Why Amazon didn’t pick Detroit

Detroit — A lack of mass transit and a questionable ability to attract talent doomed Detroit’s bid to host Amazon’s second North American headquarters, regional leaders say.

Organizers of the city’s bid received a call early Thursday morning from the online retail giant informing them that Detroit was not among the 20 cities selected to remain under consideration.

It was a call that Khalil Rahal, who heads Wayne County’s Economic Development Corp., told The Detroit News he received from Holly Sullivan, an Amazon economic development manager, before the formal announcement was made.

“As a courtesy, she called today before it hit the wire, and we had a good conversation as to what she thought and some of the reasons why we didn’t make the list,” he said. “Out of the 238 responses, she thought we had a phenomenal response to the RFP. She said not just the presentation but the data blew them away.”

Rahal then shared reasons Detroit wasn’t the best candidate for Amazon’s second headquarters.

“One thing they are looking for is what places are likely to attract talent,” he said. “What are some of the factors that exist to attract talent from 25- to 30-year-olds.”

They also, he said, had a specific conversation about mass transit.

“Some on the list either have a robust transit system or, if they don’t, have plans for some,” he said. “That was not the only factor, by any means, but it was a factor.”

The Seattle-based company said in a statement that it reviewed 238 proposals from across the U.S., Canada and Mexico to host its so-called HQ2 and picked 20 areas to move to the next phase of the selection process.

“Thank you to all 238 communities that submitted proposals. Getting from 238 to 20 was very tough — all the proposals showed tremendous enthusiasm and creativity,” Sullivan said in a statement. “Through this process, we learned about many new communities across North America that we will consider as locations for future infrastructure investment and job creation.”

Following that initial early morning call with those involved in Detroit’s bid, Amazon executives held a conference call with Detroit’s key project team members, said Sandy Baruah, president and CEO of the Detroit Regional Chamber of Commerce.

There were representatives on the call from the cities of Detroit and Windsor, Wayne County, Dan Gilbert’s office and the Detroit Economic Growth Corp.

“It was nothing too detailed,” Baruah said of the call. “They were very impressed with the proposal, creativity and impressed with the regional approach. The document itself and the accompanying video. They were impressed with our ability to integrate Windsor into the proposal. What they had questions about was talent. Do we have enough talent here over the long-term?”

In its proposal, the team said that Amazon could tap the region’s rich university talent pipeline, which includes 25 colleges and universities. It noted companies are moving downtown to capture the millennial workforce and that the total number of workers downtown age 29 or younger has grown by 38 percent from 2010 to 2015, while half of downtown’s residential population is age 18-39.

“We’ve made incredible progress,” Baruah said. “If this opportunity were to happen a few years down the road where Detroit’s renaissance and the regional renaissance were a little more established, the outcome might have been different.”

Mass transit was thought to be a weakness for Detroit as it headed into the bid proposal process. The proposal countered that Detroit roadways have ample capacity to absorb additional traffic.

Uncompetitive mass transit was one of the reasons East Lansing-based Anderson Economic Group ranked Detroit 32nd in its index of 35 metro areas.

“Amazon followed what they said in their (request for proposals), pretty much,” said Patrick Anderson, CEO of Anderson Economic Group. “Their top 20 is very clearly based on the factors of business tax burden, labor force availability and transit options that we calculated in our index and they stated in their RFP. As further evidence of that, none of the bottom 10 (from the index) were in their top 20. Detroit wasn’t singled out. Others that had similar rankings also didn’t make the cut.”

The Detroit News last week reported Metro Detroit leaders are working to put a regional transportation millage on November’s ballot just over two years after voters narrowly rejected a tax hike to expand mass transit in southeastern Michigan.

Regional leaders have been meeting to come up with a new plan, and Wayne County officials say Executive Warren Evans is leading the group. An announcement could be forthcoming as early as this month

Detroit’s Amazon bid committee was led by Gilbert, Detroit’s business mogul. Mayor Mike Duggan tapped Gilbert for the role shortly after Amazon announced plans to invest $5 billion and create 50,000 high-paying jobs averaging $100,000 a year.

Amazon was no stranger in the region. It has 200 employees at its tech hub in Detroit, and it opened a fulfillment center last fall in Livonia. Work is underway on a fulfillment center in Romulus expected to bring 1,600 jobs when it opens later this year. The company also expects to create 1,000 full-time jobs when it opens another fulfillment center in Shelby Township this year.

Gilbert said in a statement that “we are not deterred in any way, shape or form.”

“Detroit is the most exciting city in the country right now, and the momentum continues to build every single day,” he said.

Gov. Rick Snyder added Thursday the news is disappointing, but the state appreciates the company’s continued investment and expansion in Michigan.

“Detroit’s proposal to Amazon was incredible and garnered positive attention for the city from all across the world,” he said in a statement. “As a state, we will continue to pursue these types of valuable opportunities for our talented workforce.”

Duggan said the city is proud of its proposal, despite not moving on to the next phase in Amazon’s selection process. He thanked Gilbert, the governor, the area’s county executives, Windsor Mayor Drew Dilkens and the committee.

“It showed a clear vision for the future of our city and brought out the very best of our city and our region,” he said. “We’re going to keep building on the progress we’ve made and keep pursuing major developments.”

Dilkens echoed similar sentiments.

“We are not going to wallow and be sorrowful here. We want to learn where weaknesses are and see where they saw weaknesses and turn it into a strength,” he told The News, adding the same document can be used for future pitches to other companies. “We may be out of the Amazon game for now but I’m telling you the proposal is extremely strong.”

Rahal said Sullivan told him that there were some good factors working in Detroit’s favor including the fact that recently Amazon has expanded its footprint in the region.

“She thought from that standpoint, they really loved working with folks in the area,” he said. “What I say to folks is ‘this is a disappointment, but there were a lot of goals that were met.’ I think we did all we could.”

Among them, Rahal said, is the regional collaboration that came together to develop the plan.

“It’s a big deal for this area, and it hasn’t always been like that,” he said, adding they learned a lot about strengths and “what our shortcomings are.”

Wayne County’s Rahal said Detroit ranked “pretty high up there,” but Amazon was not willing to reveal the entire list.

Rahal thinks the bid will serve as a guide for future pitches to land new businesses, noting Apple is looking for an area for significant investment as are others.

Rahal said five years ago, the city wouldn’t have had a shot like this and five years from now he expects more amenities to attract all types of people.

“This was not a total loss by any stretch of the imagination,” he said. “There were several goals as a region that we hit and we learned from. We are all committed as a region to get to that next phase where we start being recognized as people on this list.”

Amazon's top 20

Atlanta, GA

Austin, TX

Boston, MA

Chicago, IL

Columbus, OH

Dallas, TX

Denver, CO

Indianapolis, IN

Los Angeles, CA

Miami, FL

Montgomery County, MD

Nashville, TN

Newark, NJ

New York City, NY

Northern Virginia, VA

Philadelphia, PA

Pittsburgh, PA

Raleigh, NC

Toronto, ON

Washington D.C.

cwilliams@detroitnews.com