GE Moving to Boston

UPDATE General Electric announced today that it has selected Boston for its new headquarters.

Fairfield has been home to GE for four decades with many employees living in Westport. (CLICK TO ENLARGE) Contributed photo

The company has been based in Fairfield for four decades with many of its executives and employees living in Westport over the years. GE said about 800 employees would be employed in Boston.

GE has been looking for a new home since last summer when it said it was unhappy with Connecticut’s corporate tax structure. Its announcement followed a report by the Boston Globe that the move was confirmed.

The Globe said the company informed Massachusetts Gov. Charlie Baker and Boston Mayor Martin J. Walsh today. Fairfield First Selectman Michael Tetreau also said he had been informed.

Here is the text of the GE announcement:

GE today announced that it has selected Boston for its corporate headquarters location.

“GE aspires to be the most competitive company in the world,” said GE Chairman and CEO Jeff Immelt. “Today, GE is a $130 billion high-tech global industrial company, one that is leading the digital transformation of industry. We want to be at the center of an ecosystem that shares our aspirations. Greater Boston is home to 55 colleges and universities. Massachusetts spends more on research & development than any other region in the world, and Boston attracts a diverse, technologically-fluent workforce focused on solving challenges for the world. We are excited to bring our headquarters to this dynamic and creative city.”

GE has been considering the composition and location of its headquarters for more than three years. The Company began its formal review in June 2015, with a list of 40 potential locations. Boston was selected after a careful evaluation of the business ecosystem, talent, long-term costs, quality of life for employees, connections with the world and proximity to other important company assets.

There is no material financial impact to GE related to the cost of the move. Working with GE, Massachusetts and the City of Boston structured a package of incentives that provides benefits to the State and City, while also helping offset the costs of the relocation to GE. GE will sell its offices in Fairfield and at 30 Rockefeller Plaza in New York City to further offset the cost of the move.

The content of GE’s headquarters will also change, with more emphasis on innovation. In Boston, GE will have roughly 800 people; 200 from corporate staff and 600 digital industrial product managers, designers and developers split between GE Digital, Current, robotics and Life Sciences. A GE Digital Foundry will be created for co-creation, incubation and product development with customers, startups and partners. The remainder of administration will be placed in shared service operations throughout the Company.

GE has a significant existing presence in Massachusetts, with nearly 5,000 employees across the state in businesses including Aviation, Oil & Gas and Energy Management. In 2014, GE moved its Life Sciences headquarters to Marlborough, and in 2015 GE announced its energy services start-up, Current, would also be headquartered in Boston.

The headquarters will be located in the Seaport District of Boston. Employees will move to a temporary location in Boston starting in the summer of 2016, with a full move completed in several steps by 2018. GE will host a public briefing in Boston with government officials, and business and community leaders, on February 18, 2016.

In response to the GE announcement, Gov. Dannel P. Malloy released the following statement:

Today’s decision is a clear signal that Connecticut must continue to adapt to a changing business climate.  Businesses care about transportation infrastructure, and we will continue to make new investments to create a more modern transportation future. 

Businesses care about talent, and we will continue our investments in our higher education system in order to connect them to the needs of high-tech employers. Businesses care about state government fostering new areas of innovation, and we will continue to invest in high-tech startups, small businesses, and major employers like United Technologies. 

And businesses care about how states budget, and now is the time to continue our bipartisan efforts to reform our budget, find new ways to pay our pensions, and create a more sustainable and predictable state budget.

Taken as a whole, there is no denying that Connecticut has had more good days than days like today.  Of course we are disappointed, and we know that many in Connecticut share that frustration. 

While GE’s headquarters may be leaving, I have been assured that the company will continue to have many employees working here in Connecticut.  Equally important, GE will continue to work with and support many smaller businesses throughout our state.

Over the past five years, Connecticut has partnered with 1,945 companies to create more than 19,900 new jobs and retain an additional 75,000 jobs.  Now is the time to meet our challenges head on, work together, and find new innovative ways to meet them.

Ctmirror.org reported the following:

Reaction elsewhere to the GE announcement was fast and negative.

