Talent & higher education: What drove Amazon to Virginia
When Amazon sought proposals for its new corporate headquarters in late 2017, cities across the country fought tooth and nail to become the home of HQ2.
The selection process was a long, tedious and highly competitive affair. Bidders engaged in endless rounds of promotional campaigns, some packaged with outrageous gimmicks and others with copious gift offers from free sandwiches to Amazonians to a 21-foot statue of a cactus.
By end October 2017, an impressive 238 proposals were put forward to Amazon.
What was driving their interest?
Cities knew that playing host to Amazon HQ2 would bring them big benefits. For one, Amazon had said construction alone would create 50,000 jobs and see US$5 billion spent.
In Maryland, a study by the Baltimore-based Sage Policy Group said Amazon HQ2 would deliver US$17 billion in economic benefit per year if the firm accepted the state’s proposal. This was inclusive of US$7.7 billion in new wages that the state could add to its tax roll, on top of creating at least 101,000 new jobs.
But probably the best measure of impact was how Amazon’s presence had helped shape the economic landscape of Seattle, the home of its first headquarters. There, the firm reportedly invested more than US$4 billion on real estate and hired more than 45,000 employees, with an average salary of US$110,000.
By Amazon’s estimates, on top of these direct hires, a knock-on effect of its investments has been the generation of an additional 53,000 jobs for city folk.
More than that, being an Amazon employee also means gaining access to the tech behemoth’s growing list of education benefits programmes. The Amazon Technical Academy, for example, is a training and job placement programme that equips nontechnical Amazon employees with the essential skills to transition into software engineering careers.
The Machine Learning University is an initiative to help Amazonians with technology and coding backgrounds gain skills in machine learning. Other similar initiatives include the Associate2Tech, Career Choice, Amazon Apprenticeship and AWS training and certification programmes.
The company has pledged to upskill 100,000 employees by 2025, with a US$700 million investment into training programmes.
Considering these opportunities, it’s no wonder why despite the many criticisms and warnings that the Amazon HQ2 project could become a money-losing proposition and turn into an economic drag on its host city, administrators from Boston to Los Angeles still fought hard for a slice of the multibillion-dollar Amazon economic pie.
In the end, Virginia, with its offer of US$573 million in tax breaks, US$23 million in cash, and a series of other incentives, emerged the sole winner of the Amazon HQ2 bid. By end-2018, after a year-long hunt, it was confirmed that Amazon HQ2 would occupy a sprawling complex in Crystal City, Arlington county.
Virginia’s two secret weapons
In a recent talk organised by University of Virginia’s School of Continuing and Professional Studies, Stephen Moret, the chief architect of Amazon’s deal with the city, revealed how Virginia beat out over 200 competitors to win the bid.
According to the city’s chief economic development official, Virginia snagged the deal because it had two secret weapons: a world-class higher education system and a high potential workforce.
“While it is true that we ultimately put together something we were really proud of, higher education helped make the difference,” he was quoted saying in a UVA Today report.
Moret explained that when the offer was being put together for HQ2, he knew just offering the most tax breaks wouldn’t win it for the city.
But the state’s excellent set of public universities and their ability to build a future pipeline of computer science talent was what really set Virginia apart from the others.
A region capable of supplying a steady stream of tech talents was exactly what Amazon would need for the success of HQ2.
“Talent is the biggest driver by far,” Moret said.
And education, he added, is as always, the key to workforce development.
This isn’t limited to the traditional two or four-year degree and post-baccalaureate programmes but must include certificate and training programmes for adult learners, which provides continuous upskilling and reskilling opportunities for modern workforces.
The $1 billion higher education lure
To lure Amazon into the city, Virginia put forward an ambitious US$1 billion package to expand tech higher education in the state over the next 20 years.
In November 2019, the governor’s office inked agreements with the city’s 11 universities for the Tech Talent Investment Programme, which aims to raise the number of Bachelor’s and Master’s degrees awarded in the computer sciences and other related fields by 25,000 to 31,000 during the two-decade period.
These graduates would get a direct line to Amazon, which is now expected to hire at least 25,000 people to fill jobs at its new urban campus in Arlington.
The universities will receive their respective share of a total US$961.5 million in state funding for the expansion of their degree programmes and construction of new facilities. Funding will be awarded on an annual basis and is subject to the institutions meeting certain targets set by the state.
Virginia’s public universities currently award about 1,300 bachelor’s degrees and 400 master’s degrees in computer science per year.
The Amazon effect on higher education
Already, Amazon’s coming to Arlington county has had a massive impact on higher education.
In addition to expanding the tech graduate pool, there’s also the planned construction of the US$1 billion Innovation Campus for Virginia Tech in Alexandria, just two miles south of the site for the Amazon HQ2, and the expansion of George Mason University’s tech programme in Arlington.
These plans also fall in line with recent efforts by the University of Virginia (UVA), which has been working to increase its footprint in Northern Virginia. The university, ranked among the nation’s top 30 national institutions, was especially stoked when Amazon said it was coming to town.
With Northern Virginia already home to the largest concentration of UVA graduates and Amazon already a key employer of UVA talents, HQ2’s presence in Arlington county only provided further impetus for the university to advance its expansion plans.
“Amazon’s new location allows us to continue and strengthen existing relationships. For example, the company has been a major employer of UVA talent for some time,” Gregory Fairchild, UVA’s first appointed director of Northern Virginia operations, said in November 2018 when Amazon confirmed its city pick.
“Likewise, we share a number of related research interests and classroom engagements. Certainly, these involve technology-related pursuits and extend from there across the academic enterprise.
UVA President Jim Ryan further emphasised this, saying UVA would continue to sharpen its focus on growing its Northern Virginia presence.
He listed several recent efforts by the university that would contribute to the talent-building pipeline.
The Darden School of Business, for example, has opened new facilities in Rosslyn, and the Medical School is partnering with Inova to open a new campus in Northern Virginia.
UVA is also working with Inova, George Mason University and the commonwealth to launch the Genomics and Bioinformatics Research Institute to help advance clinical care through precision medicine.
The UVA School of Continuing and Professional Studies, meanwhile, provides certificates online in business and technology to help working adults advance in their careers, while its Data Science Institute offers degree programmes related to data analytics.
In addition, the McIntire School of Commerce now offers a joint degree in business analytics with Darden and a degree in management of information technology on its own. And finally, UVA’s Curry School of Education, offers multiple part-time degrees for students in the area.
“We look forward to working with Amazon to see how we can best work together to create opportunities for their existing and potential employees in the Northern Virginia area,” Ryan said.
“We also look forward to working with our colleagues at Virginia Tech and George Mason to continue to strengthen Virginia’s economy and create economic opportunity for all Virginians.”
On December 14, 2019, a redevelopment plan for Amazon HQ2 received unanimous approval from the Arlington County Board, clearing the way for the first phase of the e-tailer’s new headquarters that will occupy 6.2 acres of Metropolitan Park near Pentagon City.
Once built, the Amazon HQ2 will occupy a sprawling 2.1-million square foot mixed-used building at 1232-1450 South Eads Street. Two 22-storey energy-efficient office towers will have entrances on South Eads Street and front an expanded public space within Metropolitan Park.
The structure will also offer 65,000 square feet of new retail space for shops, restaurants, and a daycare center for area residents and Amazonians.
With an estimated price tag of US$2.5 billion, the urban campus isn’t just expected to provide job security for local tech graduates, but also drive investment and diversify the state economy, creating fresh opportunities for local businesses and communities.