Will a fixation with winning Amazon.com’s massive HQ2 project cost Virginia a $1 billion expansion of the Micron Technology, Inc., plant in Manassas? It could, says a Wall Street Journal article today:
When semiconductor-maker Micron Technology Inc. approached economic-development officials in Virginia about a tax-incentive package for a $1 billion expansion of its Manassas site, it got the cold shoulder.
The state was too busy preparing its bid for Amazon.com Inc.’s second headquarters project, according to a person involved in the discussions. Now, the company is negotiating with officials in New York about taking the project—and the 500 new employees it would require—there, said the person. …
With 1,800 employees, Micron’s Manassas, Va., microprocessor plant is one of the area’s largest employers. The plant is expanding to meet increased demand—particularly in the automotive industry, for which the company produces memory-storage devices, said a person familiar with the matter.
Stephen Moret, CEO of the Virginia Economic Development Partnership, which is mostly publicly funded, declined to comment on the specific negotiations with Micron.
In an email, he said the group heavily relied on consultants to aid it in its Amazon proposal. “Consequently, we don’t think there has been an opportunity cost to our HQ2 efforts, other than the financial investment we made in third-party support,” he wrote. He declined to say how much the state authority spent on its HQ2 bid.
Bacon’s bottom line: I have long been ambivalent about Amazon HQ2. Admittedly, a major Amazon presence in Northern Virginia would be transformative, spurring a much-needed diversification of the economy away from the federal government. But the sheer magnitude of a $5 billion investment and hiring of 50,000 employees would disrupt regional labor markets and create enormous population and development pressures which state and local governments would be hard-pressed to pay for, especially if tax breaks and subsidies were needed to clinch the deal. Better to aim for projects that are big by any non-Amazon measure such as a major facility expansion planned by Apple, I have argued.
Better yet to win projects, such as Micron, which by all logic would locate in Virginia with only a modest effort. Hopefully, Virginia’s economic developers can rescue the Micron expansion, as I am confident they will. A loss to New York, a state from whom Virginia has been draining investment from for decades, would be humiliating.
While Northern Virginia arguably has as good a shot as any competing region at winning Amazon, let’s face it, snagging HQ2 is a long shot. NoVa is one of 20 regions competing for the business. To re-tread an old metaphor, we can take the bird in our hand or go for two in the bush. With the economy at full employment, I’d happily settle for the bird in hand.
Update: There’s more to the story than reported by the WSJ. Regarding the implication that the Commonwealth has given Micron the cold shoulder, Stephen Moret can say this:
Because Micron is one of our largest traded-sector employers, they interact regularly with VEDP staff members and other state officials.
Including a plant tour back in February, several in-person meetings with Manassas and/or headquarters officials of Micron, and many phone calls, I’ve personally talked with Micron at least 15 times since late last year. I’ve interacted more with Micron than with nearly any other company that has operations in Virginia.
Also, in regard to Amazon HQ2 incentives, Moret said in an email response to the Journal: “We would be thrilled for HQ2 to locate in Virginia, but our efforts to date relative to HQ2 will produce a positive ROI for Virginia whether or not we secure HQ2.” Read the full text of that email here.