General Electric Corp. has shut down the rumor mill surrounding the possible relocation of the company”™s global headquarters from Fairfield with an announcement that the city of Boston has been selected as the company”™s new home.
Westchester County had been touted as a contender for relocated GE headquarters in New York. But GE in a Jan. 13 announcement said it will sell its offices at 30 Rockefeller Plaza in New York City and its Easton Turnpike headquarters campus in Fairfield, a multi-building compound encompassing more than 606,000 square feet of office space on 69 acres, to offset the cost of the move.
Bound for the Seaport District in downtown Boston, GE said it will relocate 200 corporate staff from its Fairfield headquarters, which employs about 800 people. Another 600 digital industrial product managers, designers and developers in GE”™s digital, current, robotics and life sciences divisions will also move to Boston. It was unclear from which GE offices those employees will be relocated.
Joseph McGee, vice president of public policy and programs for The Business Council of Fairfield County, said he was told by GE officials that some Fairfield employees will move to GE offices in Norwalk.
“Of course we are disappointed,” Connecticut Gov. Dannel P. Malloy said in a statement following the announcement. “Today”™s decision is a clear signal that Connecticut must continue to adapt to a changing business climate.”
McGee said reports that GE”™s move was prompted by an unfavorable Connecticut tax climate or the state administration in Hartford are without merit.
“They are unequivocally not moving about taxes, they made it very clear to us and it is not about incentive packages either,” he said. “They had nothing but praise about the governor and his staff.”
However, GE officials last June made it publicly known that they did indeed have qualms with state tax policies.
“Reports that Connecticut officials intend to raise taxes by another $750 million are truly discouraging,” GE officials said in a statement. “Retroactively raising taxes again on Connecticut”™s residents, businesses and services makes businesses, including our own, and citizens seriously consider whether it makes any sense to continue to be located in this state. The Connecticut economy continues to struggle as other states offer more opportunities and a better environment for business growth. It is essential that Governor Malloy and legislative leaders find a more prudent and responsible path forward for Connecticut and its citizens in their current budget negotiations.”
Major state and county business organizations have echoed Malloy”™s dismay, calling the iconic company”™s move a significant blow to the state”™s image.
Joe Brennan, president and CEO of the Connecticut Business and Industry Association, said he hopes the move will not tarnish the state”™s image in the long term.
“I don”™t necessarily think that it will, but we can”™t underplay the significance of it,” he said. “It is a major company that has been here since 1974.”
There is no single easy answer why GE made their decision to move, Brennan said, but while it may have begun with a debate over the state”™s fiscal policy it certainly did not end there.
Citing statements made by GE CEO Jeffrey Immelt to the Business Council last November, McGee agreed that the move is about much more than finances.
“Immelt said in his address to the Business Council that he is looking for an ecosystem and as GE changes as a company ”” looking to be a digital industrial company ”” he needs talent, and he is right, we don”™t have the amount of digital talent you can find in Boston or New York,” he said.
Immelt in announcing the relocation said the company wants “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.”
“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,” he said.
The decision followed months of rumors and published reports of various locations being scouted by GE for its global headquarters, including neighboring Westchester County, and closed-door meetings with Connecticut officials fighting to retain the technology and engineering conglomerate.
In September, the Business Journal reported four potential sites in Westchester were being pitched to GE, all within 40 miles of its Fairfield campus.
As recently as Monday, Phil Oliva, a senior adviser to Westchester County Executive Robert P. Astorino, said, “They”™ve narrowed down the sites and Westchester is still in play.”
Immelt said GE has been considering the move for more than three years and began with a list of 40 potential locations.
Fairfield First Selectman Michael Tetreau said the town is facing the loss of 800 jobs with the pending sale of GE”™s headquarters. He called it “a very significant hit on the local economy.” “If they sell the building somebody buying it will still pay the taxes,” Tetreau said, “so the tax revenue should be protected or replaced, but there is so much else ”” charitable donations, volunteer work, purchases from small vendors and suppliers ”” so many other things they do.”
GE”™s headquarters is assessed at $76.5 million and generated about $1.8 million in taxes for Fairfield last year. While that might seem a significant revenue loss to a suburban town, Fairfield has a firm financial base, Tetreau said.
He said the $1.6 million in taxes the town expected to receive from GE in 2016 “is less than 1 percent of our $290 million tax base and our commercial occupancy rate is 95 percent, one of the highest possible, so we have an extremely healthy local economy. We should be able to recover from this ”” it will take time.
McGee of the Business Council said he also expects the county to weather the loss of GE headquarters,
“They will still have a major presence in Connecticut,” he said. “Up to 4,000 people working here is what they have indicated to us.”
McGee also cited Fairfield County”™s established reputation as a major financial center that has retained much of the workforce GE shed with the sale of its GE Capital Lending and leasing business.
Tetreau said the town also will survive GE”™s relocation.
“We are one of top five fastest-growing towns in the state, we should be able to weather this,” he said. “We are not going to stand still. We will move forward on initiatives to move Fairfield forward despite this. We knew this (relocation) was one of the options. I was hoping for the best-case scenario ”” that didn”™t turn out to be the case.”
Reporters Reece Alvarez in Fairfield County and Colleen Wilson in Westchester County reported this story.
Ouch!
Congrats to Dan Malloy and his merry band of progressive economic illiterates. During the mid-80s, Fairfield County had the second larges number of Fortune 500 corporation in the nation. Thanks to regulations, taxes and overall dissing of businesses, most of the 500 have left the state. This is what happens when you elect progressives.
I doubt this move is about taxes – otherwise they would not be moving to Massachusetts. The simple problem for CT is that the days of large, uncreative, insular corporate headquarters in the suburbs are over – and that is all CT has to offer. We did not tend to the needs of our cities, and now the regions with vibrant cities are going to be eating our lunch.