As General Electric packs its bags, eyes turn to big insurers
Fairfield, my hometown throughout high school as well as the subject of my reporting while editor of The Fairfield Sun, just lost its largest property taxpayer in the departure of General Electric. And it should come as no surprise.
Eyes are now turning to the big insurers. Connecticut-based The Hartford, Aetna, and Travelers all voiced similar concerns as General Electric upon the roll-out of Governor Dannel Malloy's bi-annual budget last June.
The most logical case at first was a GE move to New York: After all, that's where Thomas Edison helped establish the industrial manufacturer in 1892; CEO Jeff Immelt and CFO Jeff Bornstein live near the state line (in New Canaan and Ridgefield, respectively); much of GE's operations still take place at 30 Rockefeller Center; and Westchester boasts the homes of IBM, PepsiCo and Mastercard.
But then, on Wednesday morning, Immelt was quick to confirm a Boston Globe report that GE has found a new home in Massachusetts.
"Greater Boston is home to 55 colleges and universities," he said in a release. "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. We are excited to bring our headquarters to this dynamic and creative city."
GE says its search began in June, after Malloy's announcement of a variety of business tax hikes in his bi-annual state budget proposal, the most inflammatory of which was a so-called "unitary tax," which is less a tax than a new accounting method GE would incorporate in booking its out-of-state income.
Shortly after the proposal was announced, Immelt wasted no time in launching an internal exploratory committee to find a new corporate home, and he urged employees to reach out to state legislators with grievances over what he viewed as $1.9 billion in new taxes.
He cited "significant and retroactive tax increases," according to a letter to employees obtained by TheStreet. "The passing of this law, despite the concerns we raised, has serious implications for GE, other businesses and for the business climate in Connecticut."
At first, it appeared New York was the most likely choice, but after GE moved its December decision deadline to January upon Boston jumping into the fray, it began to look like Massachusetts Gov. Charlie Baker, a Republican, could sell the prospect of Boston.
Finding new talent in software has become increasingly important since GE launched its "Industrial Internet," a combination of proprietary software and machine sensors of which GE maintains a steep growth outlook. And the benefits of being next door to Harvard and the Massachusetts Institute of Technology certainly won't hurt.
Connecticut tried to pare away some of Malloy's budget in a December special session, but many lawmakers viewed the trimmings as inadequate.
Fairfield has not only benefited from having GE as a corporate neighbor for tax purposes, but the industrial giant has also been a "phenomenal corporate citizen," to borrow the words of First Selectman Michael Tetreau, a Democrat.
Employees sit on the boards of charitable foundations and the company has often been there to donate with development projects such as the recent gift of a 40-acre walking trail near the town's Lake Mohegan.
In short, GE, you will be missed.
James Passeri is a writer and analyst for Real Money, a division of TheStreet.com. He is a former resident of Easton, as well as a former editor and reporter for Hersam Acorn Newspapers.