GE dims its Boston presence
Downsizing underscores risks of government betting on business
GE MAY BRING good things to life, but they’ll be bringing a lot less to Boston than the company promised to great fanfare just three years ago.
The company announced on Thursday that it will sell the Fort Point property where it planned to build out its corporate headquarters and pay back $87 million in state funding that was used to acquire and prepare the site. It confirmed that there will be no shiny 12-story glass tower alongside refurbished brick buildings. Nix the $25 million property tax incentive deal with the city. And the 800 jobs it vowed to bring to the site will be more like 250, which is only a little more than the number of GE employees already working in nearby rented offices, reports the Globe’s Jon Chesto, who broke the news.
It seems like a million years ago, in 2016, when word that GE would move its world headquarters to the Hub had everyone talking about Boston’s future leading the “industrial internet” revolution — especially the company’s then-CEO Jeff Immelt. In March of that year, he charmed business leaders at a luncheon with talk of how Boston would be the alpha figure of that new tech chapter “the way Silicon Valley and Seattle were for the last 20 years.”
WGBH’s Adam Reilly wrote at the time that what struck him most about Immelt from hearing him speak at the event “was just how good he’ll be at telling Bostonians exactly what they want to hear.”
“When GE announced in January that Boston had won — beating out New York, which had put in a competing bid — it was the economic equivalent of the Red Sox reversing the curse and winning the World Series,” gushed the Globe.
Just a little over two years later, Immelt is long gone — and so is his successor — GE’s stock price has cratered, and the company is shedding various units and dramatically paring back its reach in an effort to find a profitable path forward.
Shirley Leung points out that the state and city should not lose any money on the GE dive, and the state could score a lucky real estate appreciation dividend. GE also says it remains committed to $50 million in local philanthropy.
That said, the GE presence here will be a far cry from the picture painted at the time city and state officials spent hundreds of hours wooing the company.
If the GE saga points to the risks of government betting big on a company in a global economy where fortunes can change quickly, the Amazon story in New York, in some ways, highlights the risks of the reverse. In that case, a booming company suddenly decided its bet on a new location, which top elected leaders in New York were swooning over, looked like less of a good thing in the face of objections bubbling up from activists and lower-level officials whose concerns had been muffled by higher-ups eager to land the deal.
Amazon announced yesterday that it was pulling out of the deal to build a secondary headquarters in Queens, a plan that involved $3 billion in state and city incentives and the promise of 25,000 jobs over time.
Gov. Andrew Cuomo lashed out at Democrats in the state Senate who threatened to derail the deal. Mayor Bill de Blasio took aim at Amazon. The city’s tabloids went after the pols, with the Daily News front-page blasting the “Amazon killers,” with photos of four elected officials, including Rep. Alexandria Ocasio-Cortez and Michael Gianaris, the Queens state senator who was leading the charge against the company. The Post zeroes in on Gianaris, with the headline “Prime suspect: Meet the man who killed the Amazon deal.”
Chris Dempsey, who led the opposition to a Boston Olympic bid, told WBUR the backlash in New York to Amazon revealed a similar disconnect between what power brokers were thinking and saying and the views at ground level.The bigger takeaway from both the GE and Amazon deals, venture capitalist Jeff Bussgang told the station, is that cities should stop the single-minded pursuit of individual companies with big incentive deals.
“The lesson for cities is to focus on creating a great environment, a great infrastructure, and a great ecosystem and not use tax incentives to focus on one particular company or another because those companies are going to change,” Bussgang said. “There’s a natural ebb and flow to the market. And cities don’t want to be dependent on the ebbs and flows, and the competitive positioning of any one company.”