Would Amazon’s HQ2 Overwhelm Canada’s Tech Sector?

Tech insiders weigh in on pros and cons if Canada is chosen for retail giant's next campus
September 21, 2017 Updated: September 21, 2017

While Canadian cities are enthusiastically courting Amazon’s second headquarters, the tech industry is expressing a range of reactions, from all-out opposition to enthusiastic embrace.

On Sept. 7, Amazon launched a bidding competition for its HQ2, a $5 billion second headquarters that will provide 50,000 high-paying jobs, and the mayors of every major Canadian city have rushed to put their name in the hat.

Despite sluggish investment this year, the Canadian tech industry is coming into its own, accounting for more of Canada’s economic output than the finance and insurance sector, according to a Brookfield Institute report.

While that may make Canada a more enticing destination for the fastest-growing retail giant in the world, it also means there’s more to protect.

Whether Canada’s tech community would actually benefit from Amazon’s HQ2 is up for debate, even among technology leaders.

For Doina Oncel, founder of both the corporate responsibility platform Socially Strategic and hErVOLUTION, which promotes women in STEM (science, technology, engineering and mathematics), there are several concerning questions.

“Why is our money being invested into an American company? We’re not investing enough into Canadian companies. If we’re bringing this American company here, how is this American company supporting the Canadian economy and how are they giving back to the community? Is all the money going back to the States or are they going to invest it here?” Oncel said.

“Instead of supporting the small business owner, we’re bringing a big company here.”

Amazon said in its announcement that in addition to direct hiring and investment, construction and the ongoing operation of the new headquarters is expected to create “tens of thousands of additional jobs and tens of billions of dollars in additional investment in the surrounding community.”

But part of the bidding process—or a bidding war if it goes that far—will determine how much cities are willing to give Amazon, and that could include taxpayers footing the bill for at least some of the construction.

The Information Technology Association of Canada, of which Amazon is a member, argues Canadian graduates in small tech startups can benefit from having the resources of a major player in the country.

“If you look at the graduating class of University of Waterloo, the vast majority are leaving the country. This would be a great way to keep some more of that talent. People would go there (Amazon), work for a while, then spin off and work for another startup,” said Daniel Messer, VP of Policy at ITAC.

“Big players like that can really have a massive ecosystem effect. Because going out of university and starting a startup can be a great thing, but … having experience with a large-scale billion-dollar global business can be a huge competitive edge for an entrepreneur.”

Talent shortage?

Everett Findlay, CEO of Arrowonics, Canada’s only drone light show company, takes a more measured approach.

“If you look at Cisco, they opened a big office in the Ottawa area and they were praised for the number of jobs they were creating. But at that time the unemployment rate of software engineers that Cisco would likely be hiring was around 2 or 3 percent. So everyone was already working,” Findlay said.

“A lot of people Amazon would hire are already sought-after employees anyway. I think it’s hard to weigh the benefits of job creation versus the costs. A lot of these companies get some pretty serious tax incentives to come in.”

Findlay noted that there are many potential upsides for Amazon to set up shop north of the border, but it comes with “tradeoffs.”

The question of talent scarcity was a point Messer acknowledged, saying Canadian university graduate computer science engineers “are purportedly the No. 1 or No. 2 sought-after talent in Silicon Valley.”

“It will make talent even more competitive in Ontario. On the flip side, it would be attractive to hopefully help retain some of the high-skilled individuals in Canada and attract people from around the world to come to Canada to work. Although it could cause hardships, it could cause benefits,” he said.

“It’s something we’re always facing. Google has big offices in Waterloo right now and there’s all sorts of startups that complain about how hard it is, that they have people come out of school and want to work for Google and don’t want to be in the trenches a little more with a startup. I think that’s to some extent always going to be the case.”

The head of Ontario’s bid to attract Amazon, Ed Clark, said Ontario won’t offer Amazon billions of dollars in incentives, but details of how much a Canadian city would offer are still unknown.

When contacted by The Epoch Times, Toronto Global, the GTA organization responsible for bringing international investment including Amazon, said it was “premature” to answer how startups would survive should the bid be successful, why incentives were being offered to a company with lots of money already, and how far a GTA bid would go.

Will Koblensky is a freelance reporter based in Toronto with a background in financial, political, and local news.