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STEM Talent and Funding a Major Factor in Ontario’s Amazon HQ2 Bid

The government of Ontario addressed the province’s bids to take on Amazon’s HQ2 this morning with a few major announcements.

Ed Clark, the business advisor to Premier Kathleen Wynne, is coordinating Ontario cities bids. He spoke about how the province is instituting new changes to make the province the most appealing spot for the e-commerce behemoth. Amazon wants to bring 50,000 new jobs and billions in revenue to one city by building a second headquarters.

“Our values put us on the right side of history,” said Clark, discussing health care, immigration and education rights.

“The American dream hasn’t died, it just lives here in Canada,” he stated.

The amount of STEM talent in Ontario was a large fixture of Clark’s speech, noting that the province’s output of talent in disciplines directly related to what Amazon does will set those cities bids apart from the rest.

“The core of the province’s commitment is all about talent,” said Clark.

Talent is so important to Ontario that they unveiled new commitments this morning making sure there will be an ample supply of graduates in STEM with or without Amazon.

The government plans to bolster the total amount of graduates in those fields by 25 per cent, growing from 40,000 annually up to 50,000. If this comes to fruition, Ontario will become the number one state or province in North America for total STEM graduates per year.

Ontario is also partnering again with the Vector Institute, an independent AI organization that works with other companies or schools to drive excellence in the field. Within five years, the government wants to graduate 1,000 master’s level students in AI-related fields, specializations Clark pointed out where Ontario paves the way. In order to do this, Ontario will pledge an additional $30 million to the Vector Institute.

The province previously committed $50 million to the institute, along with $40 to $50 million from the federal government. This funding will ensure high-level graduates are not forgotten as well.

Clark went on to describe how the province will make these investments with or without an Amazon headquarters, and addressed other companies in Ontario who may be seeing brain-drain to the U.S. or a shortage of skilled workers.

“Whether Amazon comes or not, we will grow our immigration and graduation process to get you the talent you need,” said Clark.

There were challenges though, as Ontario had to ask itself if they really wanted a new headquarters that may absorb talent from other local companies in the province. Clark promised that Canada will not offer any financial incentives to Amazon, nor to any other companies that want to move to the country. Companies should want to move to Ontario or Canada due to its inherent attractiveness, not other mitigating factors.

A little bit of math speculation was done during the speech, as Clark postulated that real estate costs for Amazon, according to the RFP, would be about $500 million a year. He then went on to state that talent costs would be around 10 times that, so real estate is not a massive concern when compared to acquiring talent cheaply.

And apparently, Canada has much cheaper talent. Clark described Canadian talent as 30 per cent cheaper than their U.S. counterparts—whether that’s due to conversion rates or otherwise, Clark did not expand. These salary differences would save Amazon $1.5 billion a year, more than enough to make up for real-estate concerns, according to Clark.

Each city in Ontario will still submit bids if they want to, but it is not really deemed as a competition. Clark said the real competition is with the world, not within the province itself, as any kind of local growth means everyone will prosper.

As for the chances of Amazon actually picking Ontario? Clark seemed pretty optimistic.

“The question you have to ask is: Does politics factor into it?” he said. ”If it does, and [Amazon CEO Jeff Bezos] doesn’t want to say ‘President Trump, I’m moving 50,000 jobs to Ontario,’ then we don’t get it.”

“If not, we are hands down the winner.”

There is no word when Amazon will make an announcement regarding the new location. The RFP for bids from cities is due tomorrow on October 19, so a first announcement may be a few months away.

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