This piece was updated at 4:30 p.m.
General Electric is pulling up stakes at its suburban Connecticut headquarters and moving north up the Acela Corridor to Boston.
The blue chip company chose Boston over 40 other potential locations after being courted by state and local officials. When General Electric moves to Boston this summer, it will become the largest publicly traded company in the state, employing hundreds of people in Boston and generating $150 billion in annual revenues. The move is expected to be complete by 2018.
In a statement, the company confirmed they will set up shop somewhere in the still developing South Boston Waterfront district. An exact location has not been determined.
“We want 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. We are excited to bring our headquarters to this dynamic and creative city,” said CEO Jeffrey Immelt in a statement.
General Electric’s move to Boston appears rooted in a decision by Connecticut state officials to raise taxes on similarly structured corporations. General Electric was so upset over a series of new taxes and regulations that were passed in 2015 to address the Nutmeg State’s budget gap that they announced publicly that they were interested in relocating their corporate headquarters.
Connecticut officials attempted to placate General Electric after the tax changes, but were unsuccessful. According to reports, executives no longer had confidence in Connecticut’s ability to solve its budget problems and were miffed when an economic development packet featured a competitor on the cover instead of General Electric. The move was about taxes, but it was also about something more—General Electric is looking to move out of an antiquated suburban-style office building and into a bustling urban center, part of a broader trend in the Northeast.
“Our administration welcomes General Electric’s decision to take advantage of the unique resources that our state has to offer, ranging from our innovative economy to top universities. In addition to adding hundreds of high-paying jobs to our state, 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,” said Baker in a statement.
Believe it or not, Massachusetts, with its eight percent corporate tax rate, is a better place to locate a company than Connecticut, where the tax rate is nine percent. The Massachusetts personal income tax rate is also more attractive than Connecticut’s, where some residents are hit with a tax bill as high as 6.75 percent, compared to the Bay State’s flat rate of 5.1 percent.
Plus, Massachusetts is a hotbed of activity for the kinds of talent and businesses General Electric wants to surround itself with. Boston’s booming technology, energy, and life sciences sectors are a huge attraction for General Electric. For years, the company has been trying to shift away from its history as a manufacturing juggernaut with expansions into a variety of different sectors, particularly technology. The company recently spun off its financial arm.
The move by General Electric to Boston also comes as the company closes a factory in Avon that manufactures valves and employs 300 people.
Guaranteed financial incentives from local officials also helped tip the scales in Boston’s favor: The state is offering General Electric $120 million in incentives for the company to relocate while Boston is kicking in an additional $25 million. Offering big companies tax breaks to relocate to cities or states is not an uncommon practice, even in progressive Massachusetts. Amazon.com and IBM both recently benefited from tax breaks to locate large operations in Massachusetts.
General Electric already employs nearly 5,000 employees in Massachusetts in a variety of industries. The company moved its life sciences headquarters to Marlborough in 2014. The General Electric-owned energy services startup, Current, moved to Boston in 2015.
A public briefing on the move is scheduled for February 18.
Editor’s Note: In the interest of full disclosure, the author of this post owns shares of General Electric stock.
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