coveted $5 billion campus that would house a skilled and well-paid workforce of up to 50,000.
The Seattle tech giant's snub of Houston was all the more stinging for its inclusion of Austin and Dallas - not to mention Newark, N.J. - on a short list of 20 potential sites. Houston was the only one of the nation's four biggest cities passed over by Amazon, a humbling moment for a community that prides itself on its stature as the world's energy capital and boasts a vibrant hub of international trade, an ethnically diverse population and the nation's largest medical center.
But the loss underscored disadvantages the city has struggled with for years, such as a legacy of underachievement in building a thriving technology sector, the dominance of cars over mass transit, and its seemingly unshakable reputation as a fossil fuel city with little to offer but concrete and cubicles.
"As disappointing and heartbreaking as this is, it serves as a wake-up call that we must move at a much quicker pace," Houston Mayor Sylvester Turner said. "The city is well positioned, but it's also is an indication that there is a lot of work that still needs to be done."
Last fall, in the wake of Hurricane Harvey, a group led by the Greater Houston Partnership moved to lure the Seattle tech giant here and put together a pitch that highlighted the region's diversity, nascent startup scene, low taxes, and relatively low cost of living. The pitch also promoted Houston as the ideal platform for Amazon's forward-thinking gurus to make breakthroughs in energy, health care and manufacturing.
The bid hinged on what Houston officials called the Innovation Corridor, a four-mile stretch along Metro's light rail line between downtown and the Texas Medical Center. That area includes Rice University, tech startups, venture capital firms and some of the city's largest companies, as well as museums, restaurants and housing.
Houston's was one more than 200 proposals from North American cities, including tech centers like Austin and Boston. Analysts said Houston was likely excluded because it doesn't have much of a startup ecosystem. It ranked 39th in the U.S. in venture capital activity, even though it's the fourth-largest U.S. city, according to Rice University's McNair Center. And it hasn't invested enough in mass transportation, which was one of Amazon's key specifications.
"We're not behaving like a large metropolitan city," said Ed Egan, director of the McNair Center for Entrepreneurship and Innovation at Rice University. "Growth is happening in technology. Oil is crucial, but we need to be able to diversify and be a part of America's future."
In terms of spending, Houston has historically favored wide freeways over public transportation. In October, Moody's Analytics ranked Houston No. 52 on the cities it believed were most likely to win Amazon's campus, in large part because of long commutes and the low percentage of workers - just 2 percent - using transit.
"Amazon prefers to have public transportation - that's an important qualification," said Adam Ozimek, a senior economist at Moody's Analytics. "You get the sense they didn't want to build a 50,000-spot parking garage."
What's more, Houston's economy has diversified, but outsiders still see it as an oil and gas-dominated region. That alone didn't preclude Houston from Amazon's wish list. Local leaders said the city could have used Houston as a laboratory to tackle some of the world's biggest challenges, including the sustainability of the world's energy resources and climate change.
But while Houston's workforce is brimming with advanced degrees in petroleum engineering, geology and medical science, it's growing a relatively small cohort of software engineers, analysts said.
Bob Harvey, chief executive of the Greater Houston Partnership, said the group put together a compelling pitch for Amazon, but acknowledged the city couldn't offer the same density of digital talent and companies many of its competitors. Austin, for example, he said, is a smaller city, but is home to nearly 6,000 tech companies, boasting a large cohort of software engineers as well as campuses and offices owned by Apple, Facebook, Samsung, Google and Dell.
Dallas, a hotbed of corporate relocations in recent years, is home to Texas Instruments and AT&T, which has built deep pool of high-tech talent. Dallas also has well as an immense transportation and logistics sector.
Harvey said Houston has a technology core among its energy, health care and manufacturing industries, but local leaders must work with institutions of higher education to develop and invest in programs that will yield bigger crops of tech-savvy workers, and bolster startup companies. "When you don't make a top 20 list of an innovative company like Amazon," Harvey said in a statement, "you know you have work to do."