GE Move: ‘This Hurts’ – Fasano Calls for Structural Changes

CT News Junkie

Connecticut’s political and business leaders expressed disappointment in General Electric’s decision Wednesday to relocate its headquarters to Boston, but none of them were truly surprised.

In a press release Wednesday, the company said it had been considering the composition and location of its headquarters for more than three years. The formal review began in June 2015, which is when GE CEO Jeffrey Immelt emailed his employees to let them know he was unhappy with the business climate in Connecticut and thinking about relocating the company.

“Boston was selected after a careful evaluation of the business ecosystem, talent, long-term costs, quality connections with the world and proximity to other important company assets,” GE officials said in a press release.

Connecticut officials were invited and did make GE an offer to stay in the state they called home for 42 years.
But one lawmaker called the attempt “half-hearted.”

Rep. John Frey, R-Ridgefield, said the presentation Connecticut made to GE included a photo of their competitor’s jet engine.

“That hastily-assembled presentation impressed no one, appeared to have been prepared at the last moment, and conclusively demonstrated a lack of understanding of the toxic business climate this administration has created, and a grossly distorted view of what a company like General Electric does, or what they mean to jobs in our region, or the economy of the state,” Frey said. “It was a consummate embarrassment.”

Gov. Dannel P. Malloy, who said he was informed of the company’s decision by Immelt on Wednesday morning, said they offered the company “a lot” to stay in the state.

He didn’t go into detail Wednesday afternoon about what type of incentives they offered the company to stay during a press conference at Pegasus manufacturing in Middletown. He said Connecticut’s offer was “highly competitive” and indicated the state was open to having a discussion about when and where dollars might be spent. He said it was obvious they weren’t interested in staying on the campus where they’ve been since 1974.

Transportation was important to them, and proximity to an airport with international flights was “extremely important to them,” Malloy said.
“You win some, and you lose some. Luckily we’ve won more than we’ve lost, but this hurts,” Malloy said.

Massachusetts offered GE incentives up to $120 million in grants and other programs and Boston offered up to $25 million in property tax relief, according to a press release from Gov. Charlie Baker’s office.

Republican lawmakers in Connecticut used the announcement to argue that it’s time to change Connecticut’s tax structure and fix some of its long-term budget problems, such as its unfunded pension liability.

He said Democratic lawmakers who are trying to rationalize the decision by claiming the iconic company was going to leave no matter what are “delusional.”
Fasano said he’s sure GE picked Boston because of the urban environment and access to a highly educated workforce, “but that’s not why they left Connecticut.” He said they left Connecticut because of the lack of predictability in its tax structure and the disrespect they were shown by some lawmakers who believed they were “bluffing.”

Malloy said he’s working to fix the state’s unfunded pension liability and he made sure GE knew they had hired a contractor to help them come up with a solution.

“I understand the significance to the business community and I want to get it resolved,” Malloy said.

Joseph Brennan, president and CEO of the Connecticut Business and Industry Association, said GE’s departure should be a wakeup call for lawmakers.

“Businesses large and small are making investment decisions every day and they are paying close attention to what’s happening in Hartford,” Brennan said. “How Connecticut policymakers react will impact the decisions other companies are now making about their investments here and elsewhere.”

Fasano believes the state could have taken steps toward resolving some of these issues during the December special session.

“Until we make structural changes to Connecticut’s budget, I fear that many more businesses will continue to leave this state,” Fasano said. “Any other conclusion, spin, or rationale demonstrates a complete loss of touch with reality.”

But Democratic lawmakers contend that it’s not really about Connecticut or its budget or tax structure. They said GE’s move is about the company’s decision to rebrand itself.

“It is clear that GE’s decision has nothing to do with taxes, or even business costs, and cannot fairly be viewed as a referendum on Connecticut’s growing economy,” Senate President Martin Looney, D-New Haven, said.

House Speaker Brendan Sharkey, D-Hamden, agreed.

“It appears, particularly from GE’s advertising, that their decision is not about taxes but more about rebranding into a high-tech company, and Boston is well known as a high-tech industry hub,” Sharkey said.