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OP-ED | Farewell GE: If You Need Connecticut, We’ll Be In Our Room Eating Ice Cream

by | Jan 13, 2016 7:49pm () Comments | Commenting has expired | Share
Posted to: Analysis, Business, Corporate Watch, The Economy, Financial Sector, Opinion, Taxes, State Capitol, Fairfield

It happened: General Electric is leaving Fairfield for Boston. The political blame game has already begun, and the economic pain is sure to be sharp. What’s worse, though, is the blow we’ve taken to something much more fragile than the economy: our collective self-esteem and identity.

General Electric finally confirmed Wednesday that it was abandoning its headquarters in Fairfield, where the company has been since moving from New York City in 1974. GE has been threatening to move since a messy fight over taxes this past summer.

Republicans pounced immediately, and Gov. Dannel P. Malloy, who had been the guest of the First Lady at the State of the Union the night before, found himself on the hook. “This hurts,” Malloy admitted in a press conference Wednesday.

But how much will it hurt? Certainly, losing hundreds of high-paying jobs is a fairly big deal for our small state, and it’s going to have ripple effects. The town of Fairfield will feel the loss most keenly; plenty of other businesses depend on revenue from GE’s employees. It won’t plunge us back into recession, but it’s a hard hit to absorb.

The fallout will be much worse politically. Because it was Democrats’ passage of certain taxes last summer that sparked all this moving talk, they’ll feel the brunt of it. The griping about Connecticut’s rotten “business climate” as well as our current cycle of debt, deficit, and taxes, began almost as soon as the Boston Globe broke the story. The line from Republicans is that Democrats hate business, spend too much, tax too much, and rack up too much debt for companies like GE to stay.

And there’s something to that. According to Rep. John Frey, R-Ridgefield, the presentation Connecticut made to GE to convince them to stay was “a complete embarrassment” and included a picture of a competitor’s engine. Oops. Certainly the Malloy administration and the Democratic leadership in the legislature have never figured out how to connect with the business community, as last summer’s tone-deaf tax package proves.

But all of that has very little to do with why GE is moving to Boston. After all, it’s not like the tax situation in Massachusetts is much better than here.

Companies move for lots of reasons, and not always the ones that are either presented or that seem obvious. It’s like when a sports team moves and fans blame attendance or the strength of a city as a market for that sport. The St. Louis Rams just announced they’re moving back to Los Angeles — is that because L.A. is a better football market? Were St. Louis fans bad fans? Nope. The Rams are moving so their owner can build a fancy new stadium, be the envy of the league, and make a ton of money.

And that’s a big part of why GE is moving, too. Boston and the state of Massachusetts are promising all kinds of goodies in the form of public funds—$145 million worth—as an incentive to head north, and at this point in time GE’s execs would much rather have a sparkling new headquarters on the waterfront in trendy, exciting Boston than their old building in a sleepy Connecticut suburb.

When GE moved to Fairfield from midtown Manhattan in 1974, companies leaving inner cities for the suburbs was the big trend. Fairfield seemed new, quiet, and safe compared to creaky, “dangerous,” and crowded New York. In that way big companies mirrored a lot of middle class white Americans who left the cities for the suburbs. In fact, GE came under fire from groups like the Suburban Action Institute for relocating to a town that was inaccessible to lower-paid racial minorities because of its zoning laws and housing costs.

But now, companies like GE want to be where the action is, and that’s in the cities. Suburban office parks feel like relics, and GE is desperately trying to rebrand itself as a nimble technology company instead of an ancient, plodding mid-century conglomerate. They can do that better in Boston than in Fairfield.

That leaves us out in the cold, though; and it’s a bitter cold indeed. After the economy absorbs the blow and the political aftershocks fade, we’ll still be feeling the loss in our hearts. GE’s headquarters was something we could be proud of, something that made Connecticut seem world-class, and now it’s gone. It’s like a bad break-up with economic consequences.

Connecticut is a state that suffers from fragile self-esteem and a deep inferiority complex. If you feel that more heavily this winter, you have General Electric to thank for it.

