GE will relocate to Boston as Baker, Walsh bet big and win
By NBP Staff | January 13, 2016, 12:13 EDT
BOSTON – Boston Mayor Marty Walsh and Massachusetts Gov. Charlie Baker got some good news today from General Electric, the Connecticut-based industrial giant, which confirmed plans to move its headquarters to the Hub, locking in a win on some big bets the two leaders made.
“They are going to be a tremendous part of the growing innovation economy we have here in Massachusetts and we really look forward to welcoming them,” Baker told reporters late Wednesday at the State House. “This is a huge win for the city of Boston and a huge win for Massachusetts.”
But the win came at a steep cost – as much as $151 million in incentives from the state and city, according to a joint statement issued Wednesday afternoon by the political leaders.
“We offered pretty much the same sort of thing that we would make available, and we do, when companies either expand here or move here, which is a combination of incentives and grants,” Baker said in the State House briefing, recorded by the State House News Service. “That’s the sort of thing that Massachusetts does under its existing authority, several times a year I would say. It doesn’t happen all the time.”
The company announced the decision Wednesday afternoon, following a Boston Globe report saying the city had won an intense competition for the move with New York.
“GE is a $130 billion high-tech global industrial company, one that is leading the digital transformation of industry,” Jeff Immelt, the company’s chief executive, said in the announcement. “We want to be at the center of an ecosystem that shares our aspirations.”
“Greater Boston is home to 55 colleges and universities,” Immelt said. “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.”
The longtime Nutmeg State powerhouse, which ranks eighth on the Fortune 500 list of the largest U.S. companies, began contemplating a move last year, after Connecticut Gov. Dan Malloy, a Democrat, signed a $40 billion budget that included significant business tax increases, cable network CNBC reported in June. Immelt said state business levies had risen five times since 2011, in an email to the company’s employees, which number about 5,700 in Connecticut. While the state subsequently reduced some taxes, by then the die had been cast.
Other locales that vied to win the company included Rhode Island and Georgia, CNBC reported Wednesday. The company said it started with a list of about 40 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,” the company said.
To land the operation, the state offered $120 million in grants and other incentives, while the city chipped in $25 million in property tax relief, according to the joint statement. As much as $6 million more was pledged, including $5 million for an innovation center and the rest for job training.
“Boston is delighted and honored to welcome General Electric and its employees to our community and we are confident that this is the start of a strong partnership,” Walsh said in the statement.
The economic effects of GE’s presence will be felt for years to come, Baker predicted. He described the company founded by Thomas Edison as “a real leader in what I would describe as sort of the Internet of things and the movement toward creating smart machines.”
Baker said negotiations with company executives began last summer and picked up steam in the fall, as a task force of about 20 officials worked on creating an incentives package big enough to lock in a deal.
“They could go anywhere,” Baker said. “They could go anywhere in the United States, they could go anywhere, period, and be welcomed because of who they are, what they represent, and the future that they bring to whatever region they decide to locate in.”
“The big message here is this is a great place, not to be for the next two years or the next five years, but for the next 50 years, and I think it’s a huge message to the market generally,” the governor said. For businesses involved in innovation and the digital economy, he added, “This is a great place to play.”
In a report Wednesday, CNBC said about 800 people work in GEs headquarters in Fairfield, in the southwest corner of the state. The company said it will have about that many in the Boston office, but 600 would be “digital industrial product managers, designers and developers” whose focus would be split between various divisions and industries. Baker said the other 200 would be senior executives.
Accolades poured in, praising both Baker and Walsh.
“Since the Industrial Revolution began, Massachusetts has been the nation’s headquarters for innovation, and GE’s location of its global operations in Boston continues this proud tradition,” U.S. Sen. Ed Markey, a Democrat from suburban Malden, said in a statement. “I congratulate Governor Baker and Mayor Walsh for their efforts forging this partnership with GE, bringing hundreds of high-paying jobs to Boston, and securing this decision.”
Rick Lord, the head of the Associated Industries of Massachusetts, said the group’s 4,500 member employers “congratulate the Baker and Walsh administrations for recognizing that taxes, work force and other elements of the business climate really matter in corporate location decisions.”
The Greater Boston Chamber of Commerce also praised Baker and Walsh for working together on the drive to bring the company into Boston. The Massachusetts Business Roundtable echoed the sentiments.
“It’s great news,” Robert DeLeo , the speaker of the Massachusetts House of Representatives, told reporters minutes before he went to the floor of the House to announce the news to lawmakers, State House News reported. It said DeLeo, a Winthrop Democrat, thanked the legislators for their work in passing two economic development bills in recent years that he said helped make the state attractive to GE.
The state Republican Party focused its praise on the governor, a Republican, while omitting Walsh, a Democrat, and chiding Malloy for creating an “environment of high taxes and heavy regulations,” in a statement.
“A pro-growth environment created by Charlie Baker leads to a big victory for Massachusetts economic development,” the party said earlier on Twitter.
The company said it worked with both city and state officials to structure “a package of incentives that provides benefits to the state and city, while also helping offset the costs of the relocation to GE.” It also said it plans to sell its corporate campus in Fairfield, Connecticut, and offices in New York at 30 Rockefeller Plaza to offset related costs. The company said the move will take several years to complete and will begin this summer with some employees relocating to temporary quarters in the city.
Connecticut lobbied General Electric to stay put, but by early this week, Malloy seemed resigned to losing the headquarters that has been located in his state for 41 years.
“I think they’re going to do what they’re going to do,” he said Monday, according to the Associated Press. “I think they’ve said that they’re going to leave thousands of jobs in Connecticut one way or the other.”
But the move was seen as a blow to Connecticut’s business reputation by many at the state Capitol in Hartford.
“We’ve got to make the environment here more attractive. I know that that doesn’t sound real sexy, but that’s the reality,” said Joe Brennan, the chief executive of the Connecticut Business and Industry Association, AP reported.
GE already has a number of businesses with offices in the Boston area, including life sciences, jet engines and a new lighting business called Current, CNBC reported. The company said it has about 5,000 Massachusetts employees.
The new headquarters will be located in Boston’s burgeoning Seaport District, GE said, and will include a new technology-driven development center, called a GE Digital Foundry for “co-creation, incubation and product development with customers, startups and partners.”
That was music to Baker’s ears.
“We look forward to partnering with GE to achieve further growth across a spectrum of industries and are confident GE will flourish in the commonwealth’s inventive economy,” the governor said in statement, adding that the company will be “an anchor in the city’s innovation industry.”