General Electric (GE) , the manufacturer that traces its roots to Thomas Edison's light bulb, is moving its headquarters to Boston as CEO Jeffrey Immelt amps up his investment in digital manufacturing.
The relocation caps a year of changes to the company's identity that included the acquisition of Alstom's power business, the largest deal in the GE's history; the collapse of a second attempt to sell its appliance division; and the wind-down of much of its sprawling lending business, with agreements to sell $157 billion of its portfolio.
GE announced this summer that it would consider moving out of Fairfield, Conn., its home of 40 years after what the company characterized as an onerous increase in state taxes. The company said Wednesday that executives had been informally reviewing the makeup and location of the headquarters for three years.
Moving to Boston, an area home to 55 colleges and universities including Harvard and the Massachusetts Institute of Technology, reflects Immelt's plan to outpace competitors by offering software products and equipment that enhance manufacturing across the industrial spectrum. The company's Predix platform, which serves as the manufacturing counterpart of systems like Apple's iOS and Alphabet's Android, allows partner companies to develop apps that can optimize equipment used in businesses from railroads to wind-turbine farms. It will invest $1 billion in digital businesses this year, adding workers and offering 100-plus apps.
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"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," CEO Jeffrey Immelt said in a statement. "We are excited to bring our headquarters to this dynamic and creative city."
The relocation will have no material financial impact on GE, the company said. Executives worked with Massachusetts Gov. Charlie Baker and Boston Mayor Marty Walsh to secure an incentive package that will curb the costs of relocation while benefiting both the state and city, GE said. Roughly 800 employees will be located in Boston, including 200 corporate staff and 600 digital industrial product managers, designers and developers.
The headquarters will be located in Boston's Seaport District, and employees will begin moving to a temporary location in the city starting this summer. The company will offset some of the expenses by selling its offices in Fairfield and at 30 Rockefeller Center in Manhattan.
GE didn't disclose the specific incentives it negotiated for the move, which was first reported by the Boston Globe. Massachusett's corporate tax rate of 8% in 2014 compared with 9% in Connecticut, according to an analysis by the Tax Foundation, an independent researcher. The overall business tax climate in Connecticut ranked 42nd among the 50 states, while Massachusetts ranked 24th, the foundation said.
The cost of living is less than $1 lower in the Massachusetts city, according to Bankrate data.
"As much as all the discussion for six months has been about taxes, this decision wasn't about taxes," said Mike Tetreau, Fairfield's first selectman, a position comparable to mayor. GE would have contributed about $1.6 million in tax revenue to Fairfield's $290 million budget, he said in a phone interview.