Susan Bigelow is an award-winning columnist and the founder of CTLocalPolitics. She lives in Enfield with her wife and their cats.

DISCLAIMER: The views, opinions, positions, or strategies expressed by the author are theirs alone, and do not necessarily reflect the views, opinions, or positions of CTNewsJunkie.com.

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(16) Archived Comments

posted by: MyOpinion | January 14, 2016  10:30am

The people of CT have nobody to blame, but themselves!!! They elected the Democratic Governor, and now they are seeing the Tax and Spend alliance the Democrates have….

posted by: oldtimer | January 14, 2016  11:27am

Malloy’s and the democrats’ arrogance is on full display with this move. Just another nail in CT’s coffin…

posted by: ocoandasoc | January 14, 2016  11:35am

I’m enjoying the spin the State Dem office holders are trying to put on this… it’s really funny, tinged with pathetic. I’m thinking if I should call Senator Looney and ask him if he still thinks GE is bluffing! And I loved the Governor’s “win some, lose some” comment, as if a company adding a dozen blue collar jobs in Glastonbury balances out for a monumental loss like GE.
The basic spin seems to be “Well, GE was going to leave anyway for other reasons.” But that doesn’t wash. GE wasn’t actively investigating a move. But their top executives understand financial issues much better than most Connecticut voters. They saw the unfunded pensions handing over the State like a sword. And they saw a State legislature whose only response was to raise taxes – primarily on businesses – and borrow more money. They now a trend when they see one. A few days before the last CT tax bill was to be voted on, they called the Governor to voice their concern. They were underwhelmed by the response, as so often happens to the legitimate gripes of the business community in general. So it became a threat to their business and their shareholders, and they reacted like any Harvard business professor would agree was appropriate. They began to study a move. And, when they did, the facts and figures made Connecticut untenable – and indefensible – as a choice. Bye-bye!
Look at it from GE’s viewpoint. For years the labor-funded faux-progressives in CT have been droning on about businesses not paying their fair share to support their special-interest driven and frequently corrupt spending. They often use GE as a whipping boy for paying such a small amount of State income tax. (As if anyone in CT voluntarily pays more in taxes than they legally have to! “Honey, maybe we should forget taking that home mortgage interest deduction this year and go ahead and pay more, what do you think?) They ignore the substantial economic impact that GE – and companies like it – have on the State’s tax coffers overall because it suits the particular narrative that keeps them in office.
Some will now say that this could be the “wake-up” call that Connecticut needs. But I think that’s wishful thinking. The CT legislature isn’t sleeping… it’s in a self-induced coma. Economic realities will continue to be ignored. And, when those realities threaten to intrude and perhaps gain the attention of the equally somnolent CT taxpayers and voters, they will be spun away with more of the fantasies and illusions that have become the stock and trade of one of the wealthiest and best educated – yet one of the worst-run – states in the nation.
We should blame GE, Susan? No, let’s put the blame where it belongs, on the Dem-controlled State legislature and leaders like Looney and Sharkey that have taken arrogance and political prevarication to all-time heights.

posted by: Harry T | January 14, 2016  12:27pm

You may not be able to afford ice cream after Malloy and the dems out a fat tax on it.

posted by: miketcha | January 14, 2016  1:00pm

Many in the state have been critical of Governor Malloy’s corporate welfare packages he has given out over his tenure as Governor. Despite our state economy actually showing some life; an additional 145 million give away at this time with a huge deficit upcoming in the next two years would have been a bad move. We can always find another trophy corporation to woe when our self-esteem really needs it.

posted by: ACR | January 14, 2016  1:23pm

ACR

Interesting to note the time table; GE moved to CT during then Republican Governor Meskill’s administration.

