(Bloomberg) -- General Electric Co. will move its headquarters to Boston from suburban Connecticut as the company looks to further position itself as a digitally savvy industrial manufacturer.
“We want to be at the center of an ecosystem that shares our aspirations,” Chief Executive Officer Jeffrey Immelt said in a statement. “Greater Boston is home to 55 colleges and universities. Massachusetts spends more on research and development than any other region in the world, and Boston attracts a diverse, technologically-fluent workforce focused on solving challenges for the world.”
The move, capping a formal review started last year, puts an exclamation point on a period of dramatic change for GE, which relocated to Fairfield, Connecticut, from a Manhattan skyscraper in 1974. Since April, GE has sold more than $100 billion of finance assets and closed one of its largest-ever acquisitions as Immelt reshapes the company around industrial equipment and data analytics.
Political leaders from states including Massachusetts and New York have courted GE since the maker of locomotives, jet engines and oilfield equipment said in June it would consider moving because of tax increases in Connecticut. GE said it has been informally “considering the composition and location” of its headquarters for three years and started the formal search with a list of 40 potential spots.
Boston offered as much as $25 million in property tax relief and the state provided a $120 million incentive package, the mayor’s office said in a statement.
“General Electric’s choice to move to Boston is the result of the city’s willingness and excitement to work creatively and collaboratively to bring positive activity to our local economy and continue to grow our industries,” Mayor Martin Walsh said in the statement.
GE will sell its offices in Fairfield and at 30 Rockefeller Plaza in Manhattan to help offset the cost of the move to Boston’s Seaport District, the company said. There isn’t any material financial impact as a result of the move, GE said.
Only about 800 of GE’s more than 300,000 employees work at the Fairfield campus. The company said it will have 800 in Boston, including 200 corporate staff and 600 digital industrial product managers. The number will include workers from the newly formed energy division known as Current. GE said workers will relocate to a temporary office in Boston this summer and the full move will be completed by 2018.
GE is attempting to position itself as a “digital industrial” company by expanding a business providing data analytical capabilities for its heavy-duty equipment. Sales for GE Digital, a division started in September, will rise at least 10 percent from $5 billion in 2015, the company said last month.
As part of the move to Boston, the manufacturer plans to create a “GE Digital Foundry” to incubate new-product development.
The company publicized its frustrations with Connecticut in June, when state lawmakers approved a two-year, $40 billion budget that raised levies on businesses and wealthy individuals. Governor Dannel Malloy revised some of the corporate income-tax increases and held meetings with GE to try to persuade it to stay put.
“Today’s decision is a clear signal that Connecticut must continue to adapt to a changing business climate,” Malloy said Wednesday in a statement. “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.”
Malloy said he was “disappointed” in GE’s announcement but was assured by the company that it would maintain a sizable presence in the state. The bulk of GE’s employees in Connecticut are located outside Fairfield in offices of GE Capital, the lending unit that is being shrunk as the company shifts its focus to manufacturing.
Connecticut ranks near the bottom in the Tax Foundation’s annual list of state business tax climates. The state’s codes have become more complex and are particularly unfavorable for large corporations as Connecticut has imposed a surtax on some businesses, said Jared Walczak, a policy analyst at the Washington-based research group.
“For a company like GE, Connecticut has a very high top corporate income rate” he said.
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