By Ted Mann and Jon Kamp
(FROM THE WALL STREET JOURNAL 1/14/16)
General Electric Co. will relocate its headquarters from leafy suburban Connecticut to Boston’s busy waterfront, ending a fierce competition among states to lure one of the nation’s largest companies.
The move comes amid a broader effort by GE to cut corporate costs and streamline operations for what it portrays as a new industrial era that will revolve around software innovation as much as bended metal — one that will make it a priority to attract the talented workers who prefer to live and work in cities.
Several states, including Georgia, Rhode Island and Texas, worked to attract GE. New York pressed hard to bring the headquarters to Manhattan or Westchester County. Connecticut tried to avoid losing one of its most iconic corporate citizens, though far from its largest employer.
GE first publicly threatened its move in June, blaming a Connecticut budget deal that raised corporate taxes and what company officials described as an inhospitable business climate.
The move, which is expected to begin this summer with some workers occupying temporary quarters in Boston, should be completed by 2018.
People familiar with the company’s thinking also said GE had outgrown its dated office campus in suburban Fairfield — a relic of a corporate era that no longer reflects the sort of environment in which the most promising talent want to work.
The company has been preparing to pull up stakes for months. It even has put the art on the walls inside its Fairfield offices up for sale in an internal auction for employees.
The company said Wednesday it will sell the 68-acre Fairfield campus as well as two floors of offices it had kept for executives at Rockefeller Center in New York City.
The headquarters relocation likely will have little effect on the majority of GE’s 360,000-person global workforce. About 200 Fairfield staff will relocate and another 600 workers eventually will be housed at the new headquarters.
GE hasn’t yet selected a specific site, but said it plans to move to Boston’s fast-growing Seaport District. Chief Executive Jeff Immelt and others will begin working from temporary offices later this year, the company said.
For most of GE’s 124-year history, it was based in New York. The company maintains a global research center and manufacturing facilities around the town of Schenectady, north of Albany, and a management training center along the Hudson River. The rest of its operations are sprawled across the globe.
Its jet-engine business is based in Ohio and its oil and gas operation is based in London. The company is moving its health-care division to Chicago from London.
The relatively small number of jobs at stake didn’t diminish the attraction to state and city officials who hoped to score a major corporate scalp. New York Gov. Andrew Cuomo made an aggressive effort to woo GE, offering state-owned property for a corporate headquarters in New York City, as well as a research facility in Utica, N.Y., people familiar with the matter said.
The total value of the incentives New York offered was larger than the $ 145 million offered by Massachusetts, according to people familiar with the discussions. New York officials were still trying to seal a deal with GE in recent days, according to people familiar with the matter, but the state’s pitch faced other hurdles, including higher personal income-tax rates.
The Massachusetts incentives include up to $ 25 million in city property tax breaks and as much as $ 120 million in state spending on infrastructure, such as new roads and parking facilities.
Meanwhile, officials in Connecticut struggled to convince GE to stay. They offered to purchase the $ 84 millionFairfield campus and relocate the company to Stamford, where it would have had direct access to mass transit, interstate highways and walkable urban neighborhoods, according to one person familiar with the talks. But the discussions never got off the ground.
This person said GE had long intended to leave the state, pointing to Wednesday’s announcement from the company that it had been considering the relocation for three years. A GE spokeswoman said discussion revolved around ways to redefine the role of the corporate headquarters, and that last year’s budget deal had prompted GE to hasten its exit.
Relations with Connecticut took a turn in 2011 during a fight in Washington about a GE product that it wouldn’t even manufacture in the state: a proposed alternate engine for the F-35 Joint Strike Fighter. The primary contractor for the existing engine was Pratt & Whitney, a division of Hartford-based United Technologies Corp.
Gov. Dannel Malloy was among the politicians who attended a rally at Pratt after the state delegation helped block GE’s effort to get a green light to develop the alternative engine. In a news conference Wednesday, Mr. Malloy said the anger over that rally “has clouded our relationship with GE for the last five years.”
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Erica Orden contributed to this article.
(See related article: “Business News: GE Flees the Suburbs, Joining Corporate Pack In Move to City Centers” — WSJ Jan. 14, 2016)
(END) Dow Jones Newswires 01-14-160247ET Copyright (c) 2016 Dow Jones & Company, Inc.
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