What Virginia Can Learn from GE’s Relocation to Boston

My apologies if I sound like a broken record, but clearly there are people who still don’t get the message. So, here I go again… Today’s Wall Street Journal interviews GE’s chief financial officer, Jeffrey Bornstein, on how the move of the conglomerate’s headquarters from suburban Connecticut to Boston is working out.

I reproduce select quotes from Bornstein below. As you read them, keep in mind the chart to the left. Richmond ranks 6th among the top ten markets in the country with the highest concentrations of millennials as a percentage of the urban population. Think about where walkable, mixed-use urban development is occurring in the metropolitan region, and where it is not occurring. (Hint, almost all of it is occurring in the city of Richmond and almost none of it in Henrico, Chesterfield or Hanover counties.)

There were moments in the past when we really asked ourselves whether Connecticut made sense for the company. There wasn’t a huge ecosystem around the company. We lived on a very beautiful property in Fairfield, but very isolated. Attracting talent there was a bit of a challenge. For younger folks maybe not the most dynamic place in the world. …

There are upward of 500,000 kids who go to school—undergrad and graduate school, doctorate—every day here in greater Boston. …

There definitely is an innate culture and tactical depth and talent here. It lends itself to these kind of entrepreneurial endeavors. The universities here, whether it’s MIT, Northeastern, Harvard, you name it…the proximity allows us to build even deeper relationships with these institutions. …

If you saw where we were in Fairfield County, it was a morgue. Very little activity. I hated it. Even in our temporary space, the offices are open. There’s a lot more interaction. You aren’t calling people who are four offices away. You can get up and go, and physically grab the folks. We’re translating those experiences to the new facility. It will be very modern, green and open. …

Millennials, this is the kind of environment they want to work in. They don’t want to work in the environment that was paneled walls, and, based on your level in the company, you could count the ceiling tiles and that determined the size of your office. That’s the world of the ’70s, ’80s, maybe the early ’90s. Young talent today want to be in a vibrant, open, interactive, high-tech, fun kind of space. That’s how we thought about design in the new facility. …

From the get-go we knew we wanted to be in a place that was vibrant and entrepreneurial, where you could walk out your door enriched by your environment and your ecosystem. I can walk out my door and visit four startups. In Fairfield, I couldn’t even walk out my door and get a sandwich. We knew we wanted to be in a more urban environment where we could actually participate in the ecosystem and be smarter and more aware as a result.

(Hat tip: Chris Spencer.)

There are currently no comments highlighted.

11 responses to “What Virginia Can Learn from GE’s Relocation to Boston

  1. The reason firms like GE located in Connecticut is simple — low taxes. That won’t be the case in Massachusetts.

  2. Great post!

  3. Peter, CT taxes are so high now that moving to Mass may have been motivated by tax savings, at least in part.

    https://taxfoundation.org/2017-state-business-tax-climate-index/

    But I’m sure that moving to Boston is because of the mix of companies and the other reasons Bacon stated. Not sure how we respond to this, however – more sidewalks in Innsbrook?

  4. The whole nature of business has changed from the time when a corporation could locate in a suburban area and people hired could settle nearby – ironically within walking distance because both the company and the worker expected to spend their career there

    The Corporation would become part of the community.. involved in little league sports, and other community organizations and events.

    Companies had their own internal R&D department where they would go about incorporating technology into their product line…

    Corning and Kodak are two similar companies…

    GE is one of the few companies that has evolved as technology and business has … and is on the forefront of many modern technologies everything from powerplants to aircraft engines to MRIs ,etc and now these things are being given “brains” and they talk to each other on networks.

    One of the most important qualities for durable corporations these days in NIMBLE and proactive… it’s the difference between a Kodak and a GE

    but the Millennial narrative itself is not single dimension.. as many high tech companies locate in smaller urbanized areas usually with research universities, . that have evolved to become tech centers and have a rich talent pool… which draws the companies.

    but here’s what caught my eye – and it violates Bacon’s philosophies about “bribing” companies to locate:

    ” GE will get an incentive package from the city and state valued at as much as $145 million for moving 200 jobs”

    let’s repeat that 145 million for 200 jobs – ZOUNDS – that’s 750K PER JOB!

    so… is GE moving to Boston because it likes the BOSTON urban area for being an urban area? I don’t think the 145 million “hurt”…

  5. GE has 295,000 employees. The top 200 (presumably) work at headquarters. Unless they plan on moving a whole lot of additional operations to Boston I’m not sure what millennials have to do with it. This sounds more like a small number of filthy rich top corporate executives deciding they’d rather live in Boston than in Fairfield, CT. I’m sure it will be easier to get customers and potential customers to visit. Why? Because the City of Boston, et al finished the “Big Dig” and made it possible to get from the airport to the business district. funny how government sometimes has to spend money to attract business.