posted by: Politijoe | January 14, 2016  1:50pm

Politijoe

Susan, you’ve made excellent points regarding the GE relocation. I would also conclude that although painful and disappointing I think this has far less to do with taxes than several other variables. Things like GE agressively rebranding itself from an industrial manufacturer to a high-tech leader.
They are also following a national trend with corporations relocating to urban settings that provide a younger-well educated workforce and a convenient transportation infastructure. Although taxes obviously played a role in this equation, I don’t think they were the deciding factor by any means. Lets not forget GE has been exploring this option for over three years and all things being equal Boston provided much of what GE was looking for…..including $150 million dollars in tax incentives. Which brings us full-circle in this race to the bottom.
Why does one of the wealthiest corporations in the world, who earns $160 billion dollars annually require tax incentives of $150 million dollars for less than 700 jobs? particularly when they have received over $300 million in tax welfare from other states. Furthermore, when we calculate the ratio of those tax incentives against each worker, Massachuettes is paying an extraordinarily high worker to cost ratio for their business. It’s disappointing GE chose to leave, but short of giving away the farm I don’t think they really had any intention of staying.

posted by: CitizenCT | January 14, 2016  5:00pm

Susan and Politjoe, what data is drawing you to the conclusion that companies are migrating their HQ’s to cities?  UTC moved from Hartford to Farmington.  Cigna moved from Philadelphia to Bloomfield.  Most of the Dow 30 are not headquartered in big cities.  The WSJ editorial titled “GE Escapes Connectitax”, seems to sum it up best.

posted by: Jim in Mfg | January 14, 2016  5:12pm

I see that GE formed its search team in June 2015.  where does that 3 year figure come from?

http://www.ctpost.com/news/article/GE-says-it-s-considering-leaving-Connecticut-6307688.php

posted by: Christine Stuart | January 14, 2016  5:45pm

Christine Stuart

Jim, it was in GE’s press release yesterday announcing its move to Boston.

posted by: Politijoe | January 14, 2016  9:24pm

Politijoe

Citizen: The UTC move from Hartford to Farmington and Cigna from Philadelphia to Bloomfield was common at one point, however the trend has been reversing in recent years.  Here are just few links:

http://www.brookings.edu/research/opinions/2014/05/27-innovative-corporations-moving-downtown-clark-katz

http://www.nytimes.com/2015/02/24/upshot/more-new-jobs-are-in-city-centers-while-employment-growth-shrinks-in-the-suburbs.html?_r=0

http://www.chicagotribune.com/business/ct-kraft-heinz-chicago-headquarters-0717-biz-20150716-story.html

posted by: Clean Agent | January 14, 2016  10:56pm

My guess is that the executives of GE would much rather live in New Hampshire than CT or MA. Putting the headquarters in Boston makes sense. They can take the MA tax breaks and hand outs while living and voting in NH. Basing the corporate aircraft in Nashua would also be cheaper too. Jet fuel is almost $8.00/gal in Boston but just a short drive away in the “Live free or die” state, jet fuel is under $5.00/gal. I am sure hangar space is cheaper there too. I bet they DID explore moving 3+ years ago. Right about the time that they figured the guns laws were about to change. But, the execs would never say the gun laws made them leave. The tax package gave them a great excuse out. If you think that the wealthy and likely republican executives are NOT gun owners, you are fooling yourself.

posted by: justsayin | January 15, 2016  7:20am

Simply put this is not good for CT, now or in the future.

posted by: justsayin | January 15, 2016  7:23am

If it was just for taxes I would feel better. Because it wasn’t we should all worry more.

posted by: Jim in Mfg | January 15, 2016  10:28am

Christine,  yes and that press release said they were “considering” for 3 years (and thus not actually moving forward), and began a formal search in June 2015.  To me this is clearly a result of their reaction to the Democratic leaderships miss-steps in June 2015.

posted by: Independent | January 15, 2016  10:56am

I think the GE situation is a perfect microcosm of all of the factors that companies weigh when deciding to stay, expand, or re-locate.  Bottom line is that CT has to improve in everyone of these areas.  The left-right blame game is entertaining, but pointless.  Adult conversations need to take place.  Keeping my fingers crossed.

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