Why Kansas City didn’t make Amazon’s top 20 list for new headquarters

Many Kansas Citians were disappointed Thursday when the region did not make Amazon’s list of 20 finalists for the company’s massive second headquarters, known as HQ2.

Not making the cut was a letdown. But Kansas Citians should not despair: The region learned a lot about itself during the process.

There is more to glean from this experience, and local leaders area should study the outcome carefully.

Kansas City was one of nearly 240 communities in the running for HQ2. The area offered a solid, well-considered proposal. Mayor Sly James good-naturedly engaged in a goofy Amazon-based publicity stunt as well.

But the company made clear from the outset that its decision would be based on objective benchmarks: a business-friendly environment, a highly-trained technical workforce, financial incentives, transportation infrastructure and more.

On Thursday, Amazon did not explain why Kansas City — or any other bidder — fell short in these areas. But we can make a guess or two:

▪ Incentives.

Kansas City appears to have offered a standard package of financial incentives for the project, including tax credits, abatements, low-cost financing and the like. Officials in Missouri and Kansas said they would help as well.

But it’s unlikely the area’s package could compete with the $7 billion New Jersey apparently offered Amazon if the company builds there. Newark, by the way, made the cut.

It will be tempting for local boosters to suggest more local incentives would make the region more competitive for future projects. That would be a mistake. Kansas City must balance the cost of incentives against the benefit for the area when it hands out goodies to private firms such as Amazon.

In this case, matching New Jersey’s $7 billion would have been foolish. Amazon’s HQ2 is an important project, but not that important.

▪ Labor.

Amazon’s request for proposals was clear: “A highly educated labor pool is critical and a strong university system is required,” the company said.

Kansas City’s tech community is strong and growing. Yet Boston, which made the cut, undoubtedly offers a broader tech workforce. So do several other cities on Amazon’s list of finalists.

That’s because those cities and states invest in higher education. Lawmakers in Kansas and Missouri continue to cut budgets for post-secondary schools, raising tuition and chasing would-be tech students to other communities.

We’ve been told repeatedly that the Kansas City region is not producing the tech-savvy workforce businesses need — not just for Amazon, but for most new companies. Local goals for 2018 should include a sharper focus on this urgent problem.

▪ Logistics.

Amazon said the winning community would need to provide efficient connections by highway and air. It’s likely Kansas City’s bid met the company’s needs for ground connections.

Work on the airport is another matter. Denver made Amazon’s list, likely in part because of its robust air travel options. So did New York, Atlanta, Los Angeles and Dallas, all cities with strong nonstop service across the nation and the world.

It was always wrong to assume Amazon would come to Kansas City if voters simply approved a new terminal at KCI. Instead, Kansas City must use the new terminal as a way to expand travel options for businesses if it wants to seriously compete for firms like Amazon.

Kansas City also lacks significant fixed-rail mass transit, likely a liability in Amazon’s estimation. On Wednesday, the Greater Kansas City Chamber of Commerce said it wants to focus on work-related transportation in the coming year.

It’s worthy goal. A warning: Fixed-rail transit can be very expensive. That cost must be compared to the benefits from an expanded system.

▪ Stability.

Amazon said it wanted “a stable and business-friendly environment.”

It’s hard to believe the firm was unaware of the ongoing battle over who will build the new terminal at KCI. Would Amazon want to do business with a city so incapable of deciding that issue?

Amazon also would surely know about the budget problems in Kansas and the growing discord and disorder in Missouri government.

Stumbles at the state and local government level are not helpful. In a close competition, dysfunction can be a disaster.

▪ Geography.

There is no shame in landing on the close-but-no-cigar Amazon list. St. Louis lost out, too. So did Minneapolis and Cleveland, Houston and San Francisco. Orlando? Tampa? Not on the list.

In fact, a look at Amazon’s picks shows something of a preference for cities east of the Mississippi. Of the 20 finalists, only four are west of KC (and two of them, Dallas and Austin, are just barely west of us).

Moving Kansas City east is not an option.

But Indianapolis, Columbus, Raleigh and Toronto made the cut. Those cities are comparable to Kansas City in many ways, yet offered something the region could not.

To the best of its ability, Kansas City should study those cities, and that reality, if it wants to compete for major projects like HQ2.

That information is worth knowing — for the next time.

This story was originally published January 18, 2018 at 1:34 PM with the headline "Why Kansas City didn’t make Amazon’s top 20 list for new headquarters."