“I think GE leaving is cataclysmic, really,” said Rep. John H. Frey, R-Ridgefield, who emerged as an informal voice of GE since June, when the company first broached leaving. “I do think it is a defining moment for Gov. Malloy, and it’s not a good one.”

One of the key questions for the state will be the extent to which GE gives a rationale for the move to a state without an obvious advantage in taxes or overall cost of business. GE has been rebranding itself as a tech company, making Boston a more attractive headquarters location.

“My understanding is what they found in Massachusetts is a supportive state and local government, which they didn’t find here, going back to the call I got from GE in late May or June,” said Frey, who is friends with Jeffrey S. Bornstein, the company’s chief financial officer.

Massachusetts has its own fiscal issues, but business leaders — including officials with the Connecticut Business and Industry Association — insisted GE’s primary concern about the Nutmeg State lay with broader questions about the longterm fiscal stability of Connecticut.

Connecticut already has one of the largest bonded debt burdens, per capita, of any state, owing more than $22 billion. But an even larger threat looms in the area of “soft debt,” specifically, more than $47 billion in unfunded retirement benefit obligations.

Connecticut was rated the third-worst state last year on unfunded pension liability by Bloomberg. Massachusetts was 11th.

Connecticut’s annual required contribution to its pension fund for state employees, which stands at $1.5 billion now, could spike by 2032 to $3.8 billion, according to Treasurer Denise L. Nappier, and $6.65 billion according to Malloy.

The governor made pitches to GE both last summer and in December to keep the company here. And though Malloy didn’t release details, he did confirm previously that some package of financial incentives was offered.

“What we have indicated is a willingness to work with them on – if you want to call it a package, you can call it a package – in general, and in some cases, specific terms of what we thought we could do,” the governor said back on Aug. 24. “… They had us in. We made a presentation.”

GE was one of several major corporations that complained loudly this past June when legislators and Malloy agreed on a new two-year budget that increased state taxes by more than $1.3 billion over the biennium.

Despite warnings from nonpartisan analysts throughout much of 2014 that state government faced a major deficit after the November elections, Malloy insisted there wasn’t a shortfall and had pledged not to increase taxes.

After negotiating a tentative budget deal in early June 2015 that included a $1.5 billion tax hike – and also canceled previously approved tax cuts worth close to $500 million over the biennium – the Malloy administration reversed itself after the Democrat-controlled legislature narrowly approved the budget.

In a June special session, the governor and legislature peeled back about $178 million of those tax hikes, focusing largely on hikes aimed at businesses.

Rep. Bob Godfrey, D-Danbury, said today that he was sorry, but unsurprised, to see the company leave, and said the decision to move was likely made “before they started gnashing their teeth.”

While he expects the company to blame Connecticut, Godfrey said doing so was “kind of childish, in my opinion.”

“Interestingly enough, they’re now moving to a place where taxes are higher,” he said. “It’s not called ‘Taxachusetts’ for nothing.”

While some have suggested the company’s decision would likely take into account the state’s long-term liabilities and fiscal stability, Godfrey said he didn’t buy it. “It just doesn’t make any sense to me,” he said. “The state, aside from GE, is taking a good hard look at our pension system.”

Will the move bring repercussions during the next legislative session, which begins Feb. 3?

“There’ll be a lot of noise,” Godfrey said. “But it’ll be more sound and fury than it is, I think, actual changes.”

The Yankee Institute for Public Policy suggested more needed to be done.

“The people of Connecticut have three options,” President Carol Platt Liebau said in a statement. “We can continue to pretend nothing is wrong. We can wallow in despair. Or we can transform our policies so that they welcome employers and increase opportunity for everyone.”

The announcement drew quick responses on social media. Danbury Mayor Mark Boughton, a former and perhaps future gubernatorial candidate, tweeted that, “Failure to fully and honestly address our long term budget problems in CT has led to the @generalelectric crisis.”

The Republican Governors Association described the company’s move as bolting Malloy’s “high-tax Connecticut” for Massachusetts. Baker, a Republican, leads the GOP governor’s association.