    As for Jim’s list of cities with the most millenials – nobody cares. Show me a list of cities with the most college educated millenials and we’ll be getting somewhere.

  6. Steve,

    I haven’t kept up with CT taxes. Also, GE is one of the biggest tax avoiders in the nation.

  7. re: tax avoiding…

    been reading lately about the difference between corporations and their taxes and what is called “pass through” businesses which is a great number of most businesses from sole proprietorships , limited partnerships, S corps, etc.

    the non-corporation businesses pay taxes on an individual tax basis.. so if their company makes even as little as 100K in income – they can pay a marginal tax rate of 50% when you take into account, Federal, State and FICA taxes..

    I’d like to see Bacon do a column on this since we are now seeing supposed efforts at tax ‘reform’ that will lower the statutory tax on corporations and some want to change the tax on pass-through entities .. and that can play a role at the State level.. and be a factor in attracting companies. (or pushing them away). Kansas lowered the marginal tax rate on pass-through businesses.. with disastrous consequences… they lost over 700 billion in revenues in one year and got almost no increase in economic activity – which was the theory – that increased economic activity would produce more jobs and more than make up the revenue shortfall… did not happen . and Mr. Gillespie is making similar noises in his campaign for Gov.

    At any rate – don’t discount the effect that taxes, incentives, and “business-friendly” policies can have on influencing a company to stay or move…

    GE is a uniquely American company that sells big globally… I’d not want to hobble them… and make it harder for them to stay. It would be our loss.

  8. Peter, Peter – I’m sure the millions of GE shareholders and the hundreds of thousands of GE employees over the years are wracked with guilt. We are a nation of tax avoiders. We were founded by tax avoiders. Only tax evaders are breaking the law, not tax avoiders….but the passing cheap shot is your forte.

  9. Interesting article:

    ” Where New Grads Can Find a Roof and a Paycheck”

    https://www.trulia.com/blog/trends/trulia-indeed-grads-17/

  10. Isn’t it likely that moving to cities is a phase in the business cycle? Just like ditching offices for many companies. The pendulum swings.

    And Larry, the figures for Kansas’ elimination of taxes on corporate pass-thorough income was $800 million, not billion. Still nothing to ignore.

    Fairfax County’s CFO has been meeting with various groups and informing them that, for the foreseeable future, county revenue growth will only be around 2% annually. What happens to RoVA? We should not be cutting taxes willy nilly, but we need to look at eliminating programs, agencies and jobs that don’t produce results. And we need to stop importing poverty, by fining the crap out of businesses that don’t follow the immigration employment laws. We might also look at how much overlap we have in major programs at our state universities and colleges.

  11. my bad on the 800 … it was million… but nearly 20% of the state budget and fiscal chaos … as a result.

    ” we need to look at eliminating programs, agencies and jobs that don’t produce results.”

    well we need to agree on a standard or benchmark as to what “results” should be… and not let that idea be used as stealth “starve the beast” strategy for programs there is disagreement on.

    “And we need to stop importing poverty, by fining the crap out of businesses that don’t follow the immigration employment laws.”

    I’m totally in favor of strict enforcement of e-verify and that includes fining the dooda out of ANY business that cannot produce valid e-verify certification for ANY employee…

    but I AM hearing that many farmers are freaking out over the dearth of labor to harvest crops…

    “We might also look at how much overlap we have in major programs at our state universities and colleges.”

    where we are now with the universities is the worst of both worlds.. we fund them but have no real way to influence their operations and spending.

    Move the state money away from the Universities and to individual students.. and let the Universities “compete” for the dollars.. that does not keep individual parents from adding more of their own funds for their kids to choose more expensive options – but then that becomes their legitimate cost and not taxpayers. Taxpayers provide the minimum… if you want more than that -have at it with your own money.

    we agree.

Leave a Reply