Consulting firms recruited as US cities battle for Amazon's HQ2

08 June 2018 Authored by Consulting.us

McKinsey and other top consulting firms have been linked to cities’ efforts to win over Amazon as the tech giant deliberates on where to open its second headquarters. Twenty cities have been shortlisted by Amazon, which plans to invest $5 billion in the new site, which could create up to 50,000 jobs.

Although the Big Three management consultancy is staying characteristically quiet on the matter, McKinsey has been linked to Philadelphia’s quest to become the site of Amazon’s heavily hyped second headquarters. The world’s largest online retailer has its current headquarters in Seattle but is keen to open ‘HQ2’ in another North American city.

A shortlist of 20 candidates has been drawn up, meaning more than 200 locations have already been rejected. The majority are scattered around the northeast, while Toronto is the only non-US city still under consideration. Amazon headhunters have already scouted 10 of the 20 candidates and are expected to make their decision soon.

The economic benefits of selection could be enormous. Amazon estimates its contribution to Seattle’s economy from 2010 to 2016 to be worth $38 billion. For the construction alone of HQ2 the company has earmarked $5 billion. There will eventually be 50,000 high-paid positions on-site and tens of thousands of indirect jobs created if everything goes to plan.

Consulting firms recruited as US cities battle for Amazon’s HQ2

The rewards are great enough for Philadelphia’s Industry Development Corp (PIDC) to have held a vote on contracting McKinsey & Company to “assist with the next stage” of the city’s bid. Though large strategy consulting firms are famously tight-lipped about their fee structures, similar projects can easily command price-tags in excess of $1 million for a month’s work.

The PIDC vote on the McKinsey contract appeared on the group’s agenda but the result has not been released to the public. As a non-governmental agency, the PIDC is under no legal requirement to publicly share information, while McKinsey generally prefers its involvement with political and public projects to be kept under wraps.

Nevertheless the resolution to be voted on was made public, and stated: “McKinsey will provide project management support, including conducting research and analysis, supporting development of key message points and positioning, and securing data from third parties as needed.”

The consultancy has also been linked to the first-round bids for HQ2 from three Virginia state locations. McKinsey’s contract to help with proposals was worth at least $1 million. It is unclear whether the firm is continuing to help through second-round applications, with Northern Virginia and the DC Metropolitan area still in the running.

Fellow Big Three consulting giant the Boston Consulting Group (BCG) has also been linked to the process. Its subsidiary – Maya Design Inc – helped Pittsburgh get through the first-round of HQ2 applications. More consulting spending can be expected as state legislatures free up funds to give their candidate cities a boost ahead of Amazon’s final decision.

Outside of Philadelphia and Pittsburgh, shortlisted candidates include Newark, Denver, Montgomery County, Raleigh, Miami, Nashville, Indianapolis, Columbus, Toronto, Austin, Northern Virginia, and Los Angeles. According to Texan consulting and research firm Everest, however, there are only six candidates capable of matching Amazon’s size and demands – Atlanta, Boston, Chicago, Dallas, New York, and D.C.

News