Amazon’s HQ2 should serve as a wakeup call for St. Louis region
By ALAN J. ORTBALS
About 2000, the American Water Company, headquartered in New Jersey, decided that it needed to create one customer service center that would handle calls for all of its subsidiaries. Through companies like Illinois American, Missouri American, etc. they served more than 100 cities in about 18 states scattered across the nation. The company’s president and CEO had just one requirement — it had to be located in one of the cities that the company served. They hired a consulting firm to determine which one of those would be best.
Obviously, that was a very broad parameter but ultimately the recommendation came back — Alton, Ill. You might wonder why Alton percolated to the top after a thorough, empirical analysis of all the contenders. The answer was workforce. Through collaboration with the client, the consultant created a profile of the model employee and compared that profile to the demographics of the various communities.
It’s important to note that this analysis was done secretly. None of the cities were aware of the company’s intentions or the consultant’s work. So, it was not a decision based on slick sales pitches or a cornucopia of incentives — just workforce demographics. Where would the company find the kind of people it needed in the quantity it required? American Water was projecting employment of 500.
Last month, Amazon announced that it was seeking a community in which to locate a second headquarters. With a projected investment of $5 billion in an 8 million-square-foot facility that would employ 50,000 people, cities from coast to coast are justifiably excited. Landing it would be a wonderful thing for St. Louis or any of the other 100 plus cities throwing their hats in the ring. But, my guess is that — like American Water Company 17 years ago — they already have a shortlist and that list is based on workforce. The other criteria on their checklist: a metro population of more than 1 million people, an international airport, proximity to interstates and arterial roads and mass transit to site will all be found in a metro area that can boast the kind of workforce Amazon requires.
These are not jobs driving forklifts and boxing products like at the Edwardsville fulfillment centers. Amazon is a high-tech company that is constantly pushing the envelope and its headquarters is the heart of those operations. For example, last year Amazon was actually granted a patent for floating warehouses that would hover in the sky with product zooming in and out via drone. Many of the 50,000 projected employees will need to be the kind of people who can envision, design, program and manage these kinds of futuristic systems. In other words, they will need a lot of highly educated, technically astute people to fulfill tomorrow’s demands.
So, how does St. Louis stack up?
None of the cities that meet the threshold requirements have 50,000 such people sitting around collecting unemployment checks but Amazon will be looking for a strong base of them. To give you some perspective, New York has 671,000 people employed in STEM fields and other advanced industries; Chicago, 426,000; Boston, 355,000; Detroit, 302,000; and Atlanta has 230,000. St. Louis, by contrast, has just 114,000.
But the base won’t be enough. They’ll also need a strong pipeline of colleges and universities graduating students in those fields and feeding them into jobs. Here we do OK with local schools like SLU, WashU, and SIUE, et al and those close by in Champaign, Carbondale, Columbia and Rolla.
But, third and very important, they will also need a metropolitan area that is attractive to the young techies they need to attract. Millennials tend to be more educated, more technically astute, more socially progressive, politically liberal, and accepting of diversity in gender, race, ethnicity and sexual orientation. This “whatever-floats-your-boat” generation is attracted to those areas that mirror their values. Niche.com ranks St. Louis 54th on its list of places millennials want to go.
This is not meant to disparage St. Louis. I love my hometown (regionally speaking) and, with the exception of one year away at college, have never lived anywhere else. We won’t win the prize this time but I think the Amazon request for proposals should serve as a wakeup call. We need to strive to be the kind of city that would make their short list. If we can do that, we’ll have all kinds of companies beating a path to our door.
Alan J. Ortbals is president and publisher of the Illinois Business Journal. He can be reached at firstname.lastname@example.org or (618) 659-1977.