Richard Drew/Associated Press
Feeling nervous about the future of General Electric?
Me, too — ever since new chief executive John Flannery decided to delay by two years the completion of a $200 million headquarters in Fort Point.
The other shoe dropped Monday when Flannery unveiled a dramatic restructuring of the conglomerate, including cutting some jobs in Boston and getting out of key business lines such as lighting and transportation.
It feels like we enjoyed about three seconds of good headlines when GE uprooted its headquarters and headed to Boston last year from suburban Connecticut. We were supposed to be where GE could complete its reinvention as an Apple for modern industry, bringing smarts and power of the Internet to hulking products like jet engines and MRIs.
Oh, that all sounded so good as Charlie Baker and Marty Walsh forked over an ultra-rich incentive package worth about $150 million to lure GE here.
Now, I can’t help but wonder, did we get sold a lemon? Instead of Boston being the place where GE rose from the ashes, will we be known as the site of its final resting place?
The business community here loved Jeff Immelt, who as chief executive pushed for the company’s fresh start in Boston. He was the anti-Jack Welch, the Midwestern math major partial to sweater vests, the guy who liked to drive his own car to work and park in a public garage at night.
But since Immelt abruptly stepped down as chief executive in August, we’ve been seeing a different side. Perhaps he was not immune to big company excesses, most devastatingly the practice of having an empty plane trail him on occasion in case his jet broke down. That won’t happen under Flannery, the new guy, because he decided to sell GE’s corporate air force to save money.
Maybe now the people of Connecticut don’t feel so bad that GE is gone.
“I think a lot of us are relieved they didn’t take the blank check Governor [Dannel] Malloy wanted to give them because we would have had a fleet of corporate jets parked with our National Guard,” said Kevin Rennie, a former Connecticut state senator who writes a political column for the Hartford Courant. GE “could have loaded a lot of troubles onto on us and called it a victory.”
Is it too soon to sour on our GE deal? Of course, the cynical Bostonian in me wants to say I told you so. This all seemed too good to be true anyway. Tee up your favorite Tito Jackson quote here.
But I’m not ready to give up on GE and what it could mean to our economy. If GE can pull off its transformation, Boston will be better off with a front row seat to a wave of innovation known as the Internet of Things.
When the city and state officials wooed GE here, it was very much like a marriage — for better or worse, in sickness and in health. This relationship is just over a year old. We have a long way to go, but so far GE has shown its commitment with its wallet — pledging $50 million in local philanthropy (half to Boston Public Schools) — and its time — with executives sitting on two dozen boards of universities, hospitals, and other nonprofits.
Also take heart in this: GE might be shrinking, but with about 295,000 employees globally and a stock market capitalization of $165 billion, the company remains gargantuan by Massachusetts standards, about twice the value of the second biggest public company in the state. That would be Thermo Fisher Scientific, which has about 65,000 employees globally.
And if taxpayers feel like we might be holding the bag on GE, know this: The company pledged to create 800 jobs at its headquarters by 2024, and hitting that number is tied to receiving $25 million in property tax breaks from Boston. If GE falls short, it won’t get the full benefit. But please — I’m talking to you, Governor Charlie Baker and Mayor Marty Walsh — don’t give the company another dime no matter how much it begs.
I predict GE will be around for a long time. It is the last of the original stocks left in the Dow Jones industrial index, which began tracking the performance of large public companies in 1896. The company has ridden the highs and lows from the Great Depression to the Great Recession.
“Change is part of our history and tradition. It’s also part of our survival,” said Ann Klee, the GE executive who is overseeing the buildout of the Boston headquarters.
When I told her some people in town are wagering on whether GE will go through with its new building, Klee assures me it will get done.
“You can tell them you talked to me, and we’re committed,” she said.
We’ve got a lot of taxpayer money riding on GE. We’re learning that big companies can come with big problems. The honeymoon is over, but this relationship is worth saving.
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