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GE: How Boston Won Over One of America’s Favorite Companies While Connecticut Slept

Massachusetts has consistently landed in the bottom five out of 50 states every year for the last three years in Chief Executive’s Best & Worst States for Business, as ranked by CEOs in those states. “Massachusetts is overtaxed and overregulated,” one CEO responded in 2015. Connecticut is never more than one or two steps above Massachusetts. So what did Boston do differently to win over GE that it hasn’t done before?

Despite GE CEO Jeff Immelt’s public protestations, Boston, along with the state of Massachusetts, really did offer the company a better overall tax package than Connecticut was willing to do. According to the Boston Globe, city officials at the time of GE’s announcement in January said they were prepared to offer as much as $25 million in property tax relief, and the state package could be valued as high as $120 million, with the possible inclusion of grants, tax incentives, and infrastructure improvements, as well as help with real estate acquisition costs.

City officials told the Boston Globe that they jumped at the chance to lure GE after Immelt wrote a memo in June to GE employees saying that the unfriendly business climate had prompted his leadership team to consider moving the headquarters out of state. The memo was a response to a decision by Connecticut officials last spring to significantly change business tax policies, to help fill a big state budget gap.

Indeed, after GE’s announcement, Connecticut Gov. Dannel Malloy, a Democrat, told Hearst Connecticut Media that Republicans and Democrats in the state need put an end to partisan sniping over GE’s defection to Massachusetts and come together to make the state a more competitive place to do business.

In his interview with the publication, Malloy pushed back against the narrative that his administration has balked at the kind of wholesale changes that companies want to see from the state.

The problem, he said, is getting the state legislature to buy into key initiatives, such as a $100 billion transportation improvement program and repairing one of the most insolvent public pension systems in the nation.

“There have been enough warnings about waking up,” Malloy said. “It’s a commitment to getting the fiscal house in order.”

A more favorable tax package wasn’t the only reason GE chose Boston over other cities. Company officials cited Greater Boston’s concentration of elite universities and nimble tech firms as the main draw.

“We want to be at the center of an ecosystem that shares our aspirations,” Immelt said in a statement at the time of the relocation announcement.

GE is not alone in considering whether to relocate to other cities, particularly from suburban locations to urban cores. Another article in the Boston Globe listed a number of companies thinking of moving to Boston from the suburbs to better attract talent, particularly millennials who think the suburbs are boring.

Newton-based design consultancy Continuum said relocating to the urban core would enable its workers to more “easily mingle with other like-minded creative types.”

Software firm Acquia moved from Burlington to downtown Boston last year when it was time to expand. Sneaker-maker Converse, meanwhile, established a “hipster-friendly” headquarters near North Station, leaving the “humdrum environs” of North Andover behind.

Workers are also attracted to the greater options for restaurants and bars that urban cores offer, and younger workers aren’t as concerned about commuting or parking, because many choose not to own cars and live close enough to work to walk, the companies told the Boston Globe. Moreover, the idea that nearby Logan International Airport is easy to get to was another selling point to relocate to the urban core.

 


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