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Why Toronto may have a shot at Amazon HQ2 (Hint: Trump’s anti-immigration stance)

By: financialpost.com 4 months ago
Why Toronto may have a shot at Amazon HQ2 (Hint: Trump’s anti-immigration stance)

Trump has spoken negatively about the H1B visa programs that tech companies such as Amazon rely on to bring highly skilled workers to the U.S. from other countries

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Toronto is the only city outside the United States that made the shortlist in Amazon Inc.’s contest for its second North American headquarters — and experts believe Canada’s more relaxed immigration policies give it a real shot at landing the coveted campus.

The internet retail giant announced its Top 20 candidates for HQ2 on Thursday, narrowing the field from 238 proposals in its highly-publicized competition for 50,000 high-paying jobs and a US$5 billion investment. No other Canadian city made the cut, even though Calgary tongue-in-cheek offered to change its name to Calmazon or Amalgary.

It may seem impossible that Amazon would choose the Toronto region over 19 U.S. metropolitan areas given the political climate. But it may be tempted enough by Canada’s immigration policies and talent pool to flout President Donald Trump’s “Buy American, Hire American” creed.

“Ultimately Amazon is going to be looking for a home that makes it easier for them to attract superior talent,” said Doug Stephens, founder of Toronto-based retail advisory firm Retail Prophet.

Trump has spoken negatively about the H1B visa programs that tech companies such as Amazon rely on to bring highly skilled workers in from other countries, Stephens said. Canada, on the other hand, has a reputation for being open towards immigration from India, Asia and South Asia. It might be easier to find talent to fill that many jobs in Canada, he said.

“We know one thing is for sure, (Amazon) would be demonized by the administration for (choosing Toronto),” Stephens said. “This is an administration that’s taken other CEOs to task even if they’ve just moved 1,000 jobs to Mexico. There’s no question that there would be fallout.”

Trump, who isn’t a big fan of Amazon in the first place, sent tweets this week that took credit for Apple Inc.’s plans to invest heavily in the U.S. and praised Chrysler for moving operations to Michigan from Mexico.

“What Amazon ultimately has to weigh, is the short-term fallout worth the long-term benefits that they would derive by being in a very ethnically diverse and immigration friendly place like Toronto,” Stephens said.

If Amazon chooses a U.S. city, it would be a political win but could be more difficult for it to find qualified workers given stricter immigration rules, said Stephen Cryne, CEO of the Canadian Employee Relocation Council. That could be especially true if the U.S. pulls out of NAFTA and TN visas are no longer an option to move professionals more easily between Canada, the U.S. and Mexico. “It’s kind of a double-edged sword,” Cryne said.

There are already significant challenges to finding talent in the industry, he said. Canada, however, has a program to process temporary visas for high-skilled workers within two weeks.

“Toronto has definitely got a shot at it, we’ve certainly got a lot of talent here,” Cryne said.

Indeed, politicians from all levels of government flaunted Canada’s talent pool as they pledged to work together on “Canada’s bid.”

“It is about the kind of high-quality people we have in Canada, talented people, diverse population, that (provides) real potential for a company like Amazon to continue their success,” Finance Minister Bill Morneau said Thursday in Toronto.

Premier Kathleen Wynne issued a statement outlining Ontario’s commitment to increasing the number of STEM graduates by 25 per cent and graduating 1,000 applied masters in artificial intelligence within five years.

Toronto Mayor John Tory said talent, not financial incentives, is Toronto’s single greatest advantage.  

“We took a decision early on that our bid would be highlighted by investments in people and the talent pool and the welcoming nature of the Toronto region to people around the world who are the best and the brightest, as opposed to trying to write some kind of a big cheque,” Tory said in an interview.

At this point, Tory said the team behind the bid has no plans to change its strategy to offer financial advantages.

University of Toronto strategic management professor Will Mitchell said Toronto’s education and immigration systems means Amazon could access the employees it needs. On the downside, he noted Amazon would have to deal with cross-border issues such as taxation, the politics of investing outside the U.S. and confusion around NAFTA.

There are potential downsides for Toronto, said Abdullah Snobar, executive director at DMZ, a tech incubator at Ryerson University.

Toronto’s tech scene is booming, but he doesn’t want to see Amazon “eat up” all the talent that could potentially create local billion-dollar startups. He advocates for a balanced approach to the bid that still invests in the local community.

“The last thing we want to do is kill a potential Amazon that would come out of Toronto,” he said. “I’m not saying that Amazon is a bad idea… as long as we deal our cards right.”

Online gambling site Paddy Power has the odds of Toronto winning HQ2 at 16-to-1. It pegs Atlanta, Boston and Austin as the best bets with 3-to-1 odds.

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