General Electric said yesterday that it will move its global headquarters to Boston, closing offices in New York City and Fairfield, Connecticut. With $130 billion a year in revenue and a market value of nearly $290 billion, GE will be far and away the largest company ever to relocate to the city.
“We want to be at the center of an ecosystem that shares our aspirations,” CEO Jeffrey Immelt said in a statement.
Immelt is in the middle of engineering a major restructuring for GE, selling off most of its finance arm to focus on digital and industrial lines, including aviation, health sciences, power and clean energy. These sectors often rely heavily on advanced software and communications technology, areas in which Boston is trying to stake a claim.
The move will bring 800 jobs — about 600 of them tech-oriented — to Boston, but more importantly, the Boston Globe reported yesterday, GE’s relocation sends a message: Boston is a hub of technology innovation.
“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,” Immelt told CNBC.
The move also squares GE with a current trend that’s seeing corporations forsake the suburbs for urban cores, where those young tech-savvy employees increasingly want to be. GE will move some employees to a temporary space in Boston this summer, and relocate entirely by 2018.
At the center of the will-they-won’t-they tale of GE’s new HQ site selection has been corporate welfare — governments luring companies to relocate with goodies like tax breaks. Many critics question the sustainability and worthiness of the approach.
GE was in Fairfield, Connecticut, for more than 40 years. Last summer the state’s lawmakers passed a budget increasing taxes by $1.2 billion over two years, prompting protest from the state’s largest corporations and threats of departure from GE. Connecticut reduced corporate taxes in December to stem criticism, but not soon enough. By the end of last summer, Immelt had already written an email to employees stating that GE was weighing relocation to a “more pro-business environment,” according to CNBC.
Despite being in a state sometimes maligned as “Taxachusetts,” Boston won out. As part of its bid to woo the company, Boston offered a combined state and city incentive package that could be valued around $145 million, with $25 million in the form of property tax relief from the city. (According to MassLive, Mayor Marty Walsh said, “I think what this will do for the city of Boston and for the commonwealth of Massachusetts is spur a lot of other companies to look to Boston.”)
Before settling on Boston, GE considered a handful of cities, including Atlanta, Austin, New York and Nashville.
Of note for the many local governments struggling with pension funds: The Chicago Tribune reported today that Chicago had been a finalist — but the state’s pension crisis and struggling city schools represented too much of a risk to the company. (Some in Chicago are staying optimistic by highlighting that GE Healthcare will move its corporate headquarters to Chicago from the U.K., the Tribune notes.)
GE has not yet picked a Boston location for its new headquarters, but is reported to be considering a waterfront area being branded as the Innovation District.
Jen Kinney is a freelance writer and documentary photographer. Her work has also appeared in Philadelphia Magazine, High Country News online, and the Anchorage Press. She is currently a student of radio production at the Salt Institute of Documentary Studies. See her work at jakinney